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any other person shall have sustained in consequence of such violation.

See Act of June 30, 1876, post.

1. A suit against the bank is abated by a decree dissolving the corporation, and forfeiting its rights and franchises in an action brought by the Comptroller for that purpose. National Bank v. Colby, 21 Wall. 609, 22 L. ed. 687.

2. The Comptroller is the only person who can bring a suit to have the charter of a national bank forfeited for violation of its organic act. Shoemaker v. National Mechanics' Bank, 2 Abb. (U. S.) 416, Fed. Cas. No. 12,801; to same effect, Union, etc., v. Rocky Mountain National Bank, 1 Colo. 531.

3. An action to enforce the liability of a director of a national bank for misconduct in office, as provided for in this section, should in general be brought by the bank, when capable of acting; but if it refuses, the stockholders will be permitted to sue in a court of equity in their own names, making the corporation a defendant; and this course of proceeding is also allowed where it appears that the corporation is still under the control of those who must be made defendants. In the latter case a demand upon the corporation is unnecessary. If, owing to insolvency, the corporation be in the hands of a receiver, so that it cannot sue, the receiver may maintain the action. If he refuses, or is himself involved, a person aggrieved may sue. When the shareholders are numerous the action may be brought by one or more in behalf of all, and the bank and receiver are necessary parties the latter, as it is through him that the amount which may be adjudged against the directors is to be collected and paid over. When the action is brought by a stockholder or stockholders, while the bank is in a receiver's hands, the complaint need not allege a demand on the Comptroller, and his refusal to direct the receiver to use, or a demand upon and refusal of the latter to do so, for this section does not require that the action be instituted by the Comptroller, and the liability of the directors of corporation for breaches of trust and the jurisdiction of courts of equity to afford redress to the corporation, and in proper cases to its shareholders, for such wrongs, exists independently of any statute. Brinckerhoff v. Bostwick, 88 N. Y. 52, reversing same case, 23 Hun, 237; Ackerman v. Halsey, 37 N. J. Eq. 356. See, also, Conway v. Halsey, 44 N. J. Law, 462.

4. The officers of a national bank are not personally responsible to creditors for losses incurred in transactions made in good faith, and appearing profitable at the time of the transactions. Witters, Receiver, v. Sowles et al., 31 Fed. Rep. 1.

5. Directors are not liable to the common-law liability for inattention to official duties in preventing a disastrous loan, if such loan is made without their actual knowledge. Id.

6. A director who sells his stock, and receives the money therefor, and orally resigns before the expiration of his term of office, ceases to be a director, and is not liable for the subsequent loss through the negligence of directors. Movius, Receiver, v. Lee et al., supra, 30 Fed. Rep. 298.

7. A president of a national bank, on leave of absence for good cause, is not liable for the negligence of other officers or directors in his absence. Id.

8. Directors are not liable for the secret illegal transactions of one of the directors. Id.

9. To show ground for forfeiting its charter it must be shown that in carrying

on the business of the bank some act or transaction in violation of the provisions of title 62 of the U. S. R. S. was done, and that the directors were either the doers thereof or knowingly permitted it to be done by some officer, agent or servant of the bank. Trenholm v. Commercial Bank, 38 Fed. Rep. 323.

10. The Comptroller has not the right to decide that the directors shall be proceeded against to enforce the liability created by this section, until he has, by a proper proceeding in a United States court, had it determined that acts have been done which justified the forfeiture of the bank's charter. Neither the Comptroller nor any one else can determine that such acts do exist, and after the proper court has decided that they exist it is still a question for the Comptroller to determine whether the receiver shall proceed to enforce the director's liability. Welles *. Graves, 41 Fed. Rep. 459.

11. The right to recover under this section, of a bank director, the damages sustained in consequence of an excessive loan under section 5200 is in no wise affected by the fact that the Comptroller has or has not procured a forfeiture of the charter. Stephens v. Overstoltz, 43 Fed. Rep. 771.

12. The provisions of the National Banking Act enter as part into the contracts of creditors with national banks, and the provisions creating the liability of directors, and prescribing the proceedings to enforce the liability, when guilty of violations of the act, are exclusive of other liability and proceedings. In view of this section and section 5234, U. S. Comp. Stat. 1901, p. 3507, a court of equity cannot entertain the suit of a creditor against the directors of a national bank. Only the receiver, under the direction of the Comptroller, can bring suit. Nat. Exch. Bank v. Peters, 43 Fed. Rep. 13.

