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 place. [R. S.] Act of June 3, 1864, ch. 106, 13 Stat. L. 102. Directors in Oklahoma Territory. See Act May 2, 1890, ch. 182, sec. 17, supra, p. 81. Residence of directors. - "One of the evident purposes of this enactment is to confine the management of each bank to persons who live in the neighborhood, and who may for that reason be supposed to know the trustworthiness of those who are to be appointed officers of the bank, and the character and financial ability of those who may seek to borrow its money." Concord First Nat. Bank v. Hawkins, (1899) 174 U. S. 364, reversing (C. C. A. 1897) 79 Fed. Rep. 51. Sec. 5147. [Oath required from directors.] 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, or willingly 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, or in any way pledged, as security for any loan or debt. Such oath, subscribed 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. [R. S.] Act of June 3, 1864, ch. 106, 13 Stat. L. 102. Reorganized state bank. In the case of a reorganized state bank the oath is not required of the old directors. Lockwood v. Mechanics Nat. Bank, (1869) 9 R. I. 342. Sec. 5148. [Filling vacancies.] 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. [R. S.] Act of June 3, 1864, ch. 106, 13 Stat. L. 102. Sec. 5149. [Proceedings where no election is held on the proper day.] 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. [R. S.] Act of June 3, 1864, ch. 106, 13 Stat. L. 102. Sec. 5150. [Election of president of the board.] One of the directors, to be chosen by the board, shall be the president of the board. [R. S.] Act of June 3, 1864, ch. 106, 13 Stat. L. 102. The appointment of the President may be before the adoption of by-laws.. Taylor v. Hutton, (1864) 43 Barb. (N. Y.) 195. As to powers and duties of the President, see Am. and Eng. Encyc. of Law, title National Banks, vol. 21, p. 353. Sec. 5151. [Individual liability of shareholders.] The shareholders of every national banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares; except that shareholders of any banking association now existing under State laws, having not less than five millions of dollars of capital actually paid in, and a surplus of twenty per centum on hand, both to be determined by the Comptroller of the Currency, shall be liable only to the amount invested in their shares; and such surplus of twenty per centum shall be kept undiminished, and be in addition to the surplus provided for in this Title; and if at any time there is a deficiency in such surplus of twenty per centum, such association shall not pay any dividends to its shareholders until the deficiency is made good; and in case of such deficiency, the Comptroller of the Currency may compel the association to close its business and wind up its affairs under the provisions of Chapter four of this Title. [R. S.] Act of June 3, 1864, ch. 106, 13 Stat. L. 102. Liability as affected by transfer of stock. - See R. S. sec. 5139 and notes, supra. - For what debts liable. The individual liability of the stockholders extends only to such contracts, debts, and engagements of the bank as have been duly made in the exercise of its corporate powers and in due course of business. Schrader v. Manufacturers' Nat. Bank, (1890) 133 U. S. 67; Stanton v. Wilkeson, (1876) 8 Ben. (U. S.) 357, 22 Fed. Cas. No. 13,299; Lyons First Nat. Bank v. Ocean Nat. Bank, (1875) 60 N. Y. 278. Contracts made after suspension. - Such liability does not extend to contracts made by the officers after the bank has gone into liquidation, unless made in compliance with the duty of such officers to wind up the bank's affairs. Schrader v. Manufacturers' Nat. Bank, (1890) 133 U. S. 67. Thus contracts of indorsement or guaranty made by the president in the name of the bank after its suspension on bills receivable which were taken by creditors in settlement of their claims are not binding on the stockholders. Richmond v. Irons, (1887) 121 U. S. 27, affirming (1884) 21 Fed. Rep. 197. Interest on debts. The individual liability extends to interest on debts where the bank would have been liable therefor. Richmond v. Irons, (1887) 121 U. S. 27, affirming (1884) 21 Fed. Rep. 197. The expenses of a receivership appointed in a creditor's suit contesting voluntary liquidation cannot be charged upon the stockholders as a part of their statutory liability, but are to be paid by the creditors, at whose instance the receiver was appointed. Richmond v. Irons, (1887) 121 U. S. 27, affirming (1884) 21 Fed. Rep. 197. After all debts have been paid the individual liability cannot be enforced by an agent chosen by the stockholders to succeed the receiver in winding up the affairs. Church v. Ayer, (1897) 80 Fed. Rep. 543. 