elsewhere in the state may consist of moneys on deposit subject to call with any bank or trust company in this state having a capital of at least two hundred thousand dollars, or a capital of at least one hundred and fifty thousand dollars and a surplus of at least one hundred and fifty thousand dollars, and approved by the superintendent of banks as a depositary of lawful money reserve. If the lawful money reserve of any bank or individual banker shall be less than the amount required by this section, such bank or banker shall not increase its liabilities by making any new loans or discount otherwise than by discounting bills of exchange payable on sight, or making any dividends from profits until the full amount of its lawful money reserve has been restored. The superintendent of banks may notify any bank or individual banker whose lawful money reserve shall be below the amount herein required to make good such reserve; and if it shall fail for thirty days thereafter to make good such reserve, such bank or individual banker shall be deemed insolvent and may be proceeded against as an insolvent moneyed corporation. (As amended by ch. 223, Laws of 1909; former section 47; L. 1908, ch. 151.) - § 68. Payment of capital stock. All of the capital stock of every bank shall be paid in before it shall commence business. (Former section 49; R. S., 1518; L. 1882, ch. 409, § 18, amended L. 1895, ch. 929; L. 1908, ch. 151.) See section 41, Stock Corporation Law; N. B. A., § 5140, see post. § 69. Annual meeting and election of directors. Every bank shall hold an annual meeting for the election of directors on the second Tuesday in January or within ten days thereafter. Notice of such meeting shall be given as required by the stock corporation law. No person shall be eligible to election as director of a bank having a capital of fifty thousand dollars or over unless he is a stockholder of the corporation owning in his own right an amount equal to at least one thousand dollars in value, nor of a bank having a capital of less than fifty thousand dollars unless he is a stockholder in his own right in an amount equal to at least five hundred dollars; and every person elected to be a director who, after such election shall hypothecate, pledge or cease to be the owner in his own right of the amount of stock aforesaid, shall cease to be a director of the corporation, and his office shall be vacant. The directors shall hold office for one year and until their successors are elected and have qualified. Each director must be a citizen of the United States, and at least threefourths of the directors must be residents of this state at the time of their election and during their continuance in office. All vacancies in he office of director shall be filled by election by the stockholders; but vacancies not exceeding one-third of the whole number of the board may be filled by the directors then in office, and the directors so elected may hold their offices until filled by the stockholders at a special or annual meeting. A bank, at any annual meeting for the election of directors, provided notice thereof be given in the notice of the annual meeting, may, by a majority of all of the votes of the stockholders of such bank, fix or change by resolution the number of directors, to not less than five nor more than a certain number to be named in said resolution, which number, when so fixed, shall be the lawful number of directors of such bank until again changed. Certified copies of all resolutions fixing or changing the number of directors under this section shall be immediately filed in the banking department. One of the directors, to be chosen by the board, shall be the president of the board; and if the number of directors necessary to constitute a quorum is not prescribed in the certificate of incorporation or in the by-laws and no provision is made therein for determining the same, the directors may fix such number, which shall not be less than five, with the same effect as if such number was prescribed in the certificate of incorporation. Whenever the articles of association of any bank organized prior to the first day of January, eighteen hundred and ninety-two, or the certificate of incorporation of any bank organized after that date, shall prescribe a different qualification for directors than such as are prescribed in this section, the qualification of such directors may be changed so as to comply with the provisions of this section in the manner prescribed for a change of the number of directors under section twentysix of the stock corporation law. (Former section 50; amended by L. 1900, ch. 89; L. 1900, ch. 240; L. 1902, ch. 145.) See General Corporation Law, §§ 23-32; Stock Corporation Law, §§ 25, 27, 28; Penal Law, §§ 290, 297, 664, 665, 668. 