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executed that the sale was duly authorized by the board of directors, and that the instrument of conveyance was directed to be made, by the officers, for the corporation. The power to sell and convey property of the bank corporation is vested in the board of directors only. 8

$91. Limitation of power.

No power.

They have no power to increase or diminish the capital stock of the bank in any way except as expressly authorized by the law.

The shareholders alone have the power to order an increase of the capital stock."

§ 92. Assessment of shares-National banks.

The directors cannot order an assessment upon the shares of stock in a national banking corporation, for impairment of capital. The assessment must be made by the stockholders.10

93. Directors cannot give away property of bank.

The directors have no power to give away any portion of the bank's property, but the stockholders by a unanimous action may do so.11

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§ 94. Cannot settle with cashier for his deficits.

They have no power or authority to make a settlement with the cashier whose accounts exhibit a deficit in the funds; but the fraudulent conduct of the director of the bank would not annul nor make it void unless the cashier was also guilty of fraud.12

$95. Assuming debts of others.

They have no power to assume the debt of a third person, except in case of urgent necessity.

In the discussion of this question the court in the case of Stark Bank v. U. S. Pottery Co., 34 Ver. 144, says:

"The directors had no such power unless under the circumstances there was an urgent necessity of doing it in order to

8 Gashwiler v. Willis, 33 Cal. 11. 9 Eidmand . Boman, 58 Ill. 444. 10 Rev. St. U. S., § 5205; Hulitt r. Bell, 85 Fed. Rep. 98.

11 Frankfort Bank v. Johnson, 24 Me. 490.

12 Frankfort Bank v. Johnson, 24 Me. 490.

save the credit of the company, and enable them to go along with their business. If there was such necessity making it for the interest of the company to enter into such arrangement, it was within the scope of their powers as directors, otherwise not."13

96. Cannot take advantage of position for profit.

The directors are precluded, by the acceptance of the trust, from making any use of their power, or of the corporate property for their own advantage.'

The stockholders confer the trust power upon the board of directors, and this power must not be used with a purpose to injure or destroy that interest.15

Courts of equity will not permit directors, in the exercise of their duty as such, to make a profit for themselves to the exclusion of the other stockholders.16

It is a well settled principle of law that where a director of a bank loaned the money of the bank, and took from the borrower a note running to the bank for the principal sum loaned, at a rate of interest therein stipulated, but at the same time, and as a part of the same transaction, made an agreement with the borrower to permit him to participate in the profits of a purchase and sale of certain lands, it is held that the director will not be permitted to retain for himself the profits thus contracted for, but that such profits must be surrendered to the bank, to be participated in by all the stockholders. No stockholder has the right to use, in any manner, any portion of the funds of the bank to the advantage of himself and as against the rights of the other stockholders.

The directors of a corporation are its chosen representatives, and constitute the corporation for all purposes of dealing with others. All acts done within the scope, purpose, and object of the corporation, by the directors, the corporation does, and are binding. The corporation is bound by the acts of directors in whatever they may do, if done in good faith and without fraud, upon their rights.

13 Seeberger r. McCormick, 178 Ill. 404.

14 Wickersham v. Crittenden, 93 Cal. 17.

15 Wright v. Oriville Mining Co., 40 Cal. 20.

16 Oakland Bank of Savings v. Wilcox, 60 Cal. 126, 93 Cal. 29.

The directors of a bank are prohibited from making an illegal loan, or becoming an accommodation endorser for the bank. But where such transactions appear to be regular, and within the authority of the bank, third parties acting with the bank, without notice of a willful or wrongful purpose, the bank cannot avoid its liability.

But where they borrow money, supposedly for the use of the bank but with the intention to use it for a different purpose, the lender being aware of their intent and purpose, the bank will be relieved from such indebtedness.

§ 97. Discretionary power.

It is held that the directors of a national bank have discretionary power, and it is left within their sound judgment and discretion in the matter of requiring an officer of the bank to give bond.

