14 Bank of Australasia v. Breillat, 6 Moore P. C. C. 173; Brandao v. Barnett, 12 Clark & F. 787.

15 See Hays v. North-western Bank, 9 Gratt. 127; Williams v. Union Bank, 2 11umph. 339; Bank of Tenn. e. Woodson, 5 Cold. 176; Towson . Havre de Grace Bank, 6 Har. & J. 47; Bank of Utica v. Magher, 18 Johns. 341. But sec Agnew r. Bank of Gettysburg, 2 Har. & G. 478; King v. Doolittle, 1 Head, 77.

16 State v. Helmes, 2 Pen. (N. J.) 764.

§ 214. Powers.-Banks possess such powers as are expressly given them by charter, or by the statute under which they are operating, and such implied powers as are necessary to the proper exercise of those expressly given.1 They have implied power to borrow money, when necessary, in the prosecution of their business,2 and may issue the ordinary evidences of debt. So, they may take and hold stock and bonds as collateral security, but not to traffic in them, for profit.5 Nor does the power to purchase and traffic in promissory notes, as a species of personal property, belong to any bank as a necessary incident to its existence, or to the exercise of any of its powers as a bank of circulation and deposit alone. But a power "to deal in bills of exchange" includes authority to take bills of exchange for collection merely, and does not restrict the bank to buying and selling bills. A bank may deal in checks, whether payable to bearer or to order; or may appoint an agent to transact any business which it may lawfully do; 9 or it may transfer by an indorsement, or by a delivery under a blank indorsement, a negotiable note; 1 and, generally, its right to sell any of its property, in the absence of restrictions to the contrary, is as unlimited as that of an individual, if not carried into the transaction of another separate and unauthorized branch of the business. 11 And, as a general rule, a bank is bound by the same obligations, moral and legal, when the rights of third parties are concerned, that apply to the case of an individual, unless expressly exempted therefrom. 12 Thus, a bank is no more exempt than an individual from the operation of the usury laws, Is except that in the case of a mercantile discount, it may

18

receive the amount of interest in advance.14 Discounting or loaning money, with a deduction of the interest in advance, 15 is a part of the general business of banking, 16 and may be done even without specific authority conferred by the charter.17

1 Barnes v. Ontario Bank, 19 N. Y. 152; Weckler v. First Nat. Bank, 42 Md. 581; Duncan v. Maryland Sav. Inst. 10 Gill & J. 299; Bliss v. Anderson, 31 Ala. 612; S...te v. Alexandrian Soc. 11 Ohio, 1; Hughes v. Bank of Somerset, 5 Litt. 45.

2 Curtis r. Leavitt. 15 N. Y. 9, 53; Talman r. Rochester City Bank, 18 Barb. 13; Union Min. Co. v. Rocky Mt. Nat. Bank, 2 Cold. 248. See also Kent v. Quicksilver Min. Co. 78 N. Y. 159, 176; and it seems that a bank may buy real estate for banking purposes alone: Metrop. Bank v. Godfrey 23 Ill. 579. Compare White v. Lester, 4 Abb. Ct. App. 585.

3 Magee v. Mokelumne etc. Co. 5 Cal. 258; Barnes v. Ontario Bank, 19 N. Y. 152; Rockwell v. Elkhorn Bank, 13 Wis. 653.

4 Dearbourn v. Union Nat. Bank, 58 Me. 273; Third Nat. Bank v. Boyd, 44 Md. 47; Scott v. Crews, 2 So. Car. 522; Trenton Banking Co. v. Woodruff, 1 Green Ch. 117.

5 Fleckner v. Bank of U. S. 8 Wheat. 338; Sacket's Harbor Bank v. Lewis County Bauk, 11 Barb. 213; Portland Bank v. Storer, 7 Mass. 433; First Nat. Bank v. Nat. Ex. Bank, 39 Md. 600. Compare Van Leuven v. First Nat. Bank, 54 N. Y. 671.

6 Farmers' etc. Bauk v. Baldwin, 23 Minn. 198; and see McLean v. Lafayette Bank, 3 McLean, 587; Dunkler. Reunick, 6 Ohio St. 534; First Nat. Bank v. Pierson. 24 Minn. 140; 31 Am. R. 341.

7 Bank at Montgomery v. Knox, 1 Ala. 148.

8 First Nat. Bank v. Harris, 108 Mass. 514.

9 Bates r. State Bank, 2 Ala. 451; Planters' etc. Bank r. Andrews, 17 id. 404. Compare City Bank v. Beach, 1 Blatchf. 425; Bank of Au gusta r. Earle, 13 Pet. 519.