13. Where officers attest an official report wherein assets excluded by the Comptroller as doubtful, and a third person buys the bank stock on the faith of such false statement, they are liable to such buyer for depreciation of such stock because of such shrinkage in value but not liable for loss by impairment unknown to the officers. Taylor v. Thomas, 124 App. Div. 53.

14. This section affords the exclusive rule measuring the right to recover damages from directors for a loss caused by their violation of any provision of the National Banking Act. Yates v. Jones Nat. Bank, 206 U. S. 158.

§ 5240. The Comptroller of the Currency, with the approval of the Secretary of the Treasury, shall, as often as shall be deemed necessary or proper, appoint a suitable person or persons to make an examination of the affairs of every banking association, who shall have power to make a thorough examination into all the affairs of the association, and, in doing so, to examine any of the officers and agents thereof on oath; and shall make a full and detailed report of the condition of the association to the Comptroller. That all persons appointed to be examiners of national banks not located in the redemption cities specified in section five thousand one hundred and ninety-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Terri

tories, shall receive compensation for such examination as follows: For examining national banks having a capital less than one hundred thousand dollars, twenty dollars; those having a capital of one hundred thousand dollars and less than three hundred thousand dollars, twenty-five dollars; those having a capital of three hundred thousand dollars and less than four hundred thousand dollars, thirty-five dollars; those having a capital of four hundred thousand dollars and less than five hundred thousand dollars, forty dollars; those having a capital of five hundred thousand dollars and less than six hundred thousand dollars, fifty dollars; those having a capital of six hundred thousand dollars and over, seventy-five dollars; which amounts shall be assessed by the Comptroller of the Currency upon, and paid by, the respective association so examined, and shall be in lieu of the compensation and mileage heretfoore allowed for making said examinations, and persons appointed to make examinations of national banks in the cities named in section five thousand one hundred and ninety-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Territories, shall receive such compensation as may be fixed by the Secretary of the Treasury upon the recommendation of the Comptroller of the Currency; and the same shall be assessed and paid in the manner herein before provided. But no person shall be appointed to examine the affairs of any banking association of which he is a director or other officer.

(As amended by Act of February 19, 1875.)

See Act of July 12, 1882, § 3, post.

§ 5241. [U. S. Comp. Stat. 1901, p. 3517.] No association shall be subject to any visitorial powers other than such as are authorized by this Title, or are vested in the courts of justice.

1. The officers of a national bank cannot be compelled by county officials to produce the books of the bank for the former's inspection, for the purpose of obtaining the necessary information for imposing a tax on deposits. First National Bank v. Hughes, Browne's N. B. Cas. 176, Fed. Cas. No. 4,811.

2. The Supreme Court of New York has jurisdiction in the case of a national bank where the charter has expired by limitation, to direct its officers to furnish certified statement showing its assets and certain specified facts relating thereto, Tuttle v. Iron Nat. Bank of Plattsburgh, 170 N. Y. 9, 62 N. E. 761, aff'g 67 App. Div. 627, 73 N. Y. Supp. 1150.

3. Any attempt by a State to define the duties of a national bank is void

Davis v. Elmira Sav. Bank, 161 U. S.

wherever conflicting with federal law. 283, 40 L. ed. 701, 16 Sup. Ct. Rep. 502.

§ 5242. [U. S. Comp. Stat. 1901, p. 3517.] All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valu able thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void, and no attachment, injunction, or execution shell be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court.

1. The words, "act of insolvency," in this section are to be taken in their usual sense and not simply such an act as authorizes the Comptroller to appoint a receiver. Irons v. Manufacturers' National Bank, 6 Biss. 301, 27 Fed. Rep. 591.

2. To make transfers, assignments, deposits and payments void under this section, it is only necessary that the insolvency should be in contemplation of the bank making the transfers, etc., and not that it should also be known to or contemplated by the party to whom they are made. Case, Receiver, v. Citizens' Bank, 2 Woods, 23, Fed. Cas. No. 2,489; Peckham v. Burroughs, 3 Story, 544, Fed. Cas. No. 10,897.

