ON Bullard v. Bank. N certificate of division in opinion between the judges of the Circuit Court for the District of Massachusetts. Action by Bullard as trustee in bankruptcy of one Clapp, against the National Eagle Bank of Boston, to recover for a refusal by said bank to allow certain stock owned by Clapp to be transferred. The defendant was organized under the National Banking Act of 1864, the thirty-fifth section of which provided: "That no associations shall make any loan or discount on the security of the shares of its own capital stock, nor be the purchaser nor holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith." The act also provided that associations for carrying on banking might be formed by any number of persons not less than five, who shall enter into articles of association which shall specify, in general terms, the object for which the association is formed, and may contain any other provisions not inconsistent with the provisions of this act which the association may see fit to adopt for the regulation of the business of the association, and the conduct of its affairs. Section 8 provided: "That every association formed pursuant to the provisions of this act shall from the date of the execution of its organization certificate, be a body corporate * * * and its board of directors shall have power to define and regulate by by-laws not inconsistent with the provisions of this act, the manner in which its stock shall be transferred *** its general business conducted, and all the privileges granted by this act to associations organized under it shall be exercised and enjoyed. SEC. 12. That the capital stock of any association formed under this act shall be divided into shares of $100 each, and be deemed personal property, and transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association." wherein it was held that a National bank could, by a by-law, create a lien on the shares of a stockholder who was indebted to it. It also overrules Pendergast v. Bank of Stockton, 4 Am. Law Times Rep. 247; and In re Bigelow, 1 Bankruptcy Reg. 202. In Rosenback v. Salt Springs National Bank, 53 Barb. 495, the Supreme Court of New York held that a lien could not be created by by-law, but the court was of opinion that the articles of association could authorize such lien-an opinion directly at variance with this case of Bullard v. Bank. In Conklin v. The Second National Bank, post, the Court of Appeals of New York held void a clause in the certificate of stock giving the bank a lien. See, also, Evansville National Bank v. Metropolitan Bank, post; and Johnson v. Laflin, post. Bullard v. Bank. The articles of association of the National Eagle Bank contained a provision that the directors of the association shall "Have the power to make all by-laws that it may be proper and convenient for them to make under said act, for the general regulation of the business of the association, and the entire management and administration of its affairs; which by-laws may prohibit, if the directors so determine, the transfer of stock owned by any stockholder who may be liable to the association, either as principal debtor or otherwise, without the consent of the board." Subsequently, on the 22d of November, 1871, at a meeting of the directors, the following by-law was adopted: "In pursuance of one of the articles of association, and to carry the same into effect, and in the exercise of an authority conferred by an act, under which the bank was organized, to define and regulate the manner in which its stock may be transferred, it is hereby declared, 'All debts actually due and payable to the bank (days of grace for payment being passed) by a stockholder, as principal debtor or otherwise, requesting a transfer, shall be made, unless the board of directors shall direct to the contrary." And on the 7th of December, 1871, this by-law was amended by adding the words, "And no person indebted to the bank shall be allowed to sell or transfer his or her stock without the consent of a majority of the directors, and this whether liable as principal or surety and whether the debt or liability be due or not." The said Clapp purchased one hundred and fifty shares of stock in said bank. He afterward borrowed money of the bank, and was subsequently decreed to be a bankrupt, and Ballard was appointed trustee. Ballard claimed the stock as part of the assets of the estate and demanded a transfer of them to him, which was refused, and this action brought. The judges in the court below differed in opinion as to what judgment should be given, and certified to this court for answer these questions: First. Whether a National bank, organized under and controlled by the act of 1864, can acquire a valid lien upon the shares of its stockholders by the articles of association or by-laws, as proved in this case. Second. Whether if such articles of association and by-laws, or both, created any valid lien upon the shares of the stockholders in a National bank organized under the act of 1864, such lien attached to the shares before the time when there was an existing debt, from the stockholders to the bank due and unpaid? Bullard v. Bank. Third. Whether the National Eagle Bank is entitled to hold the interest of Clapp, in the stock mentioned, by way of lien or security, for any of the notes mentioned? B. R. Curtis, for plaintiff. C. B. Goodrich, contra. Mr. Justice STRONG delivered the opinion of the court. The extent of the powers of National banking associations is to be measured by the act of Congress under which such associations are organized. The fifth section of that act enacts that the articles of association "shall specify in general terms the object for which the association is formed, and may contain any other provisions not inconsistent with not inconsistent with the provisions of this act, which the association may see fit to adopt for the regulation of the business of the association and the conduct of its affairs." And the eighth section of the same act empowers the board of directors" to define and regulate by by-laws, not inconsistent with the provisions of this act, the manner in which its stock shall be transferred." There are other powers conferred by the act, but unless these confer authority to make and enforce a by-law giving a lien on the stock of debtors to a