UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY
 
 PARK'S 
 
 Banking Law of Georgia 
 
 AS AMENDED 1920 
 
 with the 
 
 Trust Company and State Depository Acts. 
 ANNOTATED 
 
 DIGEST OF DECISIONS 
 
 of the 
 
 Supreme Court and Court of Appeals of Georgia 
 
 on 
 
 Banks and Banking 
 
 Opinions of the General Counsel 
 
 of the 
 
 Georgia Bankers' Association 
 
 1910-1920 
 
 By 
 
 ORVILLE A. PARK 
 /// 
 
 General Counsel of the Georgia Bankers' Association, 
 Compiler Park's Annotated Code of Georgia 
 
 Atlanta 
 
 THE HARRISON COMPANY 
 1920
 
 Copyright, 1920 
 
 By 
 THE HARRISON COMPANY.
 
 rx 
 
 x 
 
 PREFACE. 
 
 Having been intimately connected as General Counsel of the 
 Georgia Bankers' Association with the efforts which finally cul- 
 minated in the passage of the Banking Act of 1919, I was re- 
 quested shortly after the passage of the Act to prepare an anno- 
 tated and indexed copy, noting particularly the changes in the law 
 and the sources from which the various sections were derived. 
 
 I determined to broaden somewhat the scope of the work and 
 to include the Trust Company Act with its several amendments, 
 the law creating and regulating State depositories, and a few 
 other statutes relating to banks. As comparatively few of the sec- 
 tions of the new Act had received judicial construction, it seemed 
 best to make a separate digest of the decisions of the Supreme 
 Court and Court of Appeals of Georgia on banks and banking. 
 This digest is little more than a rearrangement of the notes in 
 Park's Annotated Code of Georgia, particularly the General Note 
 on Banks and Banking. 
 
 I had prepared for publication, at the instance of the Georgia 
 Bankers' Association, the manuscript for a small volume of opin- 
 ions given to members of the Association on questions of banking 
 law, negotiable instruments and kindred topics. Having decided 
 to annotate the banking law and to prepare the digest of decisions, 
 it was thought best to include in the one volume the banking opin- 
 ions, so that the bankers and bank attorneys of Georgia, for whose 
 benefit primarily the work was undertaken, should have in one 
 volume the banking law of Georgia with a sort of textbook on the 
 general subject. 
 
 Unexpected delays in the completion of the manuscript and the 
 printing of the book delayed its completion until shortly before 
 the 1920 session of the General Assembly. A bill having been in- 
 troduced early in the session at the instance of the Legislative Com- 
 mittee of the Georgia Bankers' Association to amend the Banking 
 Act in a number of particulars, it was deemed wise to delay the 
 publication until the fate of these amendments could be determined 
 and to incorporate in the book such changes and amendments as 
 might be adopted. This has been done.
 
 iv PREFACE. 
 
 Competent critics have pronounced the Georgia Banking Act of 
 1919 one of the most complete and modern adopted so far by any 
 American State. The new Department of Banking created by it 
 has been functioning successfully and satisfactorily since January 
 1, 1920. Like all new machinery, a little time is required for ad- 
 justment. It is earnestly hoped that this volume will make the 
 law more readily available and better understood, arid therefore 
 will assist to some small extent in its successful operation. 
 
 ORVILLE A. PARK. 
 
 Mac on, Georgia, August 20, 1920.
 
 ABBREVIATIONS and CITATIONS. 
 
 / or Ga. Georgia Supreme Court Reports. Thus 76/218 or 
 76 Ga., 218, means the 76th volume of Georgia Supreme 
 Court Reports, page 218. 
 
 App. or Ga. App. Georgia Court of Appeals Reports. 
 
 Code Refers to sections of Park's Annotated Code of 
 Georgia. The sections in this Code are the same as those 
 of the Code of 1910, the additional sections in Park's Code 
 being indicated by small letters in parentheses following 
 the number of the sections. 
 
 P. C. Vol. 6, Park's Annotated Code, the Penal Code. Sec- 
 tions in this Code are the same as in Vol. 2, Code of 1910. 
 
 U. S. United States Supreme Court Reports, official edition. 
 
 L. Ed. Lawyers' Edition United States Supreme Court Re- 
 ports. 
 
 S. E. Southeastern Reporter. 
 
 Fed. Federal Reporter. 
 
 U. S. R. S. United States Revised Statutes. 
 
 U. S. Comp. Stat. United States Compiled Statutes. 
 
 References to the New York Act are to the sections of that Act 
 as found in Morgan & Parker's New York Banking Law, 4th Ed., 
 1919. 
 
 References to the Alabama Law are to the official publication of 
 the Alabama Banking Act of 1911 as amended. 
 
 The usual abbreviations of the official reports of the several 
 States, of the National Reporter System, and of the several series 
 of selected cases, are used.
 
 CONTENTS. 
 
 PART I. 
 
 PAGE 
 
 Historical Note, ix 
 
 Banking Act of 1919, , 1 
 
 Trust Company Act, 1 14 
 
 Act Authorizing Banks to Acquire Trust Company 
 
 Powers, 121 
 
 Act Authorizing National Banks to Exercise Trust 
 
 Powers, 124 
 
 State Depository Act, 124 
 
 Act Authorizing County Treasurers to Deposit County 
 
 Funds in State Depositories, 134 
 
 General Tax Act As Related to Banks, 135 
 
 Powers of Foreign Executors, Administrators, or 
 
 Guardians With Respect to Dividends and Stock, . . . 136 
 
 Index to Statutes, 137 
 
 PART II. 
 
 Digest of Decisions of Supreme Court and Court of Ap- 
 peals of Georgia on Banks and Banking, 185 
 
 PART III. 
 
 Opinions'of the General Counsel, Georgia Bankers' As- 
 sociation, 221 
 
 vii
 
 HISTORICAL NOTE. 
 
 Prior to the amendment of the Constitution of Georgia, adopted 
 in 1891, conferring upon the Secretary of State the power to grant 
 charters to banking companies, banks were incorporated under 
 special acts of the Legislature; these special charters differing 
 widely as to the powers and privileges conferred and as to the 
 limitations and liabilities imposed. 
 
 The earlier legislation of a general character related, in large 
 part, to bank bills and the powers of and limitations upon banks 
 as banks of issue. As early, however, as 1832 an act was passed 
 requiring banks to make semiannual returns to the Governor, giv- 
 ing certain information as to their condition. This act was 
 amended in 1850, and as so amended continued to be practically 
 the only general measure regulating banks until 1889, when the 
 State Treasurer was made ex-officio Bank Examiner and required 
 to make an examination of all banking corporations twice each 
 year. The Act of 1894 substituted for the semiannual reports to 
 the Governor not exceeding four statements a year to the State 
 Bank Examiner, which statements were required to be published. 
 Upon the adoption of the constitutional amendment above re- 
 ferred to, a general law for the incorporation of banks was en- 
 acted. This was superseded by the Act of 1893, which remained 
 in force until the present law went into effect. The amendment 
 of bank charters in certain particulars wp authorized in 1896. 
 
 There was no considerable change in the law until the Bank 
 Bureau Act of 1907 was adopted. This act, following in many 
 particulars the National Bank Act, did much to create a modern 
 banking system. Unfortunately, however, it left in force much 
 of the old law which had been brought forward from the days 
 when the principal function of banks was the issuance of circu- 
 lating notes or bank bills. It made no attempt to harmonize pre- 
 vious laws. It was notably deficient in failing to impose any re- 
 strictions upon or require any supervision over the organization of 
 a bank. In granting and amending charters under the Act of 
 1893, the Secretary of State had no discretion, but performed a 
 
 be
 
 x HISTORICAL NOTE. 
 
 ministerial function only. Nor did the Bank Bureau Act make 
 adequate provision for the liquidation of a bank and its adminis- 
 tration in the event of insolvency. The old Acts of 1840 and 1842 
 authorized the forfeiture of charters in certain cases and the 
 appointment of receivers to liquidate the banks when such for- 
 feiture was had. These acts continued to afford the only ma- 
 chinery for administering the assets of a bank in the event of its 
 failure. 
 
 The unsatisfactory condition of the banking laws after the 
 passage of the act creating the Bank Bureau led the writer to say 
 in the preface to the Georgia Bankers' Code (published in 1909) : 
 "The banking laws of Georgia are in a very unsatisfactory, not 
 to say chaotic, condition. No attempt to bring them into a sys- 
 tematic or harmonious whole has been made. There are numer- 
 ous provisions, still the law of the State, which were applicable to 
 the old banks of issue but which are now entirely archaic and 
 useless. Other statutes have been enacted looking to the creation 
 of banks of issue when Congress shall see fit to remove the ten 
 per cent, tax on State bank notes. These are also laws, but 
 whether applicable to banks as at present organized and to what 
 extent remains to be decided. * * * Some of the legislative 
 acts seem to have been passed in ignorance or disregard of exist- 
 ing laws, and some statutes have been amended or changed so 
 often that it is difficult to determine what the present law really 
 is. The Act of 1907 creating the Bank Bureau is the most serious 
 attempt to regulate the business of banking which has been made 
 in some years, but this act is very crude and unsatisfactory. It 
 enacts as new provisions which were the law long before the Code 
 of 1895. It apparently ignores other Code sections, leaving it in 
 doubt as to whether they are still the law." This characterization 
 of the law has been qu<3^d with approval more than once by dif- 
 ferent State Treasurers in their efforts to secure the adoption of 
 a more satisfactory banking code. 
 
 In 1911, by joint resolution, the General Assembly appointed 
 a commission with authority to sit in vacation and prepare and 
 submit a comprehensive banking act. This Commission invited 
 the Legislative Committee of the Georgia Bankers' Association, 
 of which Mr. Joseph A. McCord, of Atlanta, was the chairman, 
 and the writer as the General Counsel of the Association, to 
 meet with the Commission and assist it in its labors. To the 
 writer was assigned the task of drafting the bill. In its prep- 
 aration the laws of a number of States were carefully consid-
 
 HISTORICAL NOTE. xi 
 
 ered. The sources of the bill as prepared were principally the 
 Georgia law, the National Banking Act with its amendments, the 
 Banking Laws of New York as revised in 1909, and the new Bank- 
 ing Act of Alabama adopted in 1911. The proposed act, as 
 drafted and approved by the Commission, was introduced in both 
 houses of the General Assembly at the session of 1912. The com- 
 mittees of the two houses to which the bill was referred held 
 joint sessions and invited bankers and others interested to discuss 
 the bill, which was considered and acted upon section by section. 
 With numerous amendments it was reported favorably by the 
 committees, and with a few minor changes passed the Senate. It 
 came up for final consideration in the House on the last night of 
 the second session, and on account of its length was tabled to 
 make way for more urgent legislation. At almost every session 
 of the Legislature since bills to amend the banking laws have 
 been introduced, but comparatively few acts have been passed, 
 and none of these has affected to any considerable degree the 
 banking system, its supervision or regulation. 
 
 The Legislature in 1918 proposed an amendment to the Con- 
 stitution, increasing the salary of the State Treasurer and mak- 
 ing provision for the clerical and other expenses of his office. 
 The amendment provided that it should take effect whenever a 
 separate Department of Banking should be created and the Treas- 
 urer relieved of his duties as ex-officio State Bank Examiner. 
 At the general election in 1918 this amendment was duly ratified 
 by the people. This at last opened the way for a modern banking 
 system under the control of a department charged alone with its 
 supervision and direction. . 
 
 The Legislative Committee of the Georgia Bankers' Associa- 
 tion, cooperating with a" like committee of the Country Bankers' 
 Association, undertook to prepare and submit for the considera- 
 tion of the General Assembly at the session of 1919 a complete 
 banking code, designed to supersede all existing laws on banks 
 and banking. The bill prepared by the Legislative Commission 
 in 1912 was taken as the basis for the proposed act. Numerous 
 changes were made so as to incorporate in the bill such new laws 
 as had been enacted in Georgia since its preparation and to in- 
 clude also a number of provisions taken from the recent statutes 
 of other States and from the Federal Reserve Act. The writer, 
 as General Counsel for the Georgia Bankers' Association, with the 
 assistance of Alexander W. Smith, Esq., of Atlanta, General 
 Counsel for the Country Bankers' Association, undertook to per-
 
 xii HISTORICAL NOTE. 
 
 feet the bill. As finally submitted, it was approved by the As- 
 sociations at their annual conventions. It was endorsed by the 
 State Bank Examiner, and the Budget and Efficiency Commis- 
 sion. Some minor amendments were made as the result of hear- 
 ings by the committees of the General Assembly, but with re- 
 markably few changes the bill passed both houses almost unani- 
 mously and was approved by the Governor on August 19, 1919.
 
 PART I. 
 
 The Banking Act of 1919 as Amended, 
 The Trust Company Act. 
 The State Depository Act. 
 Miscellaneous Statutes Affecting Banks.
 
 AN ACT TO REGULATE BANKING IN THE STATE; OF GEORGIA; TO 
 CREATE THE DEPARTMENT OF BANKING OF THE STATE OF 
 GEORGIA; TO PROVIDE FOR THE INCORPORATION OF BANKS, AND 
 THE AMENDMENT, RENEWAL AND SURRENDER OF CHARTERS; 
 TO PROVIDE PENALTIES FOR THE VIOLATIONS OF LAWS WITH 
 REFERENCE TO BANKING AND THE BANKING BUSINESS; AND 
 FOR OTHER PURPOSES. 
 
 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF 
 GtEORGIA AND IT IS HEREBY ENACTED BY AUTHORITY OF THE 
 SAME, AS FOLLOWS : 
 
 ARTICLE I. 
 
 Preliminary Provisions. 
 
 1. SECTION 1. Bank, Definition of. 
 
 The term "bank" as used in this act means any moneyed cor- 
 poration authorized by law to receive deposits of money and com- 
 mercial paper, to make loans,, to discount bills, notes, and other 
 commercial paper, to buy and sell bills of exchange, and to issue 
 bills, notes, acceptances or other evidences of debt, and shall in- 
 clude incorporated banks, banking companies, trust companies and 
 other corporations doing a banking business in this State, but shall 
 not include private bankers, copartnerships or voluntary associa^- 
 tions doing a banking business, or national banking associations, 
 or building and loan associations or similar associations or cor- 
 porations. The term "bank" shall include a branch bank unless 
 the context indicates that it does not. 
 
 This definition is taken substantially from the New York Banking 
 Law, 2. 
 
 Under the Bank Bureau Act of 1907 trust companies authorized 
 to receive deposits were put under the control of the State Bank 
 Examiner and required to conform to the laws regulating banks. 
 Code, 2286. The same act excluded from such control private banks 
 and bankers. Code, 2311. Under Code, 2346, the term "bank" 
 included the "parent bank, its branches and agencies." 
 
 Other definitions : 
 
 "A bank is an institution for the custody and loan of money, the 
 exchange and transmission of the same by means of bills and drafts, 
 and the issuance of its own promissory notes, payable to bearer, as 
 
 1
 
 2 PARK'S BANKING LAW otf GEORGIA. 
 
 currency; or for the exercise of one or more of these functions." 
 3 Am. & Eng. Enc. of Law, 2d ed., p. 789. 
 
 "Every incorporated or other bank, and every person, firm or 
 company 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 promis- 
 sory notes, or where stocks, bonds, bullion, bills of exchange, or 
 promissory notes are received for discount or for sale, shall be re- 
 garded as a bank or as a banker." U. S. Rev. Stat., 3407. 
 
 "Having a place of business where deposits are received and paid 
 out on checks and where money is loaned upon security is the sub- 
 stance of banking." Warren v. Shook, 91 U. S. 704. 
 
 "National banks are banking institutions created under the laws 
 of the United States which are private associations authorized by 
 Congress for the joint purposes of convenience and profit to the 
 holders of United States bonds, and of furnishing the public with 
 a convenient and uniform circulating medium." Linton v. Childs, 
 105 Ga. 569. 
 
 "A savings bank in the strict sense of the term is an institution 
 the object of which is to receive and safely invest savings, thus af- 
 fording to its depositors the advantages of security and interest for 
 their money." 24 Am. & Eng. Enc. of Law, 2d ed., p. 1243. 
 
 "An institution receiving savings deposits and paying interest 
 thereon and whose deposits are not subject to check is a savings 
 institution under the laws of Georgia, whether such an institution 
 has a capital stock or simply operates upon its deposits." Dotten- 
 heim v. Union Savings Bank & Trust Co., 114 Ga. 788. 
 
 "A trust company is a corporation created for the purpose of 
 administering trusts and trust funds, acting as agent, trustee or 
 other fiduciary capacity. It is not a bank though some of its busi- 
 ness is closely akin to banking and many banks are also trust com- 
 panies." 3 Am. & Eng. Enc. of Law, 2d ed., 791 ; Magee on Banks 
 and Banking, p. 28. 
 
 2. SEC. 2. Depositors. 
 
 The term "depositor" as used in this act means any person who 
 shall deposit money or commercial paper in any bank, either on 
 open account, subject to check, or to be withdrawn otherwise than 
 by check, whether interest is allowed thereon or not, and shall 
 include holders of demand and time certificates of deposit law- 
 fully issued. 
 
 The courts have not agreed as to whether the holder of a cer- 
 tificate of deposit was to be classed as a depositor or a note holder 
 of the issuing bank. -The Supreme Court of Georgia, in Lamar v. 
 Taylor, 141 Ga. 227, held that holders of certificates of deposit are 
 depositors within the meaning of the provision imposing on stock- 
 holders a statutory liability for the payment of depositors. This 
 section is intended to relieve all doubt as to the status of depositors. 
 Under it, one depositing money is a depositor, whether he holds a 
 certificate, collects interest, or deposits simply on open account sub- 
 ject to check. 
 
 "When money is placed in a bank on general deposit, the title 
 to the money immediately passes to the bank, and the relation of 
 debtor and creditor is created between the bank and the depositor. 
 The moment the deposit is made, the credit of the banker is sub- 
 stituted for the money." McGregor v. Battle, 128 Ga. 577 (1).
 
 BANKING ACT OF 1919. 3 
 
 "A bank is not liable for interest on funds held on general deposit 
 in the absence of a special contract therefor." American National 
 Bank v. Burke. 81 Ga. 597. 
 
 "Deposits of money in a bank do not constitute a case of naked 
 deposit, the use of the money being a valuable consideration. A 
 special deposit of a sealed package of money would be a naked de- 
 posit." Code, 3496. 
 
 "By habitually receiving through its cashier, special deposits to be 
 kept gratuitously for mere accommodation, a bank will incur liabil- 
 ity for gross negligence in respect to any such deposits, received in 
 the usual way." Chattahoochee Natl. Bank v. Schley, 58 Ga. 369. 
 
 "Subject to check" means subject to payment without limitation or 
 restriction, except that the check must be presented to the bank 
 within banking hours, on banking days." Dottenheim v. Union 
 Savings Bank & Tr. Co., 114 Ga. 788. 
 
 3. SEC. 3. Branch Banks. 
 
 Banks whose capital has been fully paid in and is unimpaired 
 may establish branches in the cities in which they are located or 
 elsewhere, after having first obtained the written approval of the 
 Superintendent of Banks, which approval may be given or with- 
 held by the Superintendent in his discretion, and shall not be given 
 until he shall have ascertained to his satisfaction that the public 
 convenience and advantage will be promoted by the opening of 
 such branch. 
 
 Such branch banks shall be operated as branches and under the 
 name of the parent bank, and under the control and direction of 
 the board of directors and executive officers of said parent bank. 
 
 The board of directors of the parent bank shall elect a cashier, 
 and such other officers as may be required to properly conduct the 
 business of said branch, and a board of directors, or loan com- 
 mittee, who shall be responsible for the conduct and management 
 of said branch but not of the parent bank, or of any other branch 
 save that of which they are officers, directors, or committee. 
 
 At the time of the establishment of any branch the board of di- 
 rectors of the parent bank shall set aside for the exclusive use of 
 the said branch such proportion of its capital [or surplus]* as may 
 be required by the Superintendent of Banks ; in no event less than 
 is required for the organization of a bank in the city, town or vil- 
 lage in which the branch shall be located. Provided, That the par- 
 ent bank shall not by such assignment of a portion of its capital 
 reduce the capital to an amount less than is required for the or- 
 ganization of a bank in the city, town or village in which said 
 parent bank is located ; [nor shall the parent bank by such assign- 
 ment of a portion of its surplus reduce the surplus account to an 
 amount less than twenty (20) per cent, of its capital.]* 
 
 *Words enclosed in brackets added by Act approved August 14, 1920.
 
 4 PARK'S BANKING LAW OF GEORGIA. 
 
 Branch banks shall be taxed on the capital set aside to their 
 exclusive use in the counties, municipalities and districts in which 
 they are located, and the parent bank shall be relieved of taxation 
 to the extent of the capital set aside for the exclusive use of such 
 branches. 
 
 The general law for the incorporation of banks made no pro- 
 vision for branch banks. A number of the old charters granted by 
 special acts of the Legislature authorized the establishment of 
 branches, and the Act of 1859, appearing in the first Code (1863) 
 as 1433, provided that "the term bank includes the parent bank, 
 its branches, if any, and agencies." This act has been brought 
 forward in all the Codes, appearing in Park's Annotated Code as 
 2346. The Act of 1862 (Code, 2364) authorized suits against banks 
 in any county in which an agency had been established. The Gen- 
 eral Tax Acts provide that all property used in operating a branch 
 bank shall be returned for taxation in the county where such 
 branch bank may be located. Code, 991. But while the general law 
 did not provide for branch banks, branches were established by 
 a number of banks, and the right to establish them seems not to 
 have been questioned. This section was intended to give branch 
 banks a definite status and to provide for the method of conduct- 
 ing them and their relations with the parent bank. The requirement 
 that a definite portion of the capital must be assigned to the 
 branches is in keeping with the requirements of the U. S. Revised 
 Statutes, 5155, ( 9695 U. S. Comp. Stat.,) which provide that State 
 banks having branches, the capital being joint and assigned to and 
 used by the mother bank and branches in definite proportions, may 
 be incorporated as national banks and may retain such branches. 
 
 4. SEC. 4. Private Banks. 
 
 No private person, firm, or voluntary association engaged in the 
 business of banking in this State, not subject to the supervision of 
 the Superintendent of Banks, and no private corporation, except a 
 bank duly chartered and organized under the laws of this State or 
 under the Acts of Congress, shall make use of any office sign at 
 the place where such business is transacted, having thereon any 
 name importing a corporation, or the name of any city, town or 
 county, or other words, indicating that such office or place of busi- 
 ness is that of a regular chartered bank; nor shall such person, 
 firm, or corporation make use of or circulate any letter-heads, bill- 
 heads, blank notes, blank receipts, certificates, circulars, or any 
 written or printed paper whereon such name importing a corpora- 
 tion, or name wherein the name of any city, town, or county is 
 used, or any other words, indicating that such business is the busi- 
 ness of a regularly chartered bank : Provided, That no private 
 bank engaged in business at the time of the passage of this act 
 shall be required to change the name adopted and in use by it. 
 
 No person, firm, or voluntary association, or private corpora- 
 tion, other than a regularly chartered and organized bank, shall
 
 BANKING ACT OF 1919. 5 
 
 use the words "bank," "banker," "banking company," "banking 
 house," or any other similar name indicating that the business 
 done is that of a bank, either upon any office sign at its place of 
 business or upon any of its letter-heads, bill-heads, blank notes, 
 receipts, certificates, circulars, or any other written or printed 
 paper, without also using therewith the words plainly written or 
 printed, so that the same may be readily read, "Private Bank, 
 Not Incorporated," and every person, firm, association, or private 
 corporation other than a regularly chartered bank, advertising to 
 receive, or receiving deposits, shall at the window or desk at which 
 such deposits are received place a conspicuous sign with letters 
 not less than one inch in height, upon which shall be printed the 
 words, "Private Bank, Not Incorporated." Provided, That any 
 private banker or bankers, engaged in the banking business at the 
 time of the passage of this act, may continue to use, without fur- 
 ther qualification or restriction, the word "banker" or "bankers," 
 where the use of their names conveys unmistakably that they are 
 not incorporated. 
 
 Code, 2287, provides that any individual firm or corporation 
 doing a banking business may prefix before its name the words 
 "banking house of," and may affix after its name the words "bank 
 or banker or bankers," while Code, 2311, excludes private banks 
 and bankers from the supervision of the State Bank Examiner. 
 The Act of 1897, p. 59, provided for the examination of private 
 banks, and further provided that private bankers should have 
 stamped upon their stationery, letter-heads and envelopes the words 
 "not incorporated." This act was repealed by the Act of 1898, p. 
 72. The prohibition on the use of the words "bank," "banking com- 
 pany," etc., by a private banker, unless he shall indicate that the 
 bank is not incorporated, is substantially the same as the provision 
 of the New York law, 141. The National Bank Act contains a 
 like prohibition of the use of the word "national" by banks other 
 than national banking associations, 5243, U. S. R. S. ; 9835 U. S. 
 Comp. Stat. 
 
 "Any private person, firm, or unincorporated company who con- 
 ducts the business of banking without a charter and without any 
 special privilege or authority of law is a private banker. Such 
 a bank has no capital stock, as is required for a regular bank. De- 
 posits in such a bank are simply loans to the banker on his individual 
 credit." Magee on Banks and Banking, p. 23. 
 
 5. SEC. 5. Insolvency Defined. 
 
 A bank shall be deemed to be insolvent, first, when it can not 
 meet its liabilities as they become due in the regular course of busi- 
 ness ; second, when the actual cash market value of its assets is in- 
 sufficient to pay its liabilities to depositors and other creditors ; 
 third, when its reserve shall fall under the amount herein required 
 and it shall fail to make good such reserve within thirty (30) days 
 after being required to do so by the Superintendent of Banks.
 
 6 PARK'S BANKING LAW OF GEORGIA. 
 
 Under the Bankruptcy Act of 1898, 1, "A person shall be 
 deemed insolvent * * * when the aggregate of his property 
 * * * shall not at a fair valuation be sufficient in amount to pay 
 his debts." The usual definition of insolvency, however, is "inabil- 
 ity to pay debts as they become due in the usual course of business." 
 Bouvier's Law Dictionary, p. 1602. This section combines both 
 definitions and adds a third, under which a bank is deemed in- 
 solvent when it fails to make good its reserve. When a bank is in 
 the condition described in this section, it is manifestly not Jn posi- 
 tion to continue for long active operation. It should not accept 
 additional deposits, and it is best for all parties that the control of 
 its affairs pass out of its hands. 
 
 6. SEC. 6. Surplus and Undivided Profits Defined. 
 
 The term "surplus" as used in this act means the portion or por- 
 tions of the "undivided profits" which have been formally set apart 
 by resolution of the board of directors and carried to surplus ac- 
 count on the books of account of the bank, as well as such amount 
 as may be paid in by stockholders for the purpose of creating a 
 surplus. 
 
 The term "undivided profits" as used in this act means the net 
 profits as shown by the books of account of the bank, in addi- 
 tion to the "surplus," less such amount as may be held for the 
 payment of current expenses, taxes, interest on savings deposits 
 and dividends to stockholders. 
 
 Code, 2277, which prohibited a bank from lending to one person, 
 unsecured, more than ten per cent, of its capital and surplus, de- 
 fined "surplus" to mean "the net profits of such bank." 
 
 ARTICLE II. 
 
 -. 
 
 Department of Banking. 
 7. SECTION 1. Department of Banking Created. 
 
 * 
 
 There is hereby created a Banking Department of the State of 
 Georgia to be designated as the "Department of Banking," 
 charged with the execution of all laws heretofore passed or which 
 may hereafter be passed relating to banks as herein defined. 
 
 Under the Act of 1907, Code, 2279, the enforcement of the bank- 
 ing laws was committed to a Bureau or Department of the State 
 Treasury, just as the Comptroller of the Currency, charged with 
 the enforcement of the national banking laws, is an officer of 
 the Treasury Department of the National Government. The pres- 
 ent act creates a separate Department of Banking similar to that 
 of New York (New York Act, 10) and to that established under 
 the laws of most of the States which have adopted modern bank- 
 ing systems.
 
 BANKING ACT OF 1919. 7 
 
 8. SEC. 2. Superintendent of Banks. 
 
 The chief officer of the Department of Banking shall be known 
 as the Superintendent of Banks. He shall be appointed by the 
 Governor, by and with the advice and consent of the Senate. The 
 first appointment hereunder shall be made at least ten days before 
 this act takes effect, and the appointee shall discharge the duties 
 of the office pending confirmation by the Senate. 
 
 The Superintendent of Banks shall hold office for the term of 
 four years, and until his successor is appointed and qualified. 
 
 Under the Bank Bureau Act of 1907, Code, 2280, the State 
 Treasurer was ex-officio State Bank Examiner. 
 This section follows 10 of the New York law. 
 
 9. Sue. 3. Vacancies, How Filled. 
 
 In the event there shall be a vacancy in the office when the Sen- 
 ate is not in session, caused by death, resignation, disability, sus- 
 pension or removal of the Superintendent of Banks, the Assistant 
 Superintendent shall act, holding the office until the Senate con- 
 venes and a successor to the Superintendent of Banks is appointed 
 and qualified. When the Assistant Superintendent shall hold the 
 office of Superintendent, as herein provided, he shall receive the 
 same salary, and give the same bond as herein provided for the 
 Superintendent of Banks. 
 
 This section follows in substance 14 of the New York law. 
 
 10. SEC. 4. Qualifications of Superintendent. 
 
 The Superintendent of Banks shall be a man of good character 
 and shall have at least five years active experience in the banking 
 business. He shall not during his term of office be an officer or 
 employee of any bank, or either directly or indirectly interested in 
 any bank, and shall not carry on business as a private banker or be 
 an employee of or interested directly or indirectly in any private 
 bank. He shall not be or become indebted directly or indirectly 
 to any bank as herein defined. The Governor shall immediately 
 remove from office any Superintendent of Banks violating the 
 provisions of this section. 
 
 Under the old law, the State Treasurer, being ex-officio State 
 Bank Examiner, was not chosen by reason of any qualification for 
 the discharge of the duties devolving on him as such Bank Ex- 
 aminer. It was provided, however, by Code, 2285, that it should 
 not be lawful for him or either of his assistants to be "an officer
 
 8 PARK'S BANKING LAW OF GEORGIA. 
 
 or stockholder of any bank or firm doing a banking business or 
 be engaged individually in banking in this State or elsewhere." 
 Under the National Bank Act, 329, U. S. R. S., 501, U. S. Comp. 
 Stat., the Comptroller of the Currency is prohibited from being 
 interested in any association issuing currency under the laws of 
 the United States. 
 
 This section is a combination of 1 of the Alabama act and 10 
 of the New York law so far as the same prescribe the qualifications 
 of the Superintendent of Banks. 
 
 11. SEC. 5. Salary of Superintendent. 
 
 The Superintendent of Banks shall receive a salary of six thou- 
 sand ($6,000.00) dollars per annum, to be paid in the same man- 
 ner as the other expenses of the Department of Banking are paid. 
 He shall receive no fees or perquisites for any official act, but the 
 fees prescribed herein shall be collected by him and deposited to 
 the credit of the Department of Banking, as hereinafter pro- 
 vided. 
 
 The salary of the State Bank Examiner, in addition to his salary 
 as State Treasurer, was $2,500. Code, 2280. 
 
 The salary of the Superintendent of New York is $10,000.00 (N. 
 Y. Law, 10) and that of Alabama $5,000.00 (Ala. Act, 1). 
 
 12. Sue. 6. Oath and Bond of Superintendent. 
 
 Before entering upon the duties of his office, the Superintendent 
 of Banks shall take an oath before the Governor or one of the jus- 
 tices of the Supreme Court to support the Constitution of the United 
 States and the Constitution of the State of Georgia, and faithfully 
 to execute the duties of his office, which oath shall be in writing 
 and subscribed to by the Superintendent of Banks and filed of 
 record in the Executive Office. He shall also give bond to the 
 State of Georgia with security or securities approved by the Gov- 
 ernor in the sum of fifty thousand ($50,000.00) dollars, con- 
 ditioned as follows : 
 
 (1) That he will faithfully discharge, execute, and perform, 
 all and singular, the duties required of him, and which may be 
 required by the Constitution and laws. 
 
 (2) That he will faithfully account for all moneys that may 
 be received by him from time to time by virtue of his office. 
 
 (3) That he will safely deliver to his successor all books, 
 moneys, vouchers, accounts and effects whatever belonging to 
 said office. 
 
 The surety on the bond shall be a regular incorporated surety 
 company or companies, qualified to do business in the State of
 
 BANKING ACT OF 1919. 9 
 
 Georgia, and the premium on the bond shall be paid as other ex- 
 penses of the Department of Banking are paid. 
 
 No additional oath or bond was required of the State Bank Ex- 
 aminer other than that taken and given by him as State Treas- 
 urer. Code, 2281. The oath prescribed in this section is in 
 almost the same words as that of the State Treasurer. Code, 
 17. The State Treasurer was required to pay the premium on 
 his own bond, but under the Constitutional amendment increasing 
 the Treasurer's salary and providing for separating the Banking 
 Department from the Treasury, the State pays the premium on 
 the Treasurer's bond in the same way as is provided in this section 
 for the payment of the premium on the Superintendent's bond. .Acts 
 1918, p. 91. 
 
 Similar oaths and bonds are required in New York (N. Y. Law, 
 10) and in Alabama (Ala. Act, 1). 
 
 13. SEC. 7. Superintendent, How Removed. 
 
 The Superintendent of Banks may be suspended or removed 
 by the Governor, whenever the Governor has trustworthy infor- 
 mation, to be judged of by him, that the Superintendent is insane 
 or has absconded or grossly neglects his duties or is guilty of con- 
 duct plainly violative of his duties. 
 
 The grounds for removing the Superintendent are similar to those 
 provided for the suspension of the State Treasurer. Code, 221, 
 222. 
 
 The Superintendent of Alabama* may be removed for substantially 
 the same reasons. 1, Ala. Act. 
 
