of full inquiry into the condition of the bank, of examining all the officers or agents thereof, with power to institute proceedings to close the bank. The examiners provided for under the national banking law have practically the same powers, except that the exercise of power is primarily with the comptroller of the currency, who is also given ample powers, under the act, to take possession of the bank by an examiner or a receiver, and close it up when satisfied that the bank is insolvent, or where it has failed to redeem any of its circulating notes. The action of the comptroller is presumed to be that of the secretary of the treasury 5 and is conclusive as to the receiver's authority. Yet it has been held that his decision is not evidence of insolvency in a suit by the receiver against the stockholders for contribution." 3 § 43. Other regulations of national banks.- Section 5190 and the following sections of the Revised Statutes contain other regulations of national banks. The requirement that a national bank shall transact its usual business at its banking house, the requirements as to "lawful money reserves," the regulations as to usurious rates of interest, as to discounts and loans, are all within the power of congress. The effect of a violation of these regulations will be examined under various divisions in this work." 44. Regulation of national banks by states. It has already been pointed out that the state governments have no control over national banks except what has been granted to them by the federal government. Yet the state government may prohibit certain conveyances, and a national bank 1 Commonwealth V. Farmers' Bank, 21 Pick. 542; State v. Union Bank, 4 Rob. (La.) 499. 6 Washington Nat. Bank v. Eckels, 57 Fed. R. 870. 7 Bowden v. Morris, 1 Hughes, 378, 2 Sec. 5240, Rev. Stat., amended Fed. Cas. No. 1715. But the case is 18 Stat. 329. 3 Act of Congress, June 30, 1876, sec. 1, 19 Stat. 63. 4 Secs. 5226 et seq., Rev. Stat. U. S. 5 Price v. Abbott, 17 Fed. R. 506. wrong. 1 Amended by 24 Stat. 559. 2 See $$ 32, 33, ante, and §§ 191 and 201, post. 1 See § 25, ante. will be subject to the general law; but national banks are not covered by an act of the state which requires all corporations to file with a certain officer the name of a designated agent. Indirectly, too, the state governments can control national banks by their criminal laws where congress has not done so; and the highest authority has held that both the state government and the federal government can make the same act of a national banker a crime as to each sovereignty. But it is held that the statute of the national government as to usurious dealings of national banks is exclusive of any state legislation, as to a civil liability. § 45. State regulation of foreign banks. It is hardly necessary to state that a state statute as to foreign banks will not affect national banks, which are chartered for the whole nation. A foreign bank is permitted by comity to make a contract in a state other than its charterer if the act is not forbidden by the law of its creation, but its general franchises, it has been said, can be exercised only in the state of its origin. This must be understood with the qualifications that the act be not forbidden by law in the state where 2 Traders' Nat. Bank v. Chipman, 164 U. S. 347; Chipman v. McClellan, 159 Mass. 363. 3 First Nat. Bank v. Commonwealth, 33 S. W. R. 1105. 4 State v. Fuller, 34 Conn. 280, as to embezzlement; State v. Fields, 98 Iowa, 748, and State v. Bardwell, 72 Miss. 535, as to receiving deposit knowing the bank to be insolvent. Compare State v. Menke, 56 Kan. 77. 5 Cross v. State, 132 U. S. 131; Hoke v. People, 122 Ill. 511; State v. White, 101 N. C. 770; Commonwealth v. Seeberg, 94 Pa. 85; State v. National Bank, 2 S. Dak. 568. Contra, Commonwealth v. Felton, 101 Mass. 204. But the state statute prohibiting a cashier from engaging in any other business does not apply to a cashier of a national bank. Allen v. Carter, 119 Pa. 192. 6 Farmers' Bank v. Dearing, 91 U. S. 29; Peterborough Nat. Bank v. Childs, 133 Mass. 248; Imp. & Trad ers' Nat. Bank v. Littell, 46 N. J. Law, 506; First Nat. Bank v. Duncan, Fed. Cas. No. 4804; Slaughter v. First Nat. Bank, 109 Ala. 157; Parker v. Rochester Nat. Bank, 59 N. H. 310; First Nat. Bank v. Garlinghouse, 22 Ohio St. 492. Contra, First Nat. Bank v. Lamb, 50 N. Y. 95. But as to the law of crimes, see § 191, post. 1 Lane v. Bank of West Tennessee, 9 Heisk. 419. Contra, Bank of Marietta v. Pindall, 2 Rand. 465. See City Bank v. Beach, 1 Blatch. 