service which interferes with the discharge of his official duties, because those exemptions are essential to enable him to perform those duties. But he is subject to all the laws of the State which affect his family or social relations or his property, and he is liable to punishment for crime, though that punishment be imprisonment or death. So of the banks. They are subject to the laws of the State, and are governed in their daily course of business far more by the laws of the State than of the Nation. All their contracts are governed and construed by State laws. Their acquisition and transfer of property, their right to collect their debts, and their liability to be sued for debts, are all based on State law. It is only when the State law incapacitates the banks from discharging their duties to the Government that it becomes unconstitutional.

It is true that national banks enter into contractual relations with others and that such contracts are subject to some extent to the laws of the State in which they are made. The question under consideration, however, is not whether State laws can be made to apply to debts due by national banks, but merely whether the language used in the act under consideration indicates a clear intention on the part of the Pennsylvania Legislature to make the provisions of the act applicable to national banks.

The deputy attorney general in his opinion

says:

It has been suggested that this language does not include national banks. I do not think the suggestion is tenable. National banks are not organized under the laws of the Commonwealth and are not doing business under the laws of the Commonwealth, in so far as the right to do business is concerned, but in a broader sense they are doing business under the laws of the Commonwealth.

With all due deference it is respectfully submitted that the conclusion reached by the attorney general, namely, that national banks are doing business in a sense which makes the act under consideration applicable, is not sustained by the authorities.

The case cited by the attorney general arose in Kentucky and the question involved was the right of the State to tax the shares of stock of a national bank. Section 5219 of the Revised

Statutes specifically provides that such stock may be taxed as the personal property of the owner or holder. The court merely sustained the right of the State to tax the stock as the personal property of the owner.

The question now under consideration, namely, whether the language used in the statute may reasonably be said to apply to national banks, has been considered and determined by the Supreme Court of Pennsylvania on more than one occasion.

In the case of Commonwealth ex rel Torrey v. Ketner (92 Pa. St. 372-376), the language of the act under consideration was much broader in its terms than the act of June 7, 1915. In the Torrey case the act prescribed and punished the offense of embezzlement by any person "being an officer, director, or member of any bank or other body corporate or public company." In considering this act and its several amendments, the court said, on page 375:

We are spared further comment upon these acts for the reason that they have no application to national banks. Neither of them refers to national banks in terms, and we must presume, that when the legislature used the words "any

any bank" that it referred to banks created under and by virtue of the laws of Pennsylvania. The national banks are the creatures of another sovereignty.

The case of Commonwealth ex rel Torrey v. Ketner, supra, was affirmed in Allen's Appeal, 119 Pa. St., 192. In the case of Allen's Appeal a Pennsylvania statute provided:

If any cashier of any bank in this commonwealth shall engage directly or indirectly in the purchase or sale of stock, or in any other profession, occupation, or calling other than that of his duty as cashier, he shall be guilty of a misdemeanor. * * *

The court held that the act did not apply to cashiers of national banks.

In the case of Commonwealth v. T. & P. Railroad Company, 98 Pa. St., 90, it was contended that the language "foreign corporation" as used in a revenue act, included national banks. The court after holding that such banks were not foreign corporations in the ordinary sense, said in reply to the argu

ment that this language was intended by the legislature to include national banks, that

This might be so if there was anything in the act itself indicative of an intent to use the word in that sense; but there is not. On the contrary, in the 5th section, which imposes a tax on limited partnerships, etc., they are described as "partnerships organized under or pursuant to the laws of this State, or of any other State or Territory, or of the United States, or under the laws of any foreign State, Kingdom, or Government"; thus clearly showing that when the legislature intended to tax associations created by the General Government they used apt words of description for that purpose.

Applying this rule to the present case it may be reasonably assumed that had the Legislature of Pennsylvania intended to make the provissions of the act of June 7, 1915, applicable to national banks it would, as the court expressed it, have "used apt words of description for that purpose."

In the opinion of this office this act was not intended to apply, and does not apply, to national banks. It is, therefore, unnecessary to consider the question of whether or not the Pennsylvania Legislature had the constitutional right to make this act applicable to national banks.