 14. SEC. 8. Superintendent's Office. 
 
 The Superintendent of Banks shall be provided with suitable 
 apartments at the State Capitol, furnished at the State's expense. 
 He shall reside at the Capital and shall keep his office open daily, 
 Sundays and holidays excepted. He shall be furnished from time 
 to time, necessary [equipment]* furniture, fuel, lights, and other 
 proper conveniences for the transaction of the business of his of- 
 fice, the expense of which shall be paid by the State in the same 
 manner as the expenses of other offices at the Capitol are paid. 
 
 No separate offices for the Banking Department were provided 
 for the State Bank Examiner, the Department being conducted in 
 the same offices as the Treasury Department. 
 
 A similar provision is found in the Alabama law, 5. 
 
 15. SEC. 9. Seal of Department of Banking. 
 
 The Secretary of State shall provide the Superintendent of 
 Banks with an official seal. Any paper executed by him as such 
 
 *Inserted by Act of August 14, 1920.
 
 10 PARK'S BANKING LAW OF GEORGIA. 
 
 Superintendent of Banks in pursuance of any authority conferred 
 on him by law and sealed with his seal of office shall be received 
 in evidence with the same effect as a duly recorded deed. 
 
 No provision was made for a seal of the Banking Department 
 until the adoption of this law. This provision is taken substantially 
 from 11 of the New York Banking Law. A similar provision for 
 a seal and the effect to be given to papers executed under seal is 
 found in the National Bank Act, 330, 884, U. S. R. S.; 502, 
 1496 U. S. Comp. Stat. 
 
 16. SEC. 10. Assistant Superintendent, Examiners, and 
 Clerks. 
 
 The Superintendent of Banks shall appoint from time to 
 time, with the right to discharge at will, an Assistant Superin- 
 tendent who shall be ex-officio an Examiner, and such additional 
 Examiners and office assistants as he may need to discharge in a 
 proper manner the duties imposed upon him by law, provided that 
 such appointments shall not extend beyond the term of office of 
 the Superintendent of Banks making such appointments. 
 
 No person so appointed shall during his term of office be an 
 officer or employee of any bank, or either directly or indirectly 
 interested in any bank. He shall not carry on business as a pri- 
 vate banker or be an employee of or interested directly or indi- 
 rectly in the business of any private banker. He shall not be or 
 become indebted directly or indirectly to any bank, as herein de- 
 fined. The Superintendent of Banks shall immediately remove 
 from office any Assistant Superintendent, Examiner, or Office 
 Assistant violating the provisions of this section. 
 
 The Assistant Superintendent, Examiners and clerks shall per- 
 form such duties as may be assigned to them, respectively, by the 
 Superintendent of Banks. 
 
 This provision is quite similar to the power given to the State 
 Bank Examiner to appoint his assistants. Code, 2282. The pres- 
 ent section is, however, fuller, especially with regard to the qualifi- 
 cations of the Assistant Superintendent and Examiners. 
 
 17. SEC. 11. Oath and Bond of Assistant Superintendent 
 
 and Examiners. 
 
 The Assistant Superintendent and each of the Examiners 
 shall take the same oath as that herein prescribed for the Su- 
 perintendent of Banks, and each shall give a bond to be ap- 
 proved by the Superintendent, with a regular incorporated 
 surety company qualified to do business in the State of Georgia,
 
 BAXKIXG ACT OF 1919. 11 
 
 as security, payable to the State of Georgia, in the penal sum 
 of ten thousand ($10,000.00) dollars, with the same conditions 
 contained in the bond as those herein prescribed for the Super- 
 intendent of Banks, the premium on which said bonds shall be 
 paid as other expenses of the Department of Banking are paid. 
 
 The reemrement as to oath and bond of the Assistant and Ex- 
 aminers is similar to that provided under the former law. Code, 
 2283. The amount of the bond, however, is increased from 
 $5,000.00 to $10,000.00. 
 
 18. SEC. 12. Salaries of Assistant Superintendents, Exam- 
 iners, and Clerks. 
 
 The. Assistant Superintendent shall be paid a salary of thirty- 
 six-hundred ($3,600.00) dollars per annum. 
 
 Each of the Examiners shall be paid a salary of not exceeding 
 twenty-four hundred ($2.400.00) dollars per annum. 
 
 The salaries of the Clerks and Office Assistants shall not exceed 
 in the aggregate the sum of [five thousand ($5,000)]* dollars 
 per annum. 
 
 Under the former lav as amended, the salary of the first assistant 
 was $2.000.00 and of the Examiners $1.800.00 each. Code, 2283. 
 The State Bank Examiner was also authorized to employ clerical 
 assistants in addition to the Examiners. Code, 2284 (a. b). 
 
 19. SEC. 13. Traveling Expenses. 
 
 The traveling expenses of the Superintendent of Banks, the As- 
 sistant Superintendent, and the Examiners, actually paid in the 
 discharge of their duties, shall be audited and approved by the Su- 
 perintendent of Banks, and paid monthly as other expenses of the 
 Department of Banking are paid. Itemized statements shall be 
 kept by the Superintendent and Examiners, showing in detail their 
 expenses and each and every item thereof, in such form and ac- 
 companied by such vouchers as the Superintendent shall pre- 
 scribe, which statements shall be filed in the office of the Superin- 
 tendent. 
 
 This is substantially the same as die Alabama law, 4. 
 
 20. SEC. 14. Expenses of the Department of Banking, How 
 
 Paid. 
 
 All the expenses incurred in and about the conduct of the 
 business of the Department of Banking, including the sal- 
 
 *Increased from $3,600.00 by Act of August 14, 1920.
 
 12 PARK'S BANKING LAW OF GEORGIA. 
 
 aries of the Superintendent of Banks, the Assistant Superin- 
 tendent, the Examiners, and office assistants, and the traveling 
 expenses incurred in examining banks, except the office expenses 
 [including printing, postage, stationery and office supplies, tele- 
 phone and telegraph tolls]* provided for in section 8 of this Ar- 
 ticle, shall be collected from the banks as hereinafter provided. 
 All amounts so paid shall be deposited by the Superintendent of 
 Banks in such bank or banks as he may see fit and subject to his 
 check as such Superintendent, and shall be used for the expenses 
 of the Department of Banking only. 
 
 Under the former law, the State Bank Examiner kept the funds 
 of the Banking Department separate from the funds in the State 
 Treasury. No provision was made, however, for auditing the ex- 
 pense accounts of the Examiners or for the deposit and disburse- 
 ment of the funds collected. 
 
 21. SEC. 15. Report of the Superintendent of Banks. 
 
 The Superintendent of Banks shall make an annual report to 
 the Governor on or before the 31st day of December, which report 
 shall be filed in his office, and by him laid before the General 
 Assembly in connection with his first annual message thereafter. 
 
 This is practically a reenactment of Code, 2294. 
 
 22. SEC. 16. Contents of the Report. 
 
 The Superintendent of Banks shall set forth in his annual re- 
 port : 
 
 1. A list of all the banks subject to his supervision, with the 
 date when each began business. 
 
 2. A summary of the condition of every bank, as shown by 
 the last report received in response to call and such condition as 
 shown by the last examination made, and such other informa- 
 tion in relation to said bank as in his judgment may be useful. 
 
 3. A statement of all applications for incorporation of new 
 banks and of all applications for the amendment, renewal, and 
 surrender of charters, together with his action thereon. 
 
 4. A statement of all banks whose business has been closed 
 during the year. 
 
 5. A list of all banks taken possession of by him during the 
 year, and of the dividends paid to creditors of all banks being 
 liquidated, and of the unclaimed and unpaid deposits or dividends 
 of each of such banks. 
 
 *Inserted by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 13 
 
 6. Any suggestion for amendments to the laws relating to 
 banking by which the system may be improved and the security 
 to the depositors and other creditors increase. 
 
 7. The names and compensation of his Assistant, Examiners, 
 and Clerks, and the whole amount of the expenses- of the banking 
 department during the year. 
 
 8. An itemized statement of the amounts collected from the 
 banks from examinations, fines, and forfeitures during the year. 
 
 This is largely a reenactment of 2296, there being added the 
 provision as to applications for incorporation, amendment, re- 
 newal and surrender of charters and as to banks taken possession 
 of by the Superintendent and the amounts collected from banks 
 for examinations, etc. A similar provision is found in the New 
 York Act, 83. A report of like character is required of the 
 Comptroller of the Currency with regard to national banks under 
 the National Bank Act, 333, U. S. R. S. ; 505 U. S. Comp. Stat. 
 
 23. SEC. 17. Copies of Report Furnished to Banks. 
 
 The annual report of the Superintendent of Banks shall be pub- 
 lished in book form, and a copy thereof furnished to each bank by 
 mail as soon as the same shall have been published and transmitted 
 to the Governor. [The expense of publishing and mailing such 
 reports shall be paid as other expenses of the Department of Bank- 
 ing are paid.]* 
 
 This is substantially a reenactment of Code, 2297. 
 
 24. SEC. 18. Rules for the Department of Banking. 
 
 The Superintendent of Banks shall make such rules and regula- 
 tions to carry out the provisions of this act as he may consider of 
 value to the Department of Banking. He may appoint special 
 Examiners, when occasion requires, prescribe their duties, and 
 limit their powers. He shall prescribe and provide forms, and 
 supply the necessary blanks for examinations and reports. 
 
 This section combines Code 2298 and 2310. 
 
 25. SEC. 19. Reports and Examinations. 
 
 The reports of all examinations and the reports made by banks 
 in response to the calls made by the Superintendent of Banks shall 
 be regularly filed and preserved by the Superintendent of Banks 
 in his office for a period of five (5) years, after which time the 
 Superintendent shall be authorized to burn the same. 
 
 This is a reenactment in substance of Code, 2312. 
 
 *The sentence enclosed in brackets stricken by Act of August 14, 1920.
 
 14 PARK'S BANKING LAW OF GEORGIA. 
 
 26. SEC. 20. Reports as Evidence. 
 
 Every official report made by the Superintendent of Banks- and 
 every sworn report, duly verified, of any regular or special Exam- 
 iner duly appointed by the Superintendent of Banks, shall be 
 prima facie evidence of the facts therein stated, in any action or 
 proceeding wherein such bank is a party, provided that the re- 
 ports of such examinations shall not be made public except when 
 required in legal proceedings. [The expense of furnishing certi- 
 fied copies of records and reports by the Superintendent of Banks 
 shall be paid by the person applying for such certified copies be- 
 fore such copies are delivered, except where such copies are called 
 for on behalf of the State.]* 
 
 A similar provision is made in the National Bank Act, 884, U. S. 
 R. S. ; 1496 U. S. Comp. Stat. 
 
 27. SEC. 21. Liability for Nonperformance of Duty. 
 
 The Superintendent of Banks, the Assistant Superintendent, and 
 the Examiners shall be liable on thein.official bonds to any person, 
 firm, or corporation injured on account of the failure of the Su- 
 perintendent, the Assistant Superintendent, or any Examiner, to 
 faithfully discharge the duties of his office. Suit may be brought 
 thereon in any court of competent jurisdiction in the name of the 
 State for the use of the injured party. 
 
 This section is taken from the Alabama Law, 34. 
 
 28. SEC. 22. Solicitors-General to Represent Superintend- 
 ent. 
 
 The Solicitors-General, in their several circuits, when re- 
 quested by the Superintendent of Banks, shall, as a part of 
 their official duties, represent the Superintendent of Banks in 
 any suit that the Superintendent may desire to bring, or that may 
 be brought against the Superintendent under the provisions of 
 this act, in regard to banks in their respective circuits. The fees 
 of the Solicitors-General for services rendered under this section 
 shall be fixed by the Superintendent subject to the approval of 
 the judge of the Superior Courts in which such suits are brought. 
 Such fees and the costs of any such suits or proceedings by or 
 against the Superintendent of Banks shall be taxed by the judge 
 of the Superior Court in which such suit is brought either against 
 
 *Added by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 15 
 
 the opposite party to such suit, or against the bank concerning 
 which the suit is brought, or against the Superintendent, in which 
 latter event such costs and fees shall be paid as other expenses of 
 the Department of Banking are paid. 
 
 Under the Constitution, it is the duty of the Solicitor-General 
 to represent the State in all cases in the Superior Courts of his 
 circuit. Code, 6531. The National Bank Act requires that suits 
 and proceedngs arising out of that act, in which the United States 
 or any of its officers or agents shall be parties, shall be conducted 
 by the district attorneys under the supervision and direction of the 
 Solicitor of the Treasury. 380, U. S. R. S.; 556, U. S. Comp. 
 Stat. In Alabama the circuit solicitor and the county solicitor of 
 each county are required to represent the Superintendent without 
 compensation. 49, Ala. Act. 
 
 29. SEC. 23. Attorney-General and Solicitors-General to 
 Advise Superintendent. 
 
 It shall be the duty of the Attorney-General to advise the Su- 
 perintendent of Banks on any question of law submitted to him by 
 the Superintendent, and it shall likewise be the duty of the So- 
 licitors-General, in their several circuits, when requested by the 
 Superintendent of Banks, to advise the Superintendent on any 
 question of law submitted to them by the Superintendent in re- 
 gard to any existing or proposed banks in their respective circuits. 
 
 Under the Constitution, it is the duty of the Attorney-General 
 to act as legal advisor of the Executive Department. Code, 6529, 
 254. Under the Alabama law the circuit and county solicitors are 
 required to advise the Superintendent. 49, Ala. Act. 
 
 ARTICLE III. 
 
 Examinations of Banks. 
 
 30. SECTION 1. Semiannual Examinations. 
 
 The Superintendent of Banks shall either personally or by one 
 of the Examiners visit and examine every bank subject to his su- 
 pervision at least twice in each year. On every examination, in- 
 quiry shall be made as to the condition and resources of the bank, 
 the mode of conducting and managing its affairs, the manner of 
 keeping its accounts and the correctness thereof, the actions of its 
 directors, the investment of its funds, the safety and prudence of 
 its management, and whether the requirements of its charter and 
 the law have been complied with in the administration of its
 
 16 PARK'S BANKING LAW OF GEORGIA. 
 
 affairs, and as to such other matters covered by this act as the 
 Superintendent of Banks may prescribe. 
 
 The first act in Georgia requiring the examination of banks 
 was the Act of 1889, p. 65, which constituted the State Treasurer 
 ex-officio Bank Examiner and required him to make an exami- 
 nation of each bank twice in each year. The above section fol- 
 lows closely Code, 2299, taken from the Bank Bureau Act of 
 1907. A similar provision is found in the New York law, 39, 
 and in the Alabama law, 7. All of these acts and the similar 
 acts of most of the States are based on the National Bank Act, 
 5240, U. S. R. S. ; 9832 U. S. Comp. Stat. 
 
 31. SEC. 2. Special Examinations. 
 
 In addition to the regular semiannual examinations the Superin- 
 tendent of Banks has power and it shall be his duty in like manner 
 to examine, or cause to be examined, any bank under his super- 
 vision whenever in the judgment of the Superintendent of Banks 
 the management and condition of the bank is such as to render an 
 examination of its ai?airs necessary or expedient, or whenever in 
 the opinion of the Superintendent of Banks the interests of the 
 public demand an examination. 
 
 This provision is new in Georgia, though there is little doubt 
 but that the State Bank Examiner was authorized to make special 
 examinations whenever in his judgment it was necessary, Code, 
 2299, providing that examinations should be made "twice in each 
 year and oftener if necessary." The section follows the language 
 of 7 of the Ala. Act. 
 
 32. SEC. 3. Examinations on Oath. 
 
 The Superintendent of Banks and the Examiners shall have 
 power and authority to administer oaths and to examine under 
 oath any person whose testimony may be required on the exami- 
 nation of any bank, and shall have the authority and power to 
 compel the appearance and attendance of aijy such person for the 
 purpose of such examination. 
 
 If any person when required so to do by the Superintendent 
 of Banks, or any one of the Examiners, shall fail or refuse to 
 appear or to testify under oath as herein provided, such failure 
 or refusal may be reported in writing to the judge of the Superior 
 Court of the county in which such bank is located, who shall 
 thereupon cause a subpoena to be issued by the clerk of said court 
 requiring such person to so attend and testify, and for failure 
 to obey such subpoena the person so failing shall be adjudged in 
 contempt of court by the judge of said court and punished ac- 
 cordingly.
 
 BANKING ACT OF 1919. 17 
 
 Similar authority was given the State Bank Examiner by Code, 
 2299. The language of this section follows closely 7 of the 
 Alabama law. 
 
 33. SEC. 4. Written Report of Examination. 
 
 The Superintendent of Banks and the Examiner who shall make 
 an examination of any bank shall reduce the result thereof to writ- 
 ing in such form as shall be prescribed by the Superintendent, 
 which shall contain a full, true, and correct statement of the con- 
 dition of such bank so examined, which reports shall be filed in the 
 Department of Banking. 
 
 This section is a reenactment in substance of a portion of Code 
 2299. 
 
 34. SEC. 5. Fees for Examination. 
 
 Each bank shall pay for each semiannual examination to the 
 Superintendent of Banks, to be deposited by him to the credit of 
 the Department of Banking, as hereinbefore provided, in propor- 
 tion to the capital, surplus and undivided profits, exclusive of 
 branches, not exceeding the following amounts : 
 
 Where the capital, surplus and undivided profits is $25,000.00 
 or less, $20.00. 
 
 ^Where the capital, surplus and undivided profits is more than 
 $2*5,000.00 and not exceeding $50,000.00, $30.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $50,000.00 and not exceeding $75,000.00, $40.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $75,000.00 and not exceeding $100,000.00, $50.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $100,000.00 and not exceeding $125,000.00, $60.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $125,000.00 and not exceeding $150,000.00, $70.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $150,000.00 and not exceeding $175,000.00, $80.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $175,000.00 and not exceeding $200,000.00, $90.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $200,000.00 and not exceeding $225,000.00, $100.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $225,000.00 and not exceeding $250,000.00, $110.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $250,000.00 and not exceeding $275,000.00, $120.00.
 
 18 PARK'S BANKING LAW of GEORGIA. 
 
 Where the capital, surplus and undivided profits isTmore than 
 $275,000.00 and not exceeding $300,000.00, $130.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $300,000.00 and not exceeding $500,000.00, $150.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $500,000.00 and not exceeding $750,000.00, $200.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $750,000.00 [and not exceeding $1,000,000.00]* $250.00. 
 
 [Where the capital, surplus and undivided profits is more than 
 $1,000,000.00 and not exceeding $1,500,000.00, $300.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $1,500,000.00 and not exceeding $2,000,000.00, $350.00. 
 
 Where the capital, surplus and undivided profits is more than 
 $2,000,000.00, $400.00.]* 
 
 In addition to the fees hereinabove fixed each bank operating 
 branch offices or banks shall pay for each branch so operated for 
 each semiannual examination, at the above rates based on the cap- 
 ital, surplus, and undivided profits employed in such branch. 
 
 For any examination herein provided to be made before permit 
 to begin business is issued, or on any amendment to a charter, or 
 on any consolidation or merger, or on any voluntary liquidation, 
 and in all other cases of like character, other than regular semi- 
 annual examinations, a fee of $25.00 shall be paid for each ex- 
 amination. 
 
 The scale of fees paid by banks for examinations has been 
 changed several times. The scale here prescribed slightly in- 
 creases the amounts paid under the Act of 1914 ; Code, 2300. 
 
 Heretofore no fee has been fixed for the examination of a branch 
 bank, and no provision has been made for special examinations 
 made before business is begun or on the amendment or renewal of 
 a charter, etc. 
 
 35. SEC. 6. Fees, How Collected. 
 
 In the event any bank should fail or refuse to pay on demand 
 the amount herein fixed as fees for examinations, the Superin- 
 tendent of Banks shall forthwith issue an execution in the name 
 of the State against such bank for the amount of such fees, which 
 shall be enforced in like manner as executions issued by the Su- 
 perior Courts of this State upon judgments rendered by them. 
 
 Under the Alabama law, 6, a penalty of $5.00 for each day 
 is assessed against banks making default in payments, and the 
 Superintendent is authorized to collect the amount by suit. The 
 
 *Added by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 19 
 
 provision of this section authorizing the immediate issuance of 
 execution is decidedly better. 
 
 36. SEC. 7. Record of Fees. 
 
 It shall be the duty of the Superintendent of Banks to keep a 
 record of all fees collected by him, together with a record of ex- 
 penses incurred in making examinations of all banks, which 
 record shall be embodied in his annual report to the Governor. 
 
 This is substantially a reenactment of Code, 2308. 
 
 37. SEC. 8. Examinations Not at Stated Times. 
 
 The Superintendent of Banks hall not visit any bank or cause 
 same to be visited by an Examiner for the purpose of examination 
 at stated or regular times, nor shall the Superintendent or any Ex- 
 aminer permit any one to know when or at what time he will 
 visit any bank or cause same to be visited, for examination. 
 
 This section is copied from 11 of the Alabama law. 
 
 38. SEC. 9. Information Kept Secret. 
 
 The information which shall be obtained by Superintendent of 
 Banks or any Examiner in making examinations into the affairs 
 of any bank shall be for the purpose of ascertaining the true con- 
 dition of said bank, and shall not be disclosed by the person mak- 
 ing the examination, unless called upon to testify concerning the 
 same in a court of justice, except that reports shall be made of the 
 condition of the affairs of the bank examined and to the Superin- 
 tendent of Banks, and a summary thereof published in the Super- 
 intendent's annual report, and except that the Superintendent may 
 take action as the result of such examination as herein provided. 
 Provided, however, That upon the request of the Federal Reserve 
 Bank the Superintendent shall be authorized to furnish to said 
 bank a copy of the report and other information concerning the 
 condition and affairs of any bank which shall be a member of the 
 Federal Reserve System ; [and provided further, that the Super- 
 intendent of Banks may in his discretion confer and exchange in- 
 formation with the Comptroller of the Currency of the United 
 States and National Bank Examiners and may when .he shall deem 
 it to be for the interest of the bank in question discuss its affairs 
 with other banks or persons interested therein or affected thereby.]* 
 
 *Added by Act of August 14, 1920.
 
 20 PARK'S BANKING LAW OF GEORGIA. 
 
 The body of this section is copied from 12 of the Alabama law. 
 The Act of 1918, p. 134, authorized the Superintendent to furnish 
 a copy of his report of examination of any bank, which is a member 
 of the Federal Reserve System, to the Federal Reserve Bank. 
 Congress, by the Act of June 21, 1917, authorized the Directors 
 of the Federal Reserve Bank to accept examinations made by 
 State authorities in lieu of examinations made by Examiners se- 
 lected by the Federal Reserve Board required under the Federal 
 Reserve Act whenever the Directors approved such examinations. 
 9792 (6), U. S. Comp. Stat. 
 
 39. SEC. 10. Reports as Evidence. 
 
 In the event the Superintendent of Banks takes charge of the 
 business and affairs of any bank as herein authorized, or in the 
 event proceedings are instituted to forfeit the charter of any bank, 
 duly authenticated copies of the reports of the examination of such 
 bank on file in the office of the Superintendent of Banks may be 
 used in any court as evidence and as an aid in arriving at the true 
 condition of the bank. Such reports shall be received in any court 
 as prima facie evidence of the truth of their contents. 
 
 With slight change in phraseology, this section is copied from 
 14 of the Alabama law. Section 59 of the New York Act is prac- 
 tically identical. 
 
 ARTICLE IV. 
 
 Reports of Banks. 
 
 40. SECTION 1. Stated Reports. 
 
 Every bank shall make at least four (4) reports each year, and 
 oftener if called upon by the Superintendent of Banks, according 
 to the form which may be prescribed by him, verified as true and 
 correct by the oath or affirmation of the president or cashier, and 
 accompanied by the certificate of at least two (2) of the direc- 
 tors of such bank to the effect that they have carefully read said 
 report and that the same is true and correct according to the best 
 of their information, knowledge and belief, and that the signature 
 of the president or cashier, is the true and genuine signature of 
 such officer. Such report shall exhibit in detail and under appro- 
 priate heads the resources and liabilities of such bank at the close of 
 business on any past date specified by the Superintendent of Banks, 
 and shall be transmitted to the Superintendent of Banks within ten 
 (10) days after [date]* of a request therefor from him, and shall 
 
 *"Receipt" changed to "date" by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 21 
 
 be published in such form as the Superintendent of Banks may 
 prescribe, within ten (10) days after the same is called for, in a 
 newspaper published in the city or town where such bank is 
 located, or if no newspaper is published in such city or town, then 
 in the county in which such bank is located, and if no newspaper 
 is published in the county, then in some newspaper having a gen- 
 eral circulation in the county, such publication to be at the ex- 
 pense of the bank, and proof that such publication has been made, 
 in such form as may be required by the Superintendent of Banks, 
 shall be furnished to him within five (5) days after such publica- 
 tion is made. 
 
 This is a substantial reenactment of Code, 2288, except that 
 under that section the report was required to be "attested by the 
 signature of at least two of the directors," this section substituting 
 the certificate for the simple attestation. Code, 2288, is in sub- 
 stantially the same language as the National Bank Act, 5211, 
 U. S. R. S., as amended; 9774, U. S. Comp. Stat. By the Fed- 
 eral Reserve Act of December 23, 1913, as amended by the Act 
 of June 21, 1917, Congress provided that State banks becoming 
 members of the Federal Reserve System shall make reports of 
 their condition to the Federal Reserve Bank of which they become 
 members, not less than three such reports being required to be 
 made annually on call of the Federal Reserve Bank on dates to 
 be fixed by the Federal Reserve Board. 9792, U. S. Comp. Stat. 
 
 41. SEC. 2. Special Reports. 
 
 The Superintendent of Banks shall have power to call for spe- 
 cial reports from any bank, whenever in his judgment the same are 
 necessary in order to obtain a full and complete knowledge of its 
 condition. Such reports shall be made on forms furnished by the 
 Superintendent of Banks, and shall be verified and certified as 
 herein provided in the case of stated reports. 
 
 This section is also taken from Code, 2288. 
 
 42. SEC. 3. Call for Reports Mailed to Banks. 
 
 A copy of each call made by the Superintendent of Banks for a 
 report from the banks under the supervision of said Superintend- 
 ent shall be mailed to each bank, and such mailing shall be deemed 
 legal notice of such call. 
 
 This is substantially a reenactment of Code, 2309. 
 
 43. SEC. 4. Dividends 'to Be Reported. 
 
 In addition to the reports required in the preceding sections, 
 each bank shall report to the Superintendent of Banks within ten
 
 22 PARK'S BANKING LAW otf GEORGIA. 
 
 ( 10) days after declaring, and at least ten ( 10) days before pay- 
 ing, any dividend, the amount of such dividend and the amount of 
 the surplus and undivided profits in excess of such dividend. Such 
 report shall be verified and certified in the same manner as it is 
 provided herein in the case of stated reports to the Superintendent 
 of Banks. 
 
 This section follows closely the National Bank Act, 5212, 
 U. S. R. S.; 9776, U. S. Comp. Stat. It, however, requires that 
 the report shall be mailed to the Superintendent at least ten days 
 before the payment of the dividend, which is not required by the 
 National Bank Act. By the Federal Reserve Act, as amended by 
 the Act of June 21, 1917, Congress provided that State banks be- 
 coming members of the Federal Reserve System shall report pay- 
 ment of dividends to the Federal Reserve Bank of which they are 
 members. 9792 (4), U. S. Comp. Stat. 
 
 44. Sue. 5. Penalty for Failing to Report. 
 
 Any bank which fails to make and transmit or to publish any 
 report as required by this act shall be subject to a penalty of 
 $10.00 for each day after the periods, respectively, herein men- 
 tioned that it delays to make and transmit its report or proof of 
 publication. 
 
 Whenever any bank delays or refuses to pay the penalty 
 herein imposed for the failure to make and transmit or to publish 
 its report, the Superintendent of Banks is hereby authorized to 
 issue an execution against such bank for the amount of such 
 penalty, which shall be enforced in like manner as executions 
 issued by the Superior Courts of this State upon judgments. 
 
 All penalties collected shall be held by the Superintendent of 
 Banks as other funds collected and deposited to the credit of the 
 Department of Banking. 
 
 Under Code, 2289, the penalty for failure to report was $50.00 
 for each day, and the State Bank Examiner was authorized to 
 maintain an action in the name of the State against the delinquent 
 bank for the recovery of the penalty. The penalty imposed on 
 National Banks for such failure is $100.00 per day. 5213, U. S. 
 R. S. ; 9777, U. S. Comp. Stat.
 
 BANKING ACT OF 1919. 23 
 
 ARTICLE V. 
 
 Communications from Department of Banking. 
 
 45. SECTION 1. Notice of Violation of Law. 
 
 If it should appear to the Superintendent of Banks that any bank 
 has violated its charter or any law of the State or any order or regu- 
 lation of the Department of Banking, he may, by an order under 
 his hand and official seal, addressed to such bank, direct the discon- 
 tinuance of such violation, or if it should appear to the Superin- 
 tendent that any such bank is conducting business in an unsafe 
 or unauthorized manner, he may in like manner direct the discon- 
 tinuance of such unsafe and unauthorized practices. Such order 
 shall be read at a meeting of the directors called for the purpose, 
 and a copy thereof shall be entered upon the minutes of said 
 board, and a majority of the board of directors, over their own 
 signatures, indorsed on said original order, shall acknowledge that 
 the same has been read at a meeting of the board and entered 
 upon the minutes and said original order shall be forthwith re- 
 turned to the Superintendent of Banks. 
 
 This is taken substantially from 56 of the New York act. 
 
 46. SEC. 2. Communications to Be Read and Entered on 
 Minutes. 
 
 Each official communication directed by the Superintendent 
 of Banks to a bank, pertaining to an investigation or exami- 
 nation conducted by the department, or to the affairs of such 
 bank, or containing orders, suggestions, or recommendations as 
 to the conduct of the business thereof, shall be submitted, by 
 the officer receiving it, to the board of directors of such bank, 
 at the next meeting of such board, and entered on the minutes, 
 and written acknowledgment thereof made to the Superintendent 
 of Banks. 
 
 This follows closely 132 of the New York act. 
 
 47. SEC. 3. Removal of Officer or Employee. 
 
 The Superintendent of Banks shall have the right to require the 
 immediate removal from office of any officer or employee of any 
 bank who shall be found by him to be dishonest, incompetent or 
 reckless in the management of the affairs of the bank, or who per-
 
 24 PARK'S BANKING LAW of GEORGIA. 
 
 sistently violates the laws of the State or the lawful orders of 
 the Superintendent. 
 
 This is a new section, giving the Superintendent a valuable right. 
 
 ARTICLE VI. 
 
 Impairment of Capital. 
 
 48. SECTION 1. Transfer of Surplus. 
 
 Whenever the Superintendent of Banks shall find that the capi- 
 tal stock of any bank has become impaired or reduced as much as 
 ten per cent, of its par value from losses or any other causes, the 
 Superintendent of Banks shall notify and require such bank to 
 make good its capital stock so impaired or reduced, by a transfer, 
 from the surplus or undivided profits thereof to the capital stock, 
 of a sum sufficient to make good such impairment or reduction, 
 and upon receipt of such notice such bank so notified shall imme- 
 diately make the transfer so required, by proper corporate action 
 and proper entries upon its books. 
 
 By Code, 2278, it was provided "whenever by reason of losses 
 a bank's capital stock is impaired, the shrinkage in the capital repre- 
 sented by such losses shall be charged on the books of the bank 
 to profit and loss," and by Code, 2291, that whenever the capital 
 should be impaired over ten per cent, the State Bank Examiner 
 should notify the bank to make good the impairment within ninety 
 days. This section is intended to provide against a bank with an 
 impaired capital continuing to claim a surplus or undivided profits, 
 the section requiring a proper adjustment of the accounts upon the 
 books of the bank. A similar requirement is made by 56 of the 
 New York act. 
 
 49. SEC. 2. Assessment of Stockholders. 
 
 If the surplus and undivided profits of such bank are insufficient 
 to make good such impairment, the Superintendent of Banks shall 
 notify such bank to make good the impairment within sixty (60) 
 days, by an assessment upon the stockholders thereof, and it shall 
 be the duty of the officers and directors of the bank receiving such 
 notice to immediately call a special meeting of the stockholders for 
 the purpose of making an assessment upon its stockholders suffi- 
 cient to cover the impairment of the capital, payable in cash, at 
 which meeting such assessment shall be made. Provided, That 
 such bank may reduce its capital to the extent of the impairment
 
 BANKING ACT OF 1919. 25 
 
 if such reduction will not place its capital below the amount re- 
 quired by this act. 
 
 This section substantially reenacts Code, 2291, reducing the time 
 within which the impairment shall be made good from ninety to sixty 
 days. The original section followed the National Bank Act, 5205, 
 U. S. R. S. ; 9767, U. S. Comp. Stat. 
 
 50. SEX. 3. Assessment, How Enforced. 
 
 If any stockholders should refuse or neglect to pay any assess- 
 ment which may be levied by the special stockholders' meeting for 
 the purpose of making good any impairment or reduction of capi- 
 tal, within thirty (30) days after such assessment shall have been 
 levied, the directors of such bank shall have the right to sell to the 
 highest bidder, at public outcry, for cash, a sufficient amount of the 
 stock of such stockholder to cover the assessment after giving pre- 
 vious notice of such sale, once a week, for two (2) weeks, in the 
 newspaper in which the sheriff's advertisements of the county 
 in which the bank is located are published. But such stock shall 
 in no event be sold for less than the amount of the assessment 
 upon the same and the necessary costs of sale. Out of the pro- 
 ceeds of the sale of said stock, the directors shall pay the neces- 
 sary costs of sale and the amount of the assessment called for 
 thereon, and the balance, if any, shall be paid to the person or 
 persons whose stock has been sold, or to the holder of the cer- 
 tificate therefor upon the surrender of such certificate. A sale 
 of the stock as herein provided shall effect an absolute cancella- 
 tion of the outstanding certificate or certificates evidencing the 
 stock so sold, and shall make the same null and void, and the 
 rights of any and all holders thereof shall terminate and a new 
 certificate, or certificates, shall be issued to the purchaser or pur- 
 chasers of such stock, free from all liens or claims whatsoever. 
 The bank shall also have the right to sue a stockholder failing to 
 pay any assessment so levied. 
 
