to the provisions of this chapter relating to the deposit of cash by banks closing business, for the redemption of its circulating notes, without notice of intention to close the business of banking; but the bank or individual banker making such deposit shall continue to make the reports and statements and to publish the same as required of the banks of this state by the laws thereof, and be in all respects amenable to the banking laws of this state, as if in full operation as a bank of discount and deposit, until due notice and evidence of the discontinuance of such business of banking shall be given to the superintendent, which discontinuance shall require the concurrence of the owners of a majority of the shares of stock in the bank. This provision shall extend and apply to any bank that has heretofore made such deposit to redeem its outstanding circulation without having given notice of intention to close its business. Any bank or individual banker having given such notice and made the deposit of cash or securities as required by law, may withdraw such notice at any time within two years after making such deposit, and may thereupon resume the business of banking under its corporate name and subject to the laws of this state; but such withdrawal shall not affect the redemption of its circulating notes previously issued according to the terms advertised by the superintendent as required by law, nor shall such bank be entitled to issue any circulating notes until the time for the redemption of its previous issue shall have expired.

(Former section 81; R. S., 1539; L. 1882, ch. 409, § 113.)

§ 102. Circulation of foreign bank notes prohibited. No bank or individual banker authorized to carry on the business of banking under the laws of this state shall receive, pay out, give or offer in payment, as money, to circulate or attempt to circulate as money, any bill, note or other evidence of debt issued or purporting to have been issued by any corporation or individual situated or residing without this state, and which bill, note or other evidence of debt shall, upon any part thereof, purport to be payable or redeemable at any place, or by any person or corporation within this state.

No such bank or banker or any person whatever within the state, directly or indirectly, on any pretense whatever, shall procure or receive, or offer to receive, from any corporation or person, any bank

bill or note or other evidence of debt in the similitude of a bank note, issued or purporting to have been issued by any corporation or individual situated or residing without this state, at a greater rate of discount than is or shall be at the time fixed by law for the redemption of the bills of the banks of this state at their agencies. No such bank or individual banker shall issue, utter or circulate as money, or in any way directly or indirectly aid or assist in the issuing, uttering or circulating as money within this state of any such bank bill, note or other evidence of debt issued or purporting to have been issued by any corporation or individual situated or residing without this state, or procure or receive in any manner whatever, any such bank bill, note or evidence of debt, with intent to issue, utter or circulate, or with intent to aid or assist in issuing, uttering or circulating the same as money within this state. Any bank or individual banker may receive and pay out such foreign bank bills as it shall receive at par in the ordinary course of its business, and it may receive foreign notes from its dealers and customers in the regular and usual course of its business, at a rate of discount not exceeding that which is or shall be at the time fixed by law for the redemption of the bills of the banks of this state at their agencies, and may obtain from the corporations or individuals by which such foreign notes were made the payment or redemption thereof.

Every bank and individual banker who shall offend against any of the provisions of this section or of section one hundred three of this chapter, shall forfeit for each and every offense the sum of one thousand dollars to be recovered with costs in the name and for the use of any person who shall sue for the same.

(Former section 82; R. S., 1539, 1540, 1541; L. 1882, ch. 409, §§ 114, 118, 119.) 1. The delivery of Canada bank bills to an individual banker, who makes agreement to receive them at one-quarter of one per cent. discount, and to pay by seventeen days' draft on New York, is not a violation of this statute. Receiver is merely the agent of vendor to send them back for redemption. It was not a circulation of the notes. Buffalo City Bank v. Codd, 25 N. Y. 165.

2. This statute does not prohibit banks or individual bankers from selling or delivering such notes for any purpose, except circulation as money within this State. It is no offence for a bank or banker having lawfully taken such notes at par, to sell them to another bank or banker at any rate of discount, provided it be not with a view to their circulation in this State. The prohibition is only on the banker buying at a greater than the legal discount. Sacketts Harbor Bank v. Codd, 18 N. Y. 240.

No bank or

§ 103. Notes not receivable at par not to be paid out. individual banker authorized to carry on the business of banking under the laws of this state shall directly or indirectly lend or pay out for paper discounted or purchased, any bank bill or note or other evidence of debt which is not received at par by such bank or banker for debts due to such bank or banker.

