guardians, or trustees, shall not be personally subject to any liabilities as stockholders; but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward, or person interested in such trust-funds would be, if living and competent to act and hold the stock in his own name."

Where the widow of a deceased stockholder of an insolvent national bank, by authority of the will, undertook to settle the estate as executrix without judicial proceedings, but failed to transfer such stock to herself or other person, cannot on the ground that the estate is settled, escape liability as executrix for assessments on such stock to the extent of assets of the estate under her control.52

In the case of Lucas v. Coe, 86 Fed Rep. 972, it is held that "A trustce though not appointed by will or an order of the court, or judge, is not personally liable for assessment against stock of an insolvent national bank owned by the cestui que trust, but standing in his name where he has been guilty of no frand, concealment or negligence.

"In fixing the liability for assessment against stock of an insolvent national bank, the effort of the court should be to ascertain who is the actual owner and to hold him, releasing the apparent owner if he has done nothing to deceive or mislead."

Another question not determined by the court, but very strongly leading in that direction is, that proof may be presented to show who is the real owner of the stock.**

§ 74. Individual liability of a stockholder in national bank, how enforced.

When the individual liability of the stockholder is to be enforced, the receiver before beginning suit must have authority from the Comptroller of the Currency. It is held that a letter from the Comptroller of the Currency directing the receiver to institute suit is sufficient evidence if not objected to, that the Comptroller has decided to enforce the individual liability of the stockholder.55

53 Baker . Beach, 85 Fed. Rep. 836.

54 Lucas v. Coe, 86 Fed. Rep. 972.

$5 Bowden v. Johnson, 107 U. S. 251.

§ 75. Creditor may sue stockholder of state bank corporations. A judgment creditor who has exhausted his legal remedies against a corporation in California may maintain an action against its stockholders to recover for the benefit of all the creditors who may desire to come in, and be made party, and collect the amount due upon unpaid subscriptions for stock when the corporation neglects or refuses to collect the same."

In Indiana the assignee of an insolvent bank cannot maintain an action to enforce the double liability of shareholders, provided by section 2933 Burns Revised Statutes, 1894 (2684 Revised Statutes 1881). Such action being enforceable only by the creditors.57

§ 76. Enforcement of individual liability of shareholders under the National Banking Act.

By an act approved June 30, 1876, section 2, it is provided: "That when any national banking association shall have gone into liquidation under the provisions of section five thousand two hundred and twenty of said statutes, the individual liability of the shareholders provided for by section fifty-one hundred and fifty-one of said statutes may be enforced by any creditor of such association, by bill in equity in the nature of a creditor's bill, brought by such ereditor on behalf of himself and of all other creditors of the association, against the shareholders thereof, in any court of the United States having original jurisdiction in equity for the district in which such association may have been located or established."

§ 77. When right of action accrues against stockholder in national bank.

A right of action does not accrue against the stockholder. holding stock in a national bank until the Comptroller of the Currency has determined that it is necessary to enforce the individual liability.

And the liability of the stockholder can be enforced only in favor of all the creditors.58

The Statute of Limitations of a State cannot be pleaded as a bar to an action brought by a receiver of a failed national bank against a stockholder.

56 Baines v. Babcock, 95 Cal. 581. 57 Runner, Assignee, r. Dwiggins, 147 Ind. 238.

58 Gatch . Fitch, 34 Fed. Rep. 566.

CHAPTER VIII.

BANK OFFICERS AND AGENTS.

§ 78. Directors - general discussion of duties and responsibilities.

The corporate powers, business and property of all corporations formed must be exercised, conducted and controlled by a board of directors.

The office of director is one of the most important connected with a banking corporation. Directors have the general control and government of all its affairs. They are the lawful representatives holding by law the management and direction of all acts affecting the welfare and prosperity of the corporation. The life of the corporation and its business cannot exist or be conducted without a board of directors. They are delegated with certain powers and duties by law which cannot. be transferred or conferred upon agents. A director cannot delegate a responsibility which the statute imposes upon him to specially and personally perform. But for the purpose of carrying into execution the usefulness and management of its details in business many of the powers conferred upon the corporation bank may be delegated to agents created by the board of directors. And while this is true, and although they may not be required to perform all the transactions which daily occur, they are bound to know all that is done beyond. the merest matter of daily routine.