 When any stockholder shall have pledged or hypothecated any 
 of his stock and shall not pay any assessment levied on the stock 
 so pledged, for any reason, it shall be his duty to give to the 
 pledgee notice, by registered mail at least five (5) days before 
 the expiration of the time within which such assessment may be 
 paid, of the levy of such assessment and the amount thereof, and 
 of the fact that he does not expect or intend to pay the same, 
 giving to the pledgee the privilege of paying the amount of the 
 assessment should he desire to do so for his own protection.
 
 26 PARK'S BANKING LAW OF GEORGIA. 
 
 No means was provided under the old law for the enforcement 
 of an assessment against a stockholder, but it was held that suit 
 could be brought for the recovery of the amount of such assess- 
 ment. Commercial Bank of Athens v. Blassingame, 147 Ga. 636. 
 This section provides an additional remedy by the sale of the stock, 
 following 5205, U. S. R. S., as amended by the Act of June 30, 
 1876 ; 9767, U. S. Comp. Stat. 
 
 ARTICLE VII. 
 
 Taking Possession of Bank by Superintendent. 
 
 51. SECTION 1. Possession May Be Taken, When. 
 
 Whenever it shall appear to the Superintendent of Banks that 
 any bank has violated its charter or any law of the State, or any 
 law or regulation of the Department of Banking, or is conducting 
 business in an unsafe or unauthorized manner ; or that its capital 
 is impaired more than ten per cent, below its par value and has 
 not been made good under the requirement of the Superintend- 
 ent ; or when any bank shall refuse to submit its papers, books, 
 and concerns to the inspection of the Superintendent, or any Ex- 
 aminer; or when any officer thereof shall refuse to be examined 
 on oath touching the affairs, business, or concerns of any bank; 
 or when any bank shall suspend payment of its obligations or shall 
 fail to pay any final judgment from which no further appellate 
 proceedings will lie within ten (10) days after the rendition 
 thereof ; or any other judgment within ten days after the expira- 
 tion of the time for entering appellate proceedings ; or when 
 from any examination made by the Superintendent, or any Ex- 
 aminer, the Superintendent shall have reason to conclude that 
 any bank is in an unsafe or unsound condition to transact the 
 business for which it was organized, or that it is unsafe for it to 
 continue business; or when any bank shall neglect or refuse to 
 observe any lawful order of the Superintendent directing or re- 
 quiring the doing of any particular matter or thing required to 
 be done bylaw, the Superintendent himself, or by a duly authorized 
 agent, shall forthwith take possession of all the assets and busi- 
 ness of such bank and retain possession thereof until such bank 
 shall be authorized by him to resume business, or its affairs be 
 liquidated as herein provided. 
 
 Under the Bank Bureau Act the State Bank Examiner had no 
 authority of his own motion to take charge of a bank, but was re- 
 quired when his examination disclosed that a bank was insolvent
 
 BANKING ACT OF 1919. 27 
 
 to report the condition to the Governor, and when ordered by the 
 Governor, to take charge. His possession was temporary until 
 an examination of the affairs could be concluded, when if the fact 
 of insolvency was established, the Governor was required to in- 
 struct the Attorney-General to institute proceedings for the ap- 
 pointment of a receiver. Code, 230, 2306. The State Bank 
 Examiner was also authorized, where any officer of a bank re- 
 fused to submit its books, papers, or assets to an Examiner or 
 obstructed or interfered with him in the discharge of his duties 
 or refused to be examined on oath touching the affairs of the 
 bank, with the concurrence of the Governor and through the At- 
 torney-General, to institute proceedings for the appointment of a 
 receiver. Code, 2292. And the State Bank Examiner was like- 
 wise authorized, where any bank refused or neglected to comply 
 with any requirement lawfully made by him for a period of thirty 
 days, to institute proceedings to forfeit the charter of such bank. 
 Code, 2347. This section follows the method outlined in the 
 National Bank Act, 5234, 5141, 5191, 5201, 5205, 5208, U. S. 
 R. S., and the Act of June 30, 1876, as amended; 9821, 9678, 
 9746, 9762, 9767, 9770, U. S. Comp. Stat. The Comptroller of 
 the Currency, under these sections is authorized to appoint a 
 receiver for a national bank, such receiver under the direction of 
 the Comptroller being authorized to wind up the affairs of the 
 bank. The Superintendent of Banks of New York, under 57 
 of that law, is likewise authorized under circumstances similar 
 to those given in this section to take charge of and administer the 
 affairs of an insolvent bank. Under 10 of the Alabama law, the 
 Superintendent, with the concurrence of the Banking Board pro- 
 vided for by that act, has the authority to take charge of and ad- 
 minister an insolvent bank. The liquidation of such bank and the 
 authority of the Superintendent in possession, as set forth in the 
 following sections of this Article, is a combination of the powers 
 of similar officers under the National Bank Act and the New York 
 and Alabama statutes. 
 
 52. SEC. 2. Directors May Surrender Possession. 
 
 Any bank may place its assets and business under the control of 
 the Superintendent of Banks by posting a notice on the front door 
 of such bank indicating that the bank is in the hands of the Su- 
 perintendent of Banks, which notice shall be signed in their own 
 handwriting by a majority of the directors of such bank. 
 
 This is substantially a reenactment of part of Code, 2290. 
 
 53. SEC. 3. Effect of Notice or Possession. 
 
 The posting of such notice by the directors, or the taking posses- 
 sion of any bank by the Superintendent of Banks, shall be sufficient 
 to place all assets and property of such bank, of whatever nature,in 
 possession of the Superintendent of Banks, and shall operate as a 
 bar to any attachment or any other legal proceedings against such 
 bank or its assets; and no lien shall be acquired in any manner 
 binding or affecting any of the assets of such bank after the 
 posting of such notice or taking possession of any bank by the
 
 28 PARK'S BANKING LAW OF GEORGIA. 
 
 Superintendent, and every transfer or assignment by such bank 
 or its authority, of the whole or any part of its assets, after the 
 posting of such notice or the taking possession of such bank, shall 
 be null and void. 
 
 A part of this section is also found in Code, 2290. That sec- 
 tion, however, only provided that the possession of the State Bank 
 Examiner should operate as a bar to attachment proceedings, while 
 this section avoids transfers and assignments as well as attachment 
 proceedings after such taking possession. 
 
 54. SEC. 4. No Assignment for Creditors Permitted. 
 
 No bank shall be authorized or permitted to make any general 
 assignment for the benefit of its creditors, save and except by sur- 
 rendering possession of its assets to the Superintendent of Banks 
 as herein provided. 
 
 This section repeals Code, 2358, which permitted a bank on sur- 
 rendering its charter or its use thereof to make an assignment for 
 the benefit of creditors. 
 
 55. SEC. 5. Notice of Taking Possession. 
 
 On taking possession of the assets and business of any bank, as 
 in this act authorized, the Superintendent of Banks shall forthwith 
 give notice of such action to all banks and other persons or corpor- 
 ations holding or in possession of any assets of such bank. No 
 bank or other person or corporation shall have a lien or charge for 
 any payment, advance, or clearance thereafter made, or liability 
 thereafter incurred, against any of the assets of the bank, of 
 whose assets and business the Superintendent shall have taken 
 possession as aforesaid. 
 
 This is taken substantially from 65 of the New York law. 
 The Alabama act, 1-0, contains a similar provision in practically 
 the same language. The National Bank Act, 5235, U. S. R. S.; 
 9822, U. S. Comp. Stat., also provides for notice to be given to 
 creditors. 
 
 56. SEC. 6. Business Resumed, How. 
 
 After the Superintendent of Banks has so taken possession of 
 any bank, the Superintendent may permit such bank to resume 
 business upon such conditions as may be approved by him. 
 
 This section is taken substantially from 61 of the New York 
 act, and is quite similar to 10 of the Alabama act.
 
 BANKING ACT OP 1919. 29 
 
 57. SEC. 7. Collections and Sales, How Made. 
 
 Upon taking possession of the assets and business of any bank, 
 the Superintendent is authorized to collect all moneys due to such 
 bank, and to do such other acts as are necessary to conserve its 
 assets and business, and shall proceed to liquidate the affairs 
 thereof, as hereinafter provided. The Superintendent shall col- 
 lect all debts due and claims belonging to such bank, and by 
 making application to the Superior Court of the county in which 
 such bank is located, or to the judge thereof, if said Superior 
 Court be not then in session, may procure an order to sell, com- 
 promise or compound any bad or doubtful debt or claim, and on 
 like order the Superintendent may sell the real and personal 
 property of such bank on such terms as the court, or the judge 
 thereof, shall direct, but on any such court proceedings the bank 
 shall be made a party by a proper notice issued from the court, 
 and the hearing of any such application or petition by the Super- 
 intendent may be had at any time, either in term or vacation, after 
 the bank has had five (5) days' notice of such application. 
 
 This section follows 69 of the New York act. Somewhat 
 similar duties were prescribed for the receiver of a bank by Code, 
 2351. The National Bank Act, as amended by the Act of March 
 29, 1886, 9828 U. S. Comp. Stat, authorized a receiver of a 
 national bank to purchase property in order to protect his trust. 
 This section, which gives to the Superintendent when in charge 
 of a bank authority to do all acts necessary to conserve its assets 
 and business, is broad enough to give the Superintendent the right 
 to purchase property where necessary in order to so "conserve 
 the assets." 
 
 58. SEC. 8. Superintendent, How Enjoined. 
 
 Whenever any bank of whost assets and business the Superin- 
 tendent has taken possession, as aforesaid, shall deem itself ag- 
 grieved thereby, it may at any time within ten ( 10) days after its 
 assets and business shall have been taken possession of, apply to the 
 Superior Court of the county in which its office shall be located, or 
 to the judge of such court, if the court be not then in session, to en- 
 join further proceedings by the Superintendent to show cause why 
 further proceedings should not be enjoined, and after hearing the 
 allegations and proof of the parties and determining the facts, 
 may dismiss such application or enjoin the Superintendent from 
 further proceeding a'nd direct the said Superintendent to sur- 
 render such business and assets to said bank. Such application 
 for injunction may be heard at any time after three (3) days' 
 notice from the time of service on the Superintendent, in the
 
 30 PARK'S BANKING LAW OF GEORGIA. 
 
 discretion of the court, with the right to either party by bill of 
 exception, as in other cases of applications for temporary injunc- 
 tion, to carry said case to the Supreme Court for review. 
 
 This is taken substantially from 10 of the Alabama law. A 
 similar provision for enjoining the Comptroller of the Currency 
 by a national bank is made by 5237, U. S. R. S. ; 9824, U. S. 
 Comp. Stat. Construing a similar section ( 60) of the New 
 York statute, it was held : The power of the Supreme Court to 
 review the action of the Superintendent is limited to ascertaining 
 whether or not there has been an abuse of discretion. If the court 
 finds that the Superintendent's action was justified, it can not di- 
 rect him to restore possession upon compliance by the delinquent 
 with certain conditions specified in the order. Matter of Lunghino 
 & Sons, 176 App. Div. (N. Y.) 285. 
 
 59. SEC. 9. Superintendent May Appoint Agent. 
 
 The Superintendent may, under his hand and official seal, appoint 
 an agent to assist him in taking possession of, liquidating and dis- 
 tributing the assets of any bank under the provisions hereof, the 
 certificate of appointment to be filed in the office of the Superin- 
 tendent, and a certified copy thereof delivered to such agent. 
 Such agent shall receive a salary, to be fixed as hereinafter pro- 
 vided for the time he is actually engaged in assisting in liquidat- 
 ing the affairs of the bank. The Superintendent may authorize 
 such agent to perform such duties connected with such liquidation 
 and distribution as the Superintendent himself could in person do 
 and perform. 
 
 This follows 10 of the Alabama act. A similar provision is 
 made by 62 of the New York act, and by 5234, U. S. R. S. ; 
 9821, U. S. Comp. Stat. 
 
 60. SEC. 10. Attorneys, Accountants, and Assistants. 
 
 The Superintendent may employ such attorneys and procure such 
 expert accountants and other experts, assistants and employees 
 as may be necessary in the liquidation and distribution of the as- 
 sets of such bank, and may retain such of the officers or employees 
 of such bank as he may deem necessary. 
 
 Similar provisions are made by 10 of the Alabama act and 62 
 of the New York act. 
 
 61. SEC. 11. Bonds of Agent and Other Assistants. 
 
 The Superintendent shall require from the agent appointed by 
 him, and from such of the assistants as will have charge of any
 
 BANKING ACT OF 1919. 31 
 
 of the assets of the bank, such security for the faithful discharge 
 of their duties as he may deem proper. 
 
 A similar provision is made by 10 of the Alabama act, 62 
 New York law, and 5234, U. S. R. S. ; 9821, U. S. Comp. Stat. 
 
 62. SEC. 12. Inventory to Be Filed. 
 
 Upon taking possession of the assets and business of any bank, 
 the Superintendent shall make an inventory of the assets thereof 
 in triplicate, one copy to be filed in the office of the Superintendent 
 and one copy to be filed, but not recorded, in the office of the clerk 
 of the Superior Court of the county in which the bank is located, 
 and one copy to be kept on file in the bank. Such inventories shall 
 be open to inspection during regular office hours of such offices, 
 respectively. 
 
 This is taken substantially from 66 of the New York law and 
 a similar provision is made in 10 of the Alabama law. 
 
 63. SEC. 13. Notice to Creditors and Proof of Claims. 
 
 The Superintendent shall cause notice to be given by advertise- 
 ment in the newspaper in which the sheriff's advertisements of 
 the county in which the bank is located are published, and in 
 any other newspaper which in the opinion of the Superintendent 
 may be necessary or advisable, once a week for four weeks, call- 
 ing on all persons who may have claims against the bank to pre- 
 sent the same to the Superintendent and make sworn proof 
 thereof, filing the same with said Superintendent at the office 
 of the bank, and within any time to be specified in the notice, 
 not less than ninety (90) days from the date of the first publica- 
 tion of the notice. A copy of this notice shall be mailed to all 
 persons whose names appear as creditors upon the books of the 
 bank. 
 
 Similar provisions are made by 10 of the Alabama law, 72 
 of the New York law, and 5235, U. S. R. S. ; 9822, U. S. Comp. 
 Stat. 
 
 64. SEC. 14. Pass Books Called In. 
 
 The Superintendent shall also in like manner notify all deposit- 
 ors to bring in their pass books to be balanced and compared with 
 the books of the bank. Deposits appearing on the books of the 
 bank which agree with deposits as shown by the pass books shall 
 be held to be prima facie proven claims against the bank.
 
 32 PARK'S BANKING LAW OF GEORGIA. 
 
 The Alabama act, 10, provides that deposits shown on the 
 books of the bank are prima facie proven claims against the bank. 
 This section goes further, requiring the calling in of pass books for 
 balancing and comparison. 
 
 65. SEC. 15. Superintendent May Reject Claims. 
 
 If the Superintendent doubts the justice and validity of any claim 
 or deposit, he may reject the same, and serve notice of such rejec- 
 tion upon the claimant or depositor, either personally or by reg- 
 istered mail, and an affidavit of the service of such notice, which 
 shall be prima facie evidence thereof, shall be filed in the office 
 of the Superintendent. Any action or suit upon such claim so re- 
 jected must be brought by the claimant against the bank in the 
 proper court of the county in which the bank is located within 
 ninety (90) days after such service, or the same shall be barred. 
 
 Similar provisions are made by 10 of the Alabama law and 
 75 of the New York law. 
 
 66. SEC. 16. Objections to Claims. 
 
 Objections to any claim or deposit not rejected by the Superin- 
 tendent may be made by any party interested by filing a copy of 
 such objections with the Superintendent, and the Superintendent, 
 after investigation, shall either allow such objections and reject the 
 claim or deposit, or present such objections to the Superior Court 
 of the county in which the bank is located, which court shall cause 
 an issue to be made up and tried at the first term thereafter as to 
 whether or not such claim or deposit should be allowed. 
 
 This follows substantially 10 of the Alabama law and 74 
 of the New York law. 
 
 67. SEC. 17. List of Claims Made Up and Filed. 
 
 Upon the expiration of the time fixed for the presentation of 
 claims, the Superintendent shall make in triplicate a full and com- 
 plete list of the claims presented and of the deposits as shown by 
 the books of the bank, including and specifying any claims or de- 
 posits which have been rejected by him, one copy to be filed in the 
 office of the Superintendent and one copy to be filed, but not re- 
 corded, in the office of the clerk of the Superior Court of the 
 county in which the bank is located, and one copy to be kept of file 
 in the bank. Such inventories and list of claims shall be open to 
 inspection during the regular office hours of such offices, respec- 
 tively.
 
 BANKING ACT OF 1919. 33 
 
 This section follows substantially 10 of the Alabama Law and 
 73 of the New York law. 
 
 68. SEC. 18. Claims Presented After Time Fixed. 
 
 Claims presented to the Superintendent after the expiration of 
 the time fixed in the notice to creditors, as herein provided, shall 
 be entitled after they have been allowed by the Superintendent 
 to share in the distribution of the assets of the bank only to the 
 extent of the assets undistributed and in the hands of the Super- 
 intendent at the time such claims are filed. 
 
 This follows 10 of the Alabama law. Under the New York 
 law, 72, the Superintendent has no power to accept a claim pre- 
 sented after the time fixed in the notice has expired. 
 
 g 
 
 69. SEC. 19. Order of Paying Debts. 
 
 The order of paying off the debts of an insolvent bank shall be 
 as follows : 
 
 1. Debts due the State of Georgia. 
 
 2. Debts due any county, district or municipality of the State, 
 including unpaid taxes. 
 
 3. Debts due the United States. 
 
 4. The expenses of liquidation, including the compensation of 
 agents and attorneys. 
 
 5. Debts due by the bank as trustee or other fiduciary and other 
 claims of like character. 
 
 6. Judgments and debts secured by lien to the extent of the 
 value of such lien, not void or voidable under the provisions of 
 this act or the law of Georgia; judgment and lien to have the 
 force, rank and dignity prescribed by law. 
 
 7. Debts due to depositors and other contractual liabilities pro 
 rata. 
 
 8. Unliquidated claims for damages and the like. 
 
 Under the Act of 1842, Cobb's Digest 119, it was provided that 
 "where the' charter of a bank is forfeited and the bank is insolvent, 
 the order of paying the debts shall be the same as prescribed 
 in cases of administration to the extent applicable, except where 
 special preference or postponement is given by law." This act 
 continued until the present law went into effect as the only rule 
 for the distribution of the assets of an insolvent bank, having been 
 reenacted in the Bank Bureau Act, Code, 2353. The rule pre- 
 scribed for the distribution in cases of administration was mani- 
 festly inappropriate where the assets of an insolvent bank were 
 to be distributed, and the present section was framed with a view 
 to making a more equitable distribution. 
 
 Under the old law it was held that the State was entitled to prior- 
 ity of payment where both State and individuals were creditors of 
 3
 
 34 PARK'S BANKING LAW OF GEORGIA. 
 
 insolvent bank. Seay v. Bank of Rome, 66 Ga. 609 (4) ; see also 
 18/65 (7-9), 95; 131/750 (2), (63 S. E. 502); 134/163 (1), (67 
 S. E. 803) ; 139/54 (2) (76 S. E. 587). But county was not so en- 
 titled to priority. County of Glynn v. Brunswick T. Co., 101 Ga. 244; 
 (28 S. E. 604). 
 
 70. SEC. 20. Assessment of Stockholders. 
 
 Within ninety (90) days after the Superintendent of Banks has 
 taken possession of the assets and business of any bank, as in this 
 act authorized, he shall make a careful estimate of the value of 
 the cash assets of said bank which can probably be converted 
 into cash within one year after so taking possession of the as- 
 sets and business of said bank, and of the amount of such cash 
 assets which will be available to pay depositors ; and he shall 
 immediately thereupon make an assessment upon the stockhold- 
 ers of said bank sufficient, when added to the cash assets so avail- 
 able for depositors, to pay the said depositors in full; pro- 
 vided that such assessment shall not exceed the liability of stock- 
 holders upon their said stock. Notice of such assessment shall 
 be given by mail to each of the stockholders of said bank, and 
 if any stockholder so notified shall refuse or neglect to pay any 
 such assessment within thirty (30) days after the levy of such 
 assessment and notice thereof, the Superintendent of Banks shall 
 issue an execution against such stockholder for the amount of 
 such assessment, which shall be enforced in like manner as exe- 
 cutions issued by the Superior Courts of this State upon judgments 
 regularly rendered by said courts; provided, however, that any 
 stockholder shall have the right by affidavit of illegality, as in 
 cases of affidavits of illegality to other executions, to contest 
 his liability for such assessment, but not the correctness of the 
 estimate made by such Superintendent or the amount of such 
 assessment, which estimate and the amount of such assessment 
 shall be final and conclusive upon the stockholders. If at any 
 time prior to the final payment of all the indebtedness of such 
 bank, it shall appear to the Superintendent that the assessment 
 made by him is insufficient in amount to pay such depositors in 
 full, said Superintendent may from time to time make other 
 assessments not in excess of the liability of the stockholders upon 
 their stock which shall be enforced and collected in like manner. 
 
 After all the indebtedness of such bank is paid in full, the re- 
 maining assets of such bank shall be applied first to reimbursing 
 the stockholders who have paid such assessment or assessments, 
 and thereafter pro rata to all the stockholders.
 
 BANKING ACT OF 1919. 35 
 
 Under Code, 2356, where the assets of the bank were insuf- 
 ficient to pay all of its liabilities, the receiver was authorized to 
 bring suit against the stockholders for the recovery from each of 
 his appropriate share thereof, and it was further provided that on 
 failure or neglect of the receiver to do so any creditor might in- 
 stitute such suit in the receiver's name. This section authorizing 
 the Superintendent to assess the stockholders follows 5234, U. S. 
 R. S. ; 9821, U. S. Comp. Stat., and is a distinct improvement 
 on the former method. The Comptroller of the Currency can only 
 enforce his assessment by suit. He can not issue an execution as 
 the Superintendent is authorized to do by this section. The New 
 York statute, 80, is quite similar to 5234, U. S. R. S.; 9821, 
 U. S. Comp. Stat. 
 
 71. SEC. 21. Dividends, When Paid. 
 
 At any time after the expiration of the date fixed by the Super- 
 intendent for the presentation of claims against the bank, and 
 from time to time thereafter, the Superintendent may, out of the 
 funds remaining in his hands after the payment of expenses and 
 priorities, declare and pay dividends to the depositors and other 
 creditors of such bank, and a dividend shall be declared when and 
 as often as the funds on hand subject to the payment of dividends 
 shall be sufficient to pay ten (10) per cent, of all claims entitled to 
 share in such dividends. 
 
 In calculating dividends, all disputed claims and deposits shall 
 be taken into account, and the amount of dividends upon such 
 disputed claims or deposits shall be held by the Superintendent 
 until the justice and validity of such claims or deposits shall have 
 been finally determined. 
 
 This section follows 10 of the Alabama law, 78 of the New 
 York law. A similar provision is made by 5236, U. S. R. S. ; 
 9823, U. S. Comp. Stat. 
 
 72. Sue. 22. Funds to Be Deposited. 
 
 All funds collected by the Superintendent shall be from time 
 to time deposited in such bank or banks as may be selected by him, 
 subject to the check of the Superintendent of Banks. 
 
 This section follows 10 of the Alabama law and 70 of the 
 New York law. Formerly the Comptroller was required to de- 
 posit all funds of insolvent national banks in his hands in the 
 United States Treasury, but by an amendment to 5234, U. S. 
 R. S., approved May 15, 1916, 9821, U. S. Comp. Stat., he was 
 authorized to deposit such funds in any regular Government de- 
 positary or any national or state bank in the city in which the 
 bank was located or in a city as adjacent thereto as practicable.
 
 36 PARK'S BANKING LAW of GEORGIA. 
 
 73. SEC. 23. Compensation of Agents, Attorneys, and 
 Others, How Fixed. 
 
 The compensation of the agents appointed by the Superin- 
 tendent and of attorneys, expert accountants, and other assist- 
 ants, and all expenses of liquidation and distribution of a bank 
 whose assets and business shall be taken possession of by the 
 Superintendent, shall be fixed by the Superintendent, but sub- 
 ject to be approved by the judge of the Superior Court of 
 the county in which the bank is located, on notice to such 
 bank. Except in cases of emergency, the compensation to be 
 paid to attorneys and expert accountants shall be fixed and 
 approved before services are rendered. When the compensa- 
 tion shall have been so fixed and approved and the services 
 rendered, the same shall be paid out of the funds of such bank 
 in the hands of the Superintendent, and shall be a proper charge 
 and 4ien on the assets of such bank. 
 
 This section follows 10 of the Alabama law and 63 of the 
 New York law. Section 5238, U. S. R. S. ; 9825, U. S. Comp. Stat, 
 also provides that the expense of receivership shall be paid out of 
 the assets before distribution thereof. 
 
 74. SEC. 24. Unclaimed Dividends and Deposits. 
 
 Dividends and unclaimed deposits remaining unpaid in the hands 
 of the Superintendent for six (6) months after the order for final 
 distribution, shall be by him deposited in a bank, to be selected 
 by him, at the best rate of interest obtainable, to the credit of 
 the Superintendent and his successors in office, in trust for the 
 several depositors in, and creditors of, the liquidated bank and 
 the Superintendent may pay over the money so held by him to the 
 persons, respectively, entitled thereto, as and when satisfactory 
 evidence of their right to the same is furnished. In case of 
 doubtful or conflicting claims, the Superintendent may require 
 an order from the Superior Court of the county in which the 
 bank is located authorizing and directing the payment thereof. 
 The interest earned on the moneys so held by him shall be applied 
 toward defraying the expenses incurred in the payment and dis- 
 tribution of such unclaimed deposits or dividends to the depositors 
 and creditors entitled to. receive the same. The balance of in- 
 terest, if any, shall be deposited and held as other funds to the 
 credit of the Department of Banking. 
 
 This section follows 10 of the Alabama law.
 
 BANKING ACT OF 1919. 37 
 
 75. SEC. 25. Stockholders' Meeting to Be Called. 
 
 Whenever the Superintendent shall have paid to each and every 
 depositor and creditor of such bank whose claim shall have been 
 duly proven and allowed, the full amount of such claim, and 
 shall have made proper provision for unclaimed and unpaid 
 deposits and disputed claims and deposits, and shall have paid 
 all the expenses of liquidation, the Superintendent shall call a 
 meeting of the stockholders of such bank by giving notice thereof 
 by publication once a week for four weeks in the newspaper 
 in which the sheriff's advertisements of the county in which 
 the bank is located are published, and by mailing a copy of such 
 notice to each stockholder addressed to him at his address as 
 the same shall appear upon the books of the bank; and at such 
 meeting the stockholders shall determine whether the Super- 
 intendent shall continue as liquidator and shall wind up the 
 affairs of such bank, or whether an agent or agents shall be 
 elected for that purpose, and in so determining, the stockhold- 
 ers shall vote by ballot in person or by duly executed proxy, 
 each share of stock entitling the holder to one vote, and a ma- 
 jority vote of the stock shall be necessary to a determination. 
 In case it is determined to continue the liquidation under the 
 Superintendent, he shall complete the liquidation of the affairs 
 of such bank, and, after paying the expenses thereof, and reim- 
 bursing the stockholders who have paid any assessments upon 
 their stock the amounts paid by them, respectively, he shall dis- 
 tribute the proceeds among the stockholders in proportion to their 
 several holdings of stock. 
 
 This section follows 10 of the Alabama law and 79 of the New 
 York law, both of which follow the Act of Congress of June 30, 
 1876, as amended, making similar provision in cases of national 
 banks. 9827 U. S. Comp. Stat. 
 
 76. SEC. 26. Stockholders' Agent, Election, Powers, and 
 
 Duties of. 
 
 In case it is determined* to appoint an agent or agents to 
 liquidate, the stockholders shall thereupon elect such agent or 
 agents by ballot, each share being entitled to one vote, the 
 majority of the stock present and voting being necessary to 
 a choice. Such agent or agents shall execute and file with the 
 Superintendent a bond in such amount, with such security and 
 in such form as shall be approved by the Superintendent con- 
 ditioned for the faithful performance of all the duties of his or
 
 38 PARK'S BANKING LAW OF GEORGIA. 
 
 their trust, so conditioned that any party aggrieved may bring 
 or cause to be brought suits on said bond, and thereupon the 
 Superintendent shall transfer and deliver to such agent or agents 
 all the undivided and uncollected or other assets of said bank 
 then remaining in his hands, and upon such transfer and deliv- 
 ery the said Superintendent shall be discharged from any and 
 all further liability to such bank and its creditors. Such agent 
 or agents shall convert the assets coming into his or their hands 
 into cash, and shall act for and make distribution of the property 
 of said bank, as is herein provided in case of distribution by 
 the Superintendent, the expenses of such liquidation being- subject 
 to the control and approval of the judge of the Superior Court 
 of the county in which the bank is located. 
 
 This section follows 10 of the Alabama law and 79 of the 
 New York Iaw 4 both of which follow the Act of Congress of June 
 30, 1876, as amended, making similar provision in cases of national 
 banks. 9827 U. S. Comp. Stat. 
 
 77. SEC. 27. Successor of Agent, How Chosen. 
 
 In case of the death, removal, or refusal to act of any agent or 
 agents elected by the stockholders, the stockholders, upon notice 
 given by the Superintendent, as is herein provided in case of the 
 original election upon proof of such death, removal, or refusal to 
 act being filed with said Superintendent, and by the same vote as 
 hereinbefore provided for, shall elect a successor, who shall have 
 the same powers and be subject to the same liabilities and duties 
 as the agent or agents originally elected. 
 
 This section follows 10 of the Alabama law, which follows the 
 Act of Congress of June 30, 1876, as amended, making similar pro- 
 vision in case of a national bank. 9827 U. S. Comp. Stat. 
 
 78. SEC. 28. Superintendent to Report Banks Liquidated. 
 
 The Superintendent shall file as a part of his annual report to 
 the Governor a list of the names of the banks so taken posses- 
 sion of and liquidated, and the sum "of unclaimed and unpaid de- 
 posits or dividends with respect to each of them respectively, and 
 where such unpaid depositors or dividends are deposited. 
 
 This section follows 10 of the Alabama law and 83 of the New 
 York law.
 
 BANKING ACT OF 1919. 39 
 
 ARTICLE VIII. 
 
 Incorporation of Banks. 
 
 79. SECTION 1. Application for Charter. 
 
 Any number of persons not less than five (5) may form a cor- 
 poration for the purpose of carrying on the business of banking, 
 by filing in the office of the Secretary of State an application in 
 writing signed by each of them, in which they shall state : 
 
 1. The name by which such bank is to be known. 
 
 2. The particular city, town, or village, where its office is to 
 be located. 
 
 3. The amount of its capital stock which shall not be less 
 than fifteen thousand dollars ($15,000.00) in any town or vil- 
 lage incorporated or unincorporated, whose population does not 
 exceed one thousand (1,000) according to the last preceding cen- 
 sus of the United States, and not less than twenty-five thousand 
 dollars ($25,000.00) in any city, town, or village whose popula- 
 tion exceeds one thousand (1,000) and is less than ten thou- 
 sand (10,000), and not less than fifty thousand dollars ($50,- 
 000.00) in any city or town whose population exceeds ten thou- 
 sand (10,000). 
 
 4. The number of shares into which such capital stock shall 
 be divided, provided the par value of each share of stock shall 
 be one hundred dollars ($100.00). 
 
 5. The purposes and nature of the business proposed to be 
 conducted, with any other matters which they may deem it 
 desirable to state. 
 
 6. The number of directors of the bank, which shall not be 
 less than three (3) nor more than twenty-five (25). 
 
 Said application shall be filed in triplicate, and a fee of fifty 
 dollars ($50.00) shall be paid to the Secretary of State to be cov- 
 ered by him into the Treasury of the State, on filing the appli- 
 cation, and the Secretary of State shall not receive said applica- 
 tion until said fee shall be paid. 
 
 [The persons filing such application may also acquire all the 
 rights, powers, privileges and immunities and be subject to all 
 the liabilities and restrictions conferred and imposed upon trust 
 companies of Sections 2815 to 2821, both inclusive, of the Civil 
 Code of Georgia of 1910 and the several Acts amendatory thereof, 
 and in addition to the usual banking powers, as conferred and de-
 
 40 PARK'S BANKING LAW of GEORGIA. 
 
 scribed in this Act, providing such applicants shall allege that at 
 least $100,000.00 of capital stock has been subscribed and actually 
 paid in ; provided also such applicants shall pay to the Secretary of 
 State upon filing such application to be covered by him into the 
 Treasury of the State, a fee of $25.00 in addition to the fee of 
 $50.00 above provided, in all cases where trust company powers 
 are desired as above set forth.]* 
 
 Under the amendment to Article III, 7, Paragraph 18, of the 
 Constitution ratified in 1892 (Code, 6446), "all corporate powers 
 to banking companies are required to be issued and granted by the 
 Secretary of State in such manner as shall be prescribed by law, and 
 if in the event the Secretary of State shall be disqualified, then the 
 Legislature shall prescribe by general laws by what person such 
 charter shall be granted." Anticipating the ratification of this 
 amendment, a general law for the incorporation of banks by the 
 Secretary of State was adopted in 1891 (Acts 1890-91, p. 59). 
 This was superseded by the Act of 1893 (Code, 2266 et seq.), 
 which act remained in force until the present law. 
 
 The legislature provided, Code, 2263, that "in case the Secretary 
 of State is disqualified to act in any case, the application shall be 
 filed with the Comptroller General, who shall perform all the duties 
 prescribed for the Secretary of State." 
 
 Under the Act of 1893 any number of persons, not less than three, 
 might form a banking corporation. Code, 2262. The minimum 
 capital was fixed at $25,000.00, not less than $15,000.00 of which was 
 required to be paid in in cash at the time the application for charter 
 was filed. Code, 2269. The provision for graduating the amount 
 of capital in accordance with the population of the town or city in 
 which the bank is located is similar to the requirement of 5138, 
 U. S. R. S., as amended by the Act of March 14, 1900, U. S. Comp. 
 Stat., 9675. Alabama also graduates the required capital stock by 
 the number of inhabitants of the city or town in which the bank is 
 to be located. 18. This section, with the exceptions mentioned, 
 follows Code, 2262, though the information required to be fur- 
 nished is somewhat fuller. 
 