10 Cooper v. Curtis, 30 Me. 488; White's Bank v. Toledo Ins. Co. 12 Ohio St. 60; Marvine v. Hymers, 12 N. Y. 223, 233.

11 Planters Bank v. Sharp, 6 How. 301.

12 Lowry v. Cominercial etc. Bank, Taney, 312.

13 Maine Bank v. Butts, 9 Mass. 49; Bates v. State Bank, 2 Ala. 451; Rimonton v. Lanier, 71 No. Car. 4.8; Darby v. Boatmens' Sav. Inst. I Dill. 141; Chafin v. Lincoln Sav. Bank, 7 Heisk. 499.

14 Bank of Alexandria v. Mandeville, 1 Cranch C. C. 552; Creed v. Commercial Bank, 11 Ohio, 489.

15 State v. Boatmen's Sav. Inst. 48 Mo. 189.

16

See Bank of Savings v. Collector, 3 Wall. 495. 17 Fleckner v. Bank of U. S. 8 Wheat. 338.

§ 215. Directors.-A board of bank directors is a body recognized by the law. They have the general superintendence and active management of all the concerns of the bank, and constitute, to all purposes of dealing with others, the corporation.2 They are chargeable with

a duty to use ordinary diligence in acquiring knowledge of the business of the bank; and should control subordinate officers of the bank in all important transactions.* They may delegate to a committee of their own number authority to mortgage the real estate of the bank to secure a debt; and they have power to authorize the president alone, or the president and cashier, to borrow money, or to obtain discounts for the use of the bank. But the power to make discounts and fix any conditions which may be proper in loaning money, rests alone and exclu sively in the directors, and they cannot delegate the power to others.8 Directors have authority to use the funds and property of the bank only for proper banking purposes. Without authority from the stockholders, they can make no gifts from the corporate property, nor appropriate the funds of the bank to any objects foreign to the material well-being of the bank.10 In reference to the corporate property, they act in the relation of trustees; 11 and are within the rule which governs the dealings of trustee and cestui que trust.12 It is implied in the acceptance of the trust, that they will use their best efforts to promote the interests of the stockholders, 18 and that they will in no way use their positions to advance their individual interest as distinguished from that of the bank, 14 or acquire interests in conflict with the fair and proper discharge of their duty.15 For losses arising from misconduct in managing the affairs of the bank they are liable; 16 but it is otherwise in respect of losses arising from excusable mistakes, or from errors strictly of discre tion. Notice to the board of directors of a bank is notice to the bank.18 And notice to one or more of the directors, when engaged in the business of the bank, will be deemed notice to the bank. 19 Thus, if a director acts for the bank in discounting a note, known to him to be infected with fraud or illegality in its inception, the bank is affected with his knowledge.20 A director is affected with notice of the condition and transactions of the bank, of its pow

ers, and of its legal rights; 21 and if he has borrowed money from it, he cannot be heard to defend an action by the bank for its recovery, on the ground that the loan was ultra vires and illegal.22

1 Burrill v. Nahant Bank, 2 Met. 163.

2 Burrill v. Nahant Bank, 2 Met. 163; and see McDougald v. Bellamy, 18 Ga. 411; Bank of Tenn. v. Woodson, 5 Cold. 176.

3 Merchants' Bank v. Rudolf, 5 Neb. 527; Lyman v. U. S. Bank, 1 Blatchf. 297; 12 How. 225; Gillet v. Phillips, 13 N. Y. 114; Curtis v. Leav itt, 15 id. 9.

4 United Society etc. v. Underwood, 9 Bush, 609.

5 Burrill v. Nahant Bank, 2 Met. 163.

6 Ridgway v. Farmers' Bank, 12 Serg. & R. 256. See also Fleckner . Bank of U. S. 8 Wheat. 338; Merrick v. Bank of Metropolis, 8 Gill, 59. 7 Lyon v. Jerome, 26 Wend. 485; Percy v. Millandon, 3 La. 568; Bank Comm'rs v. Bank of Buffalo, 6 Paige, 497; Bank of U. Š. v. Dunú, 6 Peters, 51.

8 Lyon v. Jerome, 26 Wend. 485.

9 Frankfort Bank v. Johnson, 24 Me. 490; Bank of Australasia v. Breillat, 6 Moore P. C. C. 197; Pickering v. Stephenson, Law R. 14 Eq. 322.

10 Frankfort Bank v. Johnson, 24 Me. 490; and see Bedford R. R. Co. r. Bowser, 48 Pa. St. 29.

11 Baird v. Bank of Washington, 11 Serg. & R. 411; Butts v. Wood, 38 Barb. 181; and see Hale v. Republican River Bridge Co. 8 Kan. 466; Ex parte Robinson, 2 DeGex M. & G. 517; Ex parte Bennett, 18 Beav. 339.