As above stated, it is respectfully suggested that the Federal Reserve Board recommend to

those national banks in Pennsylvania which have asked for a ruling on this question that the report called for be made to the auditor general under protest, accompanied by the statement that it is made out of deference to the opinion of the deputy attorney general and without any admission of liability on the part of such banks. Respectfully,

M. C. ELLIOTT, Counsel.

To Hon. C. S. HAMLIN,

Governor Federal Reserve Board.

Savings and Loan Associations.

A savings and loan association is a bank within the meaning of that part of section 8 of the Clayton Act which relates to interlocking bank directorates.

FEBRUARY 3, 1916. SIR: The attached letter raises the question whether a savings and loan association is a

bank within the meaning of that part of section 8 of the Clayton Act which provides that:

in any bank or trust company, organized and No private banker or person who is a director operating under the laws of a State, having deposits, capital, surplus, and undivided profits eligible to be a director in any bank or banking aggregating more than $5,000,000, shall be association organized or operating under the laws of the United States. laws of the United States.

It has generally been understood by this office that savings and loan associations are banks within the purview of this section. Although it is true that Congress did not undertake to define the word "bank" in the Clayton Act, nevertheless, common usuage as well as other acts of Congress have given it a signification sufficiently broad to include such associations.

The American and English Encyclopaedie, volume 3, page 790, states that-

banks of discount, and banks of circulation; Banks are of three kinds: Banks of deposit, and comprise national, State, savings, and private banks, and, in a popular sense, loan and trust companies.

The Century Dictionary defines a bank asAn institution for receiving and lending money. The banking institutions of the United States may be classed as national and State banks, savings banks, private banks or bankers, and loan and trust companies.

It is a well accepted rule of statutory construction that the ordinary and popular meaning shall be given to words used by the legislature unless a contrary intent is clearly indicated

or unless such a construction would be obviously absurd. Dwarris on Statutes, 573; Selden v. Equitable Trust Co. (94 U. S. 419, 421). There is nothing in the purpose or context of the Clayton Act to deprive the word "bank" of its usual significance.

It may also be noted that both section 3407, United States Revised Statutes, and section 3 of the Act of Congress approved October 22, 1914, entitled "An Act to increase internal revenue and for other purposes," in defining the

word "bank" or "banker," provide that every person, firm, or company and every incorporated or other bank "having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid or remitted upon draft, check, or order, or where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale," shall be regarded as a bank or as a banker within the meaning of those acts.

It is obvious, therefore, that a savings and loan association is a bank not only in the ordinary acceptation of the word but also as defined by Congress itself in other statutes relating to banks and bankers, and any person who is a director of any such association, which has resources aggregating more than $5,000,000 will, under the provisions of section 8 of the Clayton Act, become ineligible to serve at the same time as a director of any national bank on October 15, 1916.

such national bank the amount of its cash-paid subscriptions to the capital stock of such Federal Reserve Bank.

Section 5220 of the Revised Statutes provides that

Any association may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock.

Section 5221 provides that—

Whenever a vote is taken to go into liquidation it shall be the duty of the board of directors to provide a certificate to that effect to the Comptroller, and to publish notice in certain ing the holders of its notes and other creditors newspapers for a period of two months notifyto present the notes and other claims against the association for payment.

The law is very specific in its requirement that no national bank may be liquidated until it passes this resolution to go into liquidation. The national bank in question has not only not passed that resolution, but declines to do so on the ground that the resolution ratifying the sale of its assets is sufficient.

That is an erroneous assumption, because it is possible for a corporation to continue in existence as such, even though all its assets be sold to another corporation, and there have been many cases in which national banks, after the sale of their assets, have been revived and recommenced a regular banking business.

It seems, therefore, that though this national bank has sold its assets to another national bank, nevertheless it is legally a corporation, though not doing any business, and as such it is legally possible for it to start business again at any time it sees fit. That being the fact, it can not reasonably be said to be nonexistent.

Under the circumstances the Federal Reserve Bank would have no authority to cancel its shares of stock held by the bank in question or to refund its cash-paid subscriptions until it has been liquidated in the manner required by law.

Respectfully,

M. C. ELLIOTT, Counsel,

To Hon. C. S. HAMLIN,

Governor Federal Reserve Board.