Real Estate

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Unless expressly authorized a banking corporation has no power to purchase real estate to sell again."2 Power to purchase enough for a banking house is often expressly conferred, and would doubtless be implied, and incidentally to this power a bank may erect a building larger than necessary for its requirements and lease space in it to others. It may buy and hold real estate under any mortgage that it is authorized to take, and under sale and levy upon execution, and may take real estate in settlement or payment of a claim or debt, or to secure or save a debt. It may, of course, sell land so acquired. Even if a bank purchase land for an unauthorized

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983, 38 C. C. A. 692, affirmed 182 U. S. 555, 21 Sup. Ct. 885, 45 L. Ed. 1227. See, also, Johnston v. Laflin, 103 U. S. 800, 26 L. Ed. 532; First Nat. Bank v. Stewart, 107 U. S. 676, 2 Sup. Ct. 778, 27 L. Ed. 592. See "Banks and Banking," Dec. Dig. (Key No.) § 101; Cent. Dig. §§ 237, 238.

62 Metropolitan Bank v. Godfrey, 23 Ill. 579; Thweatt v. Bank of Hopkinsville, 81 Ky. 1; Bank of Michigan, President, etc., of v. Niles, 1 Doug. (Mich.) 401, 41 Am. Dec. 575. See "Banks and Banking," Dec. Dig. (Key No.) § 95; Cent. Dig. §§ 228, 229.

63 Clark, Corp. (2d Ed.) 119.

64 Banks v. Poitiaux, 24 Va. 136, 15 Am. Dec. 706; post, note 281. See "Banks and Banking," Dec. Dig. (Key No.) § 95; Cent. Dig. §§ 228, 229.

65 Ante, p. 250.

66 See Martin v. Branch Bank of Decatur, 15 Ala. 587, 50 Am. Dec. 147; Sherry v. Denn ex dem. State Bank of Indiana, 8 Blackf. (Ind.) 542; Merchants' Bank of St. Louis v. Harrison, 39 Mo. 433, 93 Am. Dec. 285. See "Banks and Banking," Dec. Dig. (Key No.) § 95; Cent. Dig. §§ 228, 229.

67 Brown v. Bradford, 103 Iowa, 378, 72 N. W. 648; State Security Bank v. Hoskins, 130 Iowa, 339, 106 N. W. 764, 8 L. R. A. (N. S.) 376; Thomaston Bank v. Stimpson, 21 Me. 195; Missouri State Bank v. South St. Louis Foundry, 145 Mo. App. 257, 129 S. W. 433. See "Banks and Banking," Dec. Dig. (Key No.) § 95; Cent. Dig. §§ 228, 229.

68 Jackson v. Brown, 5 Wend. (N. Y.) 590; Talman v. Rochester City Bank, 18 Barb. (N. Y.) 123 (with covenants of warranty). See

purpose, however, it is generally held that it acquires and can convey good title; the question as to the legality of the transaction being solely between the bank and the state.""

71

By the terms of the National Bank Act,70 a national bank may purchase, hold, and convey real estate for certain purposes, viz.: (1) Such as shall be necessary for its immediate accommodation in the transaction of its business; T1 (2) such as shall be mortgaged to it in good faith by way of security for debts previously contracted; 72 (3) such as shall be conveyed to it in satisfaction of debts previously contracted in the course of

"Banks and Banking," Dec. Dig. (Key No.) § 95; Cent. Dig. §§ 228, 229.

69 Litchfield v. Preston, 98 Va. 530, 37 S. E. 6; ante, p. 251. See “Banks and Banking," Dec. Dig. (Key No.) § 95; Cent. Dig. §§ 228, 229.

70 Rev. St. U. S. § 5137 (U. S. Comp. St. 1901, p. 3460).

71 This power includes the power to lease, and a bank does not exceed its powers by leasing ground for 99 years under an agreement with the owner that he will erect a building for its use. The bank may improve the land as any other prudent owner would do, and is not limited to a building only sufficient for its own use. Brown v. Schleier, 118 Fed. 981, 55 C. C. A. 475, affirmed 194 U. S. 18, 24 Sup. Ct. 558, 48 L. Ed. 857. Cf. McCormick v. Market Nat. Bank, 165 U. S. 538, 17 Sup. Ct. 433, 41 L. Ed. 817. See, also, Weeks v. International Trust Co., 125 Fed. 370, 60 C. C. A. 236.

