United States v. Curtis.

justices of the peace in the several States had not been given such authority by any provision in the Revised Statutes, or by any act of Congress prior to their adoption. Nor can any support for the indictment be derived from the act of August 15, 1876 (19 Stat. 206), which declares" that notaries public of the several States, Territories, and the District of Columbia be, and they are hereby authorized to take depositions, and do all other acts in relation to taking testimony to be used in the courts of the United States, take acknowledgments and affidavits in the same manner and with the same effect as commissioners of the United States Circuit Courts may now lawfully take or do."

The power of commissioners of the Circuit Courts did not, at the passage of that act, extend to the taking of oaths to reports by officers of National banks. They could take affidavits when required or allowed in any civil cause in a Circuit or District Court; R. S., § 945; act of February 20, 1812 (2 Stat. 679, §1); act of March 1, 1817 (3 Stat. 350); or administer oaths where, in the same State, under the laws of the United States, oaths in like cases could be administered by justices of the peace; R. S. § 1778; or they could take evidence, affidavits and proof of debts in proceedings in bankruptcy; R. S., §§ 5003, 5076; acts of March 2, 1867 (14 Stat. 527), July 27, 1868 (15 Stat. 228, § 3), and June 25, 1874 (18 Stat. 186, § 20). But the authority of commissioners did not extend to such oaths as were administered to Curtis.

Our attention is called by counsel for the government to United States v. Bailey, 9 Pet. 238. That case, it is claimed, furnishes ample ground for an implication that the notary public who administered the oath in this case was fully empowered to do so. We do not so interpret that decision. That was an indictment for false swearing. It was based upon an act of Congress which provided that if any person shall swear or affirm falsely touching the expenditure of public money, or in support of any claim against the United States, he should, upon conviction, suffer as for willful, corrupt perjury. The alleged false oath was administered before a justice of the peace for the Commonwealth of Kentucky. It was admitted that there was no statute of the United States expressly empowering a justice of the peace to ad

First National Bank of Xenia v. Stewart.

minister the oath taken by Bailey. But the authority of that officer was sustained upon the ground that the Secretary of the Treasury had previously, and as incident to his duty and authority under an act of Congress, established a regulation permitting affidavits in support of claims against the United States to be made before justices of the peace. Except for that regulation the court, it is manifest, would not have sustained the indictment in Bailey's Case.

The conclusion, therefore, is not to be avoided, and it will accordingly be certified to the court below, that the alleged false oaths of the defendant were not taken before an officer, competent at the time under the laws of the United States, to administer them. The absence of such authority in notaries public seems to have been recognized by Congress when it passed the act of February 26, 1881 (21 Stat. 352), declaring "that the oath or affirmation required by section 5211 of the Revised Statutes, verifying the returns made by National banks to the Comptroller of the Currency, when taken before a notary public properly authorized and commissioned by the State in which such notary resides and the bank is located, or any other officer having an official seal, authorized in such State to administer oaths, shall be a sufficient verification, as contemplated by said section 5211: provided, that the officer administering the oath is not an officer of the bank." What has been said renders it unnecessary to consider any other question of law certified by the judges of the Circuit Court.

FIRST NATIONAL BANK OF XENIA V. STEWART.

(107 U. S. 676.)

ledge of bank's own shares as security — estoppel.

Where a National bank made a loan upon the pledge of its own shares and afterward sold the shares to obtain payment of the loan which exceeded the amount realized from the shares, held, that the owner of the shares could not, on the ground that the statute forbids a National bank to take its own shares as security, recover from the bank the amount realized upon the sale of the shares.

IN

First National Bank of Xenia v. Stewart.

N error to the Circuit Court of the United States for the. Southern District of Ohio. The plaintiffs are administrators of the estate of Daniel McMillan, deceased, and the defendant is the First National Bank of Xenia, Ohio, a corporation formed under the National Bank Act of the United States. The action is brought to recover the sum of $4,200 with interest; the complaint alleging that in October, 1876, the bank was in possession of thirty shares of its capital stock belonging to the deceased; that it then unlawfully converted them to its own use and sold them, receiving therefor the sum mentioned, which it refuses to account for or deliver to the plaintiffs, although a demand for it has been made.