(Former section 83; R. S., 1540; L. 1882, ch. 409, § 115.)

1. Bank gave Canada bank bills to an individual banker, who advertised to redeem them, and received a draft on New York city for amount less one-fourth of one per cent. This transaction cannot be tortured into loan or purchase of the draft of defendant with Canada bank bills. Bank might have sent them home for redemption itself, and might as well give them to another for redemption and

take an equivalent. Buffalo City Bank v. Codd, 25 N. Y. 168.

2. No recovery can be had for money loaned in violation of this section of this statute, but this defense must be set up in the answer. Codd v. Rathbone, 19

N. Y. 39.

104. Bills or notes must be payable on demand. No bank or individual banker shall issue or put in circulation any bill or note of such bank or banker unless the same shall be made payable on demand and without interest, except bills of exchange on foreign countries or places beyond the limits or the jurisdiction of the United States, which bills may be made payable at or within the customary usance, or at or within ninety days' sight, and, except certificates of deposit payable on presentation, with or without interest, to bearer or to the order of a person named therein; but no such certificate of deposit shall be issued except as representing money actually on deposit.

(Former section 84; R. S., 1540; L. 1882, ch. 409; L. 1887, ch. 564.)

1. A post-dated draft taking effect by delivery is a time draft, and within prohibition of this statute. It seems the intention of the legislature to forbid the issue of contracts of a certain description, and to punish them, but not to enable them to repudiate their own obligations. The bank is prohibited from issuing, but the receiver is not forbidden to take such obligation, and may recover, if not on the obligation, certainly for money had and received. Oneida Bank v. Ontario Bank, 21 N. Y. 490; to same effect Curtis v. Leavitt, 15 N. Y. 95 and 96. See note to section 297.

2. Prior to the act of 1840 (ch. 363), banking associations could issue their time notes to secure moneys loaned, provided such obligations were not intended to circulate as money. It was not prohibited, and the right was incidental to the business. Curtis v. Leavitt, 15 N. Y. 9. Though the issue of such a draft (not payable on a demand) is a violation of this statute on the part of the banker, it is not on the part of the payee. The statute being penal is strictly construed. The seller may surrender the illegal draft, and recover on the implied assumpsit.

Buffalo City Bank v. Codd, 25 N. Y. 163; to the same effect Tracy v. Talmage, 14 N. Y. 178, 67 Am. Dec. 132.

3. All notes issued by banks, unless payable on demand without interest, are illegal though not intended to circulate as money. The act has no reference to the circulation of such notes as money, but was designed to prohibit them altogether for any purpose. A guaranty for the payment of such notes partakes of the character of the principal contract, and is equally illegal. Swift v. Beers, 3 Denio, 70.

4. Securities by banks as (collateral) security for illegal notes are also void, and confer no title on assignees. Tyler v. Yates, 3 Barb. 222.

5. Acknowledgment of debt signed by the president in pursuance of resolution of board of directors is valid, although there is no contract to repay signed as prescribed in this section. 5 Barb. 9.

6. In December, 1839, the case of Safford v. Wyckoff, President of the Farmers' Bank of Seneca County, was tried before CUSHMAN, circuit judge. This was an action against that bank as the drawer of a negotiable bill or draft for $3,000, dated August 15, 1839, and payable thirty days after date and signed "J. J. Fenton, Cashier." The bank was an association, formed under the general banking law of 1838. It was objected on the trial, among other things, that the bank "had no power to issue drafts on time, or any other paper except such as had been countersigned according to law." These objections were overruled by Judge CUSHMAN, who directed a verdict for the plaintiff, which the jury rendered. 1 Hill, 12.

In April, 1840, the court for the correction of errors, in Warner v. Beers, 23 Wend. 101-190, held, that "associations organized in conformity with the provisions" of the general banking law were "not bodies politic or corporate within the spirit and meaning of the Constitution" of 1821. But Senator Verplanck (who insisted in this case, in opposition to the chancellor and to other senators, that these associations were, in no sense, corporations, but merely partnerships, relieved by a conditional appeal from the inhibitions of the General Restraining Act), held, that "certain conditions are imposed to entitle them to the benefit of this conditional repeal. They can issue no paper unless it be secured in a certain way, and duly attested by the comptroller. The very same conditions are imposed on every individual who thinks fit to engage in this business." 23 Wend. 159. See Safford v. Wyckoff, 1 Hill, 11.