1 Married women are liable as stockholders when permitted by the law of the state in which they reside to become shareholders in national banks. Keyser v. Hitz, (1890) 133 U. S. 138, affirming (1883) 2 Mackey (D. C.) 496; Bundy v. Cocke, (1888) 128 U. S. 185; In re St. Albans First Nat. Bank, (1891) 49 Fed. Rep. 120; Witters v. Sowles, (1888) 35 Fed. Rep. 640; Anderson v. Line, (1880) 14 Fed. Rep. 405; Hobart v. Johnson, (1881) 8 Fed. Rep. 493; Laing v. Burley, (1882) 101 Ill. 591; Kerr v. Urie, (1897) 86 Md. 72. The liability is several and not affected by the failure of any other shareholder to pay the amount assessed against him; and where the comptroller has once assessed against the several shareholders a sufficient percentage upon the par value of the stock held by them respectively to discharge the liabilities of the bank, he has no power to direct a further assessment to supply a deficiency caused by the inability of the receiver to enforce payment from such shareholders as are insolvent or beyond the jurisdiction, or because of a loss sustained by the receiver in investments in endeavoring to save the debts of the bank. U. S. v. Knox, (1880) 102 U. S. 422; Lease v. Barschall, (1900) 106 Fed. Rep. 762. Release from liability. The bank cannot by contract with subscribers to its capital stock relieve them from the statutory liability created in favor of creditors. Scott v. Latimer, (C. C. A. 1898) 89 Fed. Rep. 843. All creditors are entitled to share alike in the distribution of the proceeds derived from enforcing the stockholders' liability, and the diligence of one creditor in filing a bill to enforce the stockholders' liability does not give him any priority. Richmond v. Irons, (1887) 121 U. S. 27, affirming Irons v. Manyfacturers' Nat. Bank, (1883) 17 Fed. Rep. 311, (1886) 27 Fed. Rep. 593. Preference. The liability of the stockholder for debts is not entitled to preference out of the funds of the insolvent shareholder. In re Beard, (1897) 7 Wyo. 111. SEC. 2. [Enforcement of individual liability of shareholder.] 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 creditor 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. [19 Stat. L. 63.] This is from the Act of June 30, 1876, ch. 156. For reference to entire Act, see infra, p. 183. Nature of the remedy. The remedy of a creditor's suit to enforce the liability of shareholders of national banks in voluntary liquidation, provided by this section, is cumulative, and not exclusive. King v. Pomeroy, (C. C. A. 1903) 121 Fed. Rep. 287. Contra, Williamson v. American Bank, (C. C. A. 1902) 115 Fed. Rep. 793, affirming (1901) 109 Fed. Rep. 36. Such bill was maintainable before the statute. See Wheelock v. Kost, (1875) 77 Ill. 296. In a suit by a creditor's bill pending at the time of the passage of such Act, brought to enforce payment of a judgment in which a receiver was appointed, it was held that the complainant, after the passage of such Act, could amend his bill so as to make a case for the enforcement of the stockholders' individual liability. Harvey v. Lord, (1882) 11 Biss. (U. S.) 144, 10 Fed. Rep. 236; Richmond r. Irons, (1887) 121 U. S. 49. It seems that a creditor may maintain both a creditor's bill to enforce the liability of the stockholders and a separate suit against the bank. Central Nat. Bank v. Connecticut Mut. L. Ins. Co., (1881) 104 U. S. 54. No defense to a suit by a creditor upon a disputed claim is constituted by the fact that the creditor has also filed a creditor's bill under this section to enforce the individual liability of the shareholders. Central Nat. Bank r. Connecticut Mut. L. Ins. Co., (1881) 104 U. S. 54. Appointment of receiver. - A federal court sitting in equity has jurisdiction in a proper case to appoint a receiver to liquidate the obligations of a