The Concord Bank had no power to make the contract, and it cannot be enforced against it.

receiver of the bank on the 3d day of August, 1893, and took possession of the assets of the bank on the 8th day of the same month.

"The capital stock of the bank was 3,000 shares of the par value of $100 each. On the 25th day of October, 1893, an assessment was ordered by the Comptroller of $100 per share on the capital stock of the bank, to enforce the individual liability of stockholders, and an order made to pay such assessment on or before the 25th day of November, 1893; and the defendant was duly notified thereof.

"The defendant, being a national banking association, duly organized, and authorized to do business at Concord, N. H., on the 21st day of May, 1889, with a portion of its surplus funds, purchased of a third party, authorized to hold and make sale, 100 shares of the stock of the Indianapolis National Bank as an investment, and has ever since held the same as an investment. The defendant bank has appeared upon the books of the Indianapolis bank as a shareholder of 100 shares of its stock, from the time of such purchase to the present time. During such holding the [366]defendant bank received annual dividends declared by the Indianapolis bank *prior to July, 1893. The defendant has not paid said assessment or any part thereof."

After argument the court, on July 28, 1896, entered judgment in favor of the plaintiff for the sum of $11,646.67 and costs. From that judgment a writ of error from the United States circuit court of appeals for the first circuit was sued out, and by that court the judgment of the trial court was, on March 5, 1897, affirmed. 33 U. S. App. 747. From the judgment of the circuit court of appeals a writ of error was allowed to this


Mr. Frank S. Streeter for plaintiff in


The recent decision in California Bank v. Kennedy, 167 U. S. 362, 42 L. ed. 198, determines the point raised in this case.

No power is granted by U. S. Rev. Stat. § 5136 to national banks to buy and sell stocks generally; nor is such power incidental to the business of banking.

First Nat. Bank v. National Exch. Bank, 92 U. S. 122, 23 L. ed. 679; Logan County Nat. Bank v. Townsend, 139 U. S. 67, 73, 35 L. ed. 107, 110; Re Royal Bank of India, L. R. 4 Ch. 252; Fowler v. Scully, 72 Pa. 456, 13 Am. Rep. 699; Weckler v. First Nat. Bank, 42 Md. 581, 20 Am. Rep. 95; Nassau Bank v. Jones, 95 N. Y. 115, 47 Am. Rep.


Upon principle and authority a stockholder's liability to assessment is a contractual liability.

Richmond v. Irons, 121 U. S. 27, 30 L. ed. 864; Flash v. Conn, 109 U. S. 371, 27 L. ed. 966; Hodgson v. Cheever, 8 Mo. App. 321; Manville v. Edgar, 8 Mo. App. 324; Queenan v. Palmer, 117 Ill. 619; Aultman's Appeal, 98 Pa. 505; Sackett's Harbour Bank v. Blake, 3 Rich. Eq. 225; Woods v. Wicks, 7 Lea, 40: Ex parte Van Riper, 20 Wend. 614; Grand Rapids Sav. Bank's Appeal, 52 Mich. 557; Lowry v. Inman, 46 N. Y. 119; Corning v. McCullough, 1 N. Y. 47.

Dartmouth College v. Woodward, 4 Wheat. 518, 4 L. ed. 629; Bank of United States v. Dandridge, 12 Wheat. 64, 6 L. ed. 552; Head v. Providence Ins. Co. 2 Cranch, 127, 2 L. ed. 229; Beaty v. Knowler, 4 Pet. 152, 7 L. ed. 813; Bank of Augusta v. Earle, 13 Pet. 519, 10 L. ed. 274; Perrine v. Chesapeake & D. Canal Co. 9 How. 172, 13 L. ed. 92; Oregon R. & Nav. Co. v. Oregonian R. Co. 130 U. S. 1, 32 L. ed. 837; Logan County Nat. Bank v. Townsend, 139 U. S. 67, 35 L. ed. 107; Wiley v. First Nat. Bank, 47 Vt. 546; Whitney v. First Nat. Bank, 50 Vt. 388, 28 Am. Rep. 503; Talmage v. Pell, 7 N. Y. 328; Franklin Co. v. Lewiston Inst. for Savings, 68 Me. 43, 28 Am. Rep. 9; Crocker v. Whitney, 71 N. Y. 161.

