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the expressed provisions of law, and the charter, together with such implied and incidental powers as are necessary to carry out the purposes of the corporation.

"The best settled conclusion of judicial opinion in this country is that they are general agents" of the corporation.1

§ 81. Directors' meetings.

After the directors have qualified, where the laws require such qualification, they are then authorized to carry into effect their duties and powers and the purposes of the corporation. Their meetings, if the time and place are provided for in the charter, must be held at such time and place.

If the charter does not provide for the time and place of meeting, the statute of the State generally designates the manner of calling meetings.

In the absence of a statute, charter, or by-law, providing the time and place of holding directors' meetings, they may be held without the limits of such State if desired.2

§ 82. Place of meeting and notice.

When by-laws have been adopted by the bank providing how, when, and where meetings shall be held, a meeting held by the directors, at a time and place in contravention of the by-laws, is illegal.

Notice.

In the absence of a by-law, a personal notice of the meeting should be given to each member of the board. Personal notice may be waived.3

Where the statute or by-laws prescribe the mode or manner of notice, a failure to give such notice renders the meeting illegal.

It has been held, however, in the case of American Ex. Nat. Bank v. First Nat. Bank, 82 Fed. Rep. 961, that if the directors of the bank have long pursued an established custom of holding meetings and transacting business at the bank, during business

161 Pa. St. 202, 48 Vt. 266, 86 Ill. 220; 24 Conn. 591.

2 Thompson v. Co., 58 Miss. 423; Lead Co. r. Reinhard, 114 Mo. 218, 21 S. W. 488; Bassett v. Mining Co.,

15 Nev. 283; Hanna v. Co., 23 Ohio St. 622.

3 Bank r. McCarthy, 55 Ark. 473, 18 S. W. 759; B. B. R. Co. v. Buck, 68 Me. 81; Library v. Association, 173 Pa. St. 30.

hours, whenever a sufficient number were present, the custom would carry with it a standing notice to each director; and enable those present to proceed in the absence of a controlling by-law or statute. The notice is not waived except in the absence of a controlling by-law or the statute.

§ 83. Number necessary to constitute a quorum.

A majority of the board of directors in all the States, possibly with the exception of the State of Oregon, is necessary to constitute a quorum for the transaction of business. The general rule is, that a majority of the quorum has the power to bind the corporation.*

Where the statute fixes the number necessary to transact business, any action taken by a less number will be illegal

§ 84. Directors of national banks must act as a unit.

The court in the case of National Bank v. Drake, 35 Kans. 564, in the discussion of the question as to the power conferred upon the directors acting for a national bank, says: "The only powers conferred by statute upon the directors of a national bank are vested in them as a board, and when acting as a unit, and therefore the majority of the individual members of the board acting separately and singly is not the assent of the bank, and is not binding upon it."

§ 85. Board electing officers of bank.

The board of directors is generally empowered by law, and it becomes its duty to elect the officers of the corporation, and employ clerks, and agents of the corporation, fixing their salaries or compensation.

If the statute or charter does not authorize the board of directors to choose or elect the officers, the power lies and is vested in the stockholders.5

§ 86. Vacancies in the board.

Where the statute does not expressly provide otherwise, the law implies that a director may hold his office after the term.

4 Ten Eyck v. Pontiac, etc., Co., 74 Mich. 226, 41 N. W. 905; Hoyt v. Thompson, Executor, 19 N. Y. 207.

5 Beardsley r. Johnson, 121 N. Y. 224, 24 N. E. 380; Rẻ A. A. G. Iron Co., 63 N. J. Law 168-357, 41 Atl. 931.

for which he was elected, and until the election and qualification of his successor.

Where vacancies occur in the board, they must be filled as provided for by the statute. In the absence of a charter or statutory provision or a by-law, especially giving the power to the board to fill a vacancy, it can be filled only by the stockholders.

87. Duties which cannot be delegated.

A duty imposed upon the board of directors by the statute to be personally performed cannot be delegated to a committee or agent of the bank."

They may delegate certain powers by the enactment of a by-law or a resolution, and confer thereby executive authority to a committee or an agent; but where the statute or charter of the corporation specifically defines an act or duty to be performed by the directors, they have no power to set aside the law, and appoint agents to do the very things which the law requires them personally to perform.

