shall pay said expenses; and the value so ascertained and determined shall be deemed to be a debt due, and be forthwith paid, to said shareholder, from said bank; and the shares so surrendered and appraised shall, after due notice, be sold at public sale, within thirty days after the final appraisal provided in this section: Provided, That in the organization of any banking association intended to replace any existing banking association, and retaining the name thereof, the holders of stock in the expiring association shall be entitled to preference in the allotment of the shares of the new association in proportion to the number of shares held by them respectively in the expiring association.

This section distinctly prescribes the manner in which any shareholder not assenting to the extension of the bank's charter is to be paid for his stock by the bank after the proper appraisal of its value has been made in the way provided by the section. An appeal to the Comptroller is also provided for in case the shareholder is not satisfied with the first appraisal. It also prescribes that if any new association is organized to take the place and retain the name of an expiring association the shareholders in the old bank shall be entitled to preference in taking shares in the new bank in the proportion of their respective holdings in the old bank to its capital stock.

CHAPTER V.

REMARKS ON RELATIONS BETWEEN SHAREHOLDERS AND DIRECTORS AND THEIR RESPECTIVE RIGHTS AND LIABILITIES.

Upon a general review of such portions of the National Bank Act as have been considered in this volume it will be found that the rights enjoyed by the shareholder in National banking associations in a measure are similar to, or correspond with, those of electors or voters under a republican form of government.

The unit of representation is the share—not the individual shareholder-each share counting as one vote at all shareholders' meetings. The directors, who are elected by these votes, are the direct representatives of the shareholders, and if not satisfactory to those holding a majority of the shares may be supplanted at any annual election by others chosen in their places. The law provides that directors chosen by shareholders at the regular annual election shall hold their offices for one year therefrom, and that in case the annual election is

not held at the usual time the directors continue to hold office beyond the period of a year and until their successors are elected by the shareholders, provided, of course, that meantime the directors commit no act which will legally disqualify them.

In case of resignation or disqualification of any director between annual elections, the law provides that the remaining directors may select or appoint some other shareholder-duly qualified-to serve out his term.

Necessarily, large powers are granted to these representatives—the directors—who are charged by law with the entire management of the bank's affairs, and consequently shareholders should exercise great care in the selection of those to whose integrity, ability and judgment the management of their interests are committed for the space of a year at least.

It is to the manifest interest of all concerned that any matter detrimental to the welfare of the bank should be promptly reported by shareholders to the directors, and to them also the shareholders should apply for such information regarding the bank's affairs as it may be proper and right for them to have.

In this connection it is to be noted that the Na

tional Bank Act contains no provision anywhere authorizing a shareholder to examine the books, accounts and records of the bank, and the omission of such a provision appears to have been intentional and based upon sound reasons. If this privilege were granted to one shareholder it must necessarily be extended to all, without discrimination, with the possible result that a shareholder, with the best intentions but lacking discretion or the proper knowledge of figures and accounts, might by the use of information so acquired unwittingly inflict great damage upon the interests of all concerned.

In a recent decision by a State court (Winter vs. Baldwin, 7 So. Rep., 734) it was held that a provision in the laws of Alabama giving shareholders of corporations in that State the right to inspect books, records and papers applied also to National banks located there; but it is very questionable whether this view would be sustained by the Federal courts for the reasons given in the foregoing paragraph..

For the information of shareholders and the public generally, section 5211 requires every National bank to publish its reports of condition— made to the Comptroller five times each year, under oath of its president or cashier and attested

by three directors—in a newspaper published at or near the place where the bank is located; and every shareholder has also the legal right to inspect the list of shareholders in his or her own bank at any time during business hours. Beyond this the law does not entitle him to any information regarding the bank's affairs which the directors do not see fit to give him.

For any violations of law knowingly committed or permitted by the directors, section 5239 makes their bank liable to loss of its "rights, privileges and franchises"; but these violations can be determined only before the proper courts in suits brought by the Comptroller and by no one else. In case violations are proven in this way the directors then become personally and individually liable for any damages resulting to shareholders or others concerned. It would seem, then, that when a shareholder has positive knowledge of any unlawful act or acts committed by any director or other officer of his bank likely to result in loss or damage to the shareholders, he should first seek a remedy by bringing the matter to the attention of the board of directors, whose duty it is to see that the bank's affairs are conducted in conformity with law. Such a course would probably secure the result desired;