directors have certain powers resulting from their act of incorporation, and are, for certain purposes, agents, and their acts, when in strict relation to their agency, are binding on the corporation.' See also Stewart v. Huntington Bank, 11 Serg. & Rawle, 267, 269, and Hayward v. The Pilgrim Society, 21 Pick. 270. These cases show, what is indeed quite plain, that the acts of a director or other officer of a corporation, unless official, or in respect to his agency, are no more operative as against the institution than the acts of any ordinary corporator; and these no more so than the acts of a stranger.

"In the case at bar, the learned judge held that proof of publishing the notice, and actual knowledge in the director whose duty, as one of the board, it was to pass on the discount and renewal of notes, and who was therefore to be regarded as the agent of the plaintiffs, was sufficient proof of their knowledge. In this we think he erred. The board were the agents for the purposes mentioned, and they should acquire this sort of knowledge as such, or at least the firm should show notice brought home to some other agent specially authorized by the bank, or by the course of their business, to receive it."

In the case of Fairfield Savings Bank v. Chase, 72 Me. 226, it is held that a notice to a bank director, or trustee, or knowledge obtained by him, while not engaged either officially, or as an agent or attorney in the business of the bank, is inoperative as a notice to the bank. The rule, as laid down in this case, is stated as follows:

"A single trustee or director has no power to act for the institution that creates his office, except in conjunction with others. It is the board of directors only that can act. If the board of directors or trustees makes a director or any person, its officer or agent, to act for it, then such officer or agent has the same power to act, within the authority delegated to him, that the board itself has. His authority is, in such case, the authority of the board. Notice to such officer or agent, or attorney, who is at the time acting for the corporation in the matter in question, and within the range of his authority or supervision, is notice to the corporation."

In California, in the case of Balfour v. Fresno Canal Co., 123 Cal. 395, the rule is laid down as follows:

"A corporation must be presumed to have full notice of all

the facts which are known to its president affecting its interest. It is his duty, as the head of the corporation, to report the same to the trustees, and it is usually conclusively presumed that he has done so."

The court says: "The president of a corporation is the proper person to whom notice which is to affect a corporation. is to be given. The corporation has no ears, eyes, nor understanding, save through its agents. The president is considered the head of the corporation, and it is his duty to report to the trustees information affecting the interest of the corporation. And the presumption is that he does so. Usually this is a

conclusive presumption."

The question is again discussed by the court in California, in the case of McDonald v. Randall, 139 Cal. 246.

The case was tried on an appeal from the Superior Court of Humboldt county. The lower court found the following facts: "That the said Randall Banking Company purchased said note and mortgage in good faith and in the ordinary course of business, and for value before its maturity and in ignorance of the fact that as to Margaret H. McDonald it was given without consideration, or for a debt, which was barred by the Statute of Limitation.”

The Supreme Court in its opinion says:

"This finding, if sustained by the evidence, is determinative of the case against the appellants. It is contended, however, that this finding must be held to be unwarranted, because it appears, and the court found, that Randall was the president of the bank and knew of the consideration of the note. But when he procured the bank to take the note as part payment of his indebtedness, he was acting individually and at arm's length to the bank, and his knowledge was not the knowledge of the bank. The same may be said of the former secretary, Murray, who was absent when the bank acted in the matter of accepting the note and mortgage, and who obtained his knowledge while acting for Randall individually; and also of Roberts, who was elected secretary on the day the bank acted, and who presented the note and mortgage to the bank for and as agent of Randall. The note and mortgage were accepted at a meeting of the board of directors of the bank, at which were presentHill, the vice-president, and four of the other directors, Ran

dall not being present. Neither Hill nor any other of the directors knew that the consideration of the note was an outlawed indebtedness. The fact that some of them knew, or should be held to have known, that shortly before the making of the note and mortgage the property covered by the mortgage had been conveyed to the plaintiff by her husband-it formerly having been community property- and that the conveyance had been recorded, is of no significance. The validity of the transaction here involved was in no way dependent upon the time at which she acquired title to the mortgaged premises. That a corporation is not chargeable with the knowledge of one of its officers or agents who is acting on his own behalf, and not for the corporation, is beyond question the law. Sufficient authorities are cited to the point in Bank v. Burgwyn, 110 N. C. 267. It is there said, among other things: In such transactions the attitude of the agent is one of hostility to the principal. He is dealing at arms length, and it would be absurd to suppose that he would communicate to the principal any facts within his private knowledge affecting the subject of his dealing, unless it would be his duty to do so, if he were wholly unconnected with the principal. As was said by the court in Wickersham v. Chicago Zine Co., 18 Kan. 481, Neither the acts nor knowledge of an officer of a corporation will bind it in a matter in which the officer acts for himself and deals with the corporation as if he had no official relations with it; or, as was said in Barnes v. Trenton Gas Light Co., 27 N. J. Eq. 33, 'His interest is opposed to that of the corporation, and the presumption is, not that he will communicate his knowledge of any secret infirmity of the title to the corporation, but that he will conceal it.'

