release or compromise a claim or an action,' and even authorize an assignment of the bank's property for the benefit of creditors, when in failing circumstances.

8

On the other hand, the directors can lawfully do no act that is not within the powers conferred upon the corporation, and if they attempt to do so, and relief cannot be obtained through the corporation, a stockholder may maintain a suit to enjoin them." Unauthorized acts, however, if within the powers of the corporation, may be ratified by the stockholders.10 Acts not within the powers of the corporation may not be binding upon it, because they are ultra vires, or may be a ground for forfeiture of the charter.11

Appointment of Agents

The board of directors, having the general superintendence and management of the affairs of the corporation, constitute the corporation for all purposes of dealing with others on its behalf.12 Not only have they ordinarily express authority to

"Banks and Banking," Dec. Dig. (Key No.) § 109; Cent. Dig. §§ 257-260.

7 Wolf v. Bureau, 1 Mart. N. S. (La.) 162; Frankfort Bank v. Johnson, 24 Me. 490; Baird v. Bank of Washington, 11 Serg. & R. (Pa.) 411; Olney v. Chadsey, 7 R. I. 224.

They cannot release an original subscriber to the stock, nor make any arrangement whereby the bank, its creditors, or the state shall lose any of the benefit of his subscription. McNulta v. Corn Belt Bank, 164 Ill. 427, 45 N. E. 954, 56 Am. St. Rep. 203. See "Banks and Banking," Dec. Dig. (Key No.) § 110; Cent. Dig. §§ 265–268.

8 National Pank of Commerce v. Shumway, 49 Kan. 224, 30 Pac. 411; Merrick v. Trustees of Bank of Metropolis, 8 Gill (Md.) 59; Town v. President, etc., of Bank of River Raisin, 2 Doug. (Mich.) 530; Dana v. Bank of United States, 5 Watts & S. (Pa.) 223. Cf. Gibson v. Goldthwaite, 7 Ala. 281, 42 Am. Dec. 592. See "Banks and Banking," Dec. Dig. (Key No.) § 104; Cent. Dig. §§ 246-248.

Ante, p. 290.

10 Clark, Corp. (2d Ed.) 473.

11 Ante, p. 289.

12 Percy v. Millaudon, 3 La. 56S; Burrill v. President, etc., of Nahant Bank, 2 Metc. (Mass.) 163, 35 Am. Dec. 395. See "Banks and Banking," Dec. Dig. (Key No.) § 102; Cent. Dig. §§ 239-243.

appoint the other officers and agents of the bank and to define their duties, but a board of directors may delegate an authority to a committee, or to one of their number, or to some other officer or person, to do acts for the corporation, unless the acts can by the charter be done only by themselves.13 Thus, they may authorize one of their number, or some officer, to assign over securities, or to borrow money.15

14

The cashier, and to some extent the other officers, have more or less well-defined powers, and, like other agents, they may bind their principal within the scope of their customary or apparent authority. The directors may, of course, define the duties of the officers, and thereby expressly confer upon them authority larger than that customarily incident to their offices. And the directors may also, by permitting an officer to exercise powers other than those customarily incident to his office, or ether than the powers expressly conferred, impliedly authorize him to exercise such other powers. 18 An officer may have power, however, to bind the bank, although he exceeds the customary authority of his office, and the authority actually conferred upon him; for if the directors have, by acquiescing in or shutting their eyes to the general course of dealing in the bank, permitted the officer to hold himself out as having certain powers, his acts within such general course of dealing will be binding on the bank. "Directors cannot, in justice to

16

18 Stamford Bank v. Benedict, 15 Conn. 437; Wallace v. Exchange Bank of Spencer, 126 Ind. 265, 26 N. E. 175; Waxahachi Nat. Bank v. Vickery (Tex. Civ. App.) 26 S. W. 876; First Nat. Bank of Wellsburg v. Kimberlands, 16 W. Va. 555. See "Banks and Banking," Dec. Dig. Key No. §§ 102-112; Cent. Dig. §§ 239–272.