The Concord Bank is not estopped to insist upon the defense of ultra vires.

Central Transp. Co. v. Pullman's Palace Car Co. 139 U. S. 24, 35 L. ed. 55; Pennsylva nia R. Co. v. St. Louis, A. & T. H. R. Co. 118 U. S. 290, 30 L. ed. 83; Thomas v. West Jersey R. Co. 101 U. S. 85, 25 L. ed. 953; Atty. Gen. v. Great Eastern R. Co. L. R. 5 App. Cas. 473; Small v. Smith, L. R. 10 App. Cas. 119; Wenlock v. River Dee Co. L. R. 10 App. Cas. 354; Trevor v. Whitworth, L. R. 12 App. Cas. 409; McCormick v. Market Nat. Bank, 165 U. S. 538, 41 L. ed. 817; Union P. R. Co. v. Chicago, R. I. & P. R. Co. 163 U. S. 564, 41 L. ed. 265.

Messrs. John G. Carlisle and J. W. Kern, for defendant in error:

This court, recognizing the policy of the law in this respect, has decided that the comptroller has authority to make assessments upon the shareholders to pay debts, and that an assessment made for that purpose is conclusive both as to necessity for making it and as to the amount of each shareholder's liability.

Kennedy v. Gibson, 8 Wall. 498, 19 L. ed. 476; Casey v. Galli, 94 U. S. 673, 680, 24 L. ed. 168, 170; National Bank v. Case, 99 U. S. 628, 25 L. ed. 448; Waite v. Dowley, 94 U. S. 527, 24 L. ed. 181.

National banks are not expressly prohib ited by the law from acquiring or holding shares of stock in other corporations, but on the contrary, are permitted to do so under certain circumstances.

California Bank v. Kennedy, 167 U. S. 362, 42 L. ed. 198; Anderson v. Philadel phia Warehouse Co. 111 U. S. 479, 28 L. ed. 478; National Bank v. Case, 99 U. S. 628, 25 L. ed. 448; Bowden v. Johnson, 107 U. s. 251, 27 L. ed. 386.

One is estopped from denying his liability by voluntarily holding himself out to the public as the owner of stock.

Pullman v. Upton, 96 U. S. 328, 24 L. ed. 818; Sanger v. Upton, 91 U. S. 56, 23 L. ed. 220; Upton v. Tribilcock, 91 U. S. 45, 23 L. ed. 203; Webster v. Upton, 91 U. S. 65, 23 L. ed. 384; Casey v. Galli, 94 U. S. 673, 24 L. ed. 168.

The express language of the act of Congress imposing the liability on the party to whom the shares are transferred on the

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books of the bank estops the plaintiff in er- | as pledgee it may become the owner of the
ror to deny its obligation to pay the amount, collateral and be subject to liability as other
and thus deprive the creditors of the failed stockholders. So, also, a national bank may
bank of a security which the law clearly in- be conceded to possess the incidental power
tended to afford them. The liability is not of accepting in good faith stock of another
contractual, but statutory.
corporation as security for a previous indebt-
edness. It is clear, however, that a national
bank does not possess the power to deal in
stocks. The prohibition is implied from the
failure to grant the power."

Accordingly it was held in that case that a provision of the laws of the state of CaliIns.fornia, which declared a liability on the part of stockholders to pay the debts of a savings bank, in proportion to the amount of stock held by each, could not be enforced against a national bank, in whose name stood shares that the stock of the savings bank had not of stock in a savings bank, it being admitted been taken as security, and that the transac tion by which the stock was placed in the name of the national bank was one not in the course of the business of banking for which the bank was organized.

Bank of Redemption v. Boston, 125 U. S.
60, 31 L. ed. 689; Welles v. Larrabee, 36 Fed.
Rep. 866, 2 L. R. A. 471; Witters v. Sowles,
32 Fed. Rep. 767; Pauly v. State Loan & T.
Co. 165 U. S. 606, 41 L. ed. 844; Citizens'
State Bank v. Hawkins, 34 U. S. App. 423,
71 Fed. Rep. 369, 18 C. C. A. 78; Cooper
Co. v. Hawkins, 34 U. S. App. 428, 71 Fed.
Rep. 373, 18 C. C. A. 81; Keyser v. Hitz,
133 U. S. 138, 33 L. ed. 531.

