ject and the doctrine of payment "in money's worth" is held in the particular jurisdiction, there seems to be no reason why payment for the capital stock should not be made in property, provided such property was proper for use in the business." The statutes usually require the issuance of a certificate by proper authority where the organization is made under general laws, which certificate is always evidence of due incorporation, but it will be seen that it is not the only evidence thereof.12 The effect of the failure to issue a certificate will be noticed in a later chapter.13

20. Conversion of state into national banks.-The national bank act gives the right to convert any bank organized under a special act or general law of a state into a national bank upon the certificate of the directors that twothirds of the stockholders have agreed thereto.' This authority is all that is necessary for the conversion of a state into a national bank. Under another statute, banks in the District of Columbia are authorized to convert themselves into national banks. The directors of the state bank continue to act until their successors are elected, and they are not required to take a new oath, but a majority of the old directors is required to perform any corporate act. If the state bank has voting and non-voting stock, the non-voting stock cannot participate in the voting upon the change of organization, and the act of the voting stockholders transfers the non-voting stock as well. The new bank succeeds to all the property of the old bank, and a suit upon an obligation held by the old bank can be brought in the name of the new bank, although a state law provides that the old The Illinois banking act does 1 Sec. 5154, Rev. Stat. U. S. See not require, except by a weak im- § 212, post. plication, the payment of stock in money. See on the general subject, 2 Thomp. on Corp., sec. 1562 et seq. See also Pacific Trust Co. v. Dorsey, 72 Cal. 55.

12 See § 23, post. 13 See § 31, post.

2 Casey v. Galli, 94 U. S. 673.

3 Act of Congress June 30, 1876. 4 Lockwood v. Mechanics' Nat. Bank, 9 R. L. 308, 11 Am. R. 253.

5 State v. Phoenix Bank, 34 Conn. 205.

6 State v. Phoenix Bank, supra.

incorporation shall continue to exist for three years for the purpose of prosecuting and defending suits. Even if the national bank was not in form converted from a state bank, yet, if such was the fact, the new national bank is merely the successor of the former state bank and may hold its assets.

§ 21. Alteration of bank charter. After a charter has been granted to a bank the charter becomes a contract under well settled rules, and is not subject to amendment by a state legislature, unless the amendment is immaterial or of a remedial character, or unless the power to amend has been reserved. Whether the doctrine of Munn v. Illinois, 94 U. S. 113, would be applied to charters of banks not of issue may well be doubted. The charter could not be repealed except by authority reserved or by virtue of the police power; but that subject belongs to a treatise on constitutional law or corporations and not especially to a work of this nature.2

§ 22. Power as to by-laws.-The power of a banking corporation to enact by-laws, whether the right is granted by the charter or is used as an inherent power, does not differ from the rules in regard thereto governing other corpora

Atlantic Bank v. Harris, 118 v. Bopp, 50 N. Y. Supp. 676. And it Mass. 147. applies to debts thereafter incurred. 8 Western Res. Bank v. McIntire, Barnes v. Arnold, 51 N. Y. Supp. 40 Ohio St. 528. 1109. A by-law that requires the consent of the directors to a transfer of the stock is void. McNulta v. Corn Belt Bank, 164 Ill. 427.

1 See 2 Cook on Corp., sec. 492 et seq.; 1 Thompson on Corp., secs. 66105; 4 Thompson on Corp., sec. 5380. See also Wheeler v. Frontier Bank, 23 Me. 308; In re Reciprocity Bank, 22 N. Y. 9; In re Oliver Lee Bank, 21 N. Y. 9. Compare United States Trust Co. v. Fire Ins. Co., 18 N. Y. 199; Lowry v. Inman, 46 N. Y. 119; Marr v. Bank, 4 Lea, 578; Owen v. Purdy, 12 Ohio St. 73; Sherman v. Smith, 1 Black, 587. A charter was altered to impose a stockholder's liability. Hirshfield 9 Wend. 351.

2 One case holds squarely that a bank is a corporation charged with public duties (Mechanics' Bank v. Debolt, 1 Ohio St. 591; reversed, 18 How. 380); but it can choose its de positors (Thacher v. State Bank, 5 Sandf. 121), and its charter is a contract. See Planters' Bank v. Sharp, 6 How. 301; Claghorn v. Cullen, 13 Pa. 133; People v. Manhattan Co.,

tions. But certain implied limitations arise from the charter or general law. A national bank which is forbidden by law from loaning on the security of its own shares cannot create a lien in its own favor upon the shares of its stockholders. The same rule applies to state banks similarly restricted. The passage of such a law repeals a by-law creating the lien, although the by-law was legal when made. The rules governing the relations of depositors to a savings bank as affected by the by-laws of the bank will be found discussed under a later chapter on Savings Banks.5

§ 23. Proof of corporate existence.- The corporate existence may come directly in question or indirectly. It comes directly in question when a suit is brought by the state to forfeit the charter. In such case, nothing being presumed against the state, the proof of the performance of every act required, whether by the special charter or general law, must be strictly made. None of the decisions which follow applies to such a case. But when the due incorporation of a bank comes collaterally in question a very different rule applies. As to a shareholder or officer of the corporation, or as to any one who has contracted with the corporation as such, the fact of due incorporation is conclusively presumed. Even in a criminal case the defendant could not urge the non-existence of the bank, where he had performed acts as president thereof. When collaterally attacked the existence of the corporation may be proved in favor of the corporation by the certificate of proper authority, and this certificate is conclusive. It may also be proved

1 See 1 Thompson on Corp., secs. 935-1053.

2 Bullard v. Bank, 18 Wall. 589, overruling a number of cases. See $54, post.

1 Casey v. Galli, 94 U. S. 673, citing a number of cases. Indiana permits a bill in equity by a stockholder against the corporation, in order to test the due incorporation.