banking association very plainly it has not been given. What then were the intentions of Congress respecting the powers and rights of banking associations? The act of 1864 was enacted as a substitute for a prior act, enacted February 25th, 1863, and in many particulars the provisions of the two acts are the same. But the earlier statute, in its thirty-sixth. section, declared that no shareholder in any association under the act should have power to transfer or sell any share held in his own right so long as he should be liable, either as principal, debtor, surety, or otherwise, to the association for any debt which had become due and remained unpaid. This section was left out of the substituted act of 1864, and it was expressly repealed. Its repeal was a manifestation of a purpose to withhold from banking associations a lien upon the stock of their debtors. Such was the opinion in this court in Bank v. Lanier, 11 Wall. 369. In that case it appeared that a bank had been organized under the act of 1863, and that it had adopted a by-law, which had not been repealed, that the stock of the bank should be assignable only on its books, subject to the provisions and restrictions of the act of Congress, Bullard v. Bank. among which provisions and restrictions was the one contained in the thirty-sixth section, that no shareholder should have power to sell or transfer any share so long as he should be liable to the bank for any debt due and unpaid. And when the bank was sued for refusing to permit a transfer of stock, it set up, in defense, that the stockholder was indebted to it, and that under the by-law he had no right to make the transfer. But this court said: "Congress evidently intended, by leaving out of the act of 1864 the thirty-sixth section of the act of 1863, to relieve the holders of bank shares from restrictions imposed by that section. The policy on the subject was changed, and the directors of banking associations were, in effect, notified that thereafter they must deal with their shareholders as they dealt with other people. As the restrictions fell, so did that part of the by-law relating to the subject fall with them." But this could have been only because the restriction was regarded as inconsistent with the policy and spirit of the act of 1864. It cannot truly be said that the by-law was founded upon the thirty-sixth section, though it doubtless referred to that section. It was not in that the power to make by-laws was given. The eleventh section was the one which authorized associations to make by-laws, not inconsistent with the provisions of the act, for the management of their property, the regulation of their affairs, and for the transfer of their stock; and that was substantially re-enacted in the act of 1864. Moreover, the sixty-second section of the latter act, while repealing the act of 1863, enacted that the repeal should not affect any appointments made, acts done, or proceedings had, or the organization, acts, or proceedings of any association organized, or in the process of organization under the act aforesaid, and gave to such associations all the rights and privileges granted by the act, and subjected them to all the duties, liabilities and restrictions imposed by it, it is, therefore, manifest that it was not the repeal of the thirty-sixth section which caused the by-law to fall. It fell because it was considered a regulation inconsistent with the new Currency Act, the policy of which was to permit no liens in favor of a bank upon the stock of its debtors. It is impossible, therefore, to see why the decision in the case of The Bank v. Lanier does not require that the certified question should be answered in the negative. An attempt was made in the argument to distinguish that case Bullard v. Bank. from the present, by the fact that the articles of association of the Eagle Bank contain the provision to which we have referred, namely, that the directors should have the power to make by-laws which may prohibit the transfer of stock owned by any stockholder who may be a debtor to the association, without the consent of the board, a provision which, it is said, the associates were justified in making by the fifth section of the act of 1864. The argument is, that though the act of Congress does not itself create a lien on a debtor's stock (as did the act of 1863), it does by the words of its fifth section authorize the creation of such a lien by the articles of association, and by by-laws made under them. This leads to the inquiry whether the fifth section does authorize any provision in the articles of association that by-laws may be made prohibiting the transfer of stock of debtors to a bank, for if it does not, the foundation of the argument is gone. Certainly, there is no express grant of authority to make such a prohibition contained in that section. There is no specification of such a power, and if such a grant could be implied from the words used by Congress, the implication would be in direct opposition to the policy indicated by the repeal of the thirty-sixth section of the act of 1863, and the failure to re-enact it, as well as by the provisions of the thirty-fifth section, which prohibit loans and discounts by any bank on the security of the shares of its own capital stock, and prohibits, also, every bank from purchasing or holding any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith. Surely an implication is inadmissible which contradicts either the letter or the spirit of the act. Surely, when the statute has prohibited all express agreements for a lien in favor of a bank upon the stock of its debtors, there can be no implication of a right to create such a lien from any thing contained in the fifth section. But were there no such policy manifest in the act, the words of the fifth section would not bear the meaning attributed to them. The articles of association required by that section to be entered into must specify in general terms the object for which the association is formed, and may contain any other provisions not inconsistent with the provisions of the act, which the association may see fit to adopt for the regulation of its business and the conduct of its affairs. To us it seems that a by-law, giving to the bank a lien upon its stock, as against indebted stockholders, ought not to be considered |