It may enlarge its building for better accommodation of its business, and at the same time provide offices to be rented. Wingert v. First Nat. Bank of Hagerstown, Md., 175 Fed. 739, 99 C. C. A. 315.

It may make a contract to prevent the erection of buildings on adjacent land so as to secure light and air. First Presbyterian Church v. National State Bank, 57 N. J. Law, 27, 29 Atl. 320; Id., 58 N. J. Law, 406, 36 Atl. 1129. See "Banks and Banking," Dec. Dig. (Key No.) § 259; Cent. Dig. §§ 980-982.

72 Cockrell v. Abeles, 86 Fed. 505, 30 C. C. A. 223; Cooper v. Hill, 94 Fed. 582, 36 C. C. A. 402.

Holding a second mortgage, it may buy in a first to protect its interest. Holmes v. Boyd, 90 Ind. 332.

A bank, which has taken a deed of trust to secure a previous loan, and bought the land on foreclosure, may cut and sell the timber thereon. Roebling v. First Nat. Bank (D. C.) 30 Fed. 744. See

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its dealings; and (4) such as it shall purchase under judgments, decrees, or mortgages held by it, or shall purchase to secure debts due to it. The act also provides that banks may purchase, hold and convey only for the purposes named, and that no bank shall hold possession of any real estate under mortgages, or the title and possession of any real estate purchased to secure any debts due to it, for a longer period than five years. As we have seen, however, an objection to the taking of a mortgage not authorized under the above provisions can be urged only by the government. Neither can an objection to the title to real estate purchased by a bank, although for an unauthorized purpose, be urged by any one except the government.76

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BORROWING MONEY

73. Unless expressly restricted or limited, a banking corporation has power to borrow money, whenever in the conduct of its business it is necessary or expedient to do so, and to execute notes and other evidences of indebtedness therefor.

"Banks and Banking," Dec. Dig. (Key No.) § 259; Cent. Dig. §§ 980982.

73 Turner v. First Nat. Bank of Madison, 78 Ind. 19.

It may pay the excess in value over the debt. Libby v. Union Nat. Bank, 99 Ill. 622. See "Banks and Banking," Dec. Dig. (Key No.) § 259; Cent. Dig. §§ 980-982.

74 Mapes v. Scott, 88 Ill. 352; Upton v. National Bank of South Reading, 120 Mass. 153; Wherry v. Hale, 77 Mo. 20. See "Banks and Banking," Dec. Dig. (Key No.) § 259; Cent. Dig. §§ 980-982.

75 Ante, p. 251.

76 Reynolds v. First Nat. Bank, 112 U. S. 405, 5 Sup. Ct. 213, 28 L. Ed. 733; Kerfoot v. Farmers' & M. Bank, 218 U. S. 281, 31 Sup. Ct. 14, 54 L. Ed. 1042; Brown v. Schleier, 118 Fed. 981, 55 C. C. A. 475; Mapes v. Scott, 94 Ill. 379; De Witt County Nat. Bank v. Mickelberry, 244 Ill. 77, 91 N. E. 86, 135 Am. St. Rep. 304; Wherry v. Hale, 77 Mo. 20; Hall v. Farmers' & Merchants' Bank, 145 Mo. 418, 46 S. W. 1000. See "Banks and Banking," Dec. Dig. (Key No.) §§ 95, 259; Cent. Dig. §§ 228, 229, 980-982.

Except so far as there may be express restrictions in the charter," a corporation has power to borrow money whenever the nature of its business renders it proper or expedient." It follows that a banking corporation with general powers may borrow money," and that it may give its bonds, notes, or other evidences of debt therefor.80 Thus the power to borrow money is not expressly given by the national banking act, but the power is recognized as incidentally conferred.81

National banks are prohibited from being at any time indebted or in any way liable to an amount exceeding the amount of their capital stock paid in and remaining undiminished, except on notes of circulation, deposits and collections, bills of exchange and drafts drawn against money actually on deposit to their credit, and liabilities to stockholders for dividends and

77 See Commonwealth v. Bank of Mutual Redemption, 4 Allen (Mass.) 1. See "Banks and Banking," Dec. Dig. (Key No.) § 97; Cent. Dig. § 231; "Corporations," Dec. Dig. (Key No.) § 460; Cent. Dig. § 1818.

