grossly ignore the law, which defines the obligation resting upon him.

Where the position is accepted and capital is entrusted to the care, management, or investment under the direction of a board of directors, whose duties are defined, and they wholly, wilfully, and negligently fail in the performance of their duties to such an extent as, through such negligence, results in loss, they become civilly liable.

They may become criminally liable by a failure to observe and comply with mandatory laws enacted by the Legislature. A failure to make a report when required by the statute to be made within a certain time, and at a fixed period, whereby such failure the purpose in non-compliance is to defraud or withhold information which is required to be made public, becomes a criminal act.

It is also a misdemeanor for a director to make false entries in any book, report or statement of the bank, with the intent to deceive the officers of the law.

Where the directors have taken any portion of the assets of a bank, and in violation of law distributed the same as a dividend which the bank has not earned, and where they receive a portion in such distribution, they become civilly liable and their acts may be a misdemeanor. No part of the capital of a corporation can be withdrawn in such a manner.

They cannot in any manner appropriate any portion of the property of the corporation for any purpose other than that duly authorized by law.

The responsibility resting upon a board of directors governing a bank is more onerous than upon a board of directors that may preside over corporations which do not hold, in trust, money belonging to the general public; consequently there is a greater degree of responsibility which the law imposes. This degree of responsibility is created in the very nature of the business of the corporation over which they preside.

Their duties extend beyond the mere fulfillment of the mandatory provisions of the law. They serve more in the capacity of a trustee, and are bound by the .principals of law governing that office.

They are an advisory board, and are clothed with power of direction as to all the affairs and workings of the bank.

They are also guardians of the stockholders and the depositors. It becomes their duty to make examinations into the management of the bank's affairs; also to employ such agents as are qualified to conduct a business of such peculiar responsibilities.

They have the selection of the president of the bank, the cashier and other clerks who perform the clerical work, and when selected they become in law the agents of the board of directors; and their acts, if performed within the scope of their instructions, authority, and duties, are the acts of the board which have been simply delegated.

The question of liability of the principal for the acts of his agent is one largely resting upon the facts, but the general principle of law, as is well known and defined, is that the principal is liable for the acts of his agent. A violation of authority by an agent, especially where the party dealing with the agent has knowledge, or has reason to believe, that the agent is acting beyond his authority, will relieve the principal of liability; but if an agent of a banking corporation has been permitted, with the knowledge of the board of directors, to perform certain acts not delegated to him or authorized, which are unlawful, and they have been sanctioned by the directors as between the bank and the party dealing with it, with knowledge, the agent is excused; and the bank held responsible. The directors are, in such cases, personally responsible. The loss does not fall on the bank.

It will be seen that the position of a director in a banking corporation is one of great importance and responsibility.

The board should also understand the liability of the bank to its depositors, and creditors, as well as the character of depositors and borrowers.

The reputation of a bank is made up not only by the character and standing of the officers in charge, but as well from the character of its customers.

The directors should know that the class of business to be encouraged by the bank is of a character that will establish confidence.

It is also a part of their duty to become familiar with the habits of its employees; and if they discover that they are speculating, living beyond their means, or have such habits

as if known to the general public, would bring discredit and possibly ruin upon the bank with the public, it is their duty to dispense with such services at once. It is frequently said as an excuse for retaining an officer whose habits, if publicly known, would bring disgrace upon the bank, that "his ability was unequaled, the bank could not afford to dispense with him. No one in the community could be found to take his place." Such excuses should never prevent a director from doing his duty at once by offering a resolution to vacate the position, and fill it by a person whose character for honesty, truth, and morality has at least never been questioned. Such are some of the unwritten duties or implied laws imposed upon directors of a banking corporation.

The directors of a bank, being its trustees and acting in the relationship of a guardian of its depositors, must never be swerved from doing their whole duty. If they are in possession of facts that an agent or employee engaged by them to conduct the affairs of the bank is an incompetent person, and being incompetent makes losses which they might expect by reason of this incompetency, they have not fully performed their duty. They have been guilty of negligence, which may be of such a degree as to be defined as gross negligence.

The responsibility of conducting a banking corporation is too frequently given over to the manager, president, or cashier of the bank. It does not always abide with the president to make the bank a success, or prevent its ruin and collapse.

If the directors do their duty, success may be easily attained or failure prevented.

Directors should have compensation for their services and may vote themselves reasonable pay for services performed, if authorized by the stockholders, and charge the same to expense; and should be held responsible for the failure of the bank, where it is shown that by reasonable diligence and attention to their duties it could have been by their actions prevented.

79. Directors of national banks.

The sections of the Revised Statutes of the United States relating to the election, qualification, and other duties, powers, and limitations of directors in a national bank, are as follows:

Election of directors.

Section 5145. The affairs of each association shall be managed by not less than five directors, who shall be elected by the shareholders at a meeting to be held at any time before the association is authorized by the Comptroller of the Currency to commence the business of banking; and afterward at meetings to be held on such day in January of each year as is specified therefor in the articles of association. The directors shall hold office for one year, and until their successors are elected and have qualified.

Qualifications of directors.

Section 5146. Every director must, during his whole term of service, be a citizen of the United States; and at least threefourths of the directors must have resided in the State, Territery, or District in which the association is located, for at least one year immediately preceding their election, and must be residents therein during their continuance in office. Every director must own, in his own right, at least ten shares of the capital stock of the association of which he is a director. Any director who ceases to be the owner of ten shares of the stock, or who becomes in any other manner disqualified, shall thereby vacate his office.

Oath required from directors.

Section 5147. Each director, when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such association, and will not knowingly violate, nor permit to be violated any of the provisions of this title, and that he is the owner in good faith, and in his own right, of the number of shares of stock required by this title, subscribed by him or standing in his name on the books of the association, and that the same is not hypothecated, nor in any way pledged, as security for any loan or debt. Such oath subscribed to by the director making it, and certified by the officer before whom it is taken, shall be immediately transmitted to the Comptroller of the Currency, and shall be filed and preserved in his office.

Vacancies, how filled.

Section 5148. Any vacancy in the board shall be filled by appointment by the remaining directors, and any director so appointed shall hold his place until the next election.

Proceedings where no election is held.

If from any cause, an election of directors is not made at the time appointed, the association shall not for that cause be dissolved, but an election may be held on any subsequent day, thirty days' notice thereof in all cases having been given in a newspaper published in the city, town, or county in which the association is located; and if no newspaper is published in such city, town, or county, such notice shall be published in a newspaper published nearest thereto. If the articles of association do not fix the day on which the election shall be held, or if no election is held on the day fixed, the day for the election shall be designated by the board of directors in their by-laws, or otherwise; or if the directors fail to fix the day, shareholders representing two-thirds of the shares may do so.

The president of the board must be a director.

Section 5150. One of the directors, to be chosen by the board, shall be the president of the board.

A married woman, where the laws of the State permit her to assume the obligations of a stockholder, may also be a director. All the directors may be women.

The Comptroller of the Currency requires that a director must qualify by taking the oath prescribed by the department, which oath when taken must be filed with the Comptroller.

§ 80. Directors of State bank.

The statute of the State wherein the bank is incorporated provides for the qualifications and number of directors required, setting forth the mode of their election, and fixing the term of office; and also prescribes their duties, powers, and limitations; and for what causes they may be removed from office.

A statute defining the duties, powers, and limitations of the directors, is construed as a mandatory statute and not directory. The directors derive all their powers from the statute and the charter of the corporation; and have no powers other than