the extent of the shares held by him, although he received and holds such shares as collateral security for a loan to a shareholder. Hale v. Walker, 471; Magruder v. Colston, 554; Wheelock v. Kost, 406.
4. Liability of pledgee of stock.] Stock in a National bank was pledged to secure a debt, with power to the pledgee to sell it on default of payment. Held, that a sale by him pursuant to the power was not voidable as a fraud on creditors of the bank, though he sold because he believed the bank insolvent, and in order to escape personal liability as a stockholder. Magruder v. Colston, 554.
-] Persons who hold stock of a National bank in pledge, the certifi- cates of which stand on the books of the bank in the name of the pledgee, are, in contemplation of the National Banking Act, stockholders, and so long as they thus hold the stock in pledge are responsible to the cred- itors of the bank in proportion to the amount so held. Ib.
6. Transfer of stock to escape liability to creditors.] Shareholders in a National bank, knowing it to be insolvent, transferred their shares for the purpose of escaping liability to creditors. Held, that as to such creditors the trans- fer was void. Bowden v. Santos, 271.
7. Shareholder's right to transfer shares in a National bank.] Under the National Banking Act, a shareholder has the right to make an actual and bona fide sale and transfer of his shares to any person capable in law of taking and holding the same, and of assuming the transferor's liabili ties in respect thereto; and, in the absence of fraud, this right is not sub- ject to a veto by the directors or the other shareholders. Johnson v. Laf. lin, 331.
8. Liability terminates on transfer.] Where such a sale of shares is made and the transfer entered on the books of the bank, the transferor ceases to be a shareholder, and is freed from liability in respect of such shares. Ib. 9. Directors cannot restrain right.] The provision of the National Banking Act (Rev. Stats., § 5139) that shares shall be transferable on the books of the association," construed; and held not to give the directors the power to refuse to register a bona fide transfer of stock without some valid and sufficient reason for such refusal. Ib.
10. Elements of a complete transfer.] As between the seller and purchaser of shares in a National bank, the sale is complete when the certificate of the shares duly assigned, with power to transfer the same on the books of the bank, is delivered to the buyer, and payment therefor is received by the seller; and either the purchaser or seller may compel a registration of the transfer on the books of the bank, unless the bank has some valid and sufficient ground for refusing to register the transfer. Ib.
11. Sale to president of bank — how far shareholder is affected with knowledge of condition of bank.] The defendant Laflin, owning full-paid shares of stock in a National bank of which his co-defendant, Britton, was the president, employed a broker to sell the same in the market; the broker, without Laflin's direction or knowledge at the time, sold the same at the market value to Britton individually, and received in payment his individ-
ual check on the bank for the purchase-price, and delivered to the pur- chaser the share certificates assigned in blank with blank powers of attor- ney thereon indorsed, authorizing the transfer of the shares on the books of the bank; subsequently, after the amount of the check had been col- lected, but on the same day, the president, without the knowledge of Laflin or the broker, directed the book-keeper of the bank to credit his individual account with the amount of the check which he had given for the shares, and to transfer the shares (the book-keeper inserting his own name in the blank power of attorney as attorney to make the trans- fer) to Britton, "trustee," not specifying for whom he was trustee, and charging the sum to the "sundry stock account" of the bank, all of which was done. The bank, although it had not committed any act of insolvency, was then insolvent, but this fact was not known by Laf- lin or the broker. Held, that, although the bank, or its officers for it, was prohibited from purchasing its own shares (Rev. Stat., § 5201), yet that Laflin having sold in good faith, without notice of the illegal pur- pose of Britton in buying the stock, or of his intended misappropriation of the funds of the bank in paying therefor, was not liable to pay back to the receiver the money received in payment of the shares. Ib. 12. Presumption as to citizenship.] In an action by a National bank in the United States Circuit Court, the stockholders of the bank will be pre- sumed to be citizens of the State where the bank is located. Manufactur- ers' Nat. Bank v. Baack, 161.