1. All powers conferred upon a corporation, unless otherwise expressly pre scribed, must be exercised by its directors, who are constituted by law as the agency for that purpose and the consent of or ratification by its stockholders is not necessary unless expressly required by statute or the by-laws. Beveridge v. N. Y. E. R. R., 112 N. Y. 1, 2 L. R. A. 648, 19 N. E. 489. 2. When the directors of a bank virtually abdicate their powers in favor of the president by allowing him to gain exclusive control of its affairs so that he acts as its sole representative, and, while so acting, commits fraudulent acts in respect to third persons whereby his bank is benefited, they (directors) are chargeable with notice of the fraud, and the bank is liable to the extent that it is benefited. City Natl. Bank v. Natl. Park Bank, 32 Hun, 105. 3. A director of state bank, knowing its insolvency and who participates in directing subsequent receipt of deposits which are checked out and paid to favored depositors is liable to the depositor who made the deposits so paid out; the transaction characterized as fraud. Cassidy v. Uhlmann, 170 N. Y. 505, 63 N. E. 554, aff'g 54 App. Div. 205. § 70. Oath of directors. Each director, when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such corporation, and will not knowingly violate, or willingly permit to be violated, any of the provisions of law applicable to such corporation, and that he is the owner in good faith and in his own right, of the number of shares of stock required by this chapter, subscribed by him or standing in his name on the books of the corporation, and that the same is not hypothecated, or in any way pledged as security for any loan or debt and, in case of re-election or reappointment, that such stock was not hypothecated, or in any way pledged as security for any loan or debt during his previous term. Such oath shall be subscribed by the director making it, and certified by the officer before whom it is taken, and shall be immediately transmitted to the superintendent of banks, and filed and preserved in his office. (Former section 51; L. 1908, ch. 119.) 1. In suits by a stockholder against directors for loss caused by their negligence, the plaintiff must be one who was a stockholder at the time of the accru ing of liability and at the time of bringing suit. Where the plaintiff was not thus qualified and a stockholder who is qualified has intervened, the action will lie. Hanna et al. v. Lyon et al., 179 N. Y. 107. 2. Directors who permit deposits with knowledge of the bank's insolvency are guilty of fraud. Nathan v. Uhlmann, 101 App. Div. 388. § 71. Individual liability of stockholders. — Except as prescribed in the stock corporation law, the stockholders of every such corporation shall be individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such corporation, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares. In case any such corporation shall have been or shall be dissolved by final order or judgment of a court having jurisdiction, and a permanent receiver or receivers of the said corporation shall have been or shall be appointed, all actions or proceedings to enforce the liability of stockholders under this section shall be taken and prosecuted only in the name and in behalf of such receiver or receivers, unless such receiver or receivers shall refuse to take such action or proceeding upon proper request in that behalf made by any creditor, and in that event such action or proceeding may be taken by any creditor of the corporation. (Former section 52; R. S., 1542, 1543; L. 1897, ch. 441.) See Stock Corporation Law, §§ 56–59; General Corporation Law, §§ 100-115, 161-161. 1. In 1844, Assistant Vice-Chancellor Sanford, in Boisgerard v. New York Banking Company (an association under the general banking law), 2 Sandf. Ch. 23, held that banking associations under the general banking law of 1838, were within the provisions of the Revised Statutes, entitled "Of proceedings against corporations in equity." This case was afterward affirmed upon appeal by the chancellor. 4 Ch. Sent. 20. See, also, Sagory v. Dubois, 3 Sandf. Ch. 466; Gillet v. Moody, 3 N. Y. 479, and Talmage v. Pell, 7 N. Y. 328; Cleveland's Banking Law, 59. 