The same opinion holds that certain special circumstances may arise making them personally liable if they fail to require bonds.17

98. Safe rule.

The only safe rule is to require bonds from all the officers and clerks (at least those entrusted with the moneys) of a bank, holding responsible positions. It would seem to be a part of the duty imposed upon the directors, and not a discretionary power to be used at their election. It has been too frequently discovered after a bank has suffered through neg ligent or criminal acts of its officers, that the opinion or discretion of the directors was worthless.

$99. Releasing debt.

The board of directors may release a debt owing to the bank, if by doing so it can be shown that it is clearly an advantage to the corporation.

Touching the same question, it has been held, that where an officer or an employe is in defaut to the bank, the directors may settle with him upon such terms as will best subserve the interests of the bank. 18

17 Robinson v. Hall, 63 Fed. Rep. 222.

18 Jones v. Johnson, 86 Ky. 530;

Frankfort Bank ». Johnson, 24 Me 490.

§ 100. Releasing subscriber to capital stock.

The board of directors have no power to release a subscriber to the capital stock of the corporation; but if they can make any arrangement with him in settlement without loss to the bank or its creditors, it would seem that they would have the power to do so.

The Supreme Court of the State of Illinois, in the case of McNulta v. Corn Belt Bank, 164 Ill. 427, in discussing this question, says:

"The effect of the resolution and what was done under it was to release the original subscribers to the capital stock from the obligation to pay their subscription.

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has been settled by very numerous decisions that the directors of a company are incompetent to release an original subscriber to its capital stock, or to make any arrangement with him by which the company, its creditors, or the State, shall lose any of the benefits of his subscription. Every such arrangement is regarded in equity, not merely as ultra vires, but as unjust to the other stockholders, and to the creditors of the company." § 101. Securing preferred creditor.

Where a creditor of a bank has established his debt as a preferred claim, the board of directors may dispose of property to satisfy or secure such a creditor.19

$102. Removing employes.

The board of directors have the power to remove an officer or employe of the bank, for sufficient cause, at any time. But if such employe is removed from any State bank upon a contract of employment for a fixed period of time, without a good and sufficient cause, such employe may hold the corporation liable.

In the case of Gabriel v. Bank of Suisun, 145 Cal. 266, the Supreme Court says:

"Where after the expiration of an agreement respecting wages and term of service, the parties continue the relation of master and servant, they are presumed to have renewed the agreement for the same wages and term. The Bank of Suisun employed a bookkeeper, for the year 1898, at an annual salary

19 Stevens v. Hill, 29 Me. 133; Parker v. Carolina Savings Bank, 53 S. C. 583.

of $1,200, payable monthly, and he continued in that employment during the first two months of 1899. He was then discharged and he sued the bank for $1,000, the balance of his salary for the year. There was a judgment of the Superior Court for the amount against the bank, and the Supreme Court has finally decided the case against the bank, saying: "The presumption arises that the employment was renewed for the same wages and term as for the previous term.'"

Under the provisions of the National Banking Act, the board of directors may remove the officers named in said act, without cause, at any time. A provision of said act, reads as follows:

Fifth. "To elect or appoint directors, and by its board of directors to appoint a president, vice-president, cashier and other officers, define their duties, require bonds of them, and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places."

The court, in the case of Taylor v. Hutton, 43 Barb. 195, in discussing this provision of the law, says:

"I think this construction of the act, as having reference to the directors to do these things, and not to the stockholders, is quite plain.

"It does not seem to be at all necessary that any by-laws should be adopted, before a president may be chosen or removed and another appointed in his place. This power is expressly given to the board, irrespective of any by-laws, both by the articles of association and by the act of Congress. Besides, it is a power that might be required to be exercised or that it might be expedient to exercise, prior to the adoption of any by-laws."

The board of directors derive this discretionary power to remove an officer elected by them only when such power is conferred upon them by law.

§ 103. Courts declare that directors are trustees.

The leading authorities in discussing the nature of the office of director in a banking corporation hold, that their position is in the nature of a trust, and they are held to a strict account. The nature of the business over which they preside clearly establishes this relationship. They owe a duty to the public,

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