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STOCKHOLDER-Continued.

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.

5.

-] 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.

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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-

STOCKHOLDER-Continued.

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.

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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

STOCKHOLDER-Continued.

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.

SUITS.
See ACTIONS.

SURETIES.

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.

SURPLUS.

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.

TAXATION.

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

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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.

TAXATION-Continued.

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.

12.

-

.] 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.

17.

-] 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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