them." If the notes are alleged to be destroyed it is doubtful whether such a description would be sufficient.18 Certainly in proof the contents should be proven by something more than the aggregate amount.19 Since the liability of the stockholders or directors, as engaged in the corporation, arises from the charter, it must be proven,20 unless the court takes judicial notice of the existence of the charter." It is not a matter of defense against note-holders, either in pleading or proof, that the organization was not properly made by paying the capital stock in full, either on behalf of the bank or its stockholders.22 It has been said that if the noteholder took the notes with the agreement that they were not to be put into circulation, he cannot hold the stockholders,23 but this conclusion is very properly denied.24

17 Irwin v. Humph. 145.

Planters' Bank, 1 court say the corporation's exist ence was not proven.

18 The record would fail to show what notes were recovered upon. 19 Bank of Mobile v. Meagher, 33 Ala. 622. Circumstantial evidence of loss was held insufficient. Tower v. Appleton Bank, 85 Mass. 387. Under such circumstances indemnity will not be permitted. See last case.

20 Gardner v. Post, 43 Pa. 19. The

21 This must be the case wherever the liability is created by statute, unless the court in the particular jurisdiction refuses to take judicial notice of a private act.

22 Johnston v. Southwestern Bank, 3 Strob. Eq. 263.

23 Johnston v. Southwestern Bank, supra.

24 Grew v. Breed, 10 Met. 569.

CHAPTER XII.

DISSOLUTION AND INSOLVENCY.

§ 317. Surrender of charter. The charter having been granted by the state, it may be surrendered with the consent of the state,' but not without it. This consent may be given by a special act3 or in accordance with a general law." The state may accept the surrender, but continue the corporation for a time for the purpose of settling its affairs," and during such time a cashier may be appointed and a commissioner for winding up its affairs may sue in the name of the corporation. The appointment of a receiver or of trustees does not dissolve the corporation.8 It may appoint officers, sue 1o and be sued." The corporation does

10

1 Savage v. Walshe, 26 Ala. 619. There is often a general statute in accordance with which the bank may dissolve even by action of the directors. People v. Olmstead, 45 Barb. 644. Under the national bank act the two-thirds majority of the stockholders can dissolve against the wishes of the minority. Watkins v. National Bank, 51 Kan. 254.

2 Mechanics' Bank v. Heard, 37 Ga. 401.

3 Many instances will be noticed in cases cited in this section.

4 See note 1, supra.

5 Cooper v. Curtis, 30 Me. 488. This is absolutely necessary to prevent the destruction of the rights of the corporation.

6 Cooper v. Curtis, supra. Commercial Bank v. Villavoso,

6 La. Ann. 542.

8 Merchants' Nat. Bank v. Gaslin,

41 Minn. 552; Central Bank v. Connecticut Mut. Life Ins. Co., 104 U. S. 54; Ahrens v. State Bank, 3 S. C. 401. A bank is not dissolved although it has gone into voluntary liquidation, has transferred all its assets to another bank, which assumed its debts, and has given up its organization and its business. Pritchard v. First Nat. Bank, 76 N. W. R. 1106.

9 Richards v. Attleborough Bank, 148 Mass. 187.

10 See cases cited in note 8, supra. 11 Merchants' Nat. Bank v. Masonic Hall, 65 Ga. 603. But if a receiver is appointed in Maine it is provided that the bank cannot be sued. Leathers v. Shipbuilders' Bank, 40 Me. 386. But the bank may sue. American Bank v. Cooper, 54 Me. 438. As to national banks, see § 334, post.

not cease to exist except by decree of dissolution,12 or a statute having such effect,13 or by expiration of the charter.14 After such a dissolution the corporation ceases to exist; a judgment against it is void; 15 any action taken in its name is nugatory, in the absence of a statute providing a different rule.

16

3

§ 318. Reorganization and consolidation. A reorganization of a bank or consolidation of banks can take place only under statutory authority. The national bank act permits the reorganization of a state bank into a national bank.1 The new national bank is the same corporation under another name. The new bank may sue on a claim or prosecute an appeal of the old bank. The national bank is liable for all the liabilities of the state bank out of which it was reorganized. There is no closing of the business of a state bank under such a reorganization, so as to release it under a statute on bills not presented within six years." But the corporate existence of a former state bank ceases on the expiration of three years from its reorganization, its existence as a national bank having also expired. The liability on a continuing guaranty continues in favor of the new na

12 National Bank v. Onondaga Co. Bank, 7 Hun, 549.

13 Even where the statute dissolves the corporation the affairs thereof must be wound up under the direction of a court unless the act lodges that duty in certain per

sons.

14 This, of course, ends the corporate existence, unless it be continued for certain purposes.

15 Hayden v. Bank of Syracuse, 15 N. Y. Supp. 48; Hodgson v. McKinstrey, 3 Kan. App. 412. But there was no dissolution in this

case.

