are guaranteed by the United States, and if the United States should be compelled to pay them the United States has a paramount lien on the assets of the bank for reimbursement. The administration of the bank's assets is, therefore, vested in the Comptroller as an officer of the United States. He appoints the receiver and directs his acts. Individual liability of a stockholder can only be enforced by his order.

"As the power of the Comptroller is derived from a statute of the United States, it cannot be controlled or limited by State statutes."

§ 315. When State statute does not govern.

In actions for the recovery of usurious interest, a State statute limiting the time within which an action to recover excessive interest may be brought does not apply.

In the State of California it is held in the case of Wells v. Black, that the Statute of Limitations commences to run against the liability of the stockholders of a savings bank from the time when the debt was created and the liability incurred upon. the acceptance of each deposit, and at the expiration of three years thereafter, the right to enforce the stockholder's liability is at an end.

The court says:

"Since the relation of debtor and creditor existed between the bank and its depositors it follows that the debt was created and the liability incurred at the time of the acceptance of each deposit. At the expiration of three years the right to enforce the stockholder's liability was at an end. (Code Civ. Proc., § 359; Hunt v. Ward, 99 Cal. 612, 37 Am. St. Rep. 87; Bank v. Pacific Coast S. S. Co., 103 Cal. 594.) Whatever divergence of views may be found in the earlier adjudications, the cases above cited contain the last expressions of the court. upon the question. It follows, therefore, that plaintiff's cause of action is barred as to all deposits made more than three years before the commencement of the action.

"The judgment is ordered modified to conform to these. views, appellants to have their costs upon appeal."

8 Lucas v. Government Nat. Bank of Pottsville, 1 N. B. C. 872.

§ 316. Fraudulent act by officer of bank - Statute runs when. Where an officer of a bank has committed a fraudulent act causing loss or injury to the bank, which act is unknown to the directors of the bank, in an action brought against him (the officer) for money had and received, the Statute of Limitations does not begin to run until the knowledge of the act has been discovered by the directors."

9 Atlantic Nat. Bank r. Nathaniel Harris, 118 Mass. 147.

CHAPTER XLII.

FORFEITURE OF BANK'S FRANCHISE.

§ 317. Acts of banks which may forfeit charter.

The National Banking Act, section 5239, Revised Statutes of the United States, provides:

"If the directors of any national banking association shall knowingly violate, or knowingly permit any of the officers, agents, or servants of the association to violate, any of the provisions of this title, all the rights, privileges, and franchises of the association shall be thereby forfeited. Such violation shall, however, be determined and adjudged by a proper circuit, district or territorial court of the United States, in a suit brought for that purpose by the Comptroller of the Currency, in his own name, before the association shall be declared dissolved."

§ 318. Acts constituting liability.

A franchise of a national bank is liable to forfeiture when the acts are committed by the directors knowingly, and the information brought must charge that the act was done by the directors, or that they knowingly permitted it to be done.1

If the action is not brought within a period of five years it is barred by the Statute of Limitations.2

By the provisions of the foregoing statute the Comptroller of the Currency is given discretionary power to bring the action. The authority is vested in him. No other person can complain or institute proceedings.

The statute in some of the States has enacted laws declaring that if a bank shall violate any of the laws of the State or its charter by doing acts in excess of its powers, or failing to comply with express provisions of the law directing it to perform certain acts, its charter may be forfeited in a suit instituted by the Attorney-General of the State.

The charter of a State corporation, whether obtained under 2 Welles v. Graves, 41 Fed. Rep. 459.

1 Trenholm, Comptroller of the Currency, v. Commercial Nat. Bank of Dubuque, 38 Fed. Rep. 323.

a special or general law, cannot be forfeited only by an action brought under the direction and authority of the AttorneyGeneral of the State. A complaint may be laid by any individual before such officer, but the power to bring the action is discretionary and rests with him. But where a public officer, who is empowered by law to perform an act which concerns the public, and affects the public interest, the execution of the power where the officer fails to perform his duty may be enforced by writ of mandate.

In the State of California the writ of mandate is issued only to enforce an act especially enjoined by law as a duty resulting from an office, trust, or station.3

Unintentional acts committed by the officers or directors of a bank, though violations of the law and the charter of the bank, but which do not result in serious harm to the stockholders or depositors, should not be urged and is not sufficient grounds for declaring a forfeiture of the bank's charter. But acts which are knowingly committed by the directors, or with their knowledge are committed by any of the officers or agents of the bank, with a purpose to avoid or violate a law, and which, when done, cause loss or injury to any person dealing with the bank, are acts which, when proven, present sufficient grounds and authority for declaring the charter forfeited.

§ 319. Failure to comply with statutory provisions.- Grounds for forfeiture.

Where the law requires that a banking corporation shall have a capital stock, a portion of which may be paid up when the charter is granted, the remainder to be paid within a time fixed by the statute, upon a failure to pay in the remainder at such time, works a forfeiture of the charter; and in such cases, it at once becomes the duty of the Attorney-General of the State to institute an action for that purpose.

The failure of the corporation in the performance of an act required by law to be performed at a certain time, cannot be extended.

§ 320. Nonuser of charter.

Where the statute provides that a corporation shall organize within a certain period of time, and shall perform certain

3 Price . Riverside L. & I. Co., 56 Cal. 431; Priet v. Reis, 93 Cal. 85; Code Civ. Proc. (Cal.), § 1085.

other acts at times fixed by the law, such as the election of a board of directors, or if after its organization, and commencement of its business, it shall lose or dispose of, all of its property, and shall fail for a period fixed by the statute to transact in regular order, the business of said corporation, its corporate powers shall cease and the corporation may be dissolved at the instance of a creditor at the suit of the State on the information of the Attorney-General.*

It is held in the case of the People of the State of N. Y. v. The President, Directors, etc., of the Bank of Hudson, 6 Cow. (N. Y.) 216, that an information in the nature of a quo warranto against an incorporated company, seeking to deprive it of its franchise, on the ground of forfeiture by nonuser, may be against the company in its corporate name. The judgment is a judgment of seizure, and the court holds in this case that the corporate rights may be forfeited by a nonuser or misuser. Suffering an act to be done, which destroys the end and object for which a corporation was instituted, the court holds is equivalent to a surrender of its corporate rights, as where an incorporated bank becomes involvent, and assigns so much of its property to trustees, for the purpose of paying its debts as to prevent its resumption of banking business.

§ 321. Willful violation of law or bank's charter cause for forfeiture.

Any willful violation of law, the creating of a debt in excess of the amount provided by statute, paying dividends out of the capital stock, failing to comply with the law, which requires the bank to make official reports to the proper authority of the State or knowingly making false reports, are such of fenses as would justify an action by the proper authority to forfeit the bank's charter.

In the case of People v. Oakland County Bank, 1 Doug. (Mich.) 282, where the bank under the provisions of the law and its charter is located in one county, in the absence of a statute authorizing it to establish an agency in another county, and where it establishes such an agency, receives deposits, and buys and sells exchange, held by the court that it thereby

4 Civ. Code of Cal., § 358.