425 the act is done, and, as some courts say, if the act be not malum in se. There have been cases where foreign banks have been forbidden to carry on a banking business by an agent located in the state. Foreign banks are within state statutes against unauthorized banking, and statutes have been upheld which prohibit the circulation of notes of foreign banks, although in the absence of statutory prohibition foreign currency may be put into circulation. The general rule, of course, is that a state may prescribe what terms it pleases to foreign banks doing business in the state. 2 Conn. Mut. Life Ins. Co. v. Albert, 39 Mo. 181. See the next note. 3 Bank of Newberry v. Stegall, 41 Miss. 142. 4 Merchants' Bank v. Spalding, 9 N. Y. 53; Sackett's Harbor Bank v. "Ballston Spa Bank v. Marine Bank, 16 Wis. 125. CHAPTER IV. STOCKHOLDERS. § 46. In general. The subject of stockholders in corporations is so large that no attempt will be made to examine the general subject except as the subject has been peculiarly illustrated by decisions as to banks. It will be assumed that the general principles applicable do not need citations to establish their existence. It will be necessary, however, to state those general principles in order to show the connections of this subject. It is settled that a person may become a stockholder in a banking corporation just as he becomes a stockholder in any other corporation: (1) by a valid subscription to the capital stock; (2) by a transfer of shares to himself; (3) by estoppel. For the purpose of liability on stock it will appear that two different persons may be considered as the owners of the same shares. Any person competent to become a stockholder will be so held. Even if the stockholder be a married woman laboring under the disability of coverture,1 and in case of national banks, any person permitted by the laws of the place where the bank is situated may be considered a stockholder.2 § 47. Increase or decrease of stock.— The original capital stock cannot be increased or decreased without legislative authority. Such authority in case of national banks is given by sections 5142 and 5143 of the Revised Statutes with the act of May 6, 1886. Where the constitution requires every banking act to be submitted to a vote of the people, a bank 1 In re Reciprocity Bank, 22 N. Y. 9; Simmons v. Dent, 16 Mo. App. 288. 2 Keyser v. Hitz, 133 U. S. 138; Anderson v. Line, 14 Fed. R. 405; Hobart v. Johnson, 8 Fed. R. 493; cannot increase or decrease its capital stock without the permission of an act ratified by popular vote. When an increase in the capital stock has been permitted by the proper authority, the holder of the increased stock cannot set up irregularities in the making of the increase to defeat his liability as a stockholder. In the case of national banks when the increase has been allowed by competent authority, to wit, the comptroller of the currency, who has issued his certificate, a subscriber to the increase cannot claim to be not a stockholder because the original increase has been reduced before the issuance of the certificate." But no one becomes a stockholder in the increased stock until the comptroller issues his certificate, even though the amount has been paid into the bank for the new stock. In such a case the bank holds the amount paid in as a trustee, and, if the increase of stock be not allowed by the comptroller, the amount paid in must be restored." When the capital stock is reduced on 2 People v. Nat. Sav. Bank, 129 Ill. 618; McNulta v. Corn Belt Bank, 164 Ill. 427. 3 Veeder v. Mudgett, 95 N. Y. 295. But Palmer v. Bank of Zumbrota, 75 N. W. R. 380, says the stockholder is not estopped as against past creditors. 4 Delano v. Butler, 118 U. S. 634; Aspinwall v. Butler, 133 U. S. 595. The certificate is conclusive. Columbia Nat. Bank v. Matthews, 85 Fed. R. 934, 56 U. S. App. 636. The subscription is binding although the whole amount is not subscribed. Scott v. Latimer, 89 Fed. R. 843, but it is a strained construction of the statute. The dissenting opinion is much better law. 5 Charleston v. People's Nat. Bank, 5 S. C. 103; Winters v. Armstrong, 37 Fed. R. 508; McFarlin v. First Nat. Bank, 68 Fed. R. 868; s. c., 16 C. C. A. 46; Schierenberg v. Stephens, 6 32 Mo. App. 314; Stephens v. Follett, 43 Fed. R. 842. In the last case the bank officers had transferred old stock on the books to the subscriber. 6 Armstrong v. Law, 27 Wkly. Law Bul. 100. 7 Schierenberg v. Stephens, 32 Mo. App. 314; Winters v. Armstrong. 37 Fed. R. 508. These last two cases need careful reading; the syllabus is misleading; they will show that the bank was in fact held trustee. But in a case where the comptroller seems to have been guilty of questionable conduct, it was held that the comptroller could not first refuse to authorize the increase, and then, after insolvency of the bank, issue his certificate of the increase and thus hold the subscribers to the increased capital. Mathews v. Columbia Nat. Bank, 77 Fed. R. 372: but see note 4, supra, on this case. |