They are the officers delegated by law with the power to restrain, rule, govern, direct, check, curb, overpower and counteract any and all things affecting the corporation. They cannot pass by-laws, or resolutions, relieving themselves of responsibility, or liability, which the law imposes upon them. Being in control of the powers, business and property, all acts however performed by agents of their creation may become their acts. Agents may exceed their authority or violate the same in such a manner that the directors and the corporation may be excused; but the general principle of law is, that the acts of the agents are the acts of the principal.

The office of a director is one of the most important connected with a banking corporation; but the duties, as a rule, are looked upon as unimportant, and in many cases the neglect of the directors in the performance of their duties brings disaster to the bank.

The failure of directors to perform their duty in the supervision and management of banks has been the direct cause for the arrest, trial and imprisonment of officers for offences committed in their official capacity, which could have been obviated had the directors asserted their power and fully performed such duty.

The duty of a director begins with his election and continues for one year, or until his successor is duly elected and qualified. The faithful execution and performance of all the obligations and requirements of law are so frequently neglected, that to occupy the position of director is one which the occupant himself regards as merely figurative. But such is not the case.

The officers of a bank cannot divest the directors of any power imposed upon them by law. They cannot sell any of the property or real estate of the bank unless duly authorized to do so by resolution of the board of directors. And the instrument of conveyance is not sufficient to pass the title to the property, unless it sets out the fact that it was ordered to be executed by resolution, duly passed by the board of directors.

It has been held that directors have no authority, directly or indirectly, to use any of the funds, or property of the bank, for purposes other than those properly belonging to the legitimate business of banking. They can make no gifts of the corporate property, unless duly authorized by all the stockholders.

No appropriation in any manner of the funds or property of the bank can be made by them, unless it is clearly beneficial and for the material well-being of the bank. They are the guardians of the stockholder, and in reference to the property of the bank are the trustees. If they accept the trust, it is implied that they will use their best efforts to advance and protect the interest of the stockholders. The position being a trust, they are enjoined by law not to use the same in any

manner to the injury and detriment of the stockholders or the bank. They cannot, by resolution, order the sale of real estate or other property at a consideration below its value and buy the same. A director, acting in the position of trustee, cannot make a profit off of the stockholder, who is the cestui que trust. They are also liable for losses arising from the direction and mismanagement of the affairs of the bank. Where, however, losses occur which arise from unforseen results or mistakes arising from strictly errors of discretion, they cannot be held responsible.

Upon the question of notice it has been held that when a director is engaged in the business of banking (and being a director signifies an engagement), notice to him is notice to the bank.

It is a well-established principle of law, that if a director takes a part in, or acts for the bank in discounting a note which at the time is known to him to be tainted with frand or illegality, the bank is affected with this information; and it is not necessary that he should represent the bank. If he is present at the time and is cognizant of such facts, it is held to be notice to the bank.

A director, being a trustee of the property of a corporation, is held while acting as such, especially in savings banks, to a strict account. It becomes his duty to take part in all proceedings held or acts done; while he is present at directors' meetings, he cannot close his eyes and remain passive while his co-directors are wasting by improvident investments the property and moneys of the bank. It is his duty not only actively to oppose measures passed by his associates which are unlawful, but also to invoke the law to restrain its continuance, and through the aid of the law seek to set aside such actions, and recover property and money which has been unlawfully disposed of in such cases.

The law imposes certain duties which are obligatory and from which a director cannot be excused. A failure to perform duties which the laws impose makes the director who wilfully neglects such duty, after being duly qualified in office, liable in civil damages to the person, or persons, injured by such gross neglect.

A director cannot excuse himself from statutory duties, and