The contention on the part of the defendant is that the circuit court erred in not allowing the cause to go to the jury. It is undoubtedly true, as contended by the defendant, that, as the 50 shares of stock were transferred to him originally without his knowledge and consent, he had a right to repudiate the transaction; but he is presumed to be the owner of the stock when his name appears upon the books of the bank as such owner, and the burden of proof is upon him to show that he is in fact not the owner. Webster v. Upton, 91 U.S. 65, 72; Turnbull v. Rayson, 95 U.S. 418, 421; Deyser v. Hitz, 133 U.S. 138, 10 Sup. Ct. Rep. 290. We think it entirely clear, on the evidence, that the defendant did not sustain such burden of proof, and that there was no question thereon for the jury. It is provided as follows, in regard to national banks, by section 5146 of the Revised Statutes: 'Every director must, during his whole term of service, be a citizen of the United States, and at least three-fourths of the directors must have resided in the state, territory, or district in which the association is located, for at least one year immediately preceding their elecion, 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 oisqualified, shall thereby vacate his place.' Section 5147 reads as follows: '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.' The meaning of section 5146 is that every director must own in his own right, during his whole term of service, at least 10 shares of the stock, and that, if he does not own such 10 shares, he cannot become or continue a director. In the absence of any proof on the subject, it is to be presumed that the defendant took the oath prescribed in section 5147, when he was appointed, that he owned 10 shares of the stock. As be was appointed a director and vice-president at least as early as November 21, 1883, and acted as such from that time, and did not purchase the 20 shares from Sours until December 12, 1883, he was violating the law during that interval, unless he owned during that space of time at least 10 shares of the stock; and, if he took the oath prescribed by section 5147, he took it untruly, if he did not own when he took it 10 shares of the stock. According to his own testimony, he was elected vice-president on the 21st of November, and acted as such from that time, and also from that time fulfilled the duties of cashier of the bank covering the period prior to December 12th, when he purchased the 20 shares from Sours. The only state of facts consistent with the truth, according to the books of the bank, is that he owned the 50 shares from October 29, 1883, the day those shares were transferred to him, and the day before the records of the bank show that he was elected a director. It would appear that those 50 shares may have been transferred to him at par, and he paid a premium of $20 a share for the 20 shares which he purchased from Sours.
It is provided as follows by section 5210 of the Revised Statutes: 'The president and cashier of every national banking association shall cause to be kept at all times a full and correct list of the names and residences of all the shareholders in the association, and the number of shares held by each, in the office where its business is transacted. Such list shall be subject to the inspection of all the shareholders and creditors of the association, and the officers authorized to assess taxes under state authority, during business hours of each day in which business may be legally transacted. Accpy of such list, on the first Monday of July of each year, verified by the oath of such president or cashier, shall be transmitted to the comptroller of the currency.' It was the duty of the defendant, as acting cashier, and in the absence of any regular cashier, and of any other person authorized to act as cashier, to cause to be kept, under section 5210, the list of shareholders, and of the number of their shares, therein specified; and the conclusive presumption must be that he kept such list, and was cognizant of its contents. It necessarily showed his ownership of the 50 shares. Irrespective of the general duties imposed by law upon the cashier of a bank, or a person who acts as such cashier, the statute imposed upon him, in the present case, the specific duty mentioned in section 5210; and it must be presumed conclusively that he knew from the 21st of November, 1883, that the books showed that he was a shareholder to the amount of the 50 shares. The instruction of the circuit court to that effect was therefore proper.
*In regard to the dividend of 25 per cent., it was clearly fraudulent and unlawful. The defendant did not get rid of his liability for the $1,250 by drawing his check for that sum in favor of De Walt individually, and handing the same to De Walt. The money belonged to the bank, and ought to have been restored to the bank. The dividend being unlawful, and the $1,250 having been paid to the defendant by the bank, by being transferred to his credit by the bank on its books, it was not for him to take the place of the bank, and to pay the money to De Walt. Whatever might have been the case if the dividend had been a lawful one, and if the $1,250 had been transferred by the bank to the credit of the defendant through inadvertence, the $1,250 was no more the lawful property of De Walt than if the 50 shares (10 of which had been the property of De Walt) had not been transferred to the defendant by the instruction of De Walt to Sours to that effect. The various instructions asked by the defendant, and refused, were all of them predicated, in substance, on the assumption that the conduct of the defendant and his connection with the bank were not such as to estop him from denying his ownership of the 50 shares of stock, and upon the alleged fact that the defendant, by paying the $1,250 to De Walt in respect of the 25 per cent. dividend on the 50 shares, had freed himself from his liability to repay such dividend to the bank.