The bank, in answer to the complaint, avers that in April, 1876, the deceased was owing to it a debt previously contracted, greater in amount than the value of the shares of capital stock; that it being necessary to secure the bank from loss, he delivered to it certificates of the shares with other property, as collateral security for the debt; that in October, 1876, the debt being unsatisfied and overdue, the bank sold the shares at their full market value and applied the proceeds as a credit upon it; and that after such application a large amount remained due to the bank, which is still unpaid.

The evidence produced at the trial tended to show that the shares of stock were delivered by the deceased to the bank as collateral security for money loaned to him at the time and continued to be thus held until they were sold.

The court charged the jury that if they found from the evidence that the bank stock was delivered by the deceased to the bank as a pledge or collateral security for a loan of money made by him at the time, the plaintiffs were entitled to recover the amount of the proceeds, with interest from the time of sale; as the defendant was prohibited by the Currency Act from thus receiving its own stock.

To this charge the defendant excepted. The plaintiff's recovered a verdict, and to review the judgment entered thereon the case was brought to this court on writ of error.

FIELD, J. Section 5201 of the Revised Statutes declares that “No association shall make any loan or discount on the security of the shares of VOL. III-13.

First National Bank of Xenia v. Stewart.

its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith, and stock so purchased or acquired shall, within six months from the time of the purchase, be sold or disposed of at public or private sale, or in default thereof a receiver may be appointed to close up the business of the association."

While this section in terms prohibits a banking association from making a loan upon the security of shares of its own stock, it imposes no penalty, either upon the bank or borrower, if a loan upon such security be made. If therefore the prohibition can be urged against the validity of the transaction by any one except the government, it can only be done before the contract is executed, while the security is still subsisting in the hands of the bank. It can then, if at all, be invoked to restrain or defeat the enforcement of the security. When the contract has been executed, the security sold, and the proceeds applied to the payment of the debt, the courts will not interfere with the matter. Both bank and borrower are in such case equally the subjects of legal censure, and they will be left by the courts where they have placed themselves.

There is another view of this case. The deceased authorized the bank in a certain contingency, to sell his shares. Supposing it was unlawful for the bank to take those shares as security for a loan, it was not unlawful to authorize the bank to sell them when the contingency occurred. The shares being sold pursuant to the authority, the proceeds would be in the bank as his property. The administrators, indeed, affirm the validity of that sale by suing for the proceeds. As against the deceased however the money loaned was an offset to the proceeds. In either view the administrators cannot recover.

The judgment of the court therefore must be reversed and the cause remanded for a new trial; and it is so ordered.

United States v. Britton.

Criminal law.

UNITED STATES V. BRITTON.

(108 U. S. 193.)

allowing

insolvent officer procuring discount of his own note debtor to withdraw his funds — willful misapplication of funds.

Where an insolvent officer of a National bank submits his own note, with an insolvent indorser as security, to the board of directors for discount, and they, knowing the facts, order it to be discounted, the use by the officer of the proceeds of the discount for his own purposes will not be a willful misapplication of the funds of the bank under section 5209 U. S. Revised Statutes. A count that charges that defendant, the president of a banking association, failed to apply certain funds standing to the credit of a debtor of such association to the payment of his indebtedness, and permitted such debtor to withdraw his funds from the association and transfer them to another bank, does not charge a criminal misapplication by defendant of the moneys and funds of the association.

a certificate of division in opinion between the judges of

trict of Missouri.

The first count charged that the defendant, James H. Britton, on March 24, 1877, within the Eastern District of Missouri, being the president and director of the National Bank of the State of Missouri, the same being a National banking association organized under the act of Congress, "did cause and procure to be then and there received and discounted by said association a certain promissory note, which said note was then and there in the words and figures following:

"$20,835.

ST. LOUIS, March 24, 1877.

"Four months after date I promise to pay to the order of Geo. F. Britton, negotiable and payable at the National Bank of the State of Missouri, in St. Louis, twenty thousand eight hundred and thirty-five dollars, for value received, without defalcation or discount, with interest, after maturity, at the rate of ten per cent per annum. J. H. BRITTON."

-that the note was indorsed as follows: "Geo. F. Britton; that the defendant converted to his own use the proceeds of the discount of said note, to-wit, the sum of $20,251.63; that said note, when so discounted, was not well secured; that said "James H. Britton, and the said payee and indorser of said note, to-wit,