 80. Sue. 2. Application to Be Published. 
 
 When the application is filed, the Secretary of State shall certify 
 one of the copies thereof and deliver the same to the applicants, 
 and the same shall be published by the applicants in the newspaper 
 in which the sheriff's advertisements of the county, in which the 
 bank is to be located, are published, once a week for four weeks. 
 
 This section is substantially a reenactment of Code, 2264. 
 
 81. SEC. 3. Application Referred to Superintendent of 
 , Banks. 
 
 Immediately upon the filing of the application, the Secretary of 
 State shall transmit one copy thereof to the Superintendent of 
 Banks for investigation by him. 
 
 *Added by Act of August 14, 1920.
 
 BANKING ACT. OF 1919. 41 
 
 Under the Act of 1893, no investigation of the application for 
 charter was required, no information had to be furnished other 
 than that contained in the petition and the certificate of its publica- 
 tion, and the Secretary of State acted in a purely ministerial ca- 
 pacity in issuing the charter. The requirement for investigation 
 by the Superintendent provided for in this and the following sec- 
 tion is intended to insure the full compliance with the statutory 
 requirements as to the payment of capital, etc., and is a proper safe- 
 guard thrown around the incorporation. 
 
 82. SEC. 4. Information to Be Furnished Superintendent 
 by Applicants. 
 
 When such application has been referred to the Superintendent 
 of Banks he shall call upon the applicants for a statement, show- 
 ing: 
 
 1. The names and places of residence of the subscribers to 
 the stock of such bank and the number of shares to be held 
 by each. 
 
 2. The names of the stockholders who shall be directors for 
 the first year of the incorporation of said bank. 
 
 3. How and when it is proposed that the capital stock shall 
 be paid in. 
 
 4. When it is proposed that such bank shall commence busi- 
 ness. 
 
 5. Such other information as may be desired by the Superin- 
 tendent of Banks. 
 
 Which statement it shall be the duty of said applicants to fur- 
 nish upon request of said Superintendent. 
 
 83. SEC. 5. Certificate of Publication. 
 
 When said application shall have been published, the applicants 
 may apply to the ordinary of the county in which the proposed 
 bank shall be located to certify the fact of such publication, and 
 the ordinary shall certify the fact, which certificate shall be filed 
 by the applicants in the office of the Secretary of State. 
 
 This section is substantially a ree'nactment of Code, 2265. 
 
 84. SEC. 6. Certificate of Incorporation to Be Issued. 
 
 When the certificate' of the ordinary to the fact of the publica- 
 tion of the application shall have been filed by the applicants in the 
 office of the Secretary of State, the Secretary of State shall 
 issue to the applicants, their associates, and successors, a certifi- 
 cate of incorporation under the seal of the State, certifying 
 that the applicants, their associates, and successors, are a body
 
 42 PARK'S BANKING LAW OF GEORGIA. 
 
 politic and corporate under the name and style designated in 
 the application, and that such corporation has the capacity and 
 powers conferred, and is subject to all the duties and liabilities 
 imposed by law; and the Secretary of State shall record the 
 application, the certificate of approval of the Superintendent of 
 Banks, the certificate of the ordinary as to publication, and the 
 certificate of incorporation, in the order named. 
 
 This section is also substantially a reenactment of a portion of 
 Code, 2265. 
 
 85. SEC. 7. Payment of Capital. 
 
 At least sixty per cent. (60) per share of the capital stock of 
 every bank, and in no event less than fifteen thousand dollars 
 ($15,000.00), shall be paid in, in cash, before such bank shall be 
 authorized to commence business, and the remainder of the capital 
 stock shall be paid in within one year, in such installments as may 
 be approved by the Superintendent of Banks, and the payment of 
 each installment shall be certified to the Superintendent of Banks 
 under oath by the president or cashier of the bank. 
 
 Code, 2269, provided that not less than twenty per cent, of 
 the required capital must be paid in before filing the application 
 with the Secretary of State, and in no event less than $15,000.00. 
 This section changes the requirement so as to provide that at least 
 sixty per cent, per share must be paid in, and in no event less 
 than $15,000.00, and adds that the remainder of the capital shall 
 be paid in within one year. Under the former law, banks were 
 incorporated with a minimum capital of $25,000.00, but with only 
 $15,000.00 paid in, and there was no requirement for the pay- 
 ment of the balance within any specified time. Many banks have 
 continued to do business with only $15,000.00 paid in for a number 
 of years. The requirement as to the payment of the capital in 
 installments and the certification of eaeh installment to the Super- 
 intendent of Banks is quite similar to that of 5140, U. S. R. S. ; 
 9677, U. S. Comp. Stat. 
 
 86. SEC. 8.^ Permit to Begin Business. 
 
 Before any bank shall transact any business as a bank, such bank 
 shall file with the Superintendent of Banks a request for a permit 
 to commence business. No bank shall transact any business as a 
 bank without the written permit of the Superintendent, certifying 
 that such bank has complied with all the requirements of law, and 
 is authorized to transact business as a bank, and that such business 
 can be safely entrusted to it which permit shall be recorded 
 in the office of the Superintendent in a book to be kept by him 
 for that purpose; and a certified copy thereof under the hand
 
 BANKING ACT OF 1919. 43 
 
 and official seal of the Superintendent shall be furnished to and 
 kept of file by the bank. The Superintendent, before issuing 
 his permit to any bank to begin business, shall make an examina- 
 tion, or cause an examination to be made, in order to ascertain 
 whether the requisite capital of such bank shall have been paid 
 in, in cash. The Superintendent shall not authorize any bank 
 to commence business until it shall be made to appear to his satis- 
 faction, from such examination, that the amount of capital herein 
 required has been subscribed in good faith, and that at least sixty 
 per cent. (60) per share of the authorized capital stock, and in 
 no event less tha.n fifteen thousand dollars ($15,000.00), has 
 been paid in, in cash, and that provision has been made, for col- 
 lecting the remaining portion of the capital within one (1) year. 
 The first directors shall be those named in the application for 
 charter or such stockholders as may be substituted, with the ap- 
 proval of the superintendent, for any therein named. 
 
 No permit to begin business was required under the old law. 
 The incorporators on obtaining a charter from the Secretary of 
 State could begin business immediately without any further require- 
 ment. This provision for investigation by the Superintendent to 
 ascertain whether the capital has been paid in and the other re- 
 quirements of the statute complied with is taken in substance from 
 the National Bank Act, 5168, 5169, U. S. R. S. ; 9710, 9711, 
 U. S. Comp. Stat. Similar requirements are provided under the 
 New York act, 24, and the Alabama act, 27. 
 
 87. SEC. 9. Enforcing Payment of Capital. 
 
 Whenever any stockholder, or his assignee, shall fail to pay any 
 installment on the stock when the same is required to be paid, the 
 directors of such bank may sell the stock of such delinquent stock - 
 t holder at public sale, after giving four (4) weeks' previous notice 
 thereof in the newspaper in which the sheriff's advertisements are 
 published, in the county in which the bank is located, said sale 
 to be to the highest bidder for cash, provided such bid shall 
 not be less than the amount unpaid on such stock, with the 
 expense of advertisement and sale, and out of the proceeds the 
 bank shall pay the expenses of sale and the balance due on the 
 stock, and the excess, if any, shall be paid to the delinquent 
 stockholder. If no bidder can be found who will pay for such 
 stock the amount due thereon to the bank, together with the 
 costs of advertisement and sale, the amount previously paid by 
 the stockholder shall be forfeited to the bank, and such stock 
 shall be sold by the directors either at public or private sale, as 
 they shall see fit, within six (6) months from the time of such
 
 44 PARK'S BANKING LAW OF GEORGIA. 
 
 forfeiture, and if not sold, it shall be cancelled and deducted 
 from the capital stock of the bank. If any such cancellation or 
 reduction shall reduce the capital stock of the bank below the 
 minimum capital required by law for such bank, the capital shall 
 within thirty (30) days from the date of such cancellation be in- 
 creased to the required amount, in default of which the Superin- 
 tendent of Banks shall be authorized to proceed as in cases where 
 the capital stock shall have become impaired by reason of losses 
 or otherwise. 
 
 A sale of stock as herein provided shall effect an absolute 
 cancellation of the outstanding certificate or certificates evidenc- 
 ing the stock so sold and shall make the same null and void, and 
 the rights of any and all holders thereof shall terminate, and a 
 new certificate or certificates shall be issued to the purchaser or 
 purchasers of such stock, free from all liens and claims whatso- 
 ever. 
 
 The remedies of. sale or forfeiture herein provided shall be 
 cumulative to any other remedies provided by law for the collec-. 
 tion of the unpaid balance of such subscription. 
 
 The Act of 1893 made no provision for the collection of install- 
 ments on stock. Such collection could only be enforced by suit. 
 The section follows the National Bank Act, 5141, U. S. R. S. ; 
 9678, U. S. Comp. Stat. 
 
 88. SEC. 10. Lien on Stock for Unpaid Installment. 
 
 Any bank, the stock of which has not been fully paid for by the 
 subscriber or subscribers, shall have and is hereby given a special 
 lien upon said stock, which lien shall not be divested by sale, 
 transfer, or otherwise until all installments are fully paid thereon. 
 Any certificate of stock' issued before the stock shall have been 
 paid for in full shall show upon the face thereof the amount 
 which has been paid. Save and except for unpaid installments 
 due thereon no bank shall have or enforce, by by-law or other- 
 wise, any lien on its stock unless the same shall have been regu- 
 larly pledged and the stock certificate transferred to the bank as 
 in case of other collateral. 
 
 Code, 3375, authorizes a corporation by its by-laws to create 
 a lien upon its shares of stock in favor of the corporation. This 
 section prohibits the creation of such a lien by a bank, the bank 
 being given a lien by the act itself for unpaid installments of the 
 capital stock only.
 
 BANKING ACT OF 1919. 45 
 
 ARTICLE IX. 
 
 Amendment of Bank Charters. 
 
 89. SECTION 1. What Amendments Allowed. 
 
 Any bank, whether incorporated by special act of the General 
 Assembly or by the Secretary of State under the general law, may 
 have its charter amended so as to change its corporate name ; or 
 the city, town, or village in which its office is located ; or the 
 amount of its capital stock ; or the number of shares into which 
 its capital stock is divided, so as to change the par value thereof 
 to one hundred dollars each ; [where the capital stock of such 
 bank subscribed and paid in shall be not less than One Hundred 
 Thousand ($100,000.00) Dollars, so as to acquire all the rights, 
 powers, privileges and immunities and be subject to all the liabili- 
 ties and restrictions conferred and imposed upon trust companies 
 by Sections 2815 to 282J, both inclusive, of the Civil Code of 1910, 
 and the several Acts amendatory thereof ;]* and any bank hereto- 
 fore incorporated by special act of the General Assembly may 
 have its special charter amended so as to incorporate therein any 
 provision of this act or any amendment thereto. 
 
 Under various acts of the Legislature, Code, 2197, 2201, 2268, 
 and 2271, four separate and distinct methods of amending bank 
 charters were provided. Sometimes the same amendment could be 
 obtained in either one of two ways, and sometimes where it was 
 desired to obtain more than one amendment, the two amendments 
 could only be obtained by different methods. This Article substi- 
 tutes a simple uniform method for all amendments. 
 
 90. SEC. 2. Application for Amendment. 
 
 The bank desiring such amendment shall file in the office of the 
 Secretary of State an application in triplicate, signed with its cor- 
 porate name and under its corporate seal, in which it shall state the 
 name of said bank, the date of its original charter, and all amend- 
 ments thereto, and the particular amendment or amendments 
 to its said charter it desires ; and shall pay to the Secretary of 
 State a fee of twenty-five ($25.00) dollars, to be covered by 
 him into the Treasury of the State. Said bank shall also file 
 
 *The Secretary of State having refused to grant an amendment to a 
 charter conferring trust company powers upon the ground that the Act of 
 1917 was repealed by the Banking Act of 1919, this provision was inserted 
 by the Act of August 14, 1920.
 
 46 PARK'S BANKING LAW OF GEORGIA. 
 
 with said application a certified abstract from the minutes of 
 the stockholders thereof showing that the application for the 
 proposed amendment has been authorized by a vote of a ma- 
 jority in amount of the entire capital stock at a meeting of the 
 stockholders, called for the purpose of acting thereon, by a reso- 
 lution of the board of directors, notice of which meeting shall 
 have been mailed to each stockholder, or in case of death, to his 
 legal representatives or heirs at law, addressed to his last known 
 residence at least ten (10) days previous to the date of said 
 meeting, provided, however, if the application is to change the city, 
 town or village in which its office is located, then the certified 
 abstract from the minutes shall show that the amendment was 
 authorized by the unanimous vote of the stockholders present 
 at said meeting. 
 
 The method here provided is substantially the same as in Code, 
 2272. 
 
 91. SEC. 3. Application to Be Published. 
 
 When the application is filed, the Secretary of State shall cer- 
 tify one of the copies thereof and deliver the same to the bank and 
 the same shall be published by the bank in the newspaper in which 
 the sheriff's advertisements of the county in which the bank is lo- 
 cated, are published, once a week for four (4) weeks. 
 
 This substantially reenacts Code, 2273. 
 
 92. SEC. 4. Application Referred to Superintendent of 
 Banks. 
 
 Immediately upon the filing of the application for amendment, 
 the Secretary of State shall transmit one copy thereof to the Su- 
 perintendent of Banks for investigation by him. 
 
 The requirements for referring the application to the Superin- 
 tendent for investigation and the examination and certificate pro- 
 vided for in the succeeding section are new. Similar requirements 
 are made where an amendment to the articles of association of a 
 national bank is sought. Acts of July 12, 1882, and May J, 1886. 
 9662, 9679, 9680, 9681, U. S. Comp. Stat. 
 
 93. SEC. 5. Examination by and Certificate of Superintend- 
 ent. 
 
 When such application for amendment shall have been re- 
 ferred to the Superintendent of Banks, the said Superintend- 
 ent shall immediately investigate either through himself or
 
 BANKING ACT of 1919. 47 
 
 some person appointed by him, and shall satisfy himself that 
 such amendment is proper and has been duly authorized by 
 proper corporate action, and in case said application is for the 
 increase of the capital stock, that the amount of such addi- 
 tional capital has been paid in, in cash, except where surplus 
 is capitalized, and in case said application is for the reduction of 
 the capital stock, that the method by which such reduction is ac- 
 complished is proper and fair to all the stockholders and that 
 the capital stock is not reduced below the amount required by 
 law for such bank, and that all the requirements of law have 
 been fulfilled. If so satisfied the Superintendent of Banks shall, 
 within thirty (30) days after the application for amendment 
 shall have been filed with him for examination, issue under his 
 hand and official seal a certificate approving the amendment 
 to the charter of such bank, and shall transmit a copy of such 
 certificate to the Secretary of State, who shall enter the same 
 of record in his office. The said Superintendent shall also keep 
 of file a duplicate of said certificate in his own office. If the 
 Superintendent shall not be satisfied that the amendment as 
 proposed is expedient and desirable, or that the law for such 
 cases made and provided has been fully complied with, or, if the 
 said amendment is for the increase of the capital stock, that the 
 said increase has not been paid in, as herein provided, he shall, 
 within thirty (30) days after the filing of the copy of said ap- 
 plication for amendment with him, notify the Secretary of State 
 that he refuses to approve the amendment to the charter, and no 
 amendment shall in that event be granted by the Secretary of 
 State. 
 
 94. SEC. 6. Certificate of Publication. 
 
 When the application to amend the charter shall have been pub- 
 lished, the bank may apply to the ordinary of the county in which 
 it is located to certify the fact of such publication, and the 
 ordinary shall certify the fact, which certificate shall be filed by 
 the bank in the office of the Secretary of State. 
 
 This section is substantially a reenactment of Code, 2274. 
 
 95. SEC. 7. Certificate of Amendment to Be Issued. 
 
 When the certificate of the ordinary to the fact of the publication 
 of the application for amendment shall be filed by the bank in 
 the office of the Secretary of State, and the certificate of the
 
 48 PARK'S BANKING LAW OF GEORGIA. 
 
 Superintendent of Banks approving the application for amend- 
 ment shall likewise be filed with the Secretary of State, the 
 Secretary of State shall issue to the bank a certificate, under the 
 seal of the State, amending the charter in the particulars prayed 
 for ; and the Secretary of State shall record the application for 
 amendment, the certificate of approval of the Superintendent of 
 Banks, the certificate of the ordinary as to the publication, and 
 his certificate of amendment, in the order named. 
 
 A similar certificate was required under the several methods of 
 amendment of bank charters under the former law. Code, 2198, 
 2200, 2202, 2274. 
 
 96. SEC. 8. Increase of Capital from Surplus and Undi- 
 vided Profits. 
 
 Any bank may increase its capital stock from its surplus 
 and undivided profits where its charter has been amended 
 authorizing such increase and the approval of the Superintendent 
 of Banks to such increase from the surplus and profits shall have 
 been previously obtained, provided that no increase from surplus 
 and profits shall be made which will reduce the unimpaired sur- 
 plus to an amount less than twenty (20) per cent, of the capital 
 stock. 
 
 This is an original section, its purpose while authorizing the 
 transfer of surplus to capital account being to require the keeping 
 intact of the required twenty per cent. 
 
 97. SEC. 9. Increase Offered to Stockholders. 
 
 When the capital stock of any bank shall be increased, the addi- 
 tional stock shall be offered to the stockholders of record at the 
 time of such increase pro rata, and if any such stock shall not be 
 subscribed for or taken by such original stockholders, the same 
 shall then be offered to the public upon such terms as may be fixed 
 by the board of directors subject to the approval of the Superin- 
 tendent of Banks, provided that no stock shall ever be sold for less 
 than par and that no subscription shall be payable in anything ex- 
 cept cash ; [provided, however, that the payment of such increase 
 of capital stock may be made in the manner set forth in Section 7 
 of Article 8 (85) providing for the payment of original capital 
 of such bank.]* 
 
 There was nothing in the old law which preserved to the stock- 
 holders this valuable right. By regulation of the Comptroller of 
 the Currency, national banks are required to accord to their share- 
 holders a similar right. 
 
 *Proviso added by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 49 
 
 ARTICLE X. 
 
 Renewal of Bank Charters. 
 
 98. SECTION 1. Application for Renewal. - 
 
 Any bank, whether incorporated by special act of the General 
 Assembly, or by the Secretary of State under the general law for 
 the incorporation of banks, may have its charter renewed and its 
 corporate existence extended for a period of thirty years by filing 
 with the Secretary of State at any time within six (6) months 
 prior to the expiration of its charter an application in triplicate, 
 signed with its corporate name and under its corporate seal, 
 1 in which it shall state the name of the bank, and when and how in- 
 corporated, giving the date of its original charter and all amend- 
 ments thereto, and pray for a renewal of its charter, and upon 
 filing such application, it shall pay to the Secretary of State a fee 
 of $25.00 to be covered by him into the Treasury of the State. 
 Said bank shall also file with said application a certified abstract 
 from the minutes of the stockholders thereof showing that the 
 application for renewal of its charter has been authorized by a 
 vote of two-thirds (%,) in amount of the entire capital stock of 
 the bank at a meeting of the stockholders, called for the purpose 
 of acting thereon, by resolution of the board of directors, notice 
 of which meeting shall have been mailed to each stockholder, and 
 in case of death to his legal representative, or heirs at law, ad- 
 dressed to his last known residence, at least ten (10) days previ- 
 ous to the date of said meeting. 
 
 This is a reenactment, somewhat amplified, of Code, 2193. 
 
 99. SEC. 2. Application to Be Published. 
 
 When said application for renewal of charter is filed, the Secre- 
 tary of State shall certify one of the copies thereof and deliver the 
 same to the bank, and the same shall be published once a week for 
 four (4) weeks, in the newspaper in which are published the 
 sheriff's advertisements of the county in which the bank is lo- 
 cated. 
 
 There was no requirement for the publication of the application 
 to renew under the old law, but as a renewal is practically an 
 amendment to the charter, the same method as is provided in case 
 of amendment is here provided where charters are sought to be 
 renewed. 
 4
 
 50 PARK'S BANKING LAW OE GEORGIA. 
 
 100. SEC. 3. Application Referred to the Superintendent of 
 Banks. 
 
 Immediately upon filing the application for renewal, the Secre- 
 tary of State shall transmit one copy thereof to the Superintend- 
 ent of Banks for investigation by him. 
 
 There was no requirement for an investigation before charter 
 was renewed under the old law. The requirement for reference 
 to the Superintendent and the examination and certificate provided 
 for in the next section are analogous to the provisions of the Act of 
 July 12, 1882, amending the National Bank Act, 9665, U. S. Comp. 
 Stat. 
 
 101. SEC. 4. Examination by and Certificate of the Super- 
 intendent. 
 
 When such application for renewal shall have been re- 
 ferred to the Superintendent of Banks, said Superintendent 
 shall make or cause to be made a special examination to de- 
 termine the condition of the bank, and if, from such exami- 
 nation, or otherwise, it shall appear to him that said bank is 
 in a safe and satisfactory condition and has complied with the 
 requirements of the law and that such renewal of the charter 
 is proper and has been duly authorized by proper corporate 
 action, he shall within thirty (30) days after the application 
 for renewal shall have been filed with him for examination, issue, 
 under his hand and official seal, a certificate approving the re- 
 newal of the charter of such bank, and shall transmit a copy of 
 such certificate of approval to the Secretary of State, who shall 
 enter the same of record in his office. The Superintendent shall 
 also keep of file a duplicate of said certificate in his own office. 
 If it should appear to the Superintendent of Banks from the 
 examination herein provided for, or otherwise, that the condi- 
 tion of said bank is not safe or satisfactory, or that the renewal of 
 its charter is otherwise inexpedient, or that said bank has failed 
 to comply with the law, or that the application for renewal has 
 not been authorized by proper corporate action, the Superintend- 
 ent shall notify the Secretary of State that he refuses to approve 
 the application for renewal of the charter, and in such event the 
 charter shall not be renewed by the Secretary of State. 
 
 102. SEC. 5. Certificate of Publication. 
 
 When the copy of the application for the renewal of the charter 
 shall have been published as required by law, the bank shall apply
 
 BANKING ACT OF 1919. 51 
 
 to the ordinary of the county in which it is located to certify the 
 fact of such publication, and the ordinary shall certify the fact, 
 which certificate shall be filed by the bank in the office of the Sec- 
 retary of State. 
 
 103. SEC. 6. Certificate of Renewal to Be Issued. 
 
 When the certificate of the ordinary to the fact of the publica- 
 tion of the application for renewal of charter shall have been filed 
 by the bank in the office of the Secretary of State, and the certifi- 
 cate of the Superintendent of Banks approving the application for 
 renewal shall likewise be filed with the Secretary of State, the 
 Secretary of State shall issue to the bank a certificate under the 
 seal of the State, renewing its charter for a period of thirty (30) 
 years, and the Secretary of State shall record the application for 
 renewal, the certificate of approval of the Superintendent of 
 Banks, the certificate of the ordinary as to publication, and his 
 certificate of renewal, in the order named. 
 
 This is practically a reenactment of Code, 2194. 
 
 ARTICLE XI. 
 
 Private Bank Converted into State Bank. 
 
 104. SECTION 1. Private Bank, How Incorporated. 
 
 Any person, firm, or voluntary association doing a banking busi- 
 ness in this State may convert such private bank into a bank as 
 herein defined by complying with the laws in regard to the in- 
 corporation of banks as herein prescribed, and in the event of 
 such incorporation the capital stock may be paid by a transfer 
 of the assets of such private bank, provided the live assets of such 
 bank shall exceed its liabilities by an amount equal to the amount 
 of the capital stock, such assets to be taken at the true value 
 thereof, and the Superintendent of Banks shall cause an examina- 
 tion of said private bank to be made and its assets and liabilities 
 ascertained before authorizing payment of the capital by transfer 
 of such assets and before permitting such private bank to begin 
 business as an incorporated bank. 
 
 This Article is intended to afford a simple and easy method for 
 the incorporation of a private bank without injustice to its de-
 
 52 PARK'S BANKING LAW OF GEORGIA. 
 
 positors or other creditors. The National Bank Act, 5154, U. S. 
 R. S.; 9694, U. S. Comp. Stat, provided for the conversion of 
 State banks into national banking associations. This Article was 
 framed on the general plan of that section, the object being to en- 
 courage private banks, which operate on the credit of individuals 
 and without any supervision, to become regularly incorporated State 
 institutions. 
 
 105. SEC. 2. Effect of Incorporation. 
 
 Upon the incorporation of any private bank as herein provided 
 all the assets of every kind and character, including the real and 
 personal property, and choses in action, belonging to such bank, 
 shall be deemed to be transferred to and vested in such incorpo- 
 rated bank without any deed, transfer, or assignment being exe- 
 cuted, and the incorporated bank shall hold and enjoy the same in 
 the same manner and to the same extent as the private bank held 
 and owned the same. 
 
 106. SEC. 3. Rights of Creditors and Others. 
 
 The rights of the creditors and depositors of such private bank 
 shall not be impaired in any manner by such incorporation, nor 
 shall any liability or obligation for the payment of any money due 
 or to become due, or any claim or demand in any manner or for 
 any cause existing against such private bank be in any manner re- 
 leased or impaired thereby, and all the rights, obligations and re- 
 lations of all the parties, creditors, depositors and others shall 
 remain unimpaired by such incorporation. But such incorporated 
 bank into which such private bank shall be converted shall suc- 
 ceed to all obligations, trusts and liabilities and be held liable to 
 pay and discharge all such debts and liabilities and to perform all 
 such trusts in the same manner as though such incorporated bank 
 had itself incurred the obligation or liability, and no suit or other 
 proceeding then pending before any court or tribunal in which 
 such private bank is a party shall be deemed to have abated 
 -or been discontinued by reason of any such incorporation but 
 the same may be prosecuted to final judgment in the same manner 
 as if such private bank had not been so converted and the in- 
 corporated bank may be substituted in place of the private bank 
 by order of the court in which such action, suit or proceeding 
 may be pending. Such incorporated bank shall likewise be subject 
 to be sued in any court having jurisdiction upon any cause of ac- 
 tion against such converted private bank, in the same manner 
 as if such cause of action had originated against such incorporated 
 bank.
 
 BANKING ACT OF 1919. 53 
 
 
 
 ARTICLE XII. 
 
 National Bank Converted into State Bank. 
 
 107. SECTION 1. National Bank, How Incorporated as State 
 Bank. 
 
 Whenever any National Banking Association organized under 
 the Acts of Congress and located in this State shall, under the 
 provisions of any Act of Congress, be authorized to dissolve 
 its organization as such national banking association, and shall 
 have taken the action required by such Act of Congress to 
 effect such dissolution, a majority of the directors in no event 
 less than five (5) of such dissolved association, by au- 
 thority of a resolution passed by not less than two-thirds 
 (%) of the stockholders, at a meeting of such stockholders called 
 for the purpose of taking such action, notice of which shall have 
 been given to each stockholder or to the personal representative 
 or heirs at law of any deceased stockholders, addressed to his last 
 known residence, not less than ten (10) days previous to the 
 date of such meeting, or upon the authority in writing of the 
 owners of two-thirds (%) of the capital stock of such associa- 
 tion, may apply to the Secretary of State to become incorporated 
 under the terms and provisions of this act, and upon the filing 
 of such application in the office of the Secretary of State and 
 complying with the law in regard to the incorporation of banks 
 as herein prescribed, the stockholders of such national banking 
 association may become incorporated as a State bank. 
 
 The National Bank Act, 5154, U. S. R. S.; 9694, U. S. 
 Comp. Stat., provided for the conversion of State banks into na- 
 tional banking associations. This Article is intended to provide for 
 the converse, authorizing national banks to become State banks 
 and providing the method by which this may be accomplished. The 
 method is substantially the same as that provided for the conversion 
 of a State bank under the National Bank Act. A similar provision 
 is found in the New York law, 104, this section following that in 
 substance. 
 
 108. SEC. 2. Capital Stock, How Paid. 
 
 In the event of the incorporation of such dissolved national 
 banking association as a State bank as herein provided, the capital 
 stock may be paid by a transfer of the assets of such dissolved na- 
 tional banking association, provided the live assets of such associa- 
 tion shall exceed its liabilities by an amount equal to the amount of
 
 54 PARK'S BANKING LAW OF GEORGIA. 
 
 
 
 the capital stock, such assets to be taken at the true value thereof, 
 and the Superintendent of Banks shall cause an examination of 
 such dissolved national banking association to be made and its as- 
 sets and liabilities ascertained before authorizing the payment of 
 the capital by a transfer of such assets and before permitting it to 
 begin business as a State bank. 
 
 109. SEC. 3. Effect of Such Incorporation. 
 
 Upon the incorporation of any dissolved national banking asso- 
 ciation as herein provided for, all the assets of every kind and 
 character, including the real and personal property, and choses in 
 action, belonging to such dissolved association, shall immediately, 
 by operation of law, and without any conveyance or transfer, be 
 vested in and become the property of such State ba'nk. 
 
 The directors of such dissolved association at the time of its 
 dissolution shall be the directors of the bank created in pursuance 
 hereof until the first annual election of directors thereafter, and 
 shall have power to take all necessary measures to perfect its 
 organization and adopt such regulations concerning its business 
 and management as may be proper and just and consistent with 
 the law. 
 
 110. SEC. 4. Rights of Creditors and Others. 
 
 The rights of the creditors and.depositors of any dissolved na- 
 tional banking association that shall be so converted into a State 
 bank shall not be impaired in any manner by such conversion, nor 
 shall any liability or obligation for the payment of any money due 
 or to become due, or any claim or demand in any manner or for 
 any cause existing against such national banking association, or 
 against any stockholder thereof, be in any manner released or 
 impaired thereby, and all the rights, obligations and relations of 
 all the parties, creditors, depositors, and others shall remain 
 unimpaired by such conversion. But such bank into which the 
 association shall be converted shall succeed to all obligations, 
 trusts and liabilities and be held liable to pay and discharge all 
 such debts and liabilities and to perform all such trusts in the 
 same manner as though such bank into which the association 
 shall have become converted had itself incurred the obligation 
 or liability, and the stockholders of the national banking asso- 
 ciation shall continue subject to all the liabilities, claims and 
 demands existing against them as such at or before such con-
 
 v BANKING ACT OF 1919. 55 
 
 version; and no suit, action or other proceeding then pending 
 before any court or tribunal in which any . association that may 
 be so converted is a party shall be deemed to have abated or been 
 discontinued by reason of any such conversion, but the same may 
 be prosecuted to final judgment in the same manner as if said 
 conversion had not taken place, or the bank into which the asso- 
 ciation shall have been converted may be substituted in the place 
 of any association so converted by order of the court in which 
 such action, suit or proceeding may be pending. Such State 
 bank shall likewise be subject to be sued in any court having 
 jurisdiction upon any cause of action against such association 
 in the same manner as if such cause of action had originated 
 against such State bank. 
 
 ARTICLE XIII. 
 
 Merger or Consolidation of Banks. 
 
 111. SECTION 1. Merger or Consolidation, How Accom- 
 plished. 
 
 Any two or more banks are hereby authorized to merge one 
 or more of said banks into another of them, or to consolidate in 
 the following manner: 
 
 The respective boards of directors of said banks may enter 
 into and make an agreement, under their corporate names and 
 seals, for the merger of one or more of said banks into another 
 of them, or for the consolidation of the contracting banks, pre- 
 scribing the terms and conditions thereof, and the mode of 
 carrying such merger or consolidation into effect, which agree- 
 ment shall be subject to the approval of the Superintendent of 
 Banks. Said agreement shall provide the name that such bank 
 shall have, upon and after such merger or consolidation, which 
 may be the name of any one of the banks merged or the com- 
 bined names of two or more of the consolidated banks, or such 
 other name as may be agreed upon, and shall name the persons, 
 not less than three (3) nor more than twenty-five (25), who 
 shall constitute the board of directors of such banks after the 
 merger or consolidation shall have taken place, and until a new 
 board of directors shall be elected by the stockholders, and shall 
 provide for a meeting of the stockholders of the merged or
 
 56 PARK'S BANKING LAW of GEORGIA. 
 
 consolidated banks within thirty (30) days after the merger or 
 consolidation, to elect such board of directors, with such tem- 
 porary provisions for conducting the affairs of the merged or 
 consolidated banks meanwhile, as shall be agreed upon. 
 
 The Bank Bureau Act, Code, 2303, provided that "A bank, 
 which is in good faith winding up its business for the purpose of 
 consolidating with some other bank, may transfer its assets and 
 liabilities to the bank with which it is in process of consolidation, 
 but no such consolidation of banks shall be made without the 
 consent of two-thirds of the stock of each bank, and not then 
 to defeat or defraud any of the creditors in the collection of their 
 claims against said banks, or either of them." This is the only 
 authority under the old law for the consolidation or merger of 
 banks. It will be seen that the machinery by which such consoli- 
 dation was to be accomplished was not provided. This Article is 
 intended not only to authorize such consolidation, but to provide 
 how it may be accomplished, and to preserve the rights of credit- 
 ors and stockholders of the consolidating banks. Congress, by 
 the Act of November 7, 1918, 9696 (a, b), U. S. Comp. Stat., 
 provided for the consolidation of national banking associations, 
 the provisions, while not so full, being quite similar to those of 
 this Article. This section follows closely 487 and 488 of the 
 New York law. On September 29, 1919, Alabama adopted a similar 
 statute. 
 