2. This act was passed to give effect to article 8, section 7, constitution of 1846, which is as follows: "The stockholders in every corporation and jointstock association for banking purposes, issuing bank-notes or any kind of paper credits, to circulate as money, after the first day of January, one thousand eight hundred and fifty, shall be individually responsible to the amount of their respective share or shares of stock in any such corporation or association, for all its debts and liabilities of every kind contracted after the said first day of January, one thousand eight hundred and fifty." It was held to apply to all banks, as well those organized before, as after 1846, provided right to amend charter was reserved. Reciprocity Bank, 22 N. Y. 14, 15; S. C. 29 Barb. 369; S. C. 17 How. Pr. 323; Empire City Bank, 8 Abb. 192. 3. A statute which imposes upon the stockholders of a corporation a personal liability for the corporate debts must be construed strictly. It is in derogation of the common law, and cannot be extended beyond its literal terms. Chase v. Lord, 77 N. Y. 1. 4. Each stockholder is subject to a ratable share of the debts in proportion to the whole capital stock and whole indebtedness of the bank, and without reference to the solvency of any other stockholder. When one assessment has been made and confirmed, no second assessment can be made to supply a deficiency because some stockholders are insolvent. Hollister Bank of B., 27 N. Y. 393, 84 Am. Dec. 292, approved Hollister v. Hollister Bank, 2 Abb. Ct. App. 367. 5. Though not free from obscurity, its (this act) design in one respect is perfectly clear. No payment was to be compelled from stockholders until all assets readily convertible into cash have been converted and distributed to creditors. In re Hollister Bank, 23 N. Y. 511. 6. In an action against stockholders of a corporation brought by a creditor to charge them individually with a debt, the recovery of a judgment for the debt is sufficient evidence of its indebedness to charge them, unless obtained by fraud and collusion. Although the statute prohibits judgment against the stockholders, until judgment has been recovered against the corporation and remains unpaid, they may be sued together with the corporation, and a judgment against the corporation authorizes a judgment against them also. Conklin v. Furman, 57 Barb. 484. 7. This act was designed to provide a cheap and expeditious way of winding up the affairs of insolvent banking corporations. One feature of the bill is that it prevents numerous and vexatious suits against the stockholders in case of the solvency. The leading features of the bill are 1st. To declare the liability which equitably exists under the constitution. 2d. The speedy remedy of both creditors and stockholders of insolvent institutions. Senate Document, 1849, No. 42. It supersedes proceedings against corporations in equity of Revised Statutes, inasmuch as they apply to banks, etc. Ferry v. Bank of Central New York, 15 How. Pr. 446. 8. Almost immediately after the suspension of specie payments by the New York banks, in October, 1857, a meeting of the justices of the supreme court of the first and second districts was held, for the purpose of determining the proper course to be pursued in respect to proceedings that might be instituted against banks. The following minute of their proceedings is of interest in connection with the above proceedings. At a meeting of the justices of the supreme court held for the purpose of determining a uniform course of action among themselves: Present, Justices Strong, Emott, Birdseye, Mitchell, Roosevelt, Davies, Clark and Peabody, the following opinions were unanimously concurred in: In all cases where the act of 1849 is applicable, it is deemed to supersede the provisions of the Revised Statutes. 2 R. S., 464, §§ 39 and 47. Accordingly no creditor of a bank who may have relief under that act, can have it under the Revised Statutes. That act gives the creditor a right to apply to a justice of the supreme court, only after the expiration of ten days from the refusal of the bank to pay its debts and liabilities. Even then a temporary injunction and immediate injunction can only be granted, if in the opinion of the judge it be expedent in order to prevent fraud or injustice. After both parties shall be heard before the judge, he is to determine whether the bank is clearly solvent or not. A bank is clearly solvent when it is clearly able to pay all its debts, although it may have suspended specie payment for a time. In the case of the N. American T. and B. Co., this principle was held by the supreme court and court of appeals. Curtis v. Leavitt, 17 Barb. 309, 327. When a bank is clearly solvent and its officers are acting in good faith, no receiver should be appointed. Where the act of 1849 does not apply, if the part of the Revised Statute does apply, it is discretionary on the part of the supreme court to grant an injunction or not. That discretion is controlled by legal rules, and the injunction should never be granted if the bank is clearly solvent. An ex |