78 Clark, Corp. (2d Ed.) 136.

79 Ward v. Johnson, 95 Ill. 215; Tuttle v. National Bank of Republic, 48 Ill. App. 481; Harris v. Randolph County Bank, 157 Ind. 120, 60 N. E. 1025; Deposit Bank of Carlisle v. Fleming (Ky.) 44 S. W. 961; Donnell v. Lewis County Sav. Bank, 80 Mo. 165; Ringling v. Kohn, 6 Mo. App. 333; Leavitt v. Yates, 4 Edw. Ch. (N. Y.) 134; Barnes v. Ontario Bank, 19 N. Y. 152. See "Banks and Banking," Dec. Dig. (Key No.) § 97; Cent. Dig. § 231.

80 Curtis v. Leavitt, 17 Barb. (N. Y.) 309; Id., 15 N. Y. 9. See "Banks and Banking," Dec. Dig. (Key No.) § 97; Cent. Dig. § 231.

81 Auten v. United States Nat. Bank, 174 U. S. 125, 19 Sup. Ct. 628, 43 L. Ed. 920. See, also, Western Nat. Bank v. Armstrong, 152 U. S. 346, 14 Sup. Ct. 572, 38 L. Ed. 470; Aldrich v. Chemical Nat. Bank, 176 U. S. 618, 20 Sup. Ct. 498, 44 L. Ed. 611; Hanover Nat. Bank v. First Nat. Bank of Burlingame, Kan., 109 Fed. 421, 48 C. C. A. 482. Notes given by a bank, when embarrassed by pressing demands, in part consideration of the assumption by the payee of all its outstanding obligations, secured by a pledge of all its assets remaining after turning over cash and such bills receivable as the payee would accept at par, are its valid obligations, enforceable against its stockholders after voluntary liquidation. Wyman v. Wallace, 201 U. S.

reserved profits. Notwithstanding this prohibition, an indebtedness incurred by a national bank in the exercise of any of its authorized powers, and for which it has received and retains the consideration, is not void because the indebtedness surpasses the prescribed limit. 83

GUARANTY AND SURETYSHIP

74. Unless expressly authorized, a banking corporation has not power to enter into a contract of guaranty or suretyship, except when such contract is for its own advantage, as an incident to a contract or transaction which is within its express or implied powers. It has no power to make accommodation paper.

Guaranty

In the absence of an express grant of authority, a banking corporation, as a rule, has not the power to become the guarantor or surety of the obligation of another person, or to lend its credit to any person. No such power being con

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230, 26 Sup. Ct. 495, 50 L. Ed. 738. See "Banks and Banking," Dec. Dig. (Key No.) §§ 97, 258; Cent. Dig. § 231.

82 Rev. St. U. S. § 5202 (U. S. Comp. St. 1901, p. 3494).

See,

83 Weber v. Spokane Nat. Bank, 64 Fed. 208, 12 C. C. A. 93. also, Brown v. Schleier (C. C.) 112 Fed. 577; Id., 118 Fed. 981, 55 C. C. A. 475; affirmed 194 U. S. 18, 24 Sup. Ct. 558, 48 L. Ed. 857; Stephens v. Monongahela Bank, 88 Pa. 157, 32 Am. Rep. 438. See "Banks and Banking," Dec. Dig. (Key No.) §§ 101, 261; Cent. Dig. §§ 237, 238, 991-1000.

84 Seligman v. Charlottesville Nat. Bank, Fed. Cas, No. 12,642, 3 Hughes, 647; Commercial Nat. Bank v. Pirie, 82 Fed. 799, 27 C. C. A. 171; Bowen v. Needles Nat. Bank, 94 Fed. 925, 36 C. C. A. 553; Merchants' Nat. Bank v. Baird, 160 Fed. 642, 90 C. C. A. 338, 17 L. R. A. (N. S.) 526; Barron v. McKinnon (C. C.) 179 Fed. 759; Thilmany v. Iowa Paper Bag Co., 108 Iowa, 333, 79 N. W. 68; Norton v. Derry Nat. Bank, 61 N. H. 589, 60 Am. Rep. 334; Ayer v. Hughes, 87 S. C. 382, 69 S. E. 657. See "Banks and Banking,” Dec. Dig. (Key No.) § 99; Cent. Dig. § 236.