[366] *Mr. Justice Shiras delivered the opinion

of the court:

The questions presented for our consideration in this case are whether one national bank can lawfully acquire and hold the stock of another as an investment, and, if not, whether, in the case of such an actual purchase, the bank is estopped to deny its liability, as an apparent stockholder, for an assessment on such stock ordered by the Comptroller of the Currency.

*It is suggested by the learned circuit [368} judge, in his opinion overruling a petition peals, that the question considered in the for a rehearing in the circuit court of apcase of California Nat. Bank v. Kennedy was the liability of a national bank as a the question in the present case is as to its stockholder in a state savings bank, while liability as a stockholder in another national bank, and that therefore it does not follow beyond question that the decision in the former case is decisive of the present one. U. S. App. 178.


By section 5136 of the Revised Statutes a national banking association is authorized "to exercise by its board of directors, or duly authorized officers and agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of indebtedness; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal security; and by obtaining, issuing, and circulating notes according to the provisions of this

No reason is given by the learned judge in support of the solidity of such a distinction, and none occurs to us. Indeed, we think that the reasons which disqualify a national bank from investing its money in the stock of another corporation are quite as obvious when that other corporation is a national bank as in the case of other corporations. The investment by national banks of their surplus funds in other national banks, situated, perhaps, in distant states, as in the present case, is plainly against the meaning and policy of the statutes from which they derive their powers, and evil consequences would be certain to ensue if such a course of conduct were countenanced as lawful. Thus, it is enacted, in section 5146, that "every director must, during his whole term of serv ice, 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 election, and must be residents therein during their continuance in office."

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. But if the funds of a bank in New Hampshire, instead of being retained in the custody and management of its directors. are 64 1009


In construing this provision, it was said [367]by this court, in *First National Bank v. Na tional Exchange Bank, 92 J. S 122 [23: 679], that "dealing in stocks is not expressly prohibited, but such prohibition is implied from the failure to grant the power. In the honest exercise of the power to compromise a doubtful debt owing to a bank, it can hardly be doubted that stock may be accepted in payment and satisfaction, with a view to their subsequent sale or conversion into money so as to make good or reduce an anticipated loss. Such a transaction would not amount to a dealing in stocks."

And in the recent case of California Nat. Bank v. Kennedy, 167 U. S. 362 [42: 198], it was said to be "settled that the United States statutes relative to national banks constitute the measure of the authority of such corporations, and that they cannot rightfully exercise any powers except those expressly granted, or which are incidental to carrying on the business for which they are established. No express power to acquire the stock of another corporation is conferred upon a national bank, but it has been held that, as incidental to the power to loan money on personal security, a bank may, in the usual course of doing such business, accept stock of another corporation as collateral, and by the enforcement of its rights 174 U. S. U. S., Book 43.

invested in the stock of a bank in Indiana, "It was argued on behalf of the plaintiff the policy of this wholesome provision of the that, even if the contract sued on was void, statute would be frustrated. The property because ultra vires and against public polof the local stockholders, so far as thus in- icy, yet that, having been fully performed on [369]vested, would not be managed by directors the part of the plaintiff, and the benefits of of their own selection, but by distant and it received by the defendant, for the period unknown persons. Another evil that might covered by the declaration, the defendant result, if large and wealthy banks were per- was estopped to set up the invalidity of the mitted to buy and hold the capital stock of contract as a defense to this action to recover other banks, would be that, in that way, the the compensation agreed on for that period. banking capital of a community might be But this argument, though sustained by deconcentrated in one concern, and business cisions in some of the states, finds no supmen be deprived of the advantages that at-port in the judgment of this court. tend competition between banks. Such ac- The view which this court has taken of the cumulation of capital would be in disregard question presented by this branch of the of the policy of the national banking law, as case, and the only view which appears to us seen in its numerous provisions regulating consistent with legal principles, is as folthe amount of the capital stock and the lows: methods to be pursued in increasing or reducing it. The smaller banks, in such a case, would be in fact, though not in form, branches of the larger one.