14 Stevens v. Hill, 29 Me. 133; Merrick v. Trustees of Bank of Metropolis, 8 Gill (Md.) 59; President, etc., of Northampton Bank v. Pepoon, 11 Mass. 288. See "Banks and Banking," Dec. Dig. (Key No.) 104; Cent. Dig. § 246.

15 Ridgway v. Farmers' Bank of Bucks County, 12 Serg. & R. (Pa.) 256, 14 Am. Dec. 681. See “Banks and Banking,” Dec. Dig. (Key No.) 105; Cent. Dig. § 250.

16 Post, p. 315.

those who deal with the bank, shut their eyes to what is going on around them. It is their duty to use ordinary diligence in ascertaining the condition of its business, and to exercise reasonable control and supervision of its officers. They have something more to do than, from time to time, to elect the officers of the bank, and to make declarations of dividends. That which they ought, by proper diligence, to have known as to the general course of business in the bank, they may be presumed to have known in any contest between the corporation and those who are justified by the circumstances in dealing with its officers upon the basis of that course of busi

The government and management of the corporate affairs is vested in the directors as a board, and not otherwise.18 The separate action of one or all of the directors individually is not the action of the body clothed with the corporate powers, and does not bind the corporation.19

Ratification

The board may, of course, ratify and render valid an act done without previous authority, if they could have authorized it; and they may do so impliedly, as well as expressly, as by recognizing the act as binding, and acting upon it.20

17 Martin v. Webb, 110 U. S. 7, 3 Sup. Ct. 428, 28 L. Ed. 49; post, p. 316. See "Banks and Banking," Dec. Dig. (Key No.) §§ 113, 114; Cent. Dig. §§ 273-280.

18 Louisiana State Bank v. Senecal, 13 La. 525. Cf. National Bank of Commerce v. Shumway, 49 Kan. 224, 30 Pac. 411. See "Banks and Banking," Dec. Dig. (Key No.) § 102; Cent. Dig. § 240.

19 First Nat. Bank v. Drake, 35 Kan. 564, 11 Pac. 445, 57 Am. Rep. 193; Clark, Corp. (2d Ed.) 475; post, p. 337. See "Banks and Banking," Dec. Dig. (Key No.) § 102; Cent. Dig. § 240.

20 American Exch. Nat. Bank v. First Nat. Bank, 82 Fed. 961, 27 C. C. A. 274; Roe v. Bank of Versailles, 167 Mo. 406, 67 S. W. 303; Wyckoff, Church & Partridge v. Riverside Bank, 135 App. Div. 400, 119 N. Y. Supp. 937; Winton v. Little, 94 Pa. 64. See, also, People's Bank v. Manufacturers' Nat. Bank, 101 U. S. 181, 25 L. Ed. 907;

PRESIDENT

81. The authority of the president, other than such as he may have as a director when he is a member of the board, has been declared to be limited to taking charge of the litigation of the bank; but greater authority is commonly conferred upon him, either expressly or by implication, and more recently some courts have declared that he has authority to indorse negotiable paper in the ordinary course of the bank's business and to perform other acts customarily performed by the cashier, such as drawing drafts and checks, certifying checks, and issuing certificates of deposit.

The president is usually a director, and as such has the authority of a member of the board. As president, his inherent authority is small. Greater authority than belongs to him merely ex officio may be conferred upon the president by the charter, or by the directors, either expressly 21 or by implication.22 It is said that the only function falling within.

Western Nat. Bank v. Armstrong, 152 U. S. 346, 14 Sup. Ct. 572, 38 L. Ed. 470; Eastern Townships Bank v. Vermont Nat. Bank (C. C.) 22 Fed. 186; Blanchard v. Commercial Bank, 75 Fed. 249, 21 C. C. A. 319; Clark, Corp. (2d Ed.) 486. See “Banks and Banking," Dec. Dig. (Key No.) § 114; Cent. Dig. §§ 277-280.