3 Nicollet Nat. Bank v. City Bank, Albert v. State, 65 Ind. 413.

38 Minn. 85.

2 In re Van Campen, 2 Ben. 419;

4 See Nicollet Nat. Bank v. City Fed. Cas. No. 16,835. Bank, supra.

5 See § 234, post.

3 Casey v. Galli, 94 U. S. 673;. Keyser v. Hitz, 2 Mackey, 473;

either by the special charter or a general law authorizing the incorporation with proof of user under the charter.' Even if the charter is conditional, the proof of user is sufficient proof of the performance of the condition. If a double certificate is required, for instance, one by the county clerk and another by the secretary of state, proof of the first certificate with evidence of the transaction of business as a corporation is sufficient." Parol proof that the bank was actually in existence by doing acts of business, or was generally reputed to be a bank, has been held sufficient proof in favor of the bank. Where proof of due incorporation is made by a grant of a charter, it is not necessary to show that the bank commenced business. But it may be that the general law or the charter forbids the doing of business by the bank until some certain act or acts have been done. If proof were offered that such an act had not been performed, where the objection is made by a third party as against the bank, it would seem that the person who had contracted with the bank, or a shareholder or officer who had acted in the corporation, would nevertheless be held responsible to the association.10 But if the objection be made by the corporation

Thacker v. West River Bank, 19 Mich. 196. It seems to be intimated that if proof were made that the law did not authorize the granting of the certificate in such a case, the proof would not be sufficient, in Agnew v. Bank of Gettysburg, 2 Har. & G.478. On principle the certificate would be sufficient, even if obtained by fraud.

Henderson v. Union Bank, 6 Smedes & M. 314; Farmers', etc. Bank v. Jenks, 7 Met. (Mass.) 592; Bank of Manchester v. Allen, 11 Vt. 302.

5 Williams v. Union Bank, 21 Tenn. 339.

7 Way v. Butterworth, 106 Mass. 75; Farmers', etc. Bank v. Williamson, 61 Mo. 259; Yakima Nat. Bank v. Knipe, 6 Wash. 348.

8 State v. Fitzsimmons, 30 Mo. 236. Under a statute see the same case and Jennings v. People, 8 Mich. 81. Proof is sometimes dispensed with by statute, unless the incorporation be denied under oath. It seems that a different rule than that stated in the text was laid down in United States Bank v. Stearns, 15 Wend. 314, as to the United States Bank.

9 People v. Peabody, 25 Wend. 472. 10 Berkshire v. Evans, 4 Leigh, 223.

6 Leonardsville Bank v. Willard, And see § 32, post. 25 N. Y. 574.

as against a third party, there is some confusion in the decisions. In the case of national banks it is settled that the proof would be good." This subject is, however, more properly a part of the discussion upon Unauthorized Banking.12

§ 24. Power under charters as to branches. If the law or the charter of a bank prohibits the establishment of branches, it of course cannot do so; but if the law of the state prohibits branches of a bank, whether of the state or a foreign bank, and the penalty provided is a forfeiture of the charter, it is inoperative as to foreign banks.1 If private banking is permitted, there is no reason, in the absence of legal prohibition, why a private bank should not have branches; but a corporation has only the powers granted it, and it cannot establish branches unless the power to do so is granted to it. If the law permits it and branches are established, whether the branch bank is a separate or the same corporation depends wholly upon the effect to be given to the provisions of the statute. A bank may do business anywhere unless prohibited, but it cannot change its place of location."

25. Conflict of national and state laws.- A corporation chartered as a bank by the national government cannot be controlled in any way by state laws in the exercise of the rights granted by congress. It is wholly exempt from

11 McCormick v. Market Nat. Bank 165 U. S. 538; but in this case there was no proof of user or of doing business beyond the contract sued

upon.

12 See § 33, post.

234; Trezevant v. Bank of Tennessee, 1 Rob. (La.) 465; Branch Bank v. Rhew, 37 Miss. 110; Bank v. Smith, 33 Mo. 364; Merchants' Bank v. Farmer, 43 Mo. 214; Bank v. Goddard, 5 Mason, 366; Fed. Cas.

1 Bowman v. Cecil Bank, 3 Grant No. 917; Mason v. Farmers' Bank,

Cas. 33.

2 People v. Oakland Co. Bank, 1 Doug. 282. See Atterbury v. Knox, 4 B. Mon. 90.

3 State v. Ashley, 1 Ark. 513; Elliot v. Branch Bank, 4 Ark. 424; Bower v. State, 5 Ark. 234; Farmers' Bank v. Calk, 4 Ky. Law R. 617; Union Bank v. Denere, 17 La.

12 Leigh, 84.

4 Bank of Augusta v. Earle, 13 Pet. 588.

5 Ex parte Schollenberger, 96 U.S. 369. A state statute as to service upon foreign corporations gives the same right of service to United States courts.

1 Farmers' Nat. Bank v. Dearing,