"We are of the opinion that the finding above discussed cannot here be disturbed; and therefore it is unnecessary to consider any other point argued by respondents."

In Illinois, in the case of First Nat. Bank of Monmouth v. Dunbar, 118 Ill. 625, it is held that where a cashier purchases bonds for a customer of the bank, and receives the bond on special deposit, he acts as agent of the bank. And if, to hide an embezzlement, he takes such bonds from the special deposit, and places them among the assets of the bank, his knowledge is the knowledge of the bank, and the bank cannot acquire a

legal title to the bonds without the knowledge or consent of the true owner.

The rule is again stated, as follows:

"Notice to an agent of a bank, or other corporation, entrusted to the management of its business, or of a particular branch of its business, is notice to the corporation, in transactions conducted by such agent acting for the corporation within the scope of his authority, whether the knowledge of such agent was acquired in the course of the particular dealing or on some prior occasion." 25

In Mississippi, notice to a bank clerk of matters not under his charge is not notice to the bank.26

Notice to a cashier that bank funds have been loaned is notice to the bank.27

In Massachusetts it is held that the cashier's knowledge of fraud in a note is notice to the bank.28

It is held in the case of Seneca Co. Bank v. Neass, 5 Denio, 329, that knowledge obtained by the cashier outside of his duties is not notice to the bank.

In the case of National Security Bank v. Cushman, 121 Mass. 490, the court holds, that when a director of a bank, who acts for the bank in discounting a note, has knowledge that the note was procured by fraud, the bank is affected with the knowledge. A bank is bound to take notice of a power of attorney given by a third person to its president.29

§ 109. Director must have actual knowledge.

In the case of Mann v. Sec. Nat. Bank of Springfield, 34 Kan. 746, it is held, that:

"A corporation should be held to have constructive notice of only such facts as have been brought to the actual notice or attention of some one of its officers or agents, or of such facts only as have been constructively brought to the notice or attention of some one of its officers or agents by the actual notice of such other facts as would naturally put the officer or

25 Cragie v. Hadley, 99 N. Y. 131; Smith v. Board et al. Co., 38 Conn. 208.

26 Goodloe v. Godley, 21 Miss. 233. 27 New Hope, etc., Co. v. Phoenix Bank, 3 N. Y. 156.

28 Fall, etc., Bank v. Sturtevant, 66 Mass. 372.

29 Mechanics Bank r. Schaumberg, 38 Mo. 228.

agent upon inquiry; and therefore, held, where none of the officers or agents of a bank had any actual notice of any infirmity of a note purchased by the bank but one of the directors who was also a member of the discount committee of the bank was the president and general manager of another corporation, one of whose agents, not the president and general manager, had actual notice of an infirmity of the note, such as would require the agent's own corporation to take constructive notice of such infirmity, the bank may nevertheless be considered as an innocent purchaser of the note without notice of any infirmity affecting it, notwithstanding the fact that the other corporation had constructive notice through its agent of such infirmity."

A bank is not chargeable with the knowledge which a director has acquired, in his individual capacity, as to paper offered for discount, and which he does not disclose. And where as a director he does not discount the paper himself, as an officer or agent of the bank.30

§ 110. When director is chargeable with knowledge as against himself.

"Knowledge of the corporate officer or agent will not be imputed to the corporation where the fact is one which the officer or agent is interested in concealing from it, except in cases where a contrary rule is necessary to save the rights of innocent third persons." " 31

§ 111. Directors' liability.

The well known and established rule of law is, that the directors must manage the business of the bank, as directed by the law and the bank's charter. And if they fail to perform their duty in good faith, they will be held liable for the losses to the stockholders and creditors.32

They are liable where they fail to use ordinary care in the inspection of the books of the bank.

The directors may commit the ministerial work of the bank to officers duly authorized to perform the same, but this does

30 49 Mich. 384.

31 Cyclopedia of Law & Procedure, vol. 10, p. 1064.

32 Solomon v. Bates, 118 N. C. 311, 24 N. E. 478; Bank of St. Mary's v. St. John's, 25 Ala. 566.