The general and well established rule is, that all corporate contracts are to be made by the directors.

The directors of a corporation are its chosen representatives, and as such they constitute the corporation, to all purposes of dealing with others. What they do within the scope of the objects and purposes of the corporation, the corporation does." §88. Cannot delegate authority to make discounts.

They cannot delegate, to an officer of the bank, the authority to make discounts, generally; that is, give unlimited power to an officer to loan the funds of the bank to any person or persons who might make application therefor.

It may be stated, that this inalienable duty, which is vested in the board of directors, and which neither by a by-law nor resolution, can be generally delegated to another, is a duty which is more frequently neglected by the board of directors than any other duty imposed by law upon them personally to perform.

The board of directors themselves are frequently ignorant of the law, and their duty in this respect; and just as frequently, the manager or cashier of a bank assumes that the

6 Lyons r. Jerome, 26 Wend. (N. Y.) 484.

7 Maynard . Firemans' Fund & Ins. Co., 34 Cal. 48.

right to make loans and discounts for the bank is an implied authority, and the power vests in him as a matter of custom or right.

Following the general rule, that all corporation contracts are to be made by the board of directors, every borrower of the bank's funds who enters into a written promise to pay the bank a sum of money loaned by it to him, has a contract which must be authorized, or ratified by the board of directors.

Upon examination of the principle, and reasons for the rule, it is found to be a safe and sensible law.

The directors are held by a majority of the courts, at the present time, to be the trustees of the funds and property of the banking corporation; and such funds cannot be loaned nor invested without authority emanating from the board of trustees, who are held responsible for them.

The loans and discounts may be authorized, and the executive part of the business performed by the cashier, president, or other agent of the bank; but the officer has no inherent authority in the absence of a resolution or direction coming from the board of directors, to make loans to any person or persons.

In New York in the case of Bank Commissioner v. Bank of Buffalo, 6 Paige Chancery (N. Y.) 497, it is held, that where the board of directors authorized their cashier or president, or any other officer of the bank, to make loans and discounts. in his discretion, without having the same passed upon formerly at a meeting of the board, the corporation is liable for a violation of its charter.

The directors may, by a single resolution, authorize the cashier to make loans to a certain person, firm or corporation. up to a certain amount, and in this manner delegate their authority; but beyond this it has been held, that a general resolution passed by the board of directors, authorizing the cashier to discount notes and make loans generally, to those making application, and desiring to borrow, is not within their power or authority.

If loans have been made by an officer of the bank without authority obtained from the board of directors, they may afterward be ratified by the board, and such ratification legalizes the act.

Discounting notes is the principal business of a bank; its resources almost entirely consists of its bills receivable. The deposits of the bank are placed with the bank by the depositors upon an implied theory, that when invested or loaned, they are to be loaned and invested by the trustees or directors with reasonable care and diligence. And the making of the investments for the bank is a duty and an inalienable function belonging to the board of directors.

&

§ 89. Cannot delegate statutory duties.

The directors cannot delegate any statutory duties imposed upon them by the law to perform. Where they are required to make a report to an officer of the State at periods named by the statutes, as to the condition of the affairs of the bank, and are required to prepare a statement of its condition, they cannot delegate the authority and substitute a statement made. by the officers of the bank; and where such a statement is required of them, they must make an examination into the affairs and conditions of the bank, and upon the examination base their statement and report.

Where they are required by law to make a report of the condition and affairs of the bank to an officer of the State, or for publication, and they fail to inform themselves of the condition of the bank, and make a report which is false, they are held personally liable to the stockholders and creditors of the bank.

§ 90. Powers and limitations.

Power to sell property of bank.

The power to sell the property both real and personal of the corporation, when not expressly vested in the stockholders by the statute, is one which the directors alone can carry into effect. This is done by a resolution duly passed at a meeting called for that purpose, or at a regular meeting when a sale of the property of the corporation may be authorized.

It

The resolution of authority should describe the property to be sold, and the consideration to be received by the bank. should also direct that the president and secretary of the corporation, in the name of the corporation, be authorized to execute the conveyance. The conveyance should show when

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