21 First Nat. Bank v. National Park Bank of New York (C. C.) 175 Fed. 881; Boyd's Ex'r v. First Nat. Bank of Williamsburg, 128 Ky. 468, 108 S. W. 360; Ex parte Rickey, 31 Nev. 82, 100 Pac. 134, 135 Am. St. Rep. 651; Cake v. Pottsville Bank, 116 Pa. 264, 9 Atl. 302, 2 Am. St. Rep. 600; First Nat. Bank of Wellsburg v. Kimberlands, 16 W. Va. 555. See “Banks and Banking," Dec. Dig. (Key No.) 102; Cent. Dig. § 242.

22 Armstrong v. Chemical Nat. Bank, 83 Fed. 556, 27 C. C. A. 601; Reno v. James, 16 Ky. Law Rep. 60; Neiffer v. Bank of Knoxville, 1 Head (Tenn.) 162.

Authority may be conferred by a general usage.

Armstrong v.

24

his inherent power is to take charge of the litigation of the bank.23 He may employ counsel, and appear for the bank.** It has also been said that the decisions for the most part are decisions to the effect that the president had no right by virtue of his office to perform some particular act.25 Thus it has been held that the president, as such, has not authority to sell the property of the bank,2 to execute a mortgage on its real estate,27 to borrow money, 28 to waive conditions of a contract for the sale of land,29 or to release a claim. 30

26

Chemical Nat. Bank, 83 Fed. 556, 27 C. C. A. 601. See "Banks and Banking," Dec. Dig. (Key No.) § 102; Cent. Dig. § 242.

23 Morse, Banks & B. (4th Ed.) § 143.

24 Russell v. Washington Savings Bank, 23 App. D. C. 398; Citizens' Nat. Bank of Kingman v. Berry, 53 Kan. 696, 37 Pac. 131, 24 L. R. A. 719; Savings Bank of Cincinnati v. Benton, 2 Metc. (Ky.) 240; Merchants' Nat. Bank v. Eustis, 8 Tex. Civ. App. 350, 28 S. W. 227. But see, Pacific Bank v. Stone, 121 Cal. 202, 53 Pac. 634.

He has authority by virtue of his office to make a valid assignment of a judgment in favor of the bank. Guernsey v. Black Diamond Coal & Mining Co., 99 Iowa, 471, 68 N. W. 777. See "Banks and Banking," Dec. Dig. (Key No.) § 110; Cent. Dig. § 267.

25 Morse, Banks & B. (4th Ed.) § 143.

26 Asher v. Sutton, 31 Kan. 286, 1 Pac. 535; Greenawalt v. Wilson, 52 Kan. 109, 34 Pac. 403; First Nat. Bank v. Lucas, 21 Neb. 280, 31 N. W. 805; Smith v. Lawson, 18 W. Va. 212, 41 Am. Rep. 688 (to indorse or transfer notes). See "Banks and Banking," Dec. Dig. (Key No.) § 104; Cent. Dig. § 247.

27 Leggett v. New Jersey Mfg. & Banking Co., 1 N. J. Eq. 541, 23 Am. Dec. 728. See "Banks and Banking," Dec. Dig. (Key No.) § 104; Cent. Dig. § 247.

28 Western Nat. Bank v. Armstrong, 152 U. S. 346, 14 Sup. Ct. 572, 38 L. Ed. 470. See "Banks and Banking," Dec. Dig. (Key. No.) § 102; Cent. Dig. § 242.

29 Chadbourne v. Stockton Savings & Loan Soc., 101 Cal. xvii, 36 Pac. 127. See "Banks and Banking," Dec. Dig. (Key No.) § 104; Cent. Dig. § 247.

30 E. Swindell & Co. v. Bainbridge State Bank, 3 Ga. App. 364, 60 S. E. 13. Wheat v. Bank of Louisville (Ky.) 5 S. W. 305; State Savings Loan & Trust Co. v. Stewart, 65 Ill. App. 391; Olney v. Chadsey, 7 R. I. 224; Hodge's Ex'r v. First Nat. Bank, 63 Va. 51. See,