Shortly after the decision of Judge CUSHMAN, the officers of some of the associations assumed the power of issuing evidences of debt, which an association under the general bank law had not only no legal power to issue, but the issue of which, by such a moneyed corporation having banking powers, was expressly prohibited by the 35th section of the amendatory act of April 2, 1829. Laws of 1829, § 1 and § 35. But this was not the only evil - the individual bankers were not within the terms of this prohibition of the said 35th section, and were not then required by the general law of 1838 to file any certificate stating their places of residence or of business, or to make any annual statement of their affairs to the comptroller; but these individual bankers were authorized by the same section (§ 3) and in the same language (as corporations formed under the 15th section) to loan and circulate countersigned notes and by the act of 1837 they had previously been authorized to keep offices of discount and deposit. Certain individual bankers, in 1839 and 1840, established banking offices in various part

of the interior of this State remote from business centres, and commenced business by issuing countersigned notes in the name of the "Atlas Bank," "The North River Banking Company," or other assumed names. When these counter

signed notes became current, and the name of the "Atlas Bank," etc., familiar, it was not difficult to put in circulation post-notes in the name of the "Atlas Bank," etc., engraved from plates similar to the authorized plates in the custody of the comptroller; but such post-notes were not countersigned by him or in any manner secured.

To prevent the issue of a spurious currency by individual bankers, the legislature interfered by the act of May 14, 1840. This act was passed one month after the decision by the court of errors of the case of Warner v. Beers, and before the supreme court had set aside the verdict in Safford v. Wyckoff; the decision in the latter case was not made until January, 1841. 1 Hill, 11. One of the main objects of the legislature in enacting the prohibition in the 4th section of the act of May 14, 1840, was to reach the illegal issue of post-notes, or other evidences of debt, by individual bankers in the assumed name of the "Atlas Bank," etc. Hence the language of this section is that "No individual banker, as such, shall issue or put in circulation any bill or note, unless the same shall be made payable on demand and without interest," and that every violation of this section by any individual banker shall be deemed and adjudged a misdemeanor, etc. The legislature was compelled afterward to pursue this policy of restricting and resertaining the operations of individual bankers. See Laws of 1841, ch. 319; Laws of 1844, ch. 281; Laws of 1848, ch. 340. While providing a remedy for the prevention of the evils resulting from illegal issues by individual bankers as such, the legislature of 1840 reiterated the prohibition of the 35th section of the act of April 2, 1829, against an issue of post-notes by moneyed corporations formed under the General Bank Act, so as to leave no room for doubt as to its application to them; in thus re-enacting this prohibition, the legislature added the sanction of an express reference to the penalties imposed for a violation of the statute in other words declared that such a violation was a misdemeanor, punishable by fine or imprisonment, or both. It should also be borne in mind that before the passing of the act of May 14, 1840, it had been questioned whether associations under the general law were, in the language of Judge BRONSON, "corporations or something else." It was not until December, 1844, that the court for the correction of errors finally settled this question, by deciding that they were "moneyed or stock corporations" within the meaning of the statute subjecting such corporations to taxation on capital. 1 R. S. 414, § 1; Supervisors of Niagara v. The People, 7 Hill, 504.

The Safety Fund, as well as the General Law banks, had the express power to buy and sell bills of exchange; yet both classes of moneyed corporations were prohibited from issuing any bill on time. Laws of 1829, § 1 and § 35; Cleveland's Banking Law, 114.

See the following decisions as to the issue of post-notes and post-bills: Smith and Warner v. Strong (post-bill), 2 Hill, 241; Bank of Orleans v. Merrill (postcertificate of deposit), 2 Hill, 295; Swift v. Beers (guarantee of a post-note), 3 Denio, 70; Leavitt v. Yates (assignment to secure post-notes called "Yates Trust-Notes"), 4 Edw. Ch. 134; Tylee v. Yates et al. (Yates Trust Post-Notes), 6 Barb. 222.