national bank and to authorize him to collect and to enforce by action the liability of the shareholders of the bank un ler section 5151. King v. Pomeroy, (C. C. A. 1903) 121 Fed. Rep. 287. Who may maintain suit. The trustee appointed by the shareholders has no authority to enforce the liability of the stockholders. Williamson . American Bank, (1901) 109 Fed. Rep. 36, affirmed (C. C. A. 1902) 115 Fed. Rep. 793. But it has been held that a receiver appointed by the court has such authority. King r. Pomeroy, (C. C. A. 1903) 121 Fed. Rep. 287. In the absence of restrictive legislation a receiver in liquidation proceedings may ordinarily enforce the rights of creditors as well as the rights of the debtor. King . Pomercy, (C. C. A. 1903) 121 Fed. Rep. 287. in cases in which a court of equity appoints a receiver to liquidate the debts of national banks in voluntary liquidation, no action of the comptroller is requisite to empower the court's receiver to enforce the liability of the shareholders. The court has plenary power to ascertain the necessity of enforcing the liability and to direct its receiver to collect it. King v. Pomeroy, (C. C. A. 1903) 121 Fed. Rep. 287. Where a receiver is appointed after the bringing of a suit to enforce the stockholder's individual liability by a bill in the nature of a creditor's suit, another suit by the receiver against a stockholder to enforce the same liability is barred. Harvey v. Lord, (1882) 11 Biss. (U. S.) 144, 10 Fed. Rep. 236. Jurisdiction. - A creditors' bill to enforce the individual liability of the shareholders in the case of voluntary liquidation must be brought in the federal court in the district where the bank is located. Williamson v. American Bank, (1901) 109 Fed. Rep. 36, affirmed (C. C. A. 1902) 115 Fed. Rep. 793. Limitation of action. The acts of putting the bank in liquidation and making an assessment on the capital stock are not the equivalent of filing a creditor's bill, and will not stop the running of the statute. Thompson v. German Ins. Co., (1896) 76 Fed. Rep. 892. But the filing of a bill by a creditor in behalf of himself and all other creditors of an insolvent national bank to enforce the individual liability of the stockholders for debts will stop the running of the statute of limitations as to all creditors of the bank who come in and prove their claims, though they did not make themselves parties to the bill. Richmond v. Irons, (1887) 121 U. S. 27. The liability of a shareholder of a national bank whose affairs are in course of judicial administration in a court of equity does not mature until the court ascertains the necessity of enforcing it, determines the amount which the shareholder must pay, and fixes the time of payment; and the cause of action of the receiver of the court to enforce the liability does not accrue until the liability thus matures. King v. Pomeroy, (C. C. A. 1903) 11 Fed. Rep. 287. The statute of limitations does not run against an action to enforce the liability of a shareholder of a national bank during the time while proper liquidation proceedings are pending in a court of equity. King r. Pomeroy, (C. C. A. 1903) 121 Fed. Rep. 287. Re-examination of claims. In a creditor's suit to enforce the stockholders' liability, a judgment entered against the bank after it went into voluntary liquidation may be reexamined. Schrader v. Manufacturers' Nat. Bank, (1890) 133 U. S. 67; Irons v. Manufacturers' Nat. Bank, (1888) 36 Fed. Rep. 843. 1 Sec. 5152. [Executors, trustees, etc., not personally liable.] Persons holding stock as executors, administrators, 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. [R. S.] Act of June 3, 1864, ch. 106, 13 Stat. L. 118. Death of stockholder. Under this section the liability of a shareholder continues after his death until there is a transfer of his stock on the books of the bank, Matteson v. Dent. (1900) 176 U. S. 521, affirming (1897) 70 Minn. 519; Richmond v. Irons, (1887) 121 U. S. 27, affirming (1884) 21 Fed. Rep. 197; Davis v. Weed, (1877) 44 Conn. 569, 7 Fed. Cas. No. 3,658; Wickham v. Hull, (1894) 60 Fed. Rep. 326; Parker v. Robinson, (C. C. A. 1895) 71 Fed. Rep. 256; Tourtelot v. Finke, (1898) 87 Fed. Rep. 840. And it has been so held although an executor as sole devisee and legatee paid or secured all the debts owing by the decedent where the estate still remained unsettled. Tourtelot v. Finke, (1898) 87 Fed. Rep. 840. Reissue to executor. - The executor is liable as such though the stock in question was reissued to the estate after the death of the stockholder on the reduction of the capital stock of the bank, Brown v. Ellis, (1900) 103 Fed. Rep. 834; or was transferred to him as trustee, the legal title never having been divested, Earle v. Rogers, (1900) 105 Fed. Rep. 208. A transfer on the books of the bank is essential to save the estate from liability. Notwithstanding the stockholder died and his estate was distributed and settled prior to the insolvency of the bank, the estate is still liable in the absence of such transfer of the stock, Matteson v. Dent, (1900) 176 U. S. 521, affirmed (1897) 70 Minn. 519; Davis v. Weed, (1877) 44 Conn. 569, 7 Fed. Cas. No. 3,658; and such liability may be enforced as to the assets in the hands of the personal repesentatives at the time of the insolvency of the bank, Witters v. Sowles, (1887) 32 Fed. Rep. 130; Baker 1. Beach, (1898) 85 Fed. Rep. 836; and the estate may be followed in the hands of distributees and legatees, Matteson v. Dent, (1900) 176 U. S. 521, affirming (1898) 73 Minn. 170; Witters v. Sowles, (1887) 32 Fed. Rep. 130; and the whole amount of the assessment enforced to the extent of the distributive share received, Matteson v. Dent, (1900) 176 U. S. 521, affirming (1898) 73 Minn. 170. And it does not seem to be material when the liabilities for which the assessment is made arose, so long as there is no transfer on the books of the bank. Matteson r. Dent, (1900) 176 U. S. 521. Contra, Witters v. Sowles, (1887) 32 Fed. Rep. 130. See also Zimmerman v. Carpenter, (1898) 84 Fed. Rep. 747. Transfer before insolvency. When the beneficial ownership of the stock has passed from the estate before the insolvency of the bank, and has been transferred on the books of the bank, the estate of the deceased stock holder is not liable. Blackmore v. Woodward, (C. C. A. 1895) 71 Fed. Rep. 321. Where the stock has been transferred on the books of the bank to a residuary legatee before the insolvency of the bank, the estate of the deceased stockholder is not liable. Witters v. Sowles, (1887) 32 Fed. Rep. 130. Where, in the settlement of the estate of a deceased shareholder, stock and other assets are transferred on the books of the bank by a residuary legatee before the insolvency of the bank, such legatee cannot be held liable as a distributee to the extent of assets received, but is liable only as a stockholder. Witters v. Sowles, (1887) 32 Fed. Rep. 130. Personal exemption of trustees.-The personal exemption of persons holding stock as trustees refers not only to trustees appointed by will or by order of a court or judge, but to any trust relation however created. Lucas v. Coe, (1898) 86 Fed. Rep. 972. But such exemption is limited to express and active trusts where there is a probability of some estate to respond to the liability, Hubbell v. Houghton, (1898) 86 Fed. Rep. 552; and it does not apply where the bank's records show an unencumbered title in the alleged trustee, Hubbell v. Houghton, (1898) 86 Fed. Rep. 552; Davis v. First Baptist Soc., (1877) 44 Conn. 582, 7 Fed. Cas. No. 3,633; Kerr v. Urie, (1897) 86 Md. 72. A trust relation does not exist within the meaning of the section when the alleged trustee has a right to hold and dispose of the stock as his own without liability to account therefor to any person. Horton v. Mercer, (C. C. A. 1895) 71 Fed. Rep. 153. In Lucas v. Coe, (1898) 86 Fed. Rep. 972, a father, as trustee of a fund for investment for his infant son, subscribed for stock in a national bank, stating for whom the subscription was made, but the stock was listed in his name. It was held that the father was not liable as a shareholder. In Yardley v. Wilgus, (1893) 56 Fed. Rep. 965, the bank had recovered a judgment for an assessment against the real owner of the stock standing in the name of another, who was an undisclosed trustee, and it was held that the record owner could not thereafter be made liable as a shareholder, though the real owner was insolvent. In Kerr. Urie, (1897) 86 Md. 72, the court declined to accept the defense of a married woman who had