13. Action to enforce liability of] The Comptroller of the Currency must decide when and to what extent proceedings shall be taken to enforce the liability of shareholders in National banks, and in an action therefor such determination must be averred and proved. Kennedy v. Gibson, 17. 14. Parties to such actions.] When contribution only is sought, all the stock- holders who can be reached by the process of the court may be joined in the suit, but it will be no objection that there are others beyond the jurisdiction of the court who cannot for that reason be made co-defendants. Ib. 15. Action by creditors.] Creditors cannot proceed directly in their own name against stockholders of National bank, nor are they proper parties to a suit by the receiver. (See, however, at Act June 30, 1876.) Ib.
16. Liability of, how enforced — determination of Comptroller as to liability of, conclusive.] The order of the Comptroller of the Currency determining to what extent the individual liability of the stockholders of an insolvent National bank shall be enforced, is conclusive on the stockholders; and the amount bears interest from the date of the order. Casey v. Galli, 142. 17. Action at law estoppel.] When the order is to collect the full amount of the par of the stock, the action therefor must be at law, and in such action the stockholder is estopped from denying the existence or the validity of the corporation; the certificate of the Comptroller is conclusive as to the validity of the organization of such corporation. Ib.
18. Individual liability of stockholders, how enforced.] In winding up an in- solvent National bank, the Comptroller of the Currency is vested with authority to determine when a deficiency of assets exists, so that the
individual liability of the stockholders may be enforced, and no appeal lies from his decision. Bailey v. Sawyer, 356.
19. Liability, when fixed.] The liability of a stockholder of a National bank is several, and is fixed by his taking stock in the corporation. Ib.
20. Action to enforce.] When an assessment upon the stockholders is ordered by the Comptroller, a suit at law is the proper remedy to enforce it. Ib. 21. Attachment of stock.] The shares of a stockholder may be attached by the bank for a debt due it. Hagar v. Union Nat. Bank, 523.
22. State statute requiring cashier to send list of shareholders to town clerks valid.] A State statute required, under a penalty for his neglect or re- fusal, the cashier of each National bank within the State to transmit an- nually to the clerks of the several towns in which any stock or share- holder should reside, a true list of the names of such stock or shareholders on the books of such banking association, together with the amount of money actually paid in on each share. Held, that the statute was valid. Waite v. Dowley, 137.
23. Reduction of capital.] Upon the reduction of the capital stock of a Na- tional bank, it cannot retain as a surplus, or for other purposes, the money received for the stock retired. Seeley v. New York Exchange Nat. Bank, 804.
Usury does not discharge.] The discounting of a note for the principal maker, at an unlawful rate of interest, is not such an unauthorized use of the note as will discharge the sureties from liability. In the absence of any express agreement or understanding on that subject between the sureties and the principal, of which the holder had notice, or any intention to practice a fraud on the sureties, they must be held to have trusted to the judgment and discretion of the principal, as to the terms on which the note might be discounted. First Nat. Bank v. Garlinghouse, 811. On bond of cashier.] See BOND.
1. Where the shares in National banks are required by statute to be assessed at their par value, the surplus fund of such banks in excess of the amount required by law to be kept on hand is taxable. First Nat. Bank v. Peterborough, 658.
2. The undivided surplus of National banks, if not invested in Federal secu- rities, may be taxed against the bank, where it is not included in estimat ing the value of the shares. State v. City of Newark, 672.
1. Of capital.] Where the capital stock of a National bank is invested in United States securities it cannot be taxed by the State. Van Allen v.
Assessors, 1; People v. Commissioners, 9; Bradley v. People, 14; Nat. Bank v. Commonwealth, 34; Collins v. Chicago, 191.
2. Of shares of stock in National banks.] A State may authorize the taxation of the shares of stock of National banks in the hands of stockholders, although the capital of such bank be wholly invested in stocks and bonds of the United States. Van Allen v. Assessors, 1; People v. Commissioners, 9; Bradley v. People, 14; Nat. Bank v. Commonwealth, 34.
3. Limit of restriction on State taxation.] The National Banking Act does not curtail the power of the State to tax shares of stock in National banks, or cut off the right of the State to exempt certain kinds of property if it chooses to do so. Its only object is to prevent unfriendly discrimination against National banks. Adams v. Mayor, 148; National Bank v. Com- monwealth, 34; Lionberger v. Rouse, 41.
4. Of shares at their market value.] Shares of stock in National banks may be taxed at their market value. Hepburn v. School Directors, 113; People v. Commissioners of Taxes and Assessments, 130; People v. Assessors, 776. 5. Effect of exemption of certain moneyed capital.] The fact that under a State statute, certain property is exempt from taxation, does not render invalid a tax against shares of stock in National banks. Hepburn v. School Directors, 113; Lionberger v. Rouse, 41; People v. Commissioners, 9; Adams v. Mayor, 148; but see City Nat. Bank v. Paducah, 300.
6. Section 41 of the National Bank Act construed
rate of taxation.] The 41st section of the National Banking Act which provides that shares in National banks may be taxed by the States, "but not at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such States," means that the rate of taxation of the shares shall be the same, or not greater than upon moneyed capital of the in- dividual citizen which is subject to taxation. Therefore, held, that the fact that individual citizens were not assessed on United States securi- ties owned by them was not a valid reason against the validity of the State tax on the shares of National banks, the capital of which was in- vested in United States bonds. People v. The Commissioners, 9.
7. State banks and National banks must be taxed alike.] A tax on the capital of a bank is not equivalent to a tax on the shares, and therefore, where State banks are taxed on their capital only, a State statute imposing a tax on the shares of National banks is void. Van Allen v. Assessors, 1; Bradley v. People, 14.
3. When National banks may be taxed beyond State banks.] When a State has, by contract, disabled itself from taxing State banks of issue beyond a certain amount, but not its banks of discount and deposit, a tax levied on shares of stock in all banks is valid as to National banks, although greater than the State can collect of the State banks of issue. Lionberger v. Rouse, 41; but see City Nat. Bank v. Paducah, 300.
9. Action to enjoin taxes.] A National bank is a proper party complain- ant to a bill in equity, to enjoin the collection of a tax upon its shares, assessed against its stockholders, if it be shown that the bank would be subjected to a multiplicity of suits, whereby its business will be interfered with, its credit impaired and its stock depreciated. City Vat. Bank v. Paducah, 300. See, also, Merchants' Bank v. Cumming, 926. 10. Tax when enjoined.] The remedy by injunction to stay the collection of a tax upon personal property may be invoked where the enforcement of the tax would lead to the multiplicity of suits, or where the law author- izing the tax is itself valid. Ib..
11. Rate of taxation.] Where, by the laws of a State, or municipality, differ- ent rates of taxation are imposed upon different classes of moneyed cap- ital, such State or municipality may not tax the shares of National banks at the highest rate imposed upon any class, regardless of the proportion which that class bears to other classes; nor, upon the other hand, is it confined to the lowest rate imposed upon any class. Ib.
.] Where different rates of taxation are prescribed for different classes of "other moneyed capital," the rate imposed upon shares in Na- tional banks should not, as a general rule, exceed that imposed upon other moneyed capital of the same class, viz., shares in State banks. Ib.
13. Discrimination against National banks.] Where, practically, the entire banking capital of the State of Kentucky was exempted from taxation beyond fifty cents per share, and included in this enumeration was a State bank in Paducah, the capital stock of which exceeded that of all the National banks located there, it was held that an ordinance im- posing a tax of $1.05 nominally upon all banks in the city, but from which the State banks had been adjudged exempt, was an unlawful dis- crimination against the National banks, and therefore invalid. Ib.
14. Deduction for debts.] Where other moneyed capital than bank stocks was also taxed at $1.05, but with a proviso that from the amount of this cap- ital the entire indebtedness of the owner should be deducted before the assessment was made, and no such deduction was allowed where such cap- ital consisted of shares in National banks, the tax upon such shares was held invalid. Ib.
15. Deduction for real estate.] The tax was also held invalid for the reason that no provision was made for deducting the value of real estate owned by the bank, which was thereby subjected to double taxation. Ib. 16. When court will restrain collection of taxes.] Where there is no means of recovering back from the State taxes illegally assessed and paid into the treasury, a court of equity will enjoin their collection; and when both State and county taxes are included in one warrant and are for a common reason illegal, the court will at the same time determine the validity of both the State and the county taxes. First Nat. Bank of Omaha v. County of Douglas, 267.
-] State authorities will be enjoined from collecting a tax on the capital stock of a National bank, invested in United States securities. Ib.
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