3. The respective rights and liabilities existing between the bank and its creditors and debtors became fixed when its insolvency occurred, and it passed into the hands of the receiver appointed by the Comptroller of the Currency. All the property and assets of the association then became a fund legally dedicated, first, to the satisfaction of any claim of the United States government for any deficiency in the proceeds of the bonds pledged for the redemption of its notes, to meet the amount necessary to be expended for that purpose; and second, for a ratable distribution of the balance among its general creditors, upon the principle of equality. Balch v. Wilson, 25 Minn. 299, 33 Am. Rep. 467.

4. The word " insolvency," as used in this section, is synonymous with the same word as used in the (late) bankrupt act, and means a present inability to pay in the ordinary course of business. Case, Receiver, v. Citizens' Bank, 2 Woods, 23, Fed. Cas. No. 2,489.

5. The provisions of this section prohibiting the issuing of an attachment, etc., against a national bank with property, before final judgment, applies only to an association which has become insolvent, or to one about to become so, as specified in the preceding part of the section. Robinson v. National Bank of New Berne,

81 N. Y. 385, 37 Am. Rep. 508; People's Bank v. Mechanics' National Bank, 62 How. Pr. 422; Market National Bank v. Pacific National Bank, 2 Civ. Pro. R. 330. 6. An attachment issued against an insolvent national bank, or one in contemplation of insolvency, or which has committed an act of insolvency, is illegally issued in violation of this section, and cannot be made valid by the subsequent acquisition by the bank of further capital. Raynor et al. v. Pacific National Bank, 93 N. Y. 373.

7. And when such bank after the issuing of an attachment pays a large amount of its debts in full, this fact will not estop it from setting up its insolvency to avoid the attachment, at least where the application to vacate is made for the benefit of the remaining creditors, and not the stockholders. Id.

8. This section is not repealed by the Act of Congress of July 12, 1883, providing that the jurisdiction for suits thereafter brought against national banks shall be the same as for suits against State banks, and repealing laws inconsistent therewith. This section is not inconsistent with such provision. Id.

9. The property of a national bank, attached, at the suit of an individual creditor, cannot be sold on an attachment levied after the bank become insolvent, when the same property is claimed by a receiver of the bank, who was subsequently appointed. National Bank v. Colby, 21 Wall, 609, 22 L. ed. 687.

10. The preference of one creditor to another by a national bank, mentioned in the foregoing section, is a preference given to the creditor to secure or pay a preexisting debt. When a national bank, being embarrassed, receives a loan of money, or other valuable material aid, from a person who knows its embarrassed state, on condition that the party making the loan or giving the aid shall be secured therefor, and the security is accordingly given by pledging a part of the assets of the bank, Held, this is not giving him a preference over other creditors within the meaning of this section. "If a customer or friend of a bank, knowing it to be embarrassed and in need of assistance, proffers it, for instance, a loan of $50,000 in cash, on receiving security for the amount by a transfer of a part of its portfolio, that cannot be fairly construed as giving him a preference over other creditors. Other creditors are not injured by such a transaction; for the securities that such a creditor takes out he leaves an equivalent in cash. He becomes a creditor solely on condition of receiving security. . . . It clearly was not the purpose of the act to forbid the bank from giving security to its friends for means to be advanced on the spot or in the future." Woods, J. Casey, Receiver, v. La Société de Credit Mobilier de Paris et al., 2 Woods, 77, Fed. Cas. No. 2,496.

11. A return of nulla bona upon an execution against the bank is ample evidence of its insolvency. Wheelock v. Kost, 77 Ill. 296.

12. An attachment cannot issue from a Circuit Court of the United States, in an action against a national bank before final judgment. Pacific National Bank v. Mixter, 124 U. S. 721, 31 L. ed. 567, 8 Sup. Ct. Rep. 718.

13. A receiver of a national bank can acquire no right to property in possession of bank which it does not own, as against the owner. Section 5242 of U. S. Rev. Stat. [U. S. Comp. Stat. 1901, p. 3517], was not intended to protect such receiver's possession as against the owner. Further held, that section 5242 does not prohibit the issuing of a requisition to the sheriff to take possession of the property in question. Corn Exchange Bank v. Blye, 101 N. Y. 303, 4 N. E. 625. 14. Certain creditors whose claims were disputed by a national bank attached

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