Section 5201 may also be referred to as indicating the policy of this legislation. It is in the following terms:

"No association shall make any loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and stock so purchased or acquired shall, within six months from the time of its purchase, be sold or disposed of at public or private sale; or, in default thereof, a receiver may be appointed to close up the business of the association."

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In Central Transportation Company v. Pullman's Palace Car Co. 139 U. S. 24 [35: 55], after an examination of the authorities, the conclusion was thus stated by Mr. Justice Gray:

"A contract of a corporation which is ultra vires in the proper sense, that is to say, outside the object of its creation as defined in the law of its organization, and therefore beyond the powers conferred upon it by the legislature, is not voidable only, but wholly void and of no legal effect. The objection to the contract is, not merely that the corporation ought not to have made it, but that it could not make it. The contract cannot be ratified by either party, because it could not be authorized by either. No performance on either side can give the unlawful contract any validity, or be the foundation of any right of action upon it.

"When a corporation is acting within the general scope of the powers conferred upon it by the legislature, the corporation, as well as persons contracting with it, may be estopped to deny that it has complied with the[371] legal formalities which are prerequisites to its existence or to its action, because such requisites might in fact have been complied with. But when the contract is beyond the powers conferred upon it by existing laws, neither the corporation nor the other party to the contract can be estopped by assenting to it, or by acting upon it, to show that it was prohibited by those laws."

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contract made by a corporation beyond the | It is doubtless within the scope of the Comp-
scope of its corporate powers is unlawful troller's duty, when informed by the reports
and void, and will not support an action, of the bank that such an investment has been
rests, as this court has often recognized and made, to direct that it be at once disposed
affirmed, upon three distinct grounds: The of, but the Comptroller's act in ordering an
obligation of anyone contracting with a cor- assessment, while conclusive as to the neces-
poration to take notice of the legal limits sity for making it, involves no judgment by
of its powers; the interest of the stockhold him as to the judicial rights of parties to be
ers not to be subject to risks which they have affected. While he, of course, assumes that
never undertaken, and, above all, the inter- there are stockholders to respond to his or-
est of the public that the corporation shall der, it is not his function to inquire or de-
not transcend the powers conferred upon it termine what, if any, stockholders are ex-
by law."

The conclusion reached was thus expressed:

"The claim that the bank, in consequence [872]of the receipt by it of dividends on the stock of the savings bank, is estopped from questioning its ownership and consequent liability, is but a reiteration of the contention that the acquiring of stock by the bank, under the circumstances disclosed, was not void but merely voidable. It would be a contradiction in terms to assert that there was a total want of power by any act to assume the liability, and yet to say that by a particular act the liability resulted. The transaction being absolutely void could not be confirmed or ratified."

Undoubtedly, the obligation is declared by the statute to attach to the ownership of the stock, and in that sense may be said to be statutory. But as the ownership of the stock, in most cases, arises from the voluntary act of the stockholder, he must be regarded as having agreed or contracted to be subject to the obligation.

However, whether, in the case of persons sui juris, this liability is to be regarded as a contractual incident to the ownership of the stock, or as a statutory obligation, does not seem to present a practical question in the present case.

The judgment of the Circuit Court of Appeals is reversed, the judgment of the Circuit Court is also reversed, and the cause is remanded to that court with directions to enter a judgment in conformity with this opinion.

WILLIAM M. PRICE, Administrator of
Henry C. Miller, Deceased, Appt.,

In the present case it is sought to escape the force of these decisions by the contention that the liability of the stockholder in a national bank to respond to an assessment in case of insolvency is not contractual, but statutory.


Under the act of March 3, 1891, a claimant may recover the value of his property taken from him by the Indians, but cannot recover consequential damages to other property resulting from the taking.


The jurisdiction of the court of claims cannot be enlarged by implication.



UNITED STATES and the Osage Indians.

(See S. C. Reporter's ed. 373–379.)

Act of March 3, 1891-jurisdiction of court of claims-property destroyed by Indians -construction of the act.

Consequential damages to property not taken or destroyed are not within the scope of the act authorizing recovery for damages to property taken or destroyed.


It is argued, on behalf of the receiver, that the object of the statute was to afford a speedy and effective remedy to the creditors of a failed bank, and that this object would be defeated in a great many cases if the Comptroller were obliged to inquire into the [373]validity of all the contracts by which the registered shareholders acquired their respective shares.

The force of this objection is not apparent.

The terms "damaged or destroyed" in the act of March 3, 1885, respecting allowances by the Interior Department of claims for Indian depredations, do not apply to property not damaged or destroyed, but which the owner was prevented from sending to market because his means of transportation were destroyed.

If the previous reasoning be sound, whereby the conclusion was reached that, by reason of the limitations and provisions of the national banking statutes, it is not competent for an association organized thereunder

[No. 247.]


to take upon itself, for investment, owner- Argued April 19, 1899. Decided May 15,
ship of such stock, no intention can be rea-
sonably imputed to Congress to subject the
stockholders and creditors thereof, for whose
protection those limitations and provisions
were designed, to the same liability by rea-
son of a void act on the part of the officers
of the bank, as would have resulted from a
lawful act.

PPEAL from a judgment of the Court of

Claims in favor of William M. Price, administrator, etc., against the United States et al. for the taking of certain property of the claimant by the Osage Indians. Affirmed.

See same case below, 33 Ct. Cl. 106.

Statement by Mr. Justice Brewer: This case comes to us on appeal from the Court of Claims. The matter of dispute is disclosed by the second and fourth findings of the court, which are as follows:

Second. "On the 26th day of June, 1847, near the Arkansas river, on the route from western Missouri to Santa Fé, at a place in

what is now the state of Kansas, Indians be- | R. Co. v. Minnesota, 134 U. S. 456, 33 L. ed. longing to the Osage tribe took and drove 980, 3 Inters. Com. Rep. 209. away 32 head of oxen, the property of said decedent, which at the time and place of tak[374]ing *were reasonably worth the sum of four hundred dollars ($400).

The purpose of the statute of 1891 was remedial, and the construction which the court of claims placed upon it in the case at bar defeats the primary purpose of the enactment.

United States v. Northwestern Express Stage & Transp. Co. 164 U. S. 686, 41 L. ed 599; United States v. Gorham, 165 U. S. 316, 41 L. ed. 729; Corralitos Stock Co. v. United States, 33 Ct. Cl. 342; Salois v. United States, 32 Ct. Cl. 68.

"At the time said oxen were taken they were being used by said decedent in the transportation of goods along the route aforesaid, and in consequence of such taking decedent was compelled to abandon the trip and to sell his portion of said goods and four (4) wagons belonging to him for the sum of one thousand two hundred dollars ($1,200).

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Messrs. Frank B. Crosthwaite and John G. Thompson, Assistant Attorney General, for appellees.

*Mr. Justice Brewer delivered the opin-[374] ion of the court:

The fourth finding simply shows that a claim was presented to the Interior Department and evidence filed in support thereof. the presentation of the claim and of the filThe petition alleges, not merely the fact of ing of evidence to sustain it, but also an award by the Secretary of the amount of $6,800, a sum covering both the value of the property taken by the Indians and the conse quential damages resulting therefrom. A demurrer by the defendants having been overruled, a traverse was filed, denying all the allegations of the petition. Taking the[375] pleadings with the findings we might justly assume that there had never been any award by the Secretary of the Interior, but only a presentation of a claim and evidence in support thereof; but we notice that the court of claims speaks of the award as though it was a fact found. We feel, therefore, constrained to consider the case on that basis.

The conclusions of the Secretary, both as to liability and amount, were placed before the court for consideration by the election of the defendants to reopen the case. This election opened the whole case. Leighton v. United States, 161 U. S. 291 [40: 703].

The liability of the defendants is not disputed. The single question presented is as to the amount which may be recovered. The value of the property taken was awarded, and the only question is whether the plaintiff was entitled, not merely to the value of that property, but also to the damages to other property which resulted as a consequence of the taking. The property which was not taken or destroyed, which remained in the possession of the plaintiff's intestate, which he could do with as he pleased, the title and possession of which were not disturbed, was, as the findings show, reasonably worth $7,600. Because out in the unoccupied terri tory in which the taking of the oxen took place there was no market, and because he

1 no means of transporting the property ken to a convenient market, he was to the whim or caprice of a passing and sold it to him for $1,200. The by entailed upon him he claims to der the provisions of the statute of 01. 20 US Stat. at. L. chap.

IT to recover is a

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