purchased stock in her own name, that she held it as a self-appointed attorney or trustee for an infant of tender years. An assignee for the benefit of creditors is liable as such for an assessment on the stock of his assignor levied after the assignment. Graham v. Platt, (1901) 28 Colo. 421. Sec. 5153. [Duties and liabilities when designated as depositaries of public moneys.] All national banking associations, designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money, except receipts from customs, under such regulations as may be prescribed by the Secretary, but receipts derived from duties on imports in Alaska, the Hawaiian Islands, and other islands under the jurisdiction of the United States may be deposited in such depositaries subject to such regulations; and such depositaries may also be employed as financial agents of the Government; and they shall perform all such reasonable duties as depositaries of public moneys and financial agents of the Government as may be required of them. The Secretary of the Treasury shall require the associations thus designated to give satisfactory security, by the deposit of United States bonds and otherwise, for the safe-keeping and prompt payment of the public money deposited with them, and for the faithful performance of their duties as financial agents of the Government. And every association so designated as receiver or depositary of the public money shall take and receive at par all of the national currency bills, by whatever association issued, which have been paid into the Government for internal revenue or for loans or stocks. [R. S.] This section was amended to read as above by the Act of March 3, 1901, ch. 871, 31 Stat. L. 1448. The amendment consists in the addition of the words "but receipts derived from duties on imports in Alaska, the Hawaiian Islands, and other islands under the jurisdiction of the United States may be deposited in such depositaries subject to such regulations." By the Act of June 6, 1900, ch. 797, the secretary of the treasury is authorized to designate one or more banks in the Philippine islands and in the islands of Cuba and Porto Rico in which public moneys might be deposited. See PUBLIC MONEYS. See Coudert v. U. S., (1899) 175 U. S. 182; Branch v. U. S., (1879) 100 U. S. 673. Sec. 5154. [Organization of State banks as national banking associations.] Any bank incorporated by special law, or any banking institution organized under a general law of any State, may become a national association under this Title by the name prescribed in its organization certificate; and in such case the articles of association and the organization certificate may be executed by a majority of the directors of the bank or banking institution; and the certificate shall declare that the owners of two-thirds of the capital stock have authorized the directors to make such certificate, and to change and convert the bank or banking institution into a national association. A majority of the directors, after executing the articles of association and organization certificate, shall have power to execute all other papers, and to do whatever may be required to make its organization perfect and complete as a national association. The shares of any such bank may continue to be for the same amount each as they were before the conversion, and the directors may continue to be the directors of the association until others are elected or appointed in accordance with the provisions of this chapter; and any State bank which is a stockholder in any other bank, by authority of State laws, may continue to hold its stock, although either bank, or both, may be organized under and have accepted the provisions of this Title. When the Comptroller of the Currency has given to such association a certificate, under his hand and official seal, that the provisions of this Title have been complied with, and that it is authorized to commence the business of banking, the association shall have the same powers and privileges, and shall be subject to the same duties, responsibilities, and rules, in all respects, as are prescribed for other associations originally organized as national banking associations, and shall be held and regarded as such an association. But no such association shall have a less |