No general rule can be laid down as to what will constitute, in any particular case, an acceptance of the transfer of stock or the equivalent thereof, in a case where the transferee is in fact ignorant of the fact of transfer; but each case must be decided on its own facts. In the present case the defendant testifies that on the 2d of January, 1884, when he was informed of the 25 per cent. dividend, and of the transfer to his credit of $1,250 thereof, he at once repudiated the transaction, and ordered De Walt to transfer the 50 shares to his own name without delay. But this was of no more effect than his drawing his check for the $1,250 to the order of De Walt individually, and handing it to De Walt. The defendant, as vice-president and acting cashier of the bank, had the power himself to transfer the 40 shares back to McNany, and the 10 shares back to De Walt. He did not do so; but, knowing that the 50 shares had been transferred to his credit and stood in his name upon the books, he suffered the matter to remain in that shape for 20 days, until the doors of the bank were closed. He states that he did not go upon the jury until after the transaction which resulted in the drawing of the check to the order of De Walt for $1,250. It was the defendant's duty, and he had the power, himself to make the transfer upon the books of the bank, (Whitney v. Butler, 118 U.S. 655, 662, 7 Sup. Ct. Rep. 61, Richmond v. Irons, 121 U.S. 27, 58, 7 Sup. Ct. Rep. 788;) and it made no difference, as to his power to transfer, that the certificate for the 50 shares had not been delivered to him, (Bank v. Eaton, 141 U.S. 227, 233, 11 Sup. Ct. Rep. 984.) It appears by the evidence that the bank had a stock register and a book of certificates of shares, and that a list of stockholders and of transfers was kept in one of its books, although it had no regular stock-book.
The jury would not have been justified in holding the defendant not liable for the assessment on the 50 shares, or for the $1,750 dividend. The dividend was undoubtedly fraudulent, and the records of the bank were falsified in showing that the defendant was present at the meeting at which the dividend was declared. It was declared, probably, by De Walt himself alone, for the purpose of showing a fictitious prosperity, and of concealing from the public and the directors the real condition of the affairs of the bank. The defendant had had no previous connection with banking business, and was deceived by De Walt. But all this cannot relieve him from liability. The statutes of the United States are explicit as to the necessary ownership of stock in a national bank by a director thereof, and as to his taking an oath to that effect, and as to the keeping by the cashier of a correct list of the shareholders, and of the number of shares each of them holds; and it cannot be held, with any safety to the interests of the public and of those who deal with national banks, that a director, who also is vice-president and acts as cashier, can shield himself from liability by alleging ignorance of what appears by the books of which he was charege.
It has been held in England that the fact that a person acts as director will not of itself make him liable as a holder of the number of shares required to qualify him to be a director, (Marquis of Abercorn's Case, 4 De Gex. F. & J. 78, 95, 110; Roney's Case, 4 De Gex, J. & S. 426;) but we decide this case on the fact that the defendant appeared by the books of the bank to be the holder of the 50 shares prior to the time when he became a director or vice-president, and prior to the time when he began to act as cashier; and we hold that, acting in those capacities down to the time when the doors of the bank were closed, he must be presumed conclusively to have had knowledge during that interval of what the books of the bank showed in regard to his holding the 50 shares, and that his action in respect of the 25 per cent. dividend, after he learned of it, on the 2d of January, 1884, was such as not to relieve him from his liability for the $1,250.
In some of the English cases cited, there was no requirement that, in order to be a director, there should be ownership of a specified number of shares. In the present case the statute required an ownership of at least 10 shares, to become or to continue a director; and as the books of the bank showed that 50 shares were transferred to the defendant before he was elected a director, and that those shares were in one certificate, the defendant could not have been advised that he held 10 shares without learning at the same time that he held 50 shares. But, in view of the requirements before referred to, of the statute of the United States, no rule of law deduced from the English authorities can apply. Judgment affirmed.
Notes edit
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
Public domainPublic domainfalsefalse