First National Bank of Charlotte v. National Exchange Bank of Baltimore. judgment and discretion, except to the extent that they are restrained by the charter or by-laws. Banks may do, in this behalf, whatever natural persons could do under like circumstances.

To some extent it has been thought expedient in the National Banking Act to limit this power. Thus,,as to real estate, it is provided (Rev. Stat., § 5137; 13 Stat. 107, § 28) that it may be accepted in good faith as security for, or in payment of, debts previously contracted; but, if accepted in payment, it must not be retained more than five years. So, while a bank is expressly prohibited (§ 5201; 13 Stat. 110, § 35) from loaning money upon or purchasing its own stock, special authority is given for the acceptance of its shares as security for, and in payment of, debts previously contracted in good faith; but all shares purchased under this power must be again sold or disposed of at private or public sale within six months from the time they are acquired.

Dealing in stocks is not expressly prohibited; but such a 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 stocks 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.

It was, in effect, so decided in Fleckner v. Bank U. S., 8 Wheat. 351, where it was held that a prohibition against trading and dealing was nothing more than a prohibition against engaging in the ordinary business of buying and selling for profit, and did not include purchases resulting from ordinary banking transactions. For this reason, among others, the acceptance of an indorsed note in payment of a debt due was decided not to be a "dealing" in notes. Of course, all such transactions must be compromises in good faith, and not mere cloaks or devices to cover unauthorized practices.

It is difficult to see how a debt due from, or a contested obligation resting upon a bank, occupies any different position in respect to this power of adjustment and compromise from that of a debt owing to it. The object in both cases is to get rid of or reduce an apprehended loss growing out of legitimate business; and it would seem that whatever might be done in the one case ought not to be excluded from the other under the same circumstances. Often a discharge by a bank of its own obligation creates a debt due to it

People v. Commissioners of Taxes and Assessments.

from another. Such was the case here. Bayne, without authority, transferred to the defendant, as collateral security for his indebtedness, a certificate of deposit issued to him by the plaintiff, and afterward collected the money due upon the certificate from the plaintiff without disclosing the transfer. Any payment by the plaintiff to the defendant, therefore, in discharge of its liability upon the certificate, became a lawful charge against Bayne. He was insolvent. It was, on this account, not only the right, but the duty of the officers and agents of the plaintiff, to protect by their arrangements, as far as possible, the stockholders whose interests they represented. This was necessarily left to their judgment and discretion. No question of good faith is involved. The transaction for all the purposes of this suit must be taken to have been, in fact, what it purports to be,-a fair and honest compromise of an outstanding claim, with a view to ultimate protection against an impending loss. As such, we think it was within the corporate powers of the bank, and that the Court of Appeals did not err in so holding.

Judgment affirmed.

PEOPLE V. COMMISSIONERS OF TAXES AND ASSESSMENTS.

(94 U. S. 415.)

Bank shares to be taxed at their market value.

The shares of stock of a National bank in New York should be taxed at their market value.*

N error to the Court of Appeals of New York.

IN

The proceedings were instituted to review an assessment made

by the respondents. The opinion states the facts.

Daniel D. Lord, for the plaintiff in error.

Hugh L. Cole, contra.

Mr. Justice HUNT delivered the opinion of the court.

The relators complain that their shares of stock in the Gallatin

*See Hepburn v. School Directors, ante, p. 113.

People v. Commissioners of Taxes and Assessments.

National Bank are assessed at too large a sum. They appeal from the judgment of the Court of Appeals sustaining the determination of the commissioners of taxes, which fixed the taxable value of such shares at $59 each, whereas the par or nominal value of such shares is $50 each.

Many grave questions were discussed by the counsel upon the argument, to which we do not think it necessary to refer. We place our judgment upon a single ground.

The laws of the State of New York provide that shares of stock like those we refer to shall be assessed "on the value" of the shares, and at "their full and true value, as they (the assessors) would appraise the same in payment of a just debt due from a solvent debtor," deducting the proportional value of the real estate owned by the bank. 2 Stat. N. Y. 1866, p. 1647, ch. 71; 1 R. S. N. Y. 393, § 17.

The assessors were justified, under this authority, in fixing the value as we have stated. The appraisement included the reserve fund, which is as much a part of the property of the bank, and goes to fix the value of shares, equally as if it were not called by that name, but remained as a part of the specie, bills discounted, or other funds of the bank, undistinguished from the general mass. The forty-first section of the act of Congress of June, 1864, provides that the States may tax the shares of National banks, subject to two restrictions: 1st. That this taxation shall not be "at a greater rate than is assessed upon other moneyed capital in the hands of the individual citizens of such State;" and, 2d, "that the tax so imposed ...... shall not exceed the rate imposed upon the shares of any of the banks organized under the authority of the State where such association is located." 13 Stat. 112. In Hepburn v. The School Directors, this court decided that, in making assessment of bank shares by this authority, it was competent to assess them at an amount above their par value. 23 Wall. 480.

But the relators insist that, by the act of the legislature of the State of New York, passed March 9, 1865, it was enacted that the shares of a bank could not be assessed at an amount greater than the par value thereof, and that such statute created a contract with the banks organized under the same, which could not be altered. by a subsequent legislature. Hence, it is argued that the act of 1866, authorizing such shares to be assessed at a rate which may

People v. Commissioners of Taxes and Assessments.

exceed their par value, is a law impairing the obligation of a contract, and is void.

*

*

*

The section of the statute of 1865 referred to is as follows, viz.: "SECTION 10. All the shares in any of the said banking associations, organized under this act, or the act of Congress held by any person or body corporate, shall be included in the valuation of the personal property of such person or body corporate or corporation, in the assessment of taxes in the town or ward where such banking association is located, and not elsewhere, whether the holder thereof reside in such town or ward, or not; but not at a greater rate than is assessed upon other moneyed capital in the hands of individuals of this State. Provided, that the tax so imposed upon such shares shall not exceed the par value thereof; and provided further, that the real estate of such associations shall be subject to State, county or municipal taxes, to the same extent, according to its value, as other real estate is taxed."

Had this been a valid statute, we might have been called upon to discuss the point raised. But it was held in Van Allen v. The Assessors, 3 Wall. 573, that this statute was fatally defective, in that it did not contain a proviso that the tax thereby authorized to be imposed should not exceed the rate imposed upon banks organized under the authority of the State. The system of taxation devised by the statute of 1865 was adjudged to be illegal and void. The clause now laid hold of by the relators was simply a proviso or qualification of that system. It necessarily fell with it. When the main idea was thrown out of existence, the subordinate parts, which were adjuncts of and dependent upon the main theory, ceased to exist. There never was, legally speaking, any such proviso or enactment as the relators claim the benefit of. Of course, there could be no such thing as a violation of contract contained in a proviso which never existed. Warren v. The Mayor, 2 Gray, 98, 99; Sedgwick on Statutes, 413, 414 (ed. of 1874).

Judgment affirmed.

National Bank of Commonwealth v. Mechanics' National Bank.

NATIONAL BANK OF COMMONWEALTH V. MECHANICS' NATIONAL

BANK.

(94 U. S. 437.)

Interest on deposits after demand and refusal — Nature of claim for deposits. A National bank, holding deposits, refused to pay the same on demand and thereafter a receiver was appointed. Held, that the depositor was entitled to interest thereon from the date of the demand.*

The entire principal of the deposits, but no interest thereon, was paid by the receiver. Held, that interest upon the aggregate of unpaid interest was recoverable.

The claims of depositors in a suspended National bank are, when proved to the satisfaction of the Comptroller of the Currency, on the same footing as if they were reduced to judgments.

ER

IRROR to the Circuit Court of the United States for the Southern District of New York.

Solicitor-General Phillips, for plaintiff in error.

William S. Opdyke, contra.

Mr. Justice SWAYNE delivered the opinion of the court.

This suit was brought by the defendant in error as an original claimant, and as the assignee of other parties.

All the claims have a common origin, and involve the same principle.

On

On the 22d of November, 1873, the Bank of the Commonwealth refused to pay its circulating notes on demand, and became in default. The Comptroller of the Currency appointed a receiver, and the bank has since been in his hands. The Mechanics' Bank and its assignors had funds on deposit. the 24th of September, 1873, all the parties demanded payment. Nothing was paid. Installments on account of the principal debts were subsequently paid from time to time to each of the parties. On the 20th of November, 1874, the last installment was paid in each case, and the principal debts were thereby extinguished. At each payment, interest from the 24th of September, 1873, on the amount so paid was demanded and refused. The other parties assigned to the defendant in error their claims respectively for such interest. The

*See Chemical National Bank v. Bailey, post.