2 Coffey v. National Bank, 46 Mo. 140.

3 Atlantic Nat. Bank v. Harris, 118 Mass. 147; Claflin v. Farmers' Bank, 54 Barb. 228.

4 Kelsey v. National Bank, 69 Pa. 426.

5 Metropolitan Nat. Bank v. Claggett. 141 U. S. 520, 125 N. Y. 729. It is not a payment for its stock. Maynard v. Mechanics' Nat. Bank, 1 Brewst. 483.

6 Hayden v. Bank of Syracuse, 15 N. Y. Supp. 48. See § 20, ante. But under 22 Stat. 167, § 7, a national bank does not cease to be able to sue

16 Bank of U. S. v. McLaughlin, 2 and to be suable until its affairs

Cranch, C. C. 20.

1 See § 20, ante.

are settled. Farmers' Nat. Bank v. Backus, 77 N. W. R. 142 (Minn.).

tional bank. The new bank is liable for the costs of a scire facias, although it was properly issued on a judgment in favor of the old bank in the name of that bank. But rights of the state over the bank, such as to require a payment of a bonus upon its business, cease upon reorganization." When a national bank is reorganized into a state bank, all property rights of the national bank pass to the new state bank,10 and when one national bank is reorganized into another national bank it is liable for deposits in the old bank," and special deposits of bonds recognized by the payment of interest on the bonds by the bank become special deposits in the new bank.12 In case of such a change, where the affairs of the former bank were liquidated, and all but one stockholder has taken part in the organization of the new bank, the omitted stockholder having accepted dividends from assets of the old bank cannot claim to be a stockholder in the new one. Similarly where a state savings association is reorganized into another state bank, those depositors who took stock in the new bank for their deposits and participated in the new bank are estopped from saying that their subscription to the stock of the new bank was conditional upon all the depositors taking stock in the new bank for their deposits. A defect in the reorganization under a new charter cannot be set up by a debtor to the old bank against his liability. If the reorganization consists in a liquidation of

15

7 City Bank v. Philips, 86 N. Y. 484.

8 Thomas v. Farmers' Bank, 46 Md. 43.

9 State v. National Bank, 33 Md. 75. The conversion of state into national banks was strongly opposed because the state derived a large benefit in some instances from those banks. Until the national banking law was supplemented by the state bank tax, there was little success in the national banking act. 10 First Comm. Bank v. Talbert, 103 Mich. 625.

11 Eaves v. Exchange Bank, 79 Mo. 182.

12 First Nat. Bank v. Strang, 28 Ill. App. 325.

13 First Nat. Bank v. Marshall, 26 Ill. App. 440.

14 Dallemand v. Odd Fellows' Sav. Bank, 74 Cal. 598.

15 Spahr v. Farmers' Bank, 94 Pa. 434. This was a case of an original usurious note taken up by renewals, which passed to the new bank. The indorser was not permitted to plead the usury of the old against the new bank.

16

the affairs of the old bank, even though the new bank with the same name as the old, and with generally the same stockholders, receives bills of the old bank and pays them out, the new bank does not become responsible for all the bills of the old bank, but simply those very notes which were received." A depositor in the old bank does not release it, unless he consents to the change.18 Nor does a corporation formed by the consolidation of a bank with another corporation, where trustees are appointed to wind up the affairs of the bank, become liable by the act of consolidation for the debts of the bank without some express assumption of the debts.19

§ 319. Forfeiture of charter.-The state has the right to forfeit a charter either for failure to observe the law in forming the corporation or for acts done in violation of law after the corporation is formed; thus, a failure to pay in the capital stock as required by law,' or any other failure to observe the provisions of the law governing the formation of the corporation. But the commoner grounds of forfeiture are those based upon acts done by the corporation after the formation thereof. But the act must be the act of the corporation. The unauthorized act of the cashier is no ground

16 Bellows v. Hallowell Bank, 2 Mason, 31.

17 Wyman v. Hallowell Bank, 14 Mass. 62. It is needless to say that these last two cases were not cases of a transformation of one bank into another bank. The change from one bank to another does not release the old corporation unless the creditor consents. Ray v. Bank of Kentucky, 10 Bush, 344.

18 See the last note.

19 Donally v. Hearndon, 41 W. Va. 519. If the statute or agreement imposes a liability on the new corporation, the rule is just the opposite. So it is if the new corporation receives assets of the old corpora

tion without paying value therefor.

1 People v. City Bank, 7 Colo. 226; People v. Nat. Sav. Bank, 129 Ill. 618. Compare Commercial Bank v. State, 6 Smedes & M. 599, which held that a failure to sell stock on account of non-payment of an instalment thereon was not a ground of forfeiture. Chief Justice Sharkey found himself in such an astonishing state of mental fog that he held that the state by suing the corporation in quo warranto for a forfeiture admitted the due and regular incorporation of the bank. This error was not indorsed by the other judges.