 112. SEC. 2. Submission of Agreement to Stockholders. 
 
 Such agreement for the merger or consolidation of two or more 
 banks, after the same shall have been approved by the Superin- 
 tendent of Banks, shall be submitted to the stockholders, respec- 
 tively, of each of such banks at a meeting thereof to be called upon 
 at least ten (10) days' written notice, specifying the time, place 
 and object thereof, addressed to each stockholder at his last 
 known postoffice address, and if such agreement shall be approved 
 at each of such meetings of the respective stockholders, sepa- 
 rately or at any adjournment thereof, by the affirmative vote 
 of stockholders owning at least two-thirds (%) of the stock, 
 the same shall be the agreement of such bank. A certified copy 
 of the proceedings of such meetings, respectively, signed by the 
 chairman and secretary thereof respectively, and under the seals 
 of the banks, respectively, shall be evidence of the holding and 
 action of such meetings. Such certified copies shall be filed in the 
 office of the Superintendent of Banks, and thereupon such banks 
 shall be merged or consolidated as specified in such agreement, 
 and the bank into which the other or others are merged, or the 
 consolidated bank, as the case may be, shall thereafter have the 
 new name specified in such agreement and the provisions of such 
 agreement shall be carried into effect as therein provided. 
 
 Similar provision is made in the New York law, 490.
 
 BANKING ACT OF 1919. 57 
 
 113. SEC. 3. Notice of Merger or Consolidation. 
 
 Notice of the merger or consolidation of said banks, in the cor- 
 porate names, respectively, of the banks so merged or consolidated, 
 shall be published once a week for four (4) weeks in the newspa- 
 per which publishes the sheriff's advertisements of the county in 
 which said banks so merged or consolidated are located; and if 
 the banks so merged or consolidated are in different counties, 
 such notice shall be published in such newspaper in each county. 
 Such notice shall give the name of the banks into which the 
 other or others shall be merged, or the name of the consolidated 
 bank, and the place at which the office of such merged or consoli- 
 dated bank shall be located, and it shall state that such merged 
 or consolidated bank has taken over the assets of the banks, 
 respectively, entering into the consolidation or merger agree- 
 ment, and has assumed the liabilities of such banks, including 
 the liability to depositors. 
 
 114. SEC. 4. Surrender of Original and Issue of New Cer- 
 tificates of Stock. 
 
 The bank into which the other or others have been merged, 
 or the consolidated bank as the case may be, shall have the right 
 to require the return of the original certificates of stock held by 
 each stockholder in each or either of the banks, and in lieu thereof 
 to issue new certificates for such number of shares of the bank 
 into which the other shall have been merged, or of the consoli- 
 dated bank, as under the agreement of merger or consolidation the 
 said stockholders may be entitled to receive. 
 
 This section follows the New York law, 495. 
 
 115. SEC. 5. Effect of Merger or Consolidation. 
 
 Upon the merger or consolidation of any banks in the manner 
 herein provided, all and singular, the rights, franchise, duties and 
 liabilities, and the interests of the bank or banks so merged or 
 consolidated and all the assets of every kind and character, in- 
 cluding the real and personal property and choses in action there- 
 unto belonging, shall be deemed to be transferred to and vested 
 in such bank into which the other or others has been merged or 
 in the consolidated bank, without any deed, transfer or assign- 
 ment, and said bank shall hold, enjoy and be subject to the same 
 in the same manner and to the same extent as the merged or con-
 
 58 PARK'S BANKING LAW OF GEORGIA. 
 
 solidated banks, respectively, had, held, owned, enjoyed, and was 
 subject to the same. 
 
 Similar provision is made in the New York law, 494. 
 
 116. SEC. 6. Rights of Creditors and Others. 
 
 The rights of creditors of any bank that shall be so merged or 
 consolidated shall not be impaired in any manner by any such 
 merger or consolidation; nor shall any liability or obligation for 
 the payment of any money due or to become due, or any claim 
 or demand in any manner or for any cause existing against such 
 bank, or against any stockholder thereof, be in any manner re- 
 leased or impaired; and all the rights, obligations and relations 
 of all the parties, creditors, depositors, and others shall remain 
 unimpaired by such merger or consolidation. But such bank 
 into which the other or others shall be merged, or the consoli- 
 dated bank, as the case may be, shall succeed to all obligations, 
 trusts, and liabilities and be held liable to pay and discharge all 
 such debts and liabilities and to perform all such trusts in 
 the same manner as though such bank into which the other or 
 others shall have become merged, or the consolidated bank had 
 itself incurred the obligation or liability; and the stockholders 
 of the respective banks shall continue subject to all the liabili- 
 ties, claims and demands, existing against them as such at or be- 
 fore such merger or consolidation ; and no suit, action, or other 
 proceeding then pending before any court or tribunal in which 
 any bank that may be merged or consolidated is a party shall 
 be deemed to have abated or been discontinued by reason of 
 any such merger, but the same may be prosecuted to final judg- 
 ment in the same manner as if said bank had not entered into 
 said agreement, or the bank into which the others shall have 
 been merged, or the consolidated bank, as the case "may be, may 
 be substituted in the place of any bank so merged or consoli- 
 dated by order of the court in which such action, suit or pro- 
 ceeding may be pending. Such bank into which the other or 
 others have been so merged, or the consolidated bank, shall be 
 subject to be sued in any court having jurisdiction, upon any 
 cause of action against any of the banks so merged or consoli- 
 dated, in the same manner as if such cause of action had origi- 
 nated against such bank into which the other or others have been 
 merged or against such consolidated bank. 
 
 Similar provision is made in the New York law, 494.
 
 BANKING ACT OF 1919. 59 
 
 ARTICLE XIV. 
 
 Voluntary Liquidation and Dissolution. 
 
 117. SECTION 1. Two-Thirds Vote of Stockholders Re- 
 quired. 
 
 Any bank may go into voluntary liquidation and be closed, and 
 may surrender its charter and franchise as a corporation to the 
 State by the affirmative vote of its stockholders owning two- 
 thirds of its stock, such vote to be taken at a meeting of the 
 stockholders duly called by resolution of the board of directors, 
 written notice of which, stating the purpose of the meeting, 
 shall have been mailed to each stockholder, or in case of death 
 to his legal representative or heirs at law, addressed to his last 
 known residence at least ten (10) days previous to the date of 
 said meeting. 
 
 The old law made no provision for voluntary liquidation. Under 
 5220, U. S. R. S. ; 9806, U. S. Comp. Stat., a national bank may 
 go into liquidation by a two-thirds vote of its stock. 
 
 The New York law, 486, authorizes voluntary liquidation and 
 dissolution, the method being quite similar to that prescribed in this 
 Article. Alabama adopted a similar statute September 30, 1919. 
 
 118. Sue. 2. Approval of Superintendent. 
 
 Whenever stockholders shall by such vote at a meeting regu- 
 larly held for the purpose, notice of which shall have been given 
 as herein provided, decide to liquidate said bank, a certified copy 
 of all the proceedings of the meeting at which said action shall 
 have been taken, verified by the oath of the president and cashier, 
 shall be transmitted to the Superintendent of Banks for his ap- 
 proval. If the Superintendent of Banks shall approve the same, 
 he shall issue to the said bank, under his hand and official seal, a 
 permit for such purpose. No such permit shall be issued by the 
 Superintendent of Banks until said Superintendent shall be satis- 
 fied that provision has been made by such bank to satisfy and 
 pay off all depositors and all other creditors of such bank. If 
 not satisfied, the Superintendent shall refuse to issue a permit 
 and shall be authorized to take possession of said bank and its 
 assets and business and hold the same and liquidate said bank in 
 the manner in this act provided. 
 
 This section is in line with the general scheme of the act, to give 
 the Superintendent direct control over every step in the life of a
 
 60 PARK'S BANKING LAW OF GEORGIA. 
 
 bank from its initial organization until its final liquidation by what- 
 ever process accomplished. 
 
 119. SEC. 3. Notice of Liquidation. 
 
 In the event the Superintendent of Banks shall approve the 
 voluntary liquidation of said bank, the directors shall cause to be 
 published in the newspaper in which the sheriff's advertisements 
 of the county in which the bank is located, a notice that the bank 
 is closing up its affairs and going into liquidation, and notifying 
 its depositors to withdraw their deposits and its creditors to pre- 
 sent their claims for payment. 
 
 A similar provision is contained in 5221, U. S. R S. ; 9808, 
 U. S. Comp. Stat. 
 
 120. SEC. 4. Examination of and Reports by Liquidating 
 Bank. 
 
 When any bank shall be in process of voluntary liquidation, it 
 shall be subject to examination by the Superintendent of Banks 
 and shall furnish such reports from time to time as may be called 
 for by the Superintendent. 
 
 The regulations promulgated by the Comptroller of the Currency 
 make similar requirements of national banks in voluntary liquida- 
 tion. 
 
 121. SEC. 5. Unpaid Deposits and Claims to Be Provided 
 for. 
 
 After paying all the creditors of said bank and all depositors 
 whose claims have been presented and allowed, the directors 
 shall cause to be deposited in such bank as may be designated 
 by the Superintendent of Banks, to the credit of the Superin- 
 tendent, an amount sufficient to cover all unpaid and unclaimed 
 deposits, and all other claims against said bank which for any 
 reason may not have been paid. Such sum shall be held by the 
 Superintendent in the same manner as deposits made by him to 
 cover unpaid deposits of banks liquidated by him or under his 
 direction. 
 
 122. SEC. 6. Remaining Assets Distributed to Stockholders. 
 
 After paying all debts against said bank and all amounts due 
 to the depositors thereof and after depositing a sum sufficient 
 to pay any unclaimed or unpaid deposits or other valid claims 
 as herein provided, and after deducting the expenses of liquida-
 
 BANKING ACT OF 1919. 61 
 
 tion, the remaining assets shall be distributed pro rata among 
 the stockholders in proportion to the number of shares held by 
 each respectively. 
 
 123. SEC. 7. Surrender of Charter. 
 
 When all amounts due by said bank shall have been paid or pro- 
 vided for as herein provided and all remaining assets shall have 
 been distributed to the stockholders, the bank may file in the 
 office of the Secretary of State an application, in triplicate, signed 
 with its corporate name and under its corporate seal, in which 
 it shall state the name of the bank, the place where it is located, 
 the date of its original charter, and of all amendments thereto, 
 and the fact that all debts due by the bank have been paid or 
 provided for, and that its assets have been distributed to its 
 stockholders, and that it desired to surrender its charter and 
 franchise to the State. On filing such application, the bank 
 shall pay to the Secretary of State a fee of $25.00 to be covered 
 by him into the State Treasury. Said bank shall also file with 
 said application a certified copy of the resolution of the stock- 
 holders approving the" surrendering of such charter and fran- 
 chises, which resolution must be adopted by an affirmative vote 
 of not less than two-thirds (%) of all the stockholders at a meet- 
 ing called for the purpose of taking such action as herein pro- 
 vided. 
 
 A corporation can not surrender its charter and franchise except 
 by express authority and permission of the General Assembly. 
 Davis v. White, 134 Ga. 274. By the Act of 1910, Code, 2823 (b), 
 such authority was granted to corporations organized under charters 
 granted by the Superior Courts. This and the following sections 
 grant a like authority to banks, the method provided following in 
 general plan that of the Act of 1910. 
 
 124. SEC. 8. Application to Be Published. 
 
 When the said application to surrender the charter is filed, the 
 Secretary of State shall certify one of the copies thereof and 
 deliver the same to the bank, and the same shall be published by 
 the bank in trie newspaper in which the sheriff's advertisements 
 of the county in which the bank is located are published, once a 
 week for four weeks.
 
 62 PARK'S BANKING LAW OF GEORGIA. 
 
 125. SEC. 9. Application Referred to Superintendent of 
 Banks. 
 
 Immediately upon the filing of the application to surrender the 
 charter, the Secretary of State shall transmit one copy thereof to 
 the Superintendent of Banks for investigation by him. 
 
 126. SEC. 10. Examination by and Certificate of Super- 
 intendent. 
 
 When such application to surrender charter shall have been 
 referred to the Superintendent of Banks, the said Superintendent 
 shall immediately investigate or cause an investigation to be made, 
 and shall satisfy himself that the surrender of such charter and 
 the dissolution of such bank may be allowed without injustice 
 to any stockholder, or to any person or corporation having any 
 claim or demand of any character against said bank, and that all 
 assets of said bank have been distributed and all depositors and 
 creditors paid or properly provided for, and that the surrender 
 of the charter and franchises has been authorized by proper cor- 
 porate action, and that all requirements of law have been com- 
 plied with. If so satisfied the Superintendent of Banks shall 
 within thirty (30) days after the application for surrender of 
 charter shall have been filed with him for examination, issue 
 under his hand and official seal a certificate approving the ap- 
 plication, and shall transmit a copy of such certificate of approval 
 to the Secretary of State, who shall enter the same of record 
 in his office. The said Superintendent shall also keep of file a 
 duplicate of said certificate in his own office. If the Superin- 
 tendent shall not be satisfied that the surrender of the charter 
 as proposed is proper and expedient or that the law for such cases 
 made and provided has been fully complied with, he shall within 
 thirty (30) days after the filing of said copy with him, notify 
 the Secretary of State that he refuses to approve the applica- 
 tion, and in such event no order shall be granted by the Secre- 
 tary of State dissolving the bank, or authorizing the surrender 
 of its charter. 
 
 127. SEC. 11. Certificate of Publication. 
 
 When the copy of the application to surrender the charter shall 
 have been published as required by law the bank may apply to 
 the ordinary of the county in which it is located to certify the 
 fact of such publication, and the ordinary shall certify the fact,
 
 BANKING ACT of 1919. 63 
 
 which certificate shall be filed by the bank in the office of the 
 Secretary of State. 
 
 128. SEC. 12. Order Dissolving Bank. 
 
 When the certificate of the ordinary to the fact of the publi- 
 cation of the application to surrender the charter shall be filed 
 by the bank with the Secretary of State, and the certificate of the 
 Superintendent of Banks approving the application shall likewise 
 be filed with the Secretary of State, the Secretary of State shall 
 pass an order under the seal of the State accepting the surrender 
 of the charter and franchises and dissolving the bank, and the 
 Secretary of State shall record the application, the certificate of 
 approval of the Superintendent of Banks, the certificate of the 
 ordinary as to the publication, and his order accepting the sur- 
 render of the charter and franchises and dissolving the bank, in 
 the order named; and the said bank shall thereupon be finally 
 dissolved for all purposes whatsoever. 
 
 ARTICLE XV. 
 
 Forfeiture of Charter. 
 
 129. SECTION 1. Causes of Forfeiture. 
 
 Bank charters are subject to forfeiture on the same general 
 ground as are those of other corporations, and also : 
 
 1. For the violations of any of the provisions of their charters. 
 
 2. For the violation of any obligation imposed by law. 
 
 3. Whenever it is demanded by specific enactment. 
 
 4. For refusal or neglect for a period of thirty (30) days, after 
 the written order of the Superintendent of Banks, to comply with 
 any requirement lawfully made upon it by such Superintendent. 
 
 The first three grounds of forfeiture were contained in Code, 
 2349, being codified from the Acts of 1840 and 1842. The fourth 
 ground was added by the Bank Bureau Act of 1907, Code, 2347. 
 The franchise of a national bank may be forfeited upon similar 
 grounds, 5239, U. S. R. S. ; 9831, U. S. Comp. Stat. 
 
 130. SEC. 2.' Proceedings to Forfeit. 
 
 The Superintendent of Banks in the name of the State is au- 
 thorized to institute quo warranto or other appropriate proceed-
 
 64 PARK'S BANKING LAW OF GEORGIA. 
 
 ings to vacate and forfeit the charter of any bank, where the 
 bank has done or omitted any such act or acts as under the law 
 authorizes a forfeiture of its charter. 
 
 Under the old law, reeacted by the Bank Bureau Act, the charter 
 of a bank could be forfeited only by proceedings instituted by the 
 Attorney-General by direction of the Governor in the Superior 
 Court of the county in which the bank was located, Code, 2350. 
 The method provided by this section, which follows 5239, U. S. R. 
 S.; 9831, U. S. Comp. Stat., and 49 of the Alabama law, is 
 simpler and more direct. 
 
 131. SEC. 3. Liquidation Where Charter Forfeited. 
 
 Where the charter of any bank shall be forfeited, the Superin- 
 tendent of Banks shall take charge of the business and assets of 
 such bank and proceed to liquidate it in the same manner as is 
 herein provided in cases where the superintendent takes charge of 
 a bank. 
 
 When a charter was forfeited under the old law, a receiver was 
 appointed by the Superior Court to administer the assets. Code, 
 2351. Administration by the Superintendent should be more efficient 
 and less expensive. Where the Superintendent administers, he holds 
 the assets as a receiver. McDavid v. Bank of Bay Minette, 193 Ala. 
 341, 69 So. 452. 
 
 132. SEC. 4. No Suits for Forfeiture or Liquidation Except 
 by Superintendent. 
 
 No suit to forfeit the charter of any bank, or for the liquida- 
 tion of any bank, or for the appointment of a receiver of any 
 bank, shall be instituted by any person except by and through the 
 Superintendent of Banks in the name of the State. Any person 
 shall have the right to submit to the Superintendent of Banks any 
 facts which under the law would authorize the forfeiture of the 
 charter of a bank, or any facts which would authorize the liquida- 
 tion of a bank, or the appointment of a receiver therefor, and on 
 such submission being made, it shall be the duty of the Super- 
 intendent of Banks to investigate, 'and if on such investigation, 
 he ascertains that the facts are such as will justify action for 
 forfeiture of the charter, or for the liquidation of the bank, or 
 for the appointment of a receiver, it shall be the duty of the Su- 
 perintendent to take appropriate action in the premises. 
 
 Formerly proceedings could only be insituted by the Attorney- 
 General by direction of the Governor. Code, 2350. This section 
 follows 49 of the Alabama law and 5239, U. S. R. S.; 9831, 
 U. S. Comp. Stat., in substance.
 
 BANKING ACT OF 1919. 65 
 
 ARTICLE XVI. 
 
 Mandamus Against Superintendent. 
 
 133. SECTION 1. Superintendent Subject to Mandamus. 
 
 In the event the Superintendent of Banks should refuse to 
 issue any permit authorizing the incorporation of any bank, or the 
 amendment, renewal or surrender of the charter of any bank, 
 or authorizing any bank to begin business, or any other permit, 
 authority or certificate required to be given or furnished by him 
 before any act or thing shall be permitted or done, or should re- 
 fuse to do any act or thing authorized or required by this act to 
 be done, the person or persons affected by such failure or refusal, 
 or the bank so affected, may institute appropriate proceedings in 
 the nature of a mandamus against the Superintendent in the 
 Superior Court of the county in which such bank is sought to be 
 incorporated or have its charter amended, renewed or surren- 
 dered, to compel him to issue such permit or authority, or to do 
 any such act or thing authorized or required to be done hereunder, 
 which proceeding shall be tried as in other cases of mandamus. 
 Service of such proceedings shall be made on the Superintendent 
 of Banks by second original as now prescribed by law. 
 
 The Superintendent being invested with great powers by this act, 
 this Article was inserted to prevent his arbitrary refusal to act in 
 proper cases. Similar provision is made by the Alabama law, 30. 
 
 134. SEC. 2. Trial and Judgment. 
 
 On the trial of any such cause the Superintendent shall have 
 the right to introduce evidence to sustain or tending to sustain 
 his action or refusal to act in the premises, and if from the 
 evidence in the case the court is of the opinion that such permit, 
 or authority, or certificate has been wrongfully or improperly 
 refused or withheld by the Superintendent, and that the facts 
 and circumstances authorize and require the granting of such 
 permit, authority, or certificate, or that the Superintendent has 
 wrongfully or improperly refused to do any act or thing author- 
 ized or required by this act to be done, and that the same should 
 be done, the court shall render an order, judgment or decree di- 
 recting the Superintendent of Banks to issue such permit, author- 
 ity or certificate, or to do such act or thing, and thereupon the 
 5
 
 66 PARK'S BANKING LAW OF GEORGIA. 
 
 Superintendent shall issue or do the same, and may state in any 
 permit, authority or certificate issued by him under such order, 
 that the same is done by order of the court. 
 
 135. SEC. 3. Exceptions. 
 
 A bill of exceptions may be sued out by either party who may 
 be dissatisfied with the judgment, and the cause may be carried 
 to the Supreme Court as in other cases of mandamus proceedings. 
 
 Judgments in mandamus proceedings are reviewed upon fast 
 writs of error in the same way as are the grant or refusal of injunc- 
 tions. Code, 5447, 6153. 
 
 ARTICLE XVII. 
 
 Powers of Banks. 
 
 136. SECTION 1. General Powers of Banks Enumerated. 
 
 A bank organized under this act shall have power : 
 
 1. To have continual succession for the term of thirty (30) 
 years, with the rights of renewal herein provided for, with all 
 corporate powers and privileges herein granted. 
 
 2. To sue and be sued. 
 
 3. To have and use a common seal, and at pleasure to alter the 
 same. 
 
 4. To appoint such officers, agents, and employees as the busi- 
 ness of the bank may require, prescribe their duties, and fix their 
 compensation as may be provided by the by-laws. 
 
 5. To make such by-laws as may be necessary or proper for 
 the management of its property and the regulation of its affairs. 
 
 6. To hold, purchase, encumber, dispose of, and convey such 
 real and personal property as may be necessary for its uses and 
 business, subject to the restrictions and limitations herein pre- 
 scribed. 
 
 7. To discount bills, notes or other evidences of debt; to re- 
 ceive and pay out deposits, with or without interest ; to receive on 
 special deposit, money, bullion, foreign coin, stocks, bonds, or 
 other securities, or other property ; to buy and sell foreign or do- 
 mestic exchange or other negotiable paper; to issue and sell ac- 
 ceptances ; to lend money upon personal security, or upon pledges
 
 BANKING ACT OF 1919. 67 
 
 of bonds, stocks, or securities ; to take and receive security, by 
 mortgage or otherwise, on property real or personal. 
 
 Loans and discounts are synonymous terms. National Bank of 
 Gloversville v. Johnson, 104 U. S. 271, 26 L. Ed. 742. 
 
 "A discount by a bank means, ex vi termini, a deduction or draw- 
 back made upon its advances or loans of money, upon negotiable 
 paper, or other evidences of debt, payable at a future day, which 
 are transferred to the bank." Fleckner v. The Bank of the United 
 States, 21 U. S. 338, 351, 5 L. Ed. 631. 
 
 "A deposit may be for a specific purpose, as where money or prop- 
 erty is delivered to the bank for some particular designated purpose, 
 as a note for collection, money to pay a particular note or draft, etc. 
 While such a deposit is sometimes termed a 'special deposit' and 
 partakes of the nature of a special deposit to the extent that title 
 remains in the depositor and does not pass to the bank, yet it seems 
 more accurate to look on this as a distinct class of deposit. In 
 using deposits made for the purpose of having them applied to a 
 particular purpose, the bank acts as the agent of the depositor ; and 
 if it should fail to apply it at all, or should misapply it, it can be 
 recovered as a trust deposit ; and the agency created by the deposit 
 is revocable by the depositor at any time before the purpose of the 
 deposit has been accomplished." Cooper v. National Bank of Sa- 
 vannah, 21 Ga. App. 364. 
 
 8. To increase or decrease its capital stock in the manner herein 
 provided. 
 
 9. To increase or decrease the number of its directors in the 
 manner herein provided. 
 
 This Section reenacts Code, 2266, which was codified from the 
 Act of December 20, 1893, the general law for the incorporation of 
 banks, except that to paragraph six is added "subject to the restric- 
 tions and limitations herein prescribed" ; in paragraph seven is in- 
 serted "to issue and sell acceptances," and paragraph nine is added. 
 
 Pursuant to the amendment to the Constitution authorizing the 
 Secretary of State to grant charters to banks (and certain other 
 corporations), a general law for the incorporation of banks was 
 adopted on October 21, 1891 (Acts, 1890-91). Banks incorporated 
 under this act were given not only general banking powers, but 
 also many of the powers usual to trust companies. This act was 
 superseded by the Act of 1893, which so far as the powers of banks 
 incorporated under it are concerned remained unchanged until this 
 section was adopted. There are still a considerable number of banks 
 organized and doing business under special charter granted by the 
 General Assembly before the amendment of the Constitution. Ref- 
 erence must be had to these charters to determine the powers of 
 such banks. By the Act of 1896, p. 35, Code, 2271, the Secretary of 
 State was authorized to grant amendments to these special charters 
 so as to incorporate therein any of the provisions of the general law 
 for the incorporation of banks or any amendments thereof. 
 
 "All corporations have the right to sue and be sued, to have and 
 use a common seal, to make by-laws, binding on their own members, 
 not inconsistent with the laws of this State, and of the United 
 States, to receive donations by gift or will, to purchase and hold 
 such property, real or personal, as is necessary to the purpose of 
 their organization, and to do all such acts as are necessary for the 
 legitimate execution of this purpose." Code, 2216.
 
 68 PARK'S BANKING LAW OF GEORGIA. 
 
 "Where a banking corporation acquires possession of property 
 either by a lien thereon, or by the purchase of the same for the pay- 
 ment of a debt due to it, and expends money on it, or furnishes 
 supplies either for its preservation or to carry on the business in 
 which such property is employed, with a view to rendering it pro- 
 ductive, in order to satisfy the debt the bank holds against the 
 former owner of the property, it is not chargeable with exceeding 
 its corporate powers by engaging in a business beyond the scope 
 and purpose of its creation." Reynolds v. Simpson, 74 Ga. 454. 
 
 ARTICLE XVIII. 
 
 Liability of Stockholders. 
 
 137. SECTION 1. Stockholders' Liability, Extent of. 
 
 A bank incorporated under this act shall be responsible to its 
 creditors to the extent of its capital and its assets ; and each 
 stockholder shall be individually liable for all the debts of said 
 bank to the extent of the balance remaining unpaid on his or her 
 shares of stock ; and said stockholders shall be further and ad- 
 ditionally individually liable, equally and ratably (and not one 
 for another) to depositors of such bank for all moneys deposited 
 therein, in an amount equal to the face value of their respective 
 shares of stock; it being the true intent and purpose of this sec- 
 tion, that as to depositors for all moneys deposited with said 
 bank, there shall be an individual liability upon each stockholder 
 of such bank, over and beyond the par value of his or her original 
 shares of stock in amount to the face value of said shares of 
 stock ; provided, that said liability of the stockholders shall not 
 prevent depositors from having equal rank with all other creditors 
 upon the capital, property, and assets of said bank. 
 
 This reenacts Code, 2270, codified from the Act of 1893, the gen- 
 eral law for the incorporation of banks. This was the first general 
 law imposing such liability. Whether prior to this act such liability 
 existed in any given case and the extent thereof depended on the 
 terms of the special charter under which the bank was organized. 
 Wheatley v. Glover, 125 Ga. 710. Where the charter made the stock- 
 holders liable, the liability could be enforced by a, receiver appointed 
 under authority of the Bank Bureau Act of 1907. Harris v. Taylor, 
 148 Ga. 663. 
 
 138. SEC. 2. Exception for Trustees and Other Fiduciaries. 
 
 Persons holding stock as executors, administrators, guardians, 
 or trustees shall not be personally subject to any liabilities as 
 stockholders; but the estates and funds in their hands shall be
 
 BANKING ACT OF 1919. 69 
 
 liable in like manner and to the same extent as the testator, 
 intestate, ward, or person interested in such trust fund would 
 be, if living and competent to act and hold the stock in his own 
 name : Provided, That nothing herein contained shall relieve any 
 executor, administrator, guardian or trustee from individual lia- 
 bility as a stockholder upon any unauthorized subscription for or 
 investment in bank made by such executor, administrator, 
 guardian or trustee. 
 
 This section is taken from the National Bank Act, 5152, U. S. R. 
 S. ; 9690, U. S. Comp. Stat., the proviso making the fiduciary liable 
 for unauthorized investments being added. 
 
 139. SEC. 3. Liability of Stockholder After Transfer of 
 Stock. 
 
 Whenever a stockholder in any bank is individually liable under 
 the charter, and shall transfer his stock, and have such transfer 
 entered upon the books of the bank or give to the bank written 
 notice thereof, he shall be exempt from such liability by such 
 transfer, unless such bank shall fail within six (6) months from 
 the date of the entry of such transfer, or from the delivery of 
 such notice to the bank. 
 
 This is a reenactment of Code, 2247, the clauses "and have such 
 transfer entered upon the books of the bank or give to the bank 
 written notice thereof," and "or from the delivery of such notice 
 to the bank" being added for the purpose of clearing up the doubt 
 existing as to when the transfer should be regarded as complete. 
 
 140. SEC. 4. Liability When Bank Fails. 
 
 The stockholder in whose name the capital stock stands upon 
 the books of such bank at the date of its failure, shall be primarily 
 liable to respond upon such individual liability; but upon proof 
 made that any stockholder at the date of the failure is insolvent, 
 recourse may be had against the person from whom such insol- 
 vent stockholder received his stock, if within a period of six (6) 
 months prior to the date of the failure of such bank. 
 
 This reenacts Code, 2248. 
 
 One recovery only can be had, where successive owners of same 
 shares are alike liable, one of them because he owns the shares now, 
 another because of past ownership and failure upon transferring to 
 give notice prescribed by 1496 of Code of 1882, though creditors 
 entitled to recover from each as though liability wholly his own. 
 Chatham Bank v. Brobston, 99 Ga. 801 (6), (27 S. E. 790). 
 
 Rule for locating burden among the successive owners themselves 
 is that the loss should fall ultimately upon the successive owners in 
 the inverse order of their ownership in point of time; special facts 
 may dictate different order. Chatham Bank v. Brobston, 99 Ga. 801 
 (7), (27 S. E. 790).
 
 70 PARK'S BANKING LAW OF GEORGIA. 
 
 141. SEC. 5. Failure of Bank Defined. 
 
 A bank shall be deemed to have failed within the purview of 
 this act whenever such bank shall have become insolvent and its 
 assets and business shall have been surrendered to or taken pos- 
 session of by the Superintendent of Banks. 
 
 This section was inserted for the purpose of making clear the 
 right of the Superintendent to enforce the liability of the stockhold- 
 ers whenever an insolvent bank should be taken charge of by him. 
 See 70 of the Act. 
 
 142. SEC. 6. Premature Organization. 
 
 Persons who organize a bank and transact business in its name 
 before the minimum capital stock under this act has been sub- 
 scribed for and before a permit has been issued by the Superin- 
 tendent of Banks authorizing the transaction of business in. the 
 name of such bank, are jointly and severally liable to creditors to 
 make good such minimum capital stock with interest ; and liability 
 under this section shall be enforced as hereinafter provided. 
 
 This section reenacts with special reference to banks, Code, 2220, 
 which was applicable to all corporations organized under the laws of 
 Georgia. Creditors have a right to presume that the minimum 
 capital allowed by the charter has been subscribed, the fact alone of 
 commencement of business created that presumption, to that extent 
 stockholders are liable. Hill v. Silvey, 81 Ga. 500. 
 
 143. SEC. 7. Liability of Stockholders or Incorporators 
 as Assets. 
 
 The individual liability of stockholders and that of persons 
 doing business in the name of a bank before the minimum capital 
 stock is subscribed and before a permit has been issued by the 
 Superintendent of Banks authorizing the bank to begin business, 
 shall be assets of such bank to be enforced only by and through 
 the Superintendent of Banks. 
 
 Under Code, 2249, the stockholders' liability was an asset "to 
 be enforced by the assignee, receiver or other officer having the legal 
 right to collect, marshal and distribute the assets." 
 
 144. SEC. 8. Collateral Liability Not Affected by Dissolu- 
 tion. 
 
 The surrender or forfeiture of a charter of any bank, or its 
 dissolution for any cause, shall not in any manner affect any col- 
 lateral or ultimate or other liability legally incurred by any of its 
 stockholders, directors or officers. 
 
 This is a reenactment of Code, 2246.
 
 BANKING ACT OF 1919. 71 
 
 ARTICLE XIX. 
 
 Regulation of the Business of Banking. 
 
 145. SECTION 1. Board of Directors, Number and Election. 
 
 The affairs of each bank shall be managed by a board of not 
 less than three (3) nor more than twenty-five (25) directors who 
 shall be elected by the stockholders at a meeting to be held at any 
 time before the bank is authorized by the Superintendent of 
 Banks to commence the business of banking, and afterwards at 
 meetings to be held annually at such time as may be fixed by the 
 by-laws of the bank. The directors shall hold office for one (1) 
 year and until their successors are elected and have qualified. A 
 bank, at any annual meeting of the stockholders for the election 
 of directors, provided notice thereof be given in the notice of the 
 annual meeting, may, by a majority vote of all the stockholders 
 of such bank, fix or change by resolution the number of directors, 
 provided the number of directors shall not be less than three (3) 
 nor more than twenty-five (25), which number when so fixed 
 shall be the lawful number of directors of such bank until again 
 changed in like manner. Certified copies of all resolutions fixing 
 or changing the number of directors under this section shall be 
 immediately filed with the Superintendent of Banks. 
 
 This reenacts in substance part of Code, 2302, adding the pro- 
 vision for changing the number of directors. Under the old law the 
 number of directors could be changed only by an amendment of the 
 charter, Code, 2267. 
 
 The control of the bank is vested in the board of directors. Mer- 
 chants' Bank of Macon -u. Rawls & Taylor, 7 Ga. 196. 
 
 The board of directors exercise the corporate powers of the bank. 
 Wood Hydraulic Hose Mining Co. v. King, 45 Ga. 34. 
 
 A director may resign at any time. Briggs -v. Spalding, 141 U. S. 
 132, 35 L. Ed. 662. 
 
 Bank directors are often styled trustees, but not in any technical 
 sense. The relation between the corporation and them is rather that 
 of principal and agent. The degree of care required of them is the 
 same as that which men of ordinary prudence exercise in regard to 
 their own affairs. Briggs v. Spalding, 141 U. S. 132, 35 L. Ed. 662. 
 
 Directors primarily represent the corporation and its stockholders, 
 but when the corporation becomes insolvent they are bound to man- 
 age the remaining assets for the benefit of its creditors, and can 
 not in any manner use their powers for the purpose of obtaining a 
 preference or advantage to themselves. Code, 2222.
 
 72 PARK'S BANKING LAW OF GEORGIA. 
 
 146. SEC. 2. Qualifications of Directors. 
 
 Every director of a bank having a capital stock of fifteen thou- 
 sand ($15,000.00) dollars or more and not exceeding fifty thou- 
 sand ($50,000.00) dollars, must own in his own right at least 
 two >(2) shares of such stock; upon which all installments which 
 are due shall have been fully paid, and every director of a bank 
 having a capital stock of more than fifty thousand ($50,000.00) 
 dollars must so own at least five (5) shares of the capital stock 
 of the bank of which he is a director. Any director who ceases 
 to be the owner of the number of shares herein required or who 
 fails to pay any installment thereon when the same becomes due, 
 or who becomes in any other manner disqualified, shall thereby 
 vacate his place as a member of the board. 
 