12 See Cumberland etc. Coal Co. v. Parish, 42 Md. 598; Comm'rs etc. . Reynolds, 44 Ind. 509; Richards v. New Hamp. Ins. Co. 43 N. H. 263. 13 Cumberland etc. Coal Co. v. Parish, 42 Md. 598.

14 Baird v. Bank of Washington, 11 Serg. & R. 411.

15 See European etc. Railw. Co. v. Poor, 59 Me. 277; Conynham's App. 57 Pa. St. 474; Bradley v. Farwell, 1 Holmes, 433.

16 Bank of St. Marys v. St. John, 25 Ala. 566; Conant v. Seneca County Bank, 1 Ohio St. 298; Gunkle's App. 48 l'a. St. 13.

17 Spering's App. 71 Pa. St. 11; Godbold v. Branch Bank, 11 Ala. 191. Compare Robinson v. Chartered Bank, Law R. 1 Eq. 32.

18 Mechanics' Bank v. Seton, 1 Peters, 299; Fulton Bank v. N. Y. etc. Canal Co. 4 Paige, 127; and see Toll Bridge Co. v. Betsworth, 30 Conn. 380; Olcott v. Tioga R. R. Co. 27 N. Y. 546, 564.

19 Bank of Pittsburg v. Whitehead, 10 Watts, 397; Wash. Bank v. Lewis. 22 Pick. 24; National Bank v. Norton, 1 Hill. 572; In re Carew, 31 Beav. 39. Compare Gould v. Cayuga Co. Nat. Bank, 56 How. Pr. 505. 20 Nat. Security Bank v. Cushman, 121 Mass. 490.

21 Lyman v. U. S. Bank, 1 Blatchf. 297; 12 How. 225; United Soc. v. Underwood, 9 Bush, 609.

22 Lester v. Howard Bank, 33 Md. 558; and see Merchants' Bank v. Rudolf, 5 Neb. 527.

§ 216. President. The president of a bank is usually chosen by the board of directors from their own number;

and it is his duty to preside at meetings of the board.1 By virtue of his office he has a right to take charge of the litigation of the bank,2 and may appear and answer for it, and employ counsel for its defense; but beyond this the authority inherent in the office itself is very limited.1 If, however, he is in the habit of acting as the business agent of the bank, with its knowledge and without objection, actual authority may be inferred, and the bank will be bound by his act.5 Admissions made by him relative to matters within the scope of his agency bind the bank. Thus, he has general authority to receive a deposit, and issue a certificate; and the bank is bound by statements and representations made by him when transacting the business. As a general rule, in the absence of a provision for compensation either by contract or by a vote of the directors, it is presumed that the services of the presi dent are gratuitous.8

1 See Crawford v. Branch Bank, 7 Ala. 205; Currie v. Mut. Ins. Co. 4 Hen. & M. 315.

2 Savings Bank v. Benton, 2 Met. (Ky.) 240; and see Delafield v. Kinney, 24 Wend. 345; Ogdensburgh Bank v. Van Rensselaer, 6 Hill, 240.

3 Am. Ins. Co. v. Oakley, 9 Paige, 496; Alexandria Canal Co. v. Swanu, 5 How. 83; Oakley v. Workingmen's etc. Ben. Soc. 2 Hilt. 487.

4 See Farmers' Bank v. McKee, 2 Pa. St. 318; Olney v. Chadsey, 7 R. I. 224; Spyker v. Spence, 8 Ala. 343; Austin v. Daniels, 4 Demo, 299; First Nat. Bank v. Bennett, 33 Mich. 520; Hodge r. Nat. Bank, 22 Gract. 51; Booth v. Farmers' etc. Bank, 4 Lans. 301; Sterling v. Marietta etc. Trading Co. 11 Serg. & R. 179.

5 Fremont Bank v. Panic, 28 Vt. 24; Parker v. Donally, 4 W. Va. 648; Neiffer v. Bank of Knoxville, 1 Head, 162; and see Farmers' etc. Trust Co. v. Mann, 4 Robt. 356; Chicago etc. R. R. Co. v. Coleman, 18 Ill. 297; Dougherty v. Hunter, 54 Pa. St. 380; New Orleans Build. Co. v. Law. son, 11 La. 34.

6 Spalding v. Bank of Susquehanna Co. 9 Pa. St. 28. Compare Lime Rock Bank v. Hewett, 52 Me. 531; Mackay v. Commercial Bank, Law R. 5 Com. P. 394.

7 Hazleton v. Union Bank, 32 Wis. 34. Compare Fulton Bank v. N. Y. etc. Canal Co. 4 Paige, 127.

8 Holland v. Lewiston Falls Bank, 52 Me. 564; Sawyer v. Pawner's Bank, 6 Allen, 207.

§ 217. Cashier, his powers and duties.—The cashfer is the executive officer of the bank to manage its concerns in all things not peculiarly committed to the direct