 Under Code, 2267, directors were required to be "owners and 
 holders of one or more shares of the capital stock in good faith." 
 The last sentence of the section is taken substantially from 5146, 
 U. S. R. S. ; 9684 U. S. Comp. Stat. 
 
 147. SEC. 3. Oath of Directors. 
 
 Each director, when elected, shall take an oath that he will, so 
 far as the duty delvolves upon him, diligently and honestly ad- 
 minister the affairs of the bank, and that he will not knowingly 
 violate, or willingly permit to be violated, any of the provisions 
 of law applicable to such bank or any of the by-laws thereof ; 
 and that he is the owner in good faith and in his own right, of the 
 number of shares of stock required by this act, standing in his 
 own name on the books of the bank. Such oath shall be sub- 
 scribed by the director making it, and certified by the officer 
 before whom it is taken, and shall be immediately transmitted to 
 the Superintendent of Banks, and filed and preserved in his office. 
 
 This section is taken substantially from 5147, U. S. R. S. ; 
 9685, U. S. Comp. Stat. That section requires the director also to 
 swear that the stock standing in his name is not hypothecated or 
 pledged in any way as security for any loan or debt. New York 
 requires an oath of similar character from directors. 124, N. Y. 
 law. 
 
 148. SEC. 4. Meetings of the Board of Directors. 
 
 The board of directors shall hold regular meetings at such 
 times as may be fixed by the by-laws, at least once each month, 
 and shall at all times be subject to call by the president or by any 
 two members of the board. A majority of the board of directors 
 shall constitute a quorum for the transaction of business. Correct
 
 BANKING ACT OF 1919. 73 
 
 written minutes of all meetings shall be kept in well-bound per- 
 manent books kept for that purpose, and the minutes of each 
 meeting shall be signed by the chairman and secretary thereof, 
 and shall record the names of the directors present at such meet- 
 ing. At each meeting the minutes of the preceding meeting shall 
 be read, corrected and approved. The minute book shall be 
 submitted to the examiner at each of their semiannual examina- 
 tions, and shall be examined, and the fact of such examination 
 shall be noted in the examiner's report, and the minute book. 
 
 The Bank Bureau Act, Code, 2302, required the directors to hold 
 at least one meeting each three months and to keep correct minutes 
 signed by two officers. New York also requires directors' meetings 
 to be held at least once each month. 129, N. Y. law. 
 
 Where a corporation is empowered to act through its board of 
 directors or a committee, individual or separate action of the mem- 
 bers of such board is not sufficient, the agent of the corporation is 
 the board itself acting in its organized capacity and not its members 
 acting independently of its meetings. Monroe M. Co. v. Arnold, 
 108 Ga. 449. 
 
 149. SEC. 5. Semiannual Examinations by Directors. 
 
 It shall be the duty of the board of directors of every bank, at 
 .least once in each six (6) months, to count the cash and examine 
 fully into the books, papers, and affairs of the bank of which 
 they are directors, and particularly into the loans and discounts 
 thereof, with the special view of ascertaining the value and se- 
 curity thereof, and the collateral security, if any, given in connec- 
 tion therewith, and into such other matters as the Superintendent 
 of Banks may require. Such directors may conduct such count 
 and examination by a committee of at least three (3) of its mem- 
 bers; and shall have the power to employ certified public ac- 
 countants or other expert assistance in making such examinations, 
 if they deem the same necessary. Within ten ( 10) days after the 
 completion of each of such examinations, a report in writing 
 thereof, sworn to by the directors making the same, shall be made 
 to the board of directors, which report shall be spread upon the 
 minutes of said board ; and the original thereof shall be placed 
 on file in said bank, and a duplicate thereof filed with the Super- 
 intendent of Banks. 
 
 This and 150, 151 and 152 are an amplification of Code, 2302, 
 taken from the Bank Bureau Act, that section also requiring semi- 
 annual examinations by the directors, the charging off of worthless 
 paper, entering the report on the minutes, etc. These sections follow 
 to some extent 130 of the New York law.
 
 74 PARK'S BANKING LAW OF GEORGIA. 
 
 150. SEC. 6. Report of Examination, What Must Contain. 
 
 Such report shall contain statements in detail, (1) of the assets 
 and liabilities of the bank examined, as shown by the books, to- 
 gether with any deductions from the assets or additions to the 
 liabilities which such directors or committee after such examina- 
 tion may determine to make; (2) of loans, if any, which in their 
 opinion are worthless or doubtful, together with their reasons for 
 so regarding them; (3) of loans made on collateral security 
 which in their opinion are insufficiently secured, giving in each 
 case the amount of the loan, and the name and market value of 
 the collateral, if such collateral has any market value, and if not 
 its actual value as nearly as can be determined ; (4) of all over- 
 drafts and separately of overdrafts which are considered worth- 
 less or doubtful, or which have been made without authority, with 
 the name of the officer or employee making or approving the 
 same*; (5) of all past due paper; (6) of all demand loans 
 upon which no interest has been paid within the last pre- 
 ceding six (6) months; (7) of all loans in excess of the 
 amount authorized herein to be made; (8) of all loans made 
 to the officers, agents, employees, and directors of the bank, with 
 the securities held therefor ; and of all loans to firms or corpora- 
 tions in which the officers, agents, employees, or directors of the 
 bank are interested ; (9) and of all such other matters and things 
 as may affect the solvency or soundness of the bank. No report 
 shall be held or considered as complying with the provisions of 
 this section unless it shows affirmatively the existence or non- 
 existence of all the items concerning which statements are re- 
 quired. Said directors or such committee shall also in said report 
 make recommendations to the board as to the manner of con- 
 ducting business by the bank, calling attention to any matters 
 which in their opinion are unauthorized or improper, and sug- 
 gesting any changes or improvements in the method of conducting 
 the business or handling the affairs of the bank which, in their 
 opinion, will be an improvement upon the system in operation or 
 tend in any way to the safety or soundness of the bank. 
 
 151. SEC. 7. Action on Report. 
 
 The board of directors at the meeting which such report of the 
 semiannual examination is read shall, by resolution entered on 
 the minutes, require that all debts due to the bank, which are past 
 due for a period of one year and which are not amply secured,
 
 BANKING ACT OF 1919. 75 
 
 shall be collected, placed in suit or charged to profit and loss ; that 
 all past due interest shall be collected upon any note upon which 
 no such interest has been paid within the last preceding twelve 
 (12) months, or that said note shall be collected, put in suit, or 
 charged to profit and loss ; and that all assets or claims in favor 
 of the bank, which in the opinion of the directors are worthless 
 or uncollectible, shall also be charged to profit and loss and not 
 included in the list of assets of the bank. Said board shall at 
 such meeting also require that all loans in excess of the amount 
 herein authorized to be made shall be reduced at once so as to 
 bring them within the proper amount. 
 
 A certified copy of the resolutions of the board acting on the 
 matters brought to their attention in the report of the semiannual 
 examination shall be filed with the Superintendent of Banks 
 within ten ( 10) days after said meeting shall have been held. 
 
 152. SEC. 8. Failure to Comply with Preceding Section, 
 
 Result of. 
 
 In the event the board of directors of any bank should fail to 
 make an examination every six (6) months, the Superintendent 
 of Banks shall, by an order under his hand and official seal, ad- 
 dressed to the president of the bank, require that a meeting of the 
 board of directors shall be called immediately and that the exami- 
 nation shall be made within ten (10) days after such special 
 meeting of the board, and if such meeting be not so held and 
 such examination made within said time and report thereof made 
 and submitted to the Superintendent of Banks, the said Super- 
 intendent shall be authorized to take charge of the bank as in 
 other cases herein provided for wilful refusal to obey the lawful 
 orders of the said Superintendent. If it shall appear from the 
 report of such examination that the bank is carrying as an asset 
 any worthless paper or other property, or that any asset should 
 be charged to profit and loss and not included in the assets of said 
 bank, and the directors at the meeting aforesaid should fail to 
 order such assets charged to profit and loss, or if the Superin- 
 tendent of Banks shall ascertain from any examination or other- 
 wise that any bank continues to carry as assets any worthless 
 paper or other property which should be charged to profit and 
 loss, the Superintendent shall order the bank to collect or charge 
 to profit and loss all such worthless assets at once, and upon 
 failure to comply with such order, may take possession of such 
 bank as in other cases provided.
 
 76 PARK'S BANKING LAW OF GEORGIA. 
 
 153. SEC. 9. Officers. 
 
 The board of directors at their first meeting after the annual 
 election shall elect one of their number president. They shall 
 also elect one or more vice-presidents, a cashier, and such other 
 officers and agents as may be provided by the by-laws as or 
 may be required for the prompt and orderly discharge of the 
 business of the bank. Immediately upon their election, a list, giv- 
 ing the names and addresses of the officers elected, certified under 
 the seal of the bank, shall be transmitted to the Superintendent 
 of Banks and be kept on file by him. 
 
 Code, 2302, required the president to be a member of the board 
 of directors ; 5150, U. S. R. S. ; 9688, U. S. Comp. Stat., makes 
 the same requirement. 
 
 "Every corporation acts through its officers, and is responsible 
 for the acts of such officers in the sphere of their appropriate duties; 
 and no corporation shall be relieved of its liability to third persons 
 for the acts of its officers by reason of any by-law or other limita- 
 tion upon the power of the officer, not known to such third person." 
 Code, 2225. 
 
 "Usually the question of discounting paper comes before the board 
 of directors or a committee, and the cashier is but the executive 
 officer to carry out their decision ; his duties are ordinarily strictly 
 executive. But beyond his inherent powers, the cashier may be 
 authorized to act for the bank by the organic law, by action of the 
 stockholders, by a vote of the board, by usage and tacit approval." 
 Morris v. Ga. Loan, etc., Co., 109 Ga. 21. 
 
 "A bank, by bringing an action upon a contract made in its 
 behalf by one of its officers, ratifies his action in making the con- 
 tract, and is in law chargeable with knowledge of whatever he knew 
 at the time of so doing." Singleton v. Bank of Monticello, 113 Ga. 
 527. 
 
 "Where an agent conspires with the other party, his principal is 
 not bound thereby, nor charged with knowledge of facts thus ac- 
 quired by his agent." Code, 3600. 
 
 "Notice to the agent of any matter connected with his agency is 
 notice to the principal." Code, 3599. 
 
 Notice to cashier is notice to bank. Lessee Veasey v. Graham, 
 17 Ga. 99. So is notice to president. Merchants' Bank v. Guilmar- 
 tin, 93 Ga. 509. But knowledge of president or cashier is not knowl- 
 edge of bank where he is interested adversely to the bank. Savan- 
 nah Bank & Trust Co. v. Hartridge, 73 Ga. 223 ; People's Bank v. 
 Exchange Bank, 116 Ga. 820. 
 
 154. SEC. 10. Bonds of Officers. 
 
 The board of directors shall require the cashier and any and 
 all other officers, [and employees]* having the care, control, or 
 handling of any of the funds of the bank, to give bond with a 
 regular incorporated surety company, qualified to do business in 
 the State of Georgia, as surety, in such amounts as the board shall 
 fix, the premium on such bond to be paid by the bank. Such bonds 
 
 *Inserted by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 77 
 
 shall be held by such custodian as the board of directors may 
 designate. 
 
 That part of this section which requires that the surety shall be 
 a surety company and the premium shall be paid by the bank is new. 
 The rest of the section is taken from Code, 2304. 
 
 155. SEC. 11. Borrowing for Personal Use by Officers and 
 Employees Prohibited Except by Permission of the 
 Directors. 
 
 No officer, [director]* agent, or employee of any bank shall use 
 or borrow directly or indirectly for himself, or for any firm or 
 partnership of which he is a member, any money or other property 
 belonging to any bank of which he is such officer, director, agent 
 or employee without the express authority and permission previ- 
 ously obtained of a majority of the directors or of the members 
 of a committee of the board of directors authorized to act, which 
 permission shall be evidenced by the written signatures of such 
 directors, the borrower not voting or participating in any way in 
 passing upon any loan or discount in which he may be interested. 
 
 This section reenacts Code, 2236 (Act 1887, p. 94), adding di- 
 rectors and employees to officers and agents and requiring that the 
 permission of the directors or committee shall be "previously ob- 
 tained" and evidenced by their "written signatures." 
 
 Officer of bank, though having general authority to make loans, 
 can not bind the bank by lending its money to himself or to another 
 officer for his benefit. McGregor v. Witham, 126 Ga. 702. 
 
 156. SEC. 12. Loans to Officers. 
 
 No bank shall lend any officer, director, agent, or employee any 
 amount whatever except upon good collateral or other ample 
 security ; and no such loan shall be made until after it has been 
 approved by a majority of the directors, or by the members of a 
 committee of the board of directors authorized to act, as in the 
 preceding section provided. 
 
 The amending Act of August 14, 1920, as passed by the Senate 
 struck out the word "director" from this section. The House, how- 
 ever, omitted the provision, and the Senate concurred, leaving the 
 section unchanged. 
 
 Code, 2275, from which this section is taken, only required the 
 approval of the directors where the loan exceeded ten per cent, of 
 the capital of the bank. That section only applied to officers. This 
 adds directors, agents and employees. This section authorizes a com- 
 mittee to make the loan, as well as the majority of the directors. 
 
 The section is quite similar to 20 of the Alabama act. 
 
 *By a clerical error the word "director" was omitted in the enrolled copy 
 of the Act. It was inserted by the Act of August 14, 1920.
 
 78 PARK'S BANKING LAW OF GEORGIA. 
 
 157. SEC. 13. Loans by Bank, Limit of. 
 
 No bank shall be allowed to lend to any one person, firm, or 
 corporation more than thirty (30) per cent, of its capital, unim- 
 paired surplus and undivided profits. And no loan shall be made 
 in excess of ten (10) per cent, of the capital except upon good 
 collateral or other ample security and with the approval of a 
 majority of the directors, or of a committee of the board of di- 
 rectors authorized to act, which approval shall be evidenced by 
 the written signatures of said directors or the members of said 
 committee. In estimating loans to any person, all amounts loaned 
 to firms and partnerships of which he is a member shall be 
 included : Provided, however, That a bank may buy from or 
 discount for any person, firm, or corporation, bills of exchange 
 drawn in good faith against actually existing values, or commer- 
 cial or business paper actually owned by the person negotiating 
 the same, in addition to loans directly made to the person, firm 
 or corporation selling the same, such purchase or discount, if in 
 excess of ten (10) per cent, of the capital, to be approved in 
 writing by a majority of the directors or by a committee of such 
 board authorized to act ; And provided, That the limit of loans 
 herein fixed shall not apply to bona fide loans made upon the se- 
 curity of agricultural, manufactured, industrial products or live 
 stock, having a market value and for which there is ready sale 
 in the open market, title to which by appropriate transfer shall 
 be taken in the name of the bank, which shall be secured by in- 
 surance against loss by fire with policies made payable to the 
 bank, where no more than eighty (80) per cent, of the market 
 value of such products shall be loaned or advanced thereon. In 
 all such cases a margin of twenty (20) per cent, between the 
 amount of the loan and the market value of the products shall at 
 all times be maintained (except where products are intended for 
 immediate shipment) ; and the bank shall have the right to call 
 for additional collateral when the difference between the market 
 value and the amount loaned shall be less than twenty (20) per 
 cent., and in the event of the failure to comply with such de- 
 mand, to immediately sell all or any part of such products in the 
 open market and pay the amount of the loan and the expenses 
 of sale, and the balance to the borrower ; and provided that 
 the limit herein fixed shall not apply to loans fully secured by 
 bonds or certificates of indebtedness of the United States or of 
 this State, or of the several counties, districts or municipalities
 
 BANKING ACT OF 1919. 79 
 
 thereof which have been duly and regularly validated as provided 
 by law. Liabilities arising to the makers and indorsers of checks, 
 drafts, bills of exchange, received by the bank on deposit, cashed 
 or purchased by it, shall not in any way be considered as bor- 
 rowed money or loans. 
 
 It shall be the duty of the Superintendent of Banks to order 
 any loan in excess of the amount herein fixed reduced to the 
 legal limit or the excess charged to profit and loss, provided in 
 his opinion such excess is not well secured, and if such reduction 
 shall not be made within thirty (30) days after such notification, 
 to proceed as in other cases provided for violation of the orders 
 of the Superintendent. 
 
 The Senate bill passed at the Session of 1920 amended this sec- 
 tion so as to authorize a bank to lend ten per cent, of its capital and 
 surplus without requiring security, putting state banks on an equality 
 with National Banks in this regard. But the House struck the 
 amending section, leaving the Act unchanged. 
 
 There was no limit on the amount a bank could lend under the old 
 law, but the loan if in excess of ten per cent, of the capital and sur- 
 plus was required to be "amply secured by good security." This 
 was the only restriction. No approval of the directors was re- 
 quired, and loans to firms and to the several members thereof could 
 be treated as separate lines. The exceptions set out in the proviso 
 follow in substance those in 5200, U. S. R. S., as amended by the 
 Acts of June 22, 1906, September 24, 1918, and October , 1919, 
 9761, U. S. Comp. Stat. Somewhat similar provisions are contained 
 in 108 of the New York law and 21 of the Alabama Act. 
 
 Discussing 5200, U. S. R. S., after which this section is modeled, 
 the author of Pratt's Digest says : 
 
 "The general purpose of this section is obvious. It is to prohibit 
 any bank from hazarding a large amount of its funds in loans to any 
 one person, and to require such a distribution of the risks among 
 a large number of persons that the failure of any one or two cus- 
 tomers will not so seriously involve the bank as to endanger its 
 solvency. But the transactions of the banks woud be unduly ham- 
 pered if this rule applied in the case of all discounts, and so an 
 exception is made in favor of 'bills of exchange drawn against 
 actually existing values,' and 'commercial or business paper actually 
 owned by the person negotiating the same.' In Second National 
 Bank of Oswego v. Burt (93 N. Y. 233), it was said by the New 
 York Court of Appeals: 'The object of this provision of the cur- 
 rency act was to guard national banks from the hazard of loaning 
 money in improvident amounts upon speculative and accommoda- 
 tion paper, but it contemplated and permitted, to an unlimited 
 amount, the discount of paper used and required in facilitating the 
 transfer of property and money in the transaction of the legitimate 
 business of the country.' 
 
 "Numerous questions arise under this section which cause bank 
 officers much perplexity. The question that should always be an- 
 swered is, who is the borrower? i. e., who procured the money from 
 the bank? The liabilities of a person to a bank as endorser, guar- 
 antor or surety should not be considered in computing the ten per 
 cent, limit unless such person actually negotiated the loan with the 
 bank and received the proceeds derived therefrom. * * * But it 
 is to be remembered that the question, who is the borrower? is not
 
 80 PARK'S BANKING LAW OF GEORGIA. 
 
 always to be determined from the positions of the parties as they 
 appear on the paper. The borrower may be the maker, or he may 
 be the endorser. It is the person who negotiates the paper with the 
 bank, who procures the money upon it, that is the borrower, irre- 
 spective of whether he appears thereon as endorser or guarantor 
 or maker." Pratt's Digest, 1917, p. 116. 
 
 "There is no restriction of law prohibiting the Comptroller of 
 Currency from permitting a national bank having a lawfully estab- 
 lished branch to make loans at either place, based on the total 
 amount of capitalization and surplus of the corporation. The only 
 restriction of law in this respect is that the aggregate loans made by 
 the mother bank and all its branches shall not at any one time 
 exceed the limitations of this section." (1909) 27 Op. Atty. Gen. 
 601. 
 
 158. SEC. 14. Liability of Directors for Allowing Loans 
 Exceeding Limit. 
 
 The directors of any bank who shall approve or permit any 
 loan to be made in excess of the limit herein fixed shall be per- 
 sonally and individually liable and responsible to the bank for 
 such loan in the event the same should not be paid by the bor- 
 rower : Provided, however, That any director who shall not have 
 voted in favor of such loan may have his dissent or disapproval 
 thereof entered upon the minutes at the meeting at which said 
 loan is authorized, or at the next meeting held after he has dis- 
 covered that such loan has been made, in which event he shall 
 be relieved of liability therefor. 
 
 The National Bank Act, 5239, U. S. R. S. ; 9831, U. S. Comp. 
 Stat., provided that wherever a national banking association know- 
 ingly and wilfully violates any provision of the act, "every director 
 who participated in or assented to the same shall be held liable in 
 his personal and individual capacity for all damages which the asso- 
 ciation, its shareholders, or any other person, shall have sustained in 
 consequence of such violation." The above section is a sort of 
 specific application of the principle of this provision. 
 
 Directors can not be made to respond to damages or to pay ex- 
 cessive loans, unless some injury was done to the bank or loss sus- 
 tained by reason thereof. Emerson v. Gaither, 103 Md. 564, 8 L. 
 R. A. (N. S.) 738. 
 
 159. SEC. 15. Loans on Real Estate, Limit of. 
 
 No bank doing a commercial business and receiving deposits 
 subject to check, shall lend upon real estate held as an invest- 
 ment, or for the purchase of real estate, or the improvement 
 thereof, more than fifty (50) per cent, of the fair market value 
 of such real estate ; and the aggregate amount of such loans shall 
 at no time exceed the amount of its savings and time deposits ; 
 provided that this section shall not apply to temporary loans or 
 regular commercial transactions secured in whole or in part by
 
 BANKING ACT OF 1919. 81 
 
 real estate, nor to any loan which shall have been made prior to 
 the approval of this act. 
 
 This is the first time a restriction has been placed on real estate 
 loans in Georgia. Until comparatively recently national banks were 
 not allowed to take real estate security save on debts previously 
 contracted, but by the Federal Reserve Act (December 23, 1913, 
 amended September 7, 1916), U. S. Comp. Stat., 9763, they were 
 authorized (with certain limitations) to lend not more than 25 per 
 cent, of their capital and surplus or one-third of their time deposits 
 on farm lands or improved real estate, within one hundred miles of 
 the location of the bank, the loan not to exceed 50 per cent, of the 
 value of the property. 
 
 New York makes similar restrictions, 108 (4), New York law. 
 
 A loan made in violation of this section is nevertheless valid and 
 enforceable. McCormick v. Market National Bank, 165 U. S. 538, 
 41 L. Ed. 817. 
 
 160. SEC. 16. Overdrafts. 
 
 Any officer or employee of any bank who shall permit any cus- 
 tomer of the bank to overdraw his account or who shall pay any 
 check or draft, the paying of which shall overdraw any account, 
 unless the same shall be authorized by the board of directors, or 
 by a committee of such board authorized to act, shall be per- 
 sonally and individually liable to such bank for the amount of 
 such overdraft. 
 
 In an early case the Supreme Court of the United States held that 
 an officer was personally liable for an overdraft allowed or permitted 
 by him, and that even the authority of the board of directors would 
 not relieve him. Minor v. Mechanics' Bank, 1 Pet. 46, 7 L. Ed. 47. 
 But the view generally adopted in recent years is that an overdraft 
 is a loan, an irregular and dangerous kind of loan, but a loan 
 nevertheless, and that an officer authorized to make loans may allow 
 overdrafts. Morse on Banks and Banking, 357 and 358. This 
 section is intended to limit and restrict the power of officers with 
 respect to overdrafts to cases authorized by the directors or loan 
 committee of the bank. 
 
 161. SEC. 17. Loans Upon Collateral. 
 
 No bank shall lend more than thirty (30) per cent, of its 
 capital and unimpaired surplus on the stock of any corporation, 
 although such stock may be pledged to it by several separate 
 borrowers, and where loans are made direct to the corporation, 
 without ample security, these direct loans shall be included in such 
 total of thirty (30) per cent. No bank shall make a loan secured 
 by the stock of another corporation if by the making of such 
 loan the total stock of such corporation held by it as collateral 
 will exceed in the aggregate twenty (20) per cent, of the capital 
 stock of such corporation. 
 6
 
 82 PARK'S BANKING LAW otf GEORGIA. 
 
 The general plan of 108 (3) of the New York law is followed 
 in this section. 
 
 Where stock of an incorporated company is pledged by the owner 
 as collateral security for the payment of a debt, the pledgee is, as a 
 general rule, entitled to collect and receive the dividends thereon, 
 unless this right is reserved by the pledger at the time the pledge is 
 made. Guarantee Co. of North America v. East Rome Town Co., 
 96 Ga. 511. 
 
 162. SEC. 18. Certificates of Deposit. 
 
 No bank shall issue any certificate of deposit except in ex- 
 change for lawful money of the United States, or for checks, 
 drafts, or bills of exchange which are the actual equivalent of 
 such money; [and all certificates of deposit shall be signed by 
 an officer of the bank and countersigned by another officer or 
 bonded employee thereof.]* 
 
 This section is intended to break up a practice, more or less com- 
 mon with some banks, of issuing certificates of deposit against notes 
 discounted. 
 
 163. SEC. 19. Interest to Be Charged. 
 
 Any bank may take, receive, reserve and charge on any loan 
 or advance of money, or forbearance to enforce the collection of 
 money, interest at not exceeding eight per cent. (8%) per annum. 
 
 As originally framed, this section authorized banks to discount or 
 deduct interest in advance at eight per cent. The section was so 
 framed to meet the decision of the Supreme Court in Loganville 
 Bank v. Forrester, 143 Ga. 302, in which it was held that such dis- 
 count was usurious under Code, 3436. This was thought to be de- 
 sirable as national banks were given the right to deduct interest 
 in advance at the highest rate allowed bv the laws of the State 
 where they were located, 5197, U. S. R. S.; 9758, U. S. Comp. 
 Stat, and the Court of Appeals held, in Cooper, Recr., v. National 
 Bank of Savannah, 21 Ga. App. 356, that this section authorized 
 national banks in Georgia to discount at eight per cent. This de- 
 cision has recently been affirmed by the United States Supreme 
 Court, 34 Sup. Ct. 58, 64 L. Ed. 69. The General Assembly, how- 
 ever, struck out the provision which allowed discount, leaving the 
 section as above. As enacted, the section probably makes no change 
 in the law, though the use of the word "reserve" may possibly author- 
 ize discount at eight per cent. To clear up the doubt and put State 
 banks on an equality with National Banks in the matter of discount 
 an amendment was proposed at the Session of 1920 making the 
 section read as originally framed. But the amendment was defeated. 
 The contract rate in Georgia is eight per cent., Code, 3426, and 
 banks were authorized by Code, 2336, to charge the same rates as 
 individuals. 
 
 *Added by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 83 
 
 164. SEC. 20. Foreign and Domestic Acceptances. 
 
 A bank may accept drafts or bills of exchange drawn upon it 
 having not more than six months' sight to run, which grow out 
 of transactions involving the importation or exportation of goods ; 
 or which grow out of transactions involving the domestic ship- 
 ment of goods, provided shipping documents conveying or se- 
 curing title are attached at the time of acceptance ; or which are 
 secured at the time of acceptance by a warehouse receipt or other 
 such document conveying or securing title covering readily mar- 
 ketable staples. No bank shall accept, whether in a foreign or 
 domestic transaction, for any one person, company, firm, or cor- 
 poration to an amount equal at any time in the aggregate to more 
 than ten per cent, of its paid-up and unimpaired capital stock and 
 surplus unless the bank is secured either by attached documents 
 or by some other actual security growing out of the same trans- 
 action as the acceptance and no bank shall accept such bills to 
 an amount equal at any time in the aggregate to more than one- 
 half of its paid-up and unimpaired capital stock and surplus. 
 Provided, however, That any bank which is a member of the 
 Federal Reserve System may, when so authorized by the Federal 
 Reserve Board, and under the regulations prescribed by it, ac- 
 cept such bills to an amount not exceeding one hundred per cent, 
 of its paid-up and unimpaired capital stock and surplus, but the 
 aggregate of acceptances growing out of domestic transactions 
 shall in no event exceed fifty per cent, of such capital and surplus. 
 
 The Federal Reserve Act, 9796 (5), U. S. Comp. Stat, author- 
 ized acceptances by national banks. Georgia banks were given a 
 similar power by the Act of 1916, 2366 (d), Park's Code, Sup. 
 1917. This section follows closely the terms of the Federal Reserve 
 Act. It also makes special provision for banks which are members 
 of the Federal Reserve System so as to put them on a parity with 
 national banks. 
 
 165. SEC. 21. Loans Upon or Purchase of Bank Stock. 
 
 No bank shall make any loan or discount on the security of 
 the shares of its capital stock, nor be the purchaser or holder of 
 any such shares unless such security or purchase shall be neces- 
 sary to prevent loss upon a debt previously contracted in good 
 faith, and said stock so purchased or acquired shall within six 
 (6) months of the time of its purchase be sold and disposed of at 
 public or private sale. The limit of time, however, may be ex- 
 tended by the Superintendent of Banks, if in his judgment it is 
 for the best interest of the bank that such extension be granted,
 
 84 PARK'S BANKING LAW OF GEORGIA. 
 
 but in no case shall such time be extended longer than twelve 
 (12) months from the time of the purchase of the same by the 
 bank. 
 
 This section is taken from 5201, U. S. R. S. ; 9762, U. S. Comp. 
 Stat. The Federal Reserve Act requires the observance of this 
 restriction by state banks as a condition of becoming members of 
 the Federal Reserve System, 9792 (3), U. S. Comp. Stat. Code, 
 2348, prohibited banks from applying the capital stock to the pur- 
 chase of their own shares. New York and other states forbid banks 
 to make loans upon or purchase their own stock 108 (6), New 
 York law; 29, Alabama law. 
 
 "A solvent stockholder of an insolvent corporation delivered to it 
 his shares of stock in consideration that his note held by the cor- 
 poration, secured by his stock as collateral, be credited with a given 
 amount considered by him and the president of the corporation as 
 a fair valuation of the stock; at the time of the transaction both the 
 stockholder and the president thought the corporation solvent, and 
 the shares of stock were held by the corporation until it made an 
 assignment for the benefit of creditors within a month or two there- 
 after. Adjudged, that the stockholder held the money or credit so 
 received by him subject to the superior equity of the creditors of 
 the corporation, and that a receiver subsequently appointed for the 
 corporation could recover of the stockholder, for the benefit of 
 creditors, the amount of such credit." Fitzpatrick v. McGregor, 
 133 Ga. 332 (2). 
 
 166. SEC. 22. Unauthorized Investments. 
 
 No bank shall employ or invest its funds in the purchase or 
 holding of the stock of any industrial, mercantile or mining cor- 
 poration, or in the purchase or handling of merchandise, farm or 
 manufactured products, except to secure a debt previously con- 
 tracted in good faith, and if any such stocks, merchandise, or 
 products are purchased to protect the bank from loss, the same 
 shall be disposed of at public or private sale within six (6) 
 months after receiving the same, or the same shall be charged to 
 profit and loss and not carried as assets by the bank. The limit 
 of time, however, may be extended by the Superintendent of 
 Banks, if in his judgment it is for the best interest of the bank 
 that such extension should be granted. Nothing in this section 
 is to be construed as applying to trust companies or savings banks 
 doing a trust or savings business. 
 
 This seems to be an original section. Even without this express 
 prohibition banks have no power under their charters to purchase 
 stocks. There are, however, frequent calls upon banks to take stock 
 in local enterprises being organized to benefit the community in 
 which the bank solicited is located. This section was framed to 
 prevent yielding to temptation by generous and public-spirited bank 
 officers.
 
 BANKING ACT OF 1919. 85 
 
 167. Sue. 23. Purchase of Stocks or Bonds. 
 
 No bank shall subscribe or purchase any stocks (except stock 
 in the Federal Reserve Bank or in any State bank hereafter or- 
 ganized with functions applicable to its members similar in char- 
 acter and effect to the functions of the Federal Reserve Bank to 
 its members, necessary to qualify for membership therein in 
 which case the purchase of stock in said State bank shall not 
 be made unless the purchase has first been approved by the 
 State Superintendent of Banks and the amount of stock bought 
 shall not exceed that permitted in the Federal Reserve Bank) 
 or bonds, except bonds of the United States, of the State of 
 Georgia, or of the several counties, districts, including drainage 
 districts, or municipalities thereof, which have been duly and 
 regularly validated as provided by law, or of the other States of 
 the United States or, with the approval of the Superintendent 
 of Banks, good interest-bearing bonds of foreign governments; 
 provided that nothing herein contained shall limit or interfere 
 with regularly authorized trust companies, doing a trust company 
 business, advancing or lending money on syndicate underwritings, 
 upon which such trust companies are authorized to charge such 
 commissions, in addition to interest, as may be agreed upon by the 
 parties, or from subscribing, purchasing or holding stocks, bonds, 
 or other securities ; Provided, That this section shall not apply 
 to securities actually owned at the date of the approval of this 
 act. Provided further, That any bank of this State may invest 
 not exceeding five per centum of its capital and surplus in the 
 stock of a corporation engaged in the business, in whole or in 
 part, of holding, marketing or exporting cotton from the United 
 States, or any of its dependencies, or insular possessions, to any 
 foreign country. But no bank shall subscribe to the capital stock 
 of more than one such corporation, and shall first receive the 
 approval of the Superintendent of Banks. Provided further, 
 That nothing contained in this section shall apply to savings 
 banks doing only a savings business. 
 
 Alabama has a restriction upon the purchase of bank stock. 29, 
 Alabama act. This section is much more comprehensive. It recog- 
 nizes, however, the right to invest in bonds which are of undoubted 
 value. The proviso authorizing the purchase of the stock of an 
 export company was inserted in view of the pendency in Congress 
 of two bills to amend the Federal Reserve Act so as to authorize 
 similar investments by national banks, the McLean-Platt Amend- 
 ment (approved Sept. 17, 1919,) and the Edge Export Finance Act 
 (approved Dec. 24, 1919).
 
 86 PARK'S BANKING LAW OF GEORGIA. 
 
 168. SEC. 24. Purposes for Which Banks May Hold Real 
 Estate. 
 
 Any bank may purchase, hold and convey real estate for the 
 following purposes only : first, such as shall be necessary for the 
 convenient transaction of its business, the amount of which, in- 
 cluding its furniture and fixtures, shall not exceed one-third (%) 
 of the paid-in unimpaired capital and surplus; Provided, That 
 the Superintendent of Banks may, upon application by any bank, 
 in his discretion, allow a greater sum invested; second, such as 
 shall be conveyed to it in satisfaction of debts previously contracted 
 in the course of its business; third, such as it shall purchase 
 at sales under judgments, decrees, or mortgage foreclosures 
 under securities held by it; but a bank shall not bid, at any 
 such sale, a larger amount than sufficient to satisfy its debt, costs 
 and expenses. No real estate acquired in the cases contemplated 
 in the second and third subsections above shall be held for a 
 longer period than five (5) years unless the time shall be ex- 
 tended by the Superintendent for cause shown; Provided, That 
 this section shall not apply to any banking house, furniture or 
 fixtures actually owned at the date of the approval of this act. 
 Provided further, That nothing contained in this section shall 
 apply to savings banks doing only a savings business. 
 
 This follows in substance, 5137, U. S. R. S. ; 9674, U. S. Comp. 
 Stat. The limit on the value of the banking house and fixtures, 
 however, is new. It is a wise restriction, especially since banks are 
 now authorized with only $15,000 capital. 
 
 169. SEC. 25. Restriction of Bank's Liability. 
 
 No bank shall at any time be indebted to an amount exceeding 
 double the amount of its capital stock actually paid in and 
 remaining undiminished by losses or otherwise, plus the amount 
 of the unimpaired surplus and undivided profits, except on ac- 
 count of the following: 
 
 1. Moneys deposited with or collected by the bank. 
 
 2. Bills of exchange or drafts drawn against money actually 
 on deposit to the credit of the bank or due thereto. 
 
 3. Liabilities to the stockholders of the bank or dividends and 
 reserve profits. 
 
 4. Commercial paper re-discounted. 
 
 5. Acceptances as herein authorized. 
 
 6. Liabilities incurred by the bank on account of the indorse-
 
 BANKING ACT OF 1919. 87 
 
 ment of checks, drafts and bills of exchange received by the bank 
 on deposit, cashed or purchased by it, and indorsed by the bank. 
 Provided, however, That in case of temporary emergency, 
 or to pay its depositors, temporary loans, in excess of the amount 
 hereinabove fixed, may be made, when approved in advance by 
 the Superintendent of Banks. 
 
 This section is based upon 5202, U. S. R. S. ; 9764, U. S. Comp. 
 Stat, as amended by the Federal Reserve Act and the Act of Sep- 
 tember 7, 1916, the items not included in estimating a bank's liabil- 
 ity being largely the same. The proviso is new. 
 
 170. SEC. 26. Purchase of Bank's Obligations. 
 
 No bank, nor any of its directors, officers, agents or employees 
 shall directly or indirectly purchase or be interested in the pur- 
 chase of any promissory note, certificate of deposit, or other 
 evidence of debt issued by it, for a less sum than shall appear 
 on the face thereof to be due thereon: Provided, That a bank 
 may discount its unmatured obligations at not more than the 
 legal rate, which obligations shall be cancelled and satisfied forth- 
 with. 
 
 Under an old statute (Act, 1832, Cobb, 101), codified as Code, 
 2342, banks were required to pay specie for their bills, notes, drafts 
 or other obligations when due ; to receive their bills, notes, certifi- 
 cates of deposit or other evidences of debt in payment of debts due 
 them; and to receive their own bills at par. By 207, Park's Penal 
 Code, it was made a crime for an officer to purchase the bank's 
 obligations at a discount. This section is intended to cover both 
 these sections, the penal section being reenacted also as 215. 
 
 171. SEC. 27. Reserv.e. 
 
 Every bank whose deposits are subject to check shall at all 
 times maintain a reserve of fifteen (15) per cent, of the amount 
 of its demand deposits, and five (5) per cent, of the amount of 
 its savings and time deposits. Savings banks and trust companies 
 whose deposits are not subject to check without notice shall 
 maintain a reserve of five (5) per cent, of the amount of their 
 deposits. Such reserve shall consist of lawful money of the 
 United States, gold certificates, silver certificates, Federal Re- 
 serve, or national bank notes, in the office and vaults of the bank, 
 and of moneys on deposit subject to call with other banks or 
 bankers, such banks or bankers to be approved by the Superin- 
 tendent of Banks : [provided that the reserve against savings and 
 time deposits may be invested in bonds of the United States or of 
 this State at the market value thereof ;]* Provided, That any bank
 
 88 PARK'S BANKING LAW OF GEORGIA. 
 
 which is a member of the Federal Reserve System may in lieu of 
 the reserve herein required keep and maintain such reserve as is 
 required under the acts of congress relating to Federal Reserve 
 Banks. Demand deposits within the meaning of this section shall 
 comprise all deposits payable within thirty days, and time deposits 
 shall comprise all deposits payable after thirty days, and all savings 
 accounts and certificates of deposit which are subject to not less 
 than -thirty days' notice before payment. [And provided that a 
 bank shall have the right to pay checks drawn upon it when pre- 
 sented by any bank, banker, trust company, or agent thereof, 
 either in money or in exchange, drawn on its approved reserve 
 agents, and to charge for such exchange not exceeding one-eighth 
 of one (1) per cent, of the aggregate amount of the checks so 
 presented and paid.]* 
 
 By Code, 2276, banks were required to maintain a reserve of 25 
 per cent, of their demand deposits, but the market value of stocks 
 and bonds owned by the bank could be treated as reserve. The Act 
 of 1918 (Ga. Laws, 1918, p. 134) authorized member banks to con- 
 form to the requirements of the Federal Reserve System. This 
 section follows the Federal Reserve Act, 9801, U. S. Comp. Stat., 
 as amended, and reenacts in substance the Act of 1918. 
 
 The original proviso is intended to relieve the Georgia banks which 
 are members of the Federal Reserve System from the necessity of 
 maintaining the reserve required by this act and the reserve re- 
 quired of members of the system in the event there should be any 
 difference in the two, and. to put such member banks on a parity 
 with national banks. 
 
 Alabama also requires a fifteen per cent, reserve, three-fifths of 
 which may consist of demand deposits with other banks. 19, Ala- 
 bama act. 
 
 172. SEC. 28. Reserve Not Maintained. 
 
 Whenever the reserve of any bank shall fall below the amount 
 of fifteen (15) per cent, of its demand deposits and five (5) per 
 cent, of its savings and time deposits, and whenever the reserve 
 of any savings bank or trust company whose deposits are not 
 subject to check shall be below five (5) per cent, of its deposits, 
 such bank, savings bank or trust company shall not increase its 
 liabilities by making any new loans or discounts otherwise than 
 by discounting or purchasing bills of exchange at sight, nor shall 
 any dividend be declared out of the profits of such bank, savings 
 bank, or trust company, until the required proportion between the 
 aggregate amount of its deposits and the amount to be held as a 
 reserve has been restored. The Superintendent of Banks may 
 notify any bank, savings bank or trust company, whose reserve 
 
 *Both these provisos added by Act of August 14, 1920.
 
 BANKING ACT OF 1919. 89 
 
 shall be below the amount required to be kept on hand, to make 
 good such reserve ; and if such bank, savings bank or trust com- 
 pany shall fail within thirty (30) days thereafter to make good its 
 reserve, the Superintendent of Banks may take charge of the 
 business and assets of said bank, savings bank 'or trust com- 
 pany, as in other cases herein provided. 
 
 This is practically identical with 5191, U. S. R. S. ; 9746, U. S 
 Comp. Stat. 
 
 173. SEX. 29. Dividends and Surplus. 
 
 The directors of any bank may, annually, semiannually, or 
 quarterly, declare a dividend of so much of the net profits of the 
 bank as they may deem expedient; but such bank shall, before 
 the declaration of any dividend, carry twenty-five (25) per cent, 
 of its profits earned since its last preceding dividend to its surplus 
 until the surplus shall amount to twenty (20) per cent, of its 
 capital. Each bank shall report to the Superintendent of Banks, 
 within ten (10) days after declaring and at least ten (10) days 
 before paying any dividend, the amount of such dividend and 
 the amount of net earnings in excess of the dividend and amount 
 carried to the surplus. Such report shall be attested by the oath 
 of the president or cashier of the bank. 
 
 This section follows 5199, U. S. R. S. ; 9760, U. S. Comp. Stat, 
 which requires the setting aside of ten per cent, of the earnings 
 until a surplus of twenty per cent, is accumulated. 
 
 "The natural increase of the property belongs to the tenant for 
 life. Any extraordinary accumulation of the corpus such as issue 
 of new stock upon the share of an incorporated or joint-stock com- 
 pany attaches to the corpus and goes with it to the remainderman." 
 Code, 3667. 
 
 174. SEC. 30. Unearned Dividends Prohibited. 
 
 No bank shall withdraw or permit to be withdrawn either in 
 the form of dividends or otherwise any portion of its capital nor 
 reduce its surplus below twenty (20) per cent, of its capital. If 
 losses have been sustained at any time by such bank equal to 
 or exceeding its undivided profits then on hand, no dividend 
 shall be declared, and no dividends shall ever be declared by 
 any bank to an amount greater than its undivided profits then 
 on hand, deducting therefrom its losses and bad debts. All 
 debts due to any bank on which interest is past due and unpaid 
 for a period of twelve (12) months, unless the same are well
 
 90 PARK'S BANKING LAW OF GEORGIA. 
 
 secured or in process of collection, shall be considered "bad 
 debts" within the meaning of this section. 
 
 This section is in the language of 5204, U. S. R. S. ; 9766, 
 U. S. Comp. Stat. The Federal Reserve Act prescribes as one of 
 the conditions under which State banks may become members of the 
 Federal Reserve System that they be required to conform to this 
 section of the Revised Statutes. 9792 (3), U. S. Comp. Stat. 
 
 Code, 2348 and 2225 (a) prohibited the declaration of divi- 
 dends except from net profits, and 208, Penal Code, made the pay- 
 ment of such dividends a misdemeanor. 
 
 See notes to 217. 
 
 175. SEC. 31. Dividend, How Declared and When Losses 
 Reduce Surplus. 
 
 Any losses sustained by any bank in excess of its undivided 
 profits may be charged up to its surplus account ; Provided, That 
 its surplus shall thereafter be reimbursed from its earnings, and 
 no dividend shall be declared or paid by any such bank in excess 
 of one-half (y 2 ) of its net earnings until its surplus shall be fully 
 restored to its former amount. 
 
 This is an original section, its purpose being to require the restora- 
 tion of impaired surplus. 
 
 176. SEC. 32. Calculation of Profits. 
 
 Interest unpaid, although due or accrued on debts owing to the 
 bank, shall not be included in the calculation of its profits pre- 
 vious to a dividend, unless such interest be accrued upon loan 
 secured by collaterals as provided for by this act. The undivided 
 profits from which alone a dividend can be made, shall be ascer- 
 tained by charging in the account of profit and loss and deducting 
 from the actual profits : 
 
 1. All expenses paid or incurred, both ordinary and extraor- 
 dinary, including taxes, attending the management of the affairs 
 of the bank, and the transaction of its business. 
 
 2. The interest paid, or then due and accrued, on debts owing 
 by it. 
 
 3. All losses sustained by it. In the computation of such 
 losses, there shall be included all debts owing to the bank which 
 shall have been due, without suit for twelve (12) months, and 
 upon which no interest shall have been paid during that period, 
 except such debts as in the opinion of the Superintendent are 
 well secured. There shall also be included in such computa- 
 tion all debts due the bank on which judgment shall have been
 
 BANKING ACT OF 1919. 91 
 
 recovered, which judgment shall have remained for more than 
 one (1) year unsatisfied, and on which no interest shall have 
 been paid during that period. 
 
 This is taken substantially from 116 of the New York law. 
 
 177. SEC. 33. Lien Against Bank for Collaterals. 
 
 When any bank is indebted to any other party and shall deposit 
 with such party any commercial paper or papers as collateral for 
 its debt, and such collateral shall be afterwards sent back to the 
 bank in order that it may be collected and the funds remitted 
 by the bank to the creditor, the holder of the bona fide receipt 
 of the bank for such paper to be so collected, shall, after any 
 such collections are made, but not paid over, have a lien against 
 the assets of the bank to the extent of such funds as have been 
 actually collected by the bank, and such lien shall rank with 
 other liens according to date and shall attach from the date of 
 the collection of any such fund by such bank. 
 
 This is a reenactment of Code, 2354 (Acts 1905, p. 100). The 
 act was held to be constitutional in Collins v. American Exchange 
 National Bank, 147 Ga. 273. 
 
 178. SEC. 34. Lien on Banks' Assets When Checks Are 
 Not Remitted. 
 
 When any bank, or any officer, clerk, or agent thereof, receives 
 by mail, express or otherwise, a check, bill of exchange order to 
 remit note, or draft for collection, with request that remittance 
 be made therefor, the charging of such item to the account of the 
 drawer, acceptor, indorser, or maker thereof or collecting any 
 such item from any bank or other party, and failing to remit 
 therefor, or the nonpayment of a check sent in payment therefor, 
 shall create a lien in favor of the owner of such item on the 
 assets of such bank making the collection, and such lien shall rank 
 with other liens, according to date, and shall attach from the 
 date of the charge, entry or collection of any such funds. 
 
 In Ober & Sons Co. v. Cochran, 118 Ga. 396, it was held that 
 where a note was sent to a bank for collection with instructions to 
 remit the proceeds, but the bank violated instructions, and used the 
 money in its own business, upon the insolvency of the bank no trust 
 resulted in favor of the owner of the note upon the assets of the 
 bank in the hands of a receiver. Similar rulings were made in 
 Citizens' National Bank v. Haynes, 144 Ga. 490, and in U. S. Na- 
 tional bank v. Glandon, 146 Ga. 786. It was to meet these cases that 
 this section was inserted.
 
 92 PARK'S BANKING LAW OF GEORGIA. 
 
 179. SEC. 35. Due Diligence on Part of Bank in Collect- 
 ing. 
 
 When a check, draft, note, or other negotiable instrument is 
 deposited in a bank for credit, or for collection, it shall be con- 
 sidered due diligence on the part of the bank in the collection of 
 such check, draft, note or other negotiable instrument so de- 
 posited, to forward and route the same without delay in the usual 
 commercial way, according to the regular course of business of 
 banks, and the maker, indorser, guarantor, or surety of any 
 check, draft note or other negotiable instrument so deposited shall 
 be liable to the bank until actual final payment is received ; and 
 when a bank receives for collection any check draft, note, or other 
 negotiable instrument and forwards the same for collection as 
 herein provided, it shall be liable only after actual final payment 
 is received by it, except in case of want of due diligence on its 
 part as aforesaid. 
 
 The courts of the country have divided with respect to the liability 
 of a collecting bank. By some it has been held that a collecting 
 bank is liable for the defaults of its agents and correspondents. 
 Others have taken the view, more in keeping with modern business 
 methods, that the forwarding bank is only liable for its own neglect 
 and defaults where it exercises proper care in the selection of cor- 
 respondents and means of collection, the correspondents and agents 
 being regarded as the agents of the depositor rather than of the col- 
 lecting bank. The Supreme Court of Georgia in Bailie v. Augusta 
 Savings Bank, 95 Ga. 277, adopted the first of these theories, Code, 
 2362, codified from this decision being as follows : 
 
 "In the absence of a contract, express or implied, to the contrary, 
 a bank taking paper for collection is liable for the defaults of its 
 agents and correspondents to whom the paper has been intrusted 
 for collection." 
 
 This section in effect overrules the Bailie case and adopts the 
 second of the above given theories. 
 
 180. SEC. 36. Forwarding Check Direct to Payor. 
 
 Any bank, or banker, doing business in this State, receiving 
 for collection or deposit, any check, note, or other negotiable in- 
 strument, drawn upon or payable at any other bank located in 
 another city or town whether within or without this State may 
 forward such instrument for collection directly to the bank on 
 which it is drawn or at which it is made payable and such 
 method of forwarding direct to the payor shall be deemed due 
 diligence and the failure of any such payor bank, because of 
 its insolvency or other default, to account for the proceeds 
 thereof, shall not render the forwarding bank liable therefor: 
 Provided, however, Such forwarding bank shall have used due
 
 BANKING ACT OF 1919. 93 
 
 diligence in other respects in connection with the collection of 
 such instrument. 
 
 Under the rule generally adopted by the courts a bank forwarding 
 a check or other item direct to the drawee or payor is guilty of neg- 
 ligence and responsible for any loss which may result. The custom 
 among banks, however, has sanctioned the practice of forwarding 
 items direct to the payor. In Georgia where there are many small 
 towns in which there is only one bank, this is the only practical 
 method of collection. This section legalizes the custom generally 
 prevailing. A similar statute has been adopted in Alabama, Louisi- 
 ana, Montana, and possibly other States. 
 
 181. SEC. 37. Certifying Checks. 
 
 No check shall be certified except by the president, a vice- 
 president, cashier, or an assistant cashier of a bank. It shall be 
 unlawful to certify any check, draft, or order upon the bank 
 unless the drawer of such check, draft, or order has on deposit 
 with the bank, at the time such check, draft, or order is certified, 
 an amount of money equal to the amount specified in such check, 
 draft or order. Such certification shall be entered on the face 
 of such check, draft or order, and the check, draft or order so 
 certified shall be charged against the drawer's account immedi- 
 ately. Any check certified by a proper officer shall be a good and 
 valid obligation against the bank ; but the act of any officer in 
 violation of this section shall subject him to the penalties provided 
 in this act. 
 
 This reenacts in substance Code, 2301, which in turn was copied 
 from 5208, U. S. R. S. ; 9770 U. S. Comp. Stat. 5208 has 
 been amended by the Act of Sept. 26, 1918, 9770, U. S. Comp. 
 Stat., so as to apply to Federal Reserve Banks and member banks. 
 
 It has been the practice for tellers of some banks to certify checks, 
 but the courts have generally held that a teller has no implied power 
 to certify. This section limits the power to the proper officers. 
 
 182. SEC. 38. Membership in Federal Reserve Bank. 
 
 Banks are authorized and empowered to subscribe for stock 
 and become members of the Federal Reserve Bank of the dis- 
 trict to which they properly may be assigned by the Federal Re- 
 serve Board, in accordance with the acts of congress regulating 
 Federal Reserve Banks, and any bank becoming such member 
 shall be authorized to conform to the requirements and regula- 
 tions of such Federal Reserve Bank, and of the Federal Reserve 
 Board. 
 
 The Federal Reserve Act, December 23, 1913, as amended by the 
 Act of June 21, 1917, 9792, U. S. Comp. Stat., makes full provision
 
 94 PARK'S BANKING LAW OF GEORGIA. 
 
 for the membership of State banks in the Federal Reserve System, 
 and prescribed the terms and conditions of such membership. By 
 the Act of 1915, p. 33, 2366 (a), Park's Code, Sup. 1917, banks 
 incorporated under the laws of Georgia were authorized to sub- 
 scribe for stock in and become members of the Federal Reserve 
 Bank of this district. This section is similar though somewhat 
 broader in its terms than Code, 2366 (a). Similar statutes have 
 been adopted in most of the States. 
 
 183. SEC. 39. Payment of Deposits in Two Names. 
 
 When a deposit has been made, or shall hereafter be made, in 
 any bank transacting business in this State in the names of two 
 persons, payable to either, or payable to either or the survivor, 
 such deposit, or any part thereof, or any interest or dividend 
 thereon, may be paid to either of said persons, whether the other 
 be living or not; and the receipt or acquittance of the person so 
 paid shall be a valid and sufficient release and discharge to the 
 bank for any payment so made. 
 
 In the absence of a statute, the courts generally have held that a 
 deposit in the name of two parties belongs, presumptively, to them 
 equally, and upon the death of one of them his half interest passes 
 to his personal representative. This section is intended to give the 
 bank clear legal authority for the payment of such a deposit to the 
 survivor of the two joint depositors. Similar statutes have been 
 enacted in thirty-two States. 
 
 184. SEC. 40. Check of Deceased or Bankrupt or Insane 
 Depositor. 
 
 The death or bankruptcy of a depositor unknown to the bank 
 shall not revoke a check given by him, and a bank shall be au- 
 thorized to pay through regular channels a check regularly drawn 
 upon it by a depositor therein, notwithstanding the death or 
 bankruptcy of such depositor unknown to the bank at the time of 
 such payment. A bank paying the check of an insane depositor 
 in good faith and without notice or knowledge of the insanity of 
 such depositor shall be protected in so doing and may lawfully 
 charge such check to the account of such depositor. 
 
 The rule adopted by the courts generally is that death revokes a 
 check and that a bank paying a check after the death of the drawer, 
 although in good faith and without notice of his death, is not pro- 
 tected. This is also the rule with respect to the bankruptcy of the 
 drawer. An insane person not being able to contract, (Code, 
 4237,) could not legally withdraw a deposit by check, and a bank 
 paying such check, though the fact of the drawer's insanity was un- 
 known to it, was not protected in so doing. American Tr. & Bkg. 
 Co. v. Boone, 102 Ga. 202. These rules which were manifestly un- 
 just to the bank are intended to be corrected by this section.
 
 BANKING ACT of 1919. 95 
 
 185. SEC. 41. Deposits by Minors. 
 
 A minor shall be allowed to deposit money in bank in his own 
 name, and the money so deposited shall not be subject to the con- 
 trol of his parent, guardian, or trustee, but may be drawn or 
 checked out by the minor depositing the same as though he were 
 of full age. 
 
 Under the Code, the contracts of an infant, i. e., one under 
 twenty-one years of age, are voidable by him except in a few cases. 
 Code, 4233. As the opening of a bank account and checking 
 thereon is a contract, a bank accepting an account from a minor did 
 so at considerable risk. This section provides another exception to 
 the general rule, making voidable the contracts of an infant. 
 
 186. SEC. 42. Deposit by Agent, Trustee, or Other Fidu- 
 ciary. 
 
 Whenever any agent, administrator, executor, guardian, trus- 
 tee, either express or implied, or other fiduciary whether bona 
 fide or mala fide shall deposit any money in any bank to his credit 
 as an individual or as such agent, trustee, or other fiduciary, 
 whether the name of the person or corporation for whom he 
 is acting or purporting- to act be given or not, such bank shall be 
 authorized to pay the amount of such deposit or any part thereof, 
 upon the check of such agent, administrator, executor, guardian, 
 trustee, or other fiduciary, signed with the name in which such 
 deposit was entered, without being accountable in any way to 
 the principal, cestui que trust, or other person or corporation 
 who may be entitled to or interested in the amount so deposited. 
 
 Nothing herein contained shall prevent the person or corpora- 
 tion claiming the beneficial interest in or to any deposit in any 
 bank from resorting to the courts to subject such deposit, pro- 
 vided such action is brought and served before such deposit is 
 paid out, and to any action brought for this purpose both the 
 bank and the depositor shall be necessary parties defendant. 
 
 This section puts in the form of a statute a rule established by 
 the decisions of the Supreme Court in Munnerlyn v. Augusta Sav. 
 Bank, 88 Ga. 333; America Tr. & Bkg. Co. v. Boone, 102 Ga. 202, 
 and other cases. It should be remembered, however, that these 
 cases also hold that a bank actively aiding a trustee or agent in 
 misappropriating a trust fund deposited by him, and especially if 
 it participates in the misappropriation and receives the fruits of it 
 by obtaining the payment of a debt due it by the trustee or agent 
 individually is liable to the true owner for the amount so wrongfully 
 appropriated to its own uses. While this section protects a bank act- 
 ing in good faith, it is not intended to shield a bank which know- 
 ingly participates in a misappropriation by an agent, trustee or other 
 fiduciary.
 
 96 PARK'S BANKING LAW OE GEORGIA. 
 
 187. SEC. 43. Payment of Deposits in Trust. 
 
 Whenever any deposits shall be made in any bank by any 
 person in trust for another, and no other or further notice of the 
 existence and terms of a legal and valid trust shall have been 
 given in writing to the bank, in the event of the death of the 
 trustee, the same, or any part thereof, together with the dividends 
 or interest thereon may be paid to the person for whom said de- 
 posit was made. 
 
 Similar statutes have been enacted in twenty-four States. The 
 section is intended to protect the bank in paying to the beneficial 
 owner funds deposited for his benefit upon the death of the trustee. 
 
 188. SEC. 44. Forged or Raised Checks. 
 
 No bank which in good faith has paid, and charged to the ac- 
 count of a depositor, any money on a forged or raised check 
 issued in the name of the depositor shall be liable to said de- 
 positor for the amount paid thereon, unless, (1) within sixty 
 (60) days after the return to the depositor of the voucher repre- 
 senting such payment, the depositor shall notify the bank that 
 the check so paid was forged or raised, or, (2) in the event the 
 voucher has not been returned to the depositor, within sixty days 
 after notice shall have been given by the bank to the depositor to 
 have his pass book balanced and to call for his vouchers. The 
 notice herein referred to may be given by mail to said depositor 
 at his last known address. 
 
 The well-known rule is that a bank paying a forged or raised 
 check of its depositor can not charge the amount to his account, but 
 must itself bear the loss, provided the depositor has been free from 
 blame and has not contributed to the forgery by his own negligence. 
 Ga. R. R. & Bkg. Co. v. Love, etc., Society, 85 Ga. 293; Atlanta 
 National Bank v. Burke, 81 Ga. 597; Woods v. Colony Bank, 114 
 Ga. 683. The purpose of this section is to fix a limit of time within 
 which the depositor must give notice of the forgery or alteration 
 after his account has been balanced and the opportunity for detec- 
 tion has been afforded him. Similar statutes have been enacted in 
 twenty-two States, the period of time varying from thirty days to 
 one year after the return of the vouchers. 
 
 189. SEC. 45. List of Stockholders to Be Sent to Superin- 
 tendent of Banks. 
 
 The president and cashier of every bank shall cause to be kept 
 at all times, in the office where its business is transacted, a full 
 and correct list of the names and residences of all the stockhold- 
 ers in the bank, with the number of shares held by each, respec-
 
 BANKING ACT OF 1919. 97 
 
 tively. Such list shall be subject to the inspection of all stock- 
 holders of the bank during business hours of each day in which 
 business may be legally transacted. A copy of such list, verified 
 by oath of such president or cashier, shall be transmitted on the 
 first Monday in July of each year, to the Superintendent of 
 Banks, such copy list also to be subject to inspection as herein- 
 above provided. 
 
 This is a reenactment of Code, 2307, codified from the Bank 
 Bureau Act, and modelled after 5210, U. S. R. S.; 9773, U. S. 
 Comp. Stat. 
 
 190. Sec. 46. Transfers After or in Contemplation of In- 
 solvency. 
 
 All transfers of notes, bonds, bills of exchange, or other evi- 
 dence of debt owing to any bank, or deposits to its credit; all 
 assignments, mortgages, conveyances or liens; all judgments 
 or decrees suffered or permitted against it ; all deposits of money, 
 bills or other value things for its use, or for the use of its stock- 
 holders or creditors ; and all payments of money, either after in- 
 solvency or in contemplation of insolvency, with a view to prevent 
 application of its assets in the manner prescribed in this act, or 
 with a view to the preference of one creditor over another, shall 
 be null and void, provided such acts enumerated were committed 
 within three months prior to the failure of such bank. 
 
 Conveyances and transfers after or in contemplation of insol- 
 vency were declared fraudulent and void by Code, 2360. This 
 section is somewhat broader and more definite in its terms, follow- 
 ing in substance the Bankruptcy Act, 67. 
 
 "Where a bank, after cashing several checks drawn upon another 
 bank, received from the drawee bank a check covering the amounts 
 paid out, and then presented the check thus given for payment, and 
 received therefor, instead of cash, a promissory note payable to 
 the drawee bank, which was insolvent at the time and closed its 
 doors two days later, the transaction was not necessarily invalid, 
 but the title to the note passed to the purchaser thereof, where there 
 was no fraudulent intent upon its part and it took without notice of 
 the insolvency of the other bank. The check which it surrendered 
 was a valuable consideration for the note received, and was not, as a 
 matter of law, the same as a preexisting debt, so as to make the 
 transfer of the note a preference by the insolvent bank." Thomas v. 
 Crawford, 147 Ga. 437 (1). 
 
 "The provisions of the Code, 2360, which prohibits all convey- 
 ances and assignments by a bank in contemplation of insolvency or 
 after insolvency, except for the benefit of all creditors and stock- 
 holders, is intended to prevent preferences for an antecedent debt, 
 and has no application against an innocent assignee for value, with- 
 out knowldege of such condition of the bank. Booth v. Atlanta 
 Clearing House, 132 Ga. 100 (63 S. E. 907) ; Hightower v. Mustian, 
 8 Ga. 506; Clarke y. Ingram, 107 Ga. 565, 576 (33 S. E. 802)." 
 Toomey Bros. v. Citizens' and Southern Bank, 19 Ga. App. 271. 
 7
 
 98 PARK'S BANKING LAW OF GEORGIA. 
 
 191. SEC. 47. Savings Deposits ; Regulations; Limitations. 
 
 Sums deposited with any savings bank and savings deposits 
 taken by any bank doing both a commercial and savings bank 
 business, together with interest credited thereto, shall be repaid 
 to the depositors, respectively, or to their legal representatives, 
 after demand, in such manner and at such times and after such 
 previous notice and under such regulations as the board of di- 
 rectors of such bank shall prescribe, and interest thereon shall 
 be credited at such times and at such rates and under such regu- 
 lations as may be prescribed by said board of directors. The 
 rules and regulations adopted by the board of directors governing 
 deposits shall be printed in the pass books or other evidences of 
 deposit furnished by such bank, and shall be evidence between the 
 bank and the depositors holding the same of the terms upon 
 which the deposits therein acknowledged are made. A bank 
 receiving savings deposits may limit the aggregate amount which 
 any one person, firm, association or corporation, may deposit to 
 such sum as it may deem expedient to receive, and may in its 
 discretion refuse to receive any deposit, and may also at any time 
 return all or any part of any deposit with the interest accrued 
 thereon, according to the rules and regulations adopted by said 
 bank. Where a bank does both a commercial and savings busi- 
 ness separate records shall be kept of its savings deposits. 
 
 This section follows rather closely 248 of the New York act. 
 The right of a bank accepting savings accounts to prescribe reason- 
 able rules binding on the depositor has been upheld in Langdale v. 
 Citizens' Bank, 121 Ga. 105, and Wilson v. Citizens & Southern Bank, 
 23 Ga. App. 654. The rule in question in these cases and which was 
 held to be a reasonable regulation, was : "Every effort will be made 
 to protect depositors against fraud, but payment made to a person 
 presenting the pass book shall be good and valid on account of the 
 owner unless the pass book has been lost and notice in writing 
 given to this bank before such payment is made." 
 
 192. SEC. 48. Payment of Deposit of Deceased Depositor. 
 
 Upon the death of any person, intestate, having a deposit in 
 a bank of not more than $100, such bank shall be authorized to 
 pay over such deposit (a) to the husband or wife of the depositor, 
 (b) if no husband or wife, to the children, (c) if no children, to 
 the father if living, if not to the mother of the depositor, (d) if 
 no children or parent, then to the brothers and sisters of the 
 depositor. The receipt of such person or persons shall be a full 
 and final acquittance to the bank and relieve it of all liability to
 
 BANKING ACT OF 1919. 99 
 
 the estate of said deceased depositor or the representative thereof 
 should one be appointed. 
 
 This section follows in general plan Code, 3134-36, authorizing 
 certain corporations to pay over to the widow and children without 
 administration, wages due a deceased employee. The provision will 
 be quite valuable in that large class of small accounts where the de- 
 positor has no other property and the cost of administration is out 
 of proportion to the amount of the deposit. 
 
 Alabama, since the passage of this act, has adopted a statute simi- 
 lar to the above section authorizing the payment to the widow or 
 heirs of a depositor of deposits of $1,000.00 or less. 
 
 ARTICLE XX. 
 
 Crimes and Misdemeanors. 
 
 193. SECTION 1. Giving Notice of Examination. 
 
 Any Superintendent of Banks, Assistant Superintendent, Ex- 
 aminer, or office assistant, who shall, previous to the visitation of 
 any bank for regular examination, give notice or information, 
 directly or indirectly, to any officer, director, agent, represent- 
 ative, or employee of such bank, as to the time when the same 
 will be visited for examination, shall be guilty of a misdemeanor. 
 Provided, That this section shall not apply to special examina- 
 tions made at the request of any bank or on motion of the super- 
 intendent. 
 
 This is taken from 35 of the Alabama law. 
 
 194. Sec. 2. Disclosing Condition of Bank. 
 
 Any Superintendent of Banks, Assistant Superintendent, Ex- 
 aminer, or office assistant, who shall knowingly and wilfully dis- 
 close the condition and affairs of any bank ascertained by exami- 
 nation, except to the extent authorized by law, shall be guilty of 
 a misdemeanor. 
 
 This follows 36 of the Alabama law. The Federal Reserve Act, 
 as amended, 9833, U. S. Comp. Stat., makes it a misdemeanor for 
 an examiner to disclose the names of borrowers or the collateral 
 for loans of a member bank. This section covers these as well as 
 any other disclosures of the affairs of a bank. 
 
 195. SEC. 3. False Report of Examination by Examiner. 
 
 Any Superintendent of Banks, or Examiner, who shall make 
 report as to the result of any examination made by him, which
 
 100 PARK'S BANKING LAW OF GEORGIA. 
 
 is knowingly and wilfully false, shall be punished by confinement 
 and labor in the penitentiary for not less than one (1) year nor 
 more than five (5) years. 
 
 This follows 37 of the Alabama law. 
 
 i 
 
 196. SEC. 4. Neglect and Misconduct of Superintendent, 
 Examiner, or Clerk. 
 
 Any Superintendent of Banks, Assistant Superintendent, Ex- 
 aminer, or office assistant, who shall wilfully neglect to perform 
 any duties required by him by law or who shall knowingly and 
 wilfully make any false statement of or concerning any bank, 
 or who shall be guilty of any misconduct or corruption in office, 
 shall be punished as for a misdemeanor, and upon conviction, 
 shall be removed from office by the Governor. 
 
 This reenacts 622, Penal Code, codified from the Bank Bureau 
 Act. 
 
 197. SEC. 5. False Expense Account. 
 
 Any Superintendent of Banks, Assistant Superintendent or 
 Examiner who shall knowingly and wilfully render a false ac- 
 count of expenses paid by him in the discharge of his duties, shall 
 be guilty of a misdemeanor. 
 
 This is doubtless covered by the preceding section, but it was 
 thought well to cover false expense accounts in terms. 
 
 198. SEC. 6. Loans or Gratuities to Superintendent or Ex- 
 aminers. 
 
 No bank, nor any officer, director, or employee thereof shall 
 make any loan, or grant any gratuity to the Superintendent of 
 Banks, the Assistant Superintendent or any bank examiner; nor 
 shall the Superintendent of Banks, the Assistant Superintendent, 
 or any Examiner, accept any loan or gratuity of any kind from 
 any bank, or from any officer, director or employee thereof, nor 
 accept any employment from, or peform any service for compen- 
 sation for, any bank, or for any officer, director or employee 
 thereof. 
 
 Any bank officer, director or employee violating any of the 
 provisions of this section shall be guilty of a misdemeanor. Any 
 Superintendent of Banks, Assistant Superintendent or Bank Ex- 
 aminer violating any of the provisions hereof shall be guilty of
 
 BANKING ACT OF 1919. 101 
 
 a misdemeanor and shall forfeit his office and be thereafter dis- 
 qualified from holding office in the Department of Banking of 
 this State. 
 
 This section is taken from the Federal Reserve Act, as amended 
 by the Acts of June 21, 1917, and September 26, 1918, 9833, U. S. 
 Comp. Stat. 
 
 199. SEC. 7. Opening Bank Without Permit. 
 
 Any person who shall hereafter transact any business as an 
 officer, director, agent, or representative of any bank hereafter in- 
 corporated, before such bank is authorized to transact business 
 as a bank by the permit of the Superintendent of Banks, shall 
 be guilty of a misdemeanor. 
 
 This section is taken from 38 of the Alabama law. 
 
 200. SEC. 8. False Statement of Condition. 
 
 Any person who knowingly and wilfully verifies by oath or 
 affirmation any false report of the condition of any bank, made 
 to the Superintendent of Banks, on the call of the Superintendent 
 for such report, or any false report or certificate of any other 
 matter or thing required by this act to be reported, shall be pun- 
 ished by confinement and labor in the penitentiary for not less 
 than one (1) year nor longer than five (5) years. 
 
 This section follows 665 (3) of the New York act, and 39 of 
 the Alabama act. 
 
 201. SEC. 9. False 'Oath. 
 
 Any person who wilfully and corruptly swears or affirms 
 falsely when being examined under oath by the Superintendent 
 of Banks, or any Examiner appointed by him, in regard to any 
 material matter or thing, shall be guilty of false swearing, and 
 upon conviction shall be punished by confinement and labor in the 
 penitentiary for not less than one (1) year nor more than five 
 (5) years. 
 
 This section follows 40 of the Alabama act. Doubtless 261, 
 P. C., making penal false swearing wherever an oath is lawfully 
 administered would have been sufficient to cover the cases provided 
 for by this section. 
 
 202. SEC. 10. False Entries. 
 
 Any officer, agent, clerk, or employee of any bank who makes 
 any false entry in any book, report, or statement of the bank, or
 
 102 PARK'S BANKING LAW OF GEORGIA. 
 
 who omits or concurs in omitting to make any material entry in 
 its books or accounts with intent in either case to injure or de- 
 fraud the bank, or any other company, firm, or person, or to de- 
 ceive any officer of the bank, or the Superintendent of Banks, or 
 any Examiner, and every person who with like intent aids or 
 abets any officer, director, clerk, agent, or employee, in making 
 any false entry, report', or statement, or omitting to make any 
 material entry on its books and accounts, shall be punished by im- 
 prisonment and labor in the penitentiary for not less than one (1) 
 year nor more than ten (10) years. 
 
 This section is modelled after 5209, U. S. R. S.; 9772, U. S. 
 Comp. Stat. The Federal Reserve Act extends the provisions of 
 5209 to State banks on their becoming members of the Federal Re- 
 serve System, 9792 U. S. Comp. Stat. 
 
 203. SEC. 11. Refusing to Make Statements. 
 
 Any officer, director, agent, clerk, or employee who refuses, or 
 wilfully and intentionally neglects to make any report or state- 
 ment of or concerning the bank of which he is such officer, di- 
 rector, clerk, or employee, where such report or statement is 
 called for by the Superintendent of Banks, shall be guilty of a 
 misdemeanor. 
 
 This follows 46 of the Alabama law. 
 
 204. SEC. 12. Bank Officers Violating the Charter. 
 
 Any president, director, or other officer of any bank who shall 
 violate or be concerned in violating any provision of the charter 
 of said bank, shafl be punished by imprisonment and labor in the 
 penitentiary for not less than one (1) year nor longer than five 
 (5) years. 
 
 This reenacts 202, Penal Code, which with the following section 
 were contained in the Penal Code of 1833 (Cobb's Digest 797) and 
 have been brought forward in each succeeding Penal Code. 
 
 205. SEC. 13. Presumption Against Such Officers. 
 
 Every president, director or other officer of any chartered bank 
 in this State shall be deemed to possess such a knowledge of the 
 affairs of the banks as to enable him to determine whether any 
 act, proceeding, or omission is a violation of the charter. And 
 every president and director, who shall be present at a meeting 
 when such violation shall occur, shall be deemed to have con-
 
 BANKING ACT OF 1919. 103 
 
 curred therein, unless he shall at the time cause, or in writing re- 
 quire, his dissent therefrom to be entered at large on the minutes 
 of the board. And every president and director not present at 
 any meeting when such violation shall take place, shall neverthe- 
 less be deemed to have concurred therein, if the facts constituting 
 such violation appear on the books of the bank, and he remain 
 president or director for three (3) months thereafter, and do not 
 within that time, unless prevented by illness or other providential 
 cause, cause or in writing require, his dissent from such illegal 
 proceedings to be entered at large on the minutes of the board. 
 
 This reenacts 203, Penal Code. 
 
 206. Sue. 14. Falsely Representing Capital Stock. 
 
 Any officer, director, agent, clerk, or employee who knowingly 
 by letter-heads, newspaper advertisements, sign, circulars, or 
 otherwise represents capital stock of any bank to be in excess 
 of the capital actually paid in, or who knowingly makes or con- 
 curs in making or publishing any written report, exhibit, or state- 
 ment of its affairs or pecuniary condition, containing any material 
 statement therein which is false, or who knowingly omits or con- 
 curs in omitting any statement required by law to be contained 
 therein, shall be punished by imprisonment and labor in the peni- 
 tentiary for not less than one (1) year nor more than five (5) 
 years. 
 
 This is taken from 46, of the Alabama law. 
 
 207. SEC. 15. Falsely Advertising That Deposits Are In- 
 sured. 
 
 Any officer, director, agent, or employee of any bank who 
 shall advertise by any office sign, or upon any letter-head, bill- 
 head, blank note, receipt, certificate, circular, or on any written 
 or printed paper that the deposits in said bank are insured or are 
 guaranteed, unless such deposits are in fact insured or guaran- 
 teed, shall be guilty of a misdemeanor. 
 
 The deposit guarantee laws of a few of the States led some of the 
 banks to insure their deposits. Some of this insurance was of no 
 value, the insuring company being without responsibility. It was to 
 prevent such fraudulent insurance that this section was framed.
 
 104 PARK'S BANKING LAW OF GEORGIA. 
 
 208. SEC. 16. Concealing Loans. 
 
 Any officer, director, clerk, or other employee of any bank who 
 intentionally conceals from the directors of such bank, or from 
 the committee to whom the directors have delegated authority to 
 pass on loans and discounts, any discount or loan made for and 
 in behalf of said bank, or the purchase or sale of any note, bill of 
 exchange or security, shall be guilty of a misdemeanor. 
 
 This is taken from 44 of the Alabama law. 
 
 209. SEC. 17. Commissions to Officers on Loans. 
 
 Any officer, director, agent, teller, clerk, or other employee of any 
 bank who asks or receives, or covenants or agrees to receive, any 
 commission, emolument, gratuity, or reward, or any promise of 
 any commission, emolument, gratuity, or reward, or any money 
 or property or thing of value, or of personal advantage, for pro- 
 curing or endeavoring to procure for any person, firm, or cor- 
 poration, any loan from, or the purchase or discount of, any 
 paper, note, draft, check, or bill of exchange, by any such bank, 
 shall be guilty of a misdemeanor. 
 
 This is taken from 45 of the Alabama law. The Federal Re- 
 serve Act as amended, 9833, U. S. Comp. Stat., contains a similar 
 provision applicable to officers, directors and employees of member 
 banks. 
 
 210. SEC. 18. Misappropriation by Officers, Directors, 
 Agents, or Employees. 
 
 Any officer, director, agent, clerk or employee of any bank who 
 knowingly and with intent to defraud, receives or possesses him- 
 self of any of its money or property, or who with intent to de- 
 fraud, omits to make on its books of account a full and true entry 
 of any money or property of the bank received or possessed by 
 him, or who with such intent causes such omission, shall be pun- 
 ished by imprisonment and labor in the penitentiary for not less 
 than one (1) year nor more than five (5) years. 
 
 The Acts enumerated in this section are included in the section 
 providing a penalty for embezzlement in the National Bank Act, 
 5209, U.. S. R. S. ; 9792, U. S. Comp. Stat., which by amendment 
 has been extended so as to include all members of the Federal Re- 
 serve System See 212.
 
 BANKING ACT OF 1919. 105 
 
 211. SEC. 19. Overdrafts of Officers, Agents, and Em- 
 ployees. 
 
 Any officer, agent, director, clerk, teller, or other employee 
 of any bank who wilfully and knowingly, and without authority 
 from the board of directors, overdraws his account with such 
 bank, and thereby obtains moneys or funds of any such bank, 
 shall be guilty of a misdemeanor. 
 
 This section is taken from 45 of the Alabama law. 
 
 212. SEC. 20. Embezzlement. 
 
 Any officer, director, agent, clerk, or employee of any bank 
 who embezzles, abstracts, or wilfully misapplies, any of the 
 moneys, funds, securities or credits of the bank or who issues or 
 puts forth any certificate of deposit, draws any draft or bill of 
 exchange, makes any acceptance, assigns any note, bond, draft, 
 bill of exchange, mortgage, judgment, decree or execution or who 
 makes use of the name of the bank in any manner, with intent in 
 either case to injure or defraud the bank, or any person, firm, or 
 corporation, or to deceive any officer of the bank, or the Super- 
 intendent of Banks, or any Examiner, or any person who with 
 like intent aids or abets any such officer, director, agent, clerk, 
 or employee in any violation of this section, shall be punished by 
 imprisonment and labor in the penitentiary for not less than one 
 (1) year nor more than ten (10) years. 
 
 See 210. 
 
 This section is taken from 5209, U. S. R. S. ; 9772, U. S. 
 Comp. Stat. 186, Penal Code, made it a felony for an officer 
 or employee to "embezzle, steal, secrete, or fraudulently take and 
 carry away" any money or property of a bank or other corporation. 
 This section is considerably broader and more comprehensive, and 
 includes wilful misapplication as well as embezzlement. By the 
 Act of September 26, 1918, 5209, U. S. R. S., is made applicable to 
 officers, directors, agents and employees of Federal Reserve Banks 
 and of member banks as well as to national banking associations. 
 9792, U. S. Comp. Stat. The language employed is substantially 
 taken from 46 of the Alabama act. 
 
 Accessory, one may be, who is not an employee of corporation. 
 118/799 (3) (45 S. E. 614). 
 
 Indictment substantially in language of section, sufficient. 10 App. 
 21, 23 (72 S. E. 516). Indictment need not allege accused was em- 
 ployed "in the house of, or place of business of the corporation"; 
 nor from whom accused received the money ; nor character of false 
 and fraudulent reports rendered. 114/25 (1) (40 S. E. 13). In- 
 dictment sufficiently alleges by whom the property embezzled was 
 intrusted to the defendant, when it states that he was president of 
 corporation, having the general management of its business and the 
 control of its funds, and having in his trust, custody and control 
 large sums of money belonging to it, etc. 76/551 (13).
 
 106 PARK'S BANKING LAW OF GEORGIA. 
 
 Intention to restore money not prevent act from being embezzle- 
 ment, where money of principal is knowingly used by agent for his 
 own private benefit, and in violation of duty to principal. 11 App. 
 427 (1) (75 S. E. 512). 
 
 213. SEC. 21. Borrowing by Officers, Directors, and Em- 
 ployees. 
 
 Any officer, agent, or employee of any bank who shall use or 
 borrow for himself, directly or indirectly, or for any firm or part- 
 nership of which he is a member, any money or other prop- 
 erty belonging to any bank of which he is an officer, agent, or em- 
 ployee, without such use or loan being approved by a majority of 
 the directors or by the members of a committee of the board of 
 directors authorized to act, as provided by Article XIX, 11, of 
 this act, or who shall in like manner procure any such loan which 
 is not secured in the manner provided by Article XIX, 12, of 
 this act, shall be guilty of a misdemeanor. 
 
 This reenacts in substance 210, Penal Code, modifying it some- 
 what so as to conform to the requirements of 155 and 156 of the 
 act. 
 
 214. SEC. 22. Loans to Officers, Directors, and Employees. 
 
 Any officer, director, agent, or employee of any bank whc shall 
 lend to any other officer, director, agent, or employee, or who 
 shall discount any note, draft, or other paper for such officer, di- 
 rector, agent, or employee, directly or indirectly without such 
 loan or discount being approved by a majority of the directors 
 or by the membe'rs of the committee of the board of directors 
 authorized to act as provided in Article XIX, 11, of this act, 
 or who shall make any loan to any such officer, director, agent, 
 or employee, which is not secured in the manner provided by 
 Article XIX, 12, of this act, or who shall be concerned in 
 making any such loan or discount, shall be guilty of a misde- 
 meanor. 
 
 This reenacts in substance 211, Penal Code, modifying it to 
 conform to the requirements of 155 and 156 of the act. 
 
 215. SEC. 23. Bank Officers Purchasing Its Paper at Dis- 
 count. 
 
 If any president, director, officer, or agent of any bank shall 
 by himself or agent, or in any other manner either for himself 
 or for the bank, directly or indirectly, purchase, or be interested
 
 BANKING ACT OF 1919. 107 
 
 in the purchase of any note, bill, certificate of deposit, check, 
 or other evidence of debt issued by said bank for a less sum than 
 shall appear then due on the face thereof, he shall be guilty of a 
 misdemeanor : Provided, however, That a bank may discount its 
 unmatured obligations at a rate not exceeding the legal rate of 
 discount, such obligation to be immediately cancelled and satis- 
 fied. 
 
 This reenacts 207, Penal Code, but adds the proviso at the end 
 of the section. 
 
 216. Sec. 24. Purchasing Shares with Capital Stock. 
 
 If any officer, director, or agent of any bank shall use or apply 
 any part of the capital stock of such bank to the purchase of 
 shares of its own stock, unless such purchase shall be necessary 
 to prevent loss upon a debt previously contracted in good faith, 
 he shall be guilty of a misdemeanor. 
 
 This is a reenactment in substance of 209, Penal Code, the right 
 to purchase where necessary to prevent loss on a debt previously 
 contracted being inserted in the Code section. 
 
 217. SEC. 25. Unearned Dividends and Misuse of Capital. 
 
 Any director of any bank who concurs in any vote or act of 
 the directors of such bank, by which it is intended to declare a 
 dividend, except from the net profits arising from the business 
 of the bank ; or to divide, withdraw, or in any manner pay to 
 the stockholders, or any of them, any part of the capital stock 
 of the bank, or to purchase or reduce its capital stock, except in 
 pursuance of law ; or to discount and receive any note or other 
 evidence of debt in payment of any installment of capital stock 
 actually called in and required to be paid, with intent to provide 
 the means of making such payment ; or to receive or discount any 
 note or other evidence of debt with the intent of enabling any 
 stockholder to withdraw any part of the money paid in by him 
 on any stock held by him in such bank ; or to apply any portion 
 of the funds of such bank, except as allowed by law, directly or 
 indirectly; in the purchase of shares of its own stock, shall be 
 guilty of a misdemeanor. 
 
 See 174 and notes. 
 
 This section is taken from 664, of the New York act. 42 of 
 the Alabama act is practically the same. The declaring of dividends 
 except from net profits, and the distribution of capital as dividends 
 was made a misdemeanor by 208 and 740, P. C.
 
 108 PARK'S BANKING LAW OF GEORGIA. 
 
 Books of bank properly admitted in evidence to prove dividends 
 illegally disclosed. Cabaniss v. State, 8 App. 129 (19) (68 S. E. 849). 
 
 Conditions which made declaration of dividend illegal, evidence 
 to show existence of, for some time prior thereto is relevant, as 
 tending to establish condition of bank's affairs on day in question, 
 as well as to show opportunities for knowledge of these conditions. 
 8 App. 129 (10) (68 S. E. 849). 
 
 Expert accountant may give summarized statement of what books 
 show, where books not accessible. 8 App. 129 (14) (68 S. E. 849). 
 
 Indictment against president or one of directors need not set out 
 the names of other directors not indicted, though they may have 
 participated in declaration of dividend; offense of president or di- 
 rector is several rather than joint. 8 App. 129 (2) (68 S. E. 849). 
 
 Pendency of another indictment for same offense, no ground for 
 plea in abatement. 8 App. 129 (5) (68 S. E. 849). 
 
 Motives of officers immaterial if they did those acts which are 
 penal under this section. 8 App. 129 (7) (68 S. E. 849). 
 
 Solvency or insolvency is matter admitting of opinion evidence. 
 There was no error in allowing one witness to testify as to correct- 
 ness of list of insolvent papers, though he was ignorant of fact of 
 solvency or insolvency of papers, and in allowing another witness, 
 who could not swear to correctness of list, to testify as to solvency or 
 insolvency of the papers. 8 App. 129 (16, 17) (68 S. E. 849). 
 
 Knowledge on part of defendants as to financial condition of cor- 
 poration will be presumed, where evidence shows that, as officers in 
 actual charge of current business, they had full opportunity to ac- 
 quire such knowledge; and where it is also shown that they pre- 
 pared and presented to directors a statement of financial status of 
 corporation, and joined with directors in declaring dividend, and it 
 subsequently appeared that this statement was not true, jury was 
 authorized to infer that accused, with knowledge of true financial 
 condition, made and presented false statements to deceive directors 
 as to true financial status. Mangham v. State, 11 App. 440 (4) (75 
 S. E. 508). 
 
 Net Earnings : Dividends can be lawfully declared only out of net 
 earnings ; and the difference between the present value of all the 
 corporate assets and the amount of all losses, expenses, other 
 charges and liabilities, including capital stock, constitutes net earn- 
 ings for purpose of dividends. It follows that an insolvent corpora- 
 tion cannot have net earnings out of which dividends can be de- 
 clared. 11 App. 440 (2) (75 S. E. 508). 
 
 218. SEC. 26. Overissue of Capital. 
 
 Any officer, agent, or director of any bank who knowingly and 
 wilfully issues, participates in issuing, or concurs in any vote of 
 the directors to issue any increase of its capital stock beyond the 
 amount of the capital thereof duly authorized by or in pursuance 
 of law, or who knowingly or wilfully sells, or agrees to sell, or 
 who is interested, directly or indirectly, in the sale of any such 
 shares of stock of such bank, or in any agreement to sell same, 
 shall be guilty of a misdemeanor. 
 
 This is taken from 43 of the Alabama law.
 
 BANKING ACT OF 1919. 109 
 
 219. SEC. 27. Certifying Checks. 
 
 Any officer of a bank certifying any check, draft, or order in 
 violation of the provisions of 37 of Article XIX of this act shall 
 be guilty of a misdemeanor. 
 
 This reenacts in substance 623, P. C. See note to 181. 
 
 220. SEC. 28. Bank Insolvency Deemed Fraudulent. 
 
 Every insolvency of a bank shall be deemed fraudulent, and the 
 president and directors shall be severally punished by imprison- 
 ment and labor in the penitentiary for not less than one (1) year 
 nor longer than ten (10) years : Provided, That the defendant 
 in a case arising under this section may repel the presumption 
 of fraud by showing that the affairs of the bank have been fairly 
 and legally administered, and generally with the same care and 
 diligence that agents receiving a commission for their services are 
 required and bound by law to observe; and upon such showing 
 the jury shall acquit the prisoner. 
 
 This is a reenactment of 204, P. C., the section first appearing in 
 the Penal Code of 1833. See 148/758; 18 App. 403 (7). 
 
 Debt, punishment provided by this section does not amount to im- 
 prisonment for. 7 App. 101 (2), 108 (66 S. E. 383). 
 
 Indictment should charge that bank became "fraudulently insol- 
 vent." 7 App. 101 (4), 111 (66 S. E. 383). 
 
 Intentional fraud and dishonesty of bank officials punishable under 
 this section, not mere mismanagement resulting in insolvency. 7 
 App. 101 (2), 108 (66 S. E. 383). 
 
 Presumption that bank's insolvency due to fraudulent acts of its 
 officials could be legalized as evidence by legislature. 7 App. 101 (3), 
 110 (66 S. E. 383) ; and see 124/15 (5) (52 S. E. 74) ; 128/668 (5) 
 (57 S. E. 889). Either insolvency or failure to redeem bills raises 
 presumption that crime committed in mismanagement of bank. 7 
 App. 101 (1) (66 S. E. 383). 
 
 221. SEC. 29. Receiving Deposits After Insolvency. 
 
 When money is deposited on general deposit with any bank in 
 this State, or with any company or individual doing a banking 
 business in this State, and such bank, or company, or individual is 
 insolvent at the time, ad such insolvency is known to the officers 
 having charge or control of such bank, or company, or to such 
 individual, and loss or injury shall result to such depositor, then 
 such individual or such officers having charge or control of such 
 bank or company who, with the knowledge aforesaid, so received 
 such deposits, shall be punished by imprisonment in the peniten- 
 tiary for not less than one (1) year nor more than ten (10) years.
 
 110 PARK'S BANKING LAW of GEORGIA. 
 
 This reenacts 205, Penal Code, with this change, 205 made the 
 officer or individual banker liable where the bank or individual 
 "shall fail to pay the depositor or person entitled thereto within 
 three days after the demand therefor, the said deposit or deposits," 
 while this section makes the officer or individual liable where "loss 
 or injury shall result to such depositor," no demand being neces- 
 sary. 
 
 Alabama has a similar provision, 41, Alabama act. 
 
 222. SEC. 30. Certain Transfers, etc., of Stock, etc., Fraud- 
 ulent. 
 
 The president, directors or officers of a bank, or any of them, 
 who shall make, or consent to the making of any conveyance, as- 
 signment, transfer, mortgage, or lien, with intent to hinder, delay, 
 or defraud creditors, after insolvency, or in contemplation 
 thereof, whether the same be made to an innocent purchaser or 
 to any other person shall severally be guilty of a misdemeanor. 
 
 This reenacts in substance 206, P. C. 
 
 223. SEC. 31. Penalty for Failing to Comply with Act. 
 
 Any officer, employee, director or agent of any bank or any 
 other person whether connected with said bank or not, who shall 
 wilfully violate any of the provisions of this act shall, unless 
 otherwise provided in the act, be guilty of a misdemeanor. 
 
 This is a general section intended to cover all cases not specially 
 provided for and in terms covered. 
 
 224. SEC. 32. Libel of Bank. 
 
 Any person who shall publish or cause to be published any false 
 statement, expressed either by printing or writing, or signs, pic- 
 tures, or like, of or concerning any bank, as to the assets or lia- 
 bilities of said bank, or as to its solvency or ability to meet its 
 obligations, or as to its soundness, or who shall publish or cause 
 to be published any other false statement so expressed, calculated 
 to affect the credit or standing of said bank, or to cast suspicion 
 upon its solvency, soundness, or ability to meet its deposits or 
 other obligations, in due course, shall be guilty of a misdemeanor. 
 
 This and 225 are designed to meet an evil to which banks are 
 peculiarly subject and for which heretofore there has been no ade- 
 quate redress. The language follows substantially that of 340, 
 P. C., denning criminal libel. 
 
 Statutes punishing derogatory statements affecting banks have 
 been passed in twenty-three States.
 
 BANKING ACT OF 1919. Ill 
 
 225. SEC. 33. Slander of Bank. 
 
 Any person who shall falsely circulate any report, or make 
 any false oral statement as to the assets or liabilities of a bank, 
 or as to its solvency or ability to meet its obligations, or as to its 
 soundness; or who shall make any other false oral statement 
 calculated to affect the credit or standing of said bank, or to cast 
 suspicion upon its solvency, soundness, or ability to meet its de- 
 posits, or other obligations in due course, shall be guilty of a mis- 
 demeanor. 
 
 See notes to 224. 
 
 226. SEC. 34. Check or Draft Without Funds. 
 
 Any person who, with intent to defraud, shall make, or draw, 
 or utter, or deliver any check, draft, or order for the payment 
 of money upon any bank, or other depository, knowing at the 
 time of such making, drawing, uttering or delivery that the maker 
 or drawer has not sufficient funds in or credit with such bank, 
 or other depository, for the payment of such check, draft or order 
 in full upon its presentation, shall be guilty of a misdemeanor. 
 The making, drawing, uttering or delivering of such check, draft 
 or order as aforesaid, shall be prima facie evidence of intent to 
 defraud. The word "credit" as used herein shall be construed to 
 mean an arrangement or understanding with the bank or deposi- 
 tory for the payment of such check, draft or order. 
 
 This section is in the form recommended by the American Bank- 
 ers' Association. It supersedes the Act of 1914, 718 (d), P. C. 
 That Act made the procuring of money or other thing of value upon 
 a worthless check a misdemeanor provided the check was not made 
 good in thirty days. Under this section the giving of the check 
 "with intent to defraud" constitutes the offense, whether the person 
 issuing or uttering the check obtains value therefore or not, and 
 having committed the crime by the fraudulent issuing of the check 
 the utterer is no longer allowed to compound it by making it good 
 in thirty days, as he could do under the former statute. Thirty- 
 eight States have enacted statutes in one form or another for the 
 punishment of the crime of passing worthless checks. 
 
 227. SEC. 35. Private Banker Using Unauthorized Name, 
 Signs, etc. 
 
 Any private person or the members, of any firm or voluntary 
 association engaged in the business of banking who shall violate 
 the provisions of section four (4), Article I, of this act, shall be 
 guilty of a misdemeanor; Provided, however, That the pro- 
 visions of this section shall not become operative until the ex-
 
 112 PARK'S BANKING LAW OF GEORGIA. 
 
 piration of twelve (12) months from and after the time when this 
 act shall go into effect. 
 
 A similar provision is found in 141 of the New York law. 
 
 228. SEC. 36. Stockholder Failing to Give Notice of As- 
 sessment to Pledgee. 
 
 Should any stockhelder fail to give to any person, firm, or 
 corporation to whom he shall have pledged or hypothecated any 
 stock in any bank notice of any assessment levied thereon to 
 make good the capital stock of any bank which may have become 
 impaired, of which he. has received notice and which assessment 
 he shall fail or refuse to pay for any reason, by registered mail 
 at least five (5) days before the expiration of the time within 
 which such assessment may be paid, giving to such creditor the 
 right to pay the same should he so desire, he shall be guilty of a 
 misdemeanor. Proof by the person to be notified that no such 
 notice has been received shall be prima facie evidence that such 
 notice was not given. 
 
 This section affords a necessary protection to the pledgees or 
 holders of bank stock as collateral in view of the provision of 50 
 of the act authorizing the sale of stock to make good impairment 
 of capital and the cancellation of the outstanding certificate. 
 
 229. SEC. 37. Criminal Violations to Be Submitted to the 
 Grand Juries. 
 
 The Superintendent of Banks shall have the right to submit 
 to the grand juries of the respective counties of the State any 
 criminal violations of the banking laws known by him to have 
 occurred in such counties. But this provision shall not be so con- 
 strued as to prevent the Superintendent or other persons from 
 proceeding in such cases by affidavit and warrant. 
 
 A similar provision is made by 47 of the Alabama law. 
 
 230. SEC. 38. Misdemeanors, How Punished. 
 
 Upon conviction of a misdemeanor, as prescribed by the sev- 
 eral provisions of this act, the offender shall be punished as pre- 
 scribed by 1065 of the Penal Code of Georgia. 
 
 1065, P. C., is as follows : 
 
 "Except where otherwise provided, every crime declared to be a 
 misdemeanor is punishable by a fine not to exceed one thousand dol- 
 lars, imprisonment not to exceed six months, to work in the chain
 
 BANKING ACT OF 1919. 113 
 
 gang on the public roads or on such other public works as the county 
 or State authorities may employ the chain gang, not to exceed twelve 
 months, any one or more of these punishments in the discretion of 
 the judge: Provided, That nothing herein contained shall authorize 
 the giving the control of convicts to private persons, or their em- 
 ployment by the county or State authorities in such mechanical pur- 
 suits as will bring the products of their labor into competition with 
 the products bf free labor. If the convict be a female, the judge 
 may, in his discretion, sentence her to labor and confinement in the 
 woman's prison on the State farm, in lieu of a chain gang sentence, 
 not to exceed twelve months: Provided, That the trial judge shall 
 have the discretion also of sending any person convicted of a mis- 
 demeanor to the State farm." 
 
 ARTICLE XXI. 
 
 Act to Take Effect, When. 
 
 231. SUCTION 1. Act, When to Take Effect. 
 
 This act shall take effect from and after the 1st day of Janu- 
 ary, 1920, and shall then supersede all existing laws regulating 
 banks and banking in this State. On said date, or as soon there- 
 after as the Superintendent of Banks shall be appointed and 
 qualified, the State Treasurer shall turn over and deliver to the 
 Superintendent of Banks all moneys in his hands as ex-officio 
 State Bank Examiner and all records, books, papers, property, 
 and effects belonging to the Bank Bureau as now organized and 
 conducted in the State Treasury. The receipt of the Superin- 
 tendent of Banks shall be a full acquittance to the State Treas- 
 urer for all funds, records and property so turned over and de- 
 livered. 
 
 The act is intended to furnish a complete banking code, supersed- 
 ing all existing laws on the subject. 
 
 ARTICLE XXII. 
 
 Conflicting Laws Repealed. 
 
 232. SECTION 1. General Repealing Clause. 
 
 All laws and parts of laws in conflict with this act, are hereby 
 repealed.
 
 114 PARK'S BANKING LAW OF GEORGIA. 
 
 TRUST COMPANIES. 
 
 (Acts 1898, p. 78, as amended, 2815-2821 (e), Park's Ann. Code.) 
 Section i. Their Incorporation. 
 
 233. ( 2815.) How Incorporated. 
 
 Any number of persons, not less than five, may associate them- 
 selves together for the purpose of organizing a trust company 
 in accordance with the provisions of this act. The persons so 
 desiring to become incorporated shall file in the office of the 
 Secretary of State a declaration in writing, signed by each of 
 them, stating their names, and residences, the name and style 
 of the proposed corporation, the location of the principal business 
 thereof, the amount of the capital stock, and such other matters 
 as they may deem it desirable to state. Such declaration must be 
 accompanied by the affidavit of at least three of the subscribers 
 that at least twenty-five thousand dollars ($25,000.00) of the 
 capital stock subscribed has been actually paid in by the sub- 
 scribers and that the same is in fact held and is to be used solely 
 for the business or purposes of the corporation. A fee of fifty 
 ($50.00) dollars shall be paid, on filing the application into the 
 treasury, and the Secretary of State shall not issue any charter 
 before its payment. 
 
 Acts 1898, p. 78. 
 
 Constitutional, this act declared to be; it does not violate pro- 
 visions of the Constitution embraced in 6446. 120/1080 (4) (48 
 S. E. 437). 
 
 234. ( 2816.) Notice; Certificate of Incorporation. 
 
 Previous to filing the declaration, as provided in the preceding 
 section hereof, a notice of intention to organize such trust com- 
 pany shall be published at least once a week for four weeks in 
 a newspaper of general circulation published in the city in which 
 the principal office of the proposed corporation will be located, 
 which notice shall specify the names of the proposed corporators, 
 name of the proposed trust company and the location of the same. 
 
 When such declaration shall have been filed and notice of in- 
 tention shall have been published as herein provided, the Secre- 
 tary of State shall issue to the subscribers, their associates, and 
 successors, a certificate of incorporation under the seal of the
 
 TRUST COMPANY ACT. 115 
 
 State, certifying that the subscribers, their associates and suc- 
 cessors, are a body politic and corporate under the name and 
 style designated in the declaration, and that such corporation has 
 the capacity and powers conferred and is subject to all the duties 
 and liabilities imposed by law. The Secretary of State shall 
 record the declaration, affidavit and certificate of incorporation. 
 
 Acts of 1898, p. 78. 
 
 Section 2. Their Powers. 
 
 235. ( 2817.) Corporate Powers. 
 
 All trust companies organized under this act are declared to 
 be corporations possessed of the powers and functions of cor- 
 porations generally, and as such have power : 
 
 1. To make contracts. 
 
 2. To sue and be sued, complain and defend, in any court, as 
 fully as natural persons. 
 
 3. Fiscal Agent. To act as the fiscal or transfer agent of any 
 state, municipality, body politic or corporation, and in such 
 capacity to receive and disburse money, and transfer, register and 
 countersign certificates of stock, bonds, and other evidence of in- 
 debtedness. 
 
 4. Deposits and Loans. To receive deposits of trust moneys, 
 securities and other personal property from any person or cor- 
 poration, and to loan money on real estate or personal securities. 
 
 5. Buy and Sell Real Estate. To lease, purchase, hold and 
 convey any and all real estate necessary in the transaction of 
 its business, or which the purposes -of the corporation may re- 
 quire, or which it shall acquire in satisfaction or partial satisfac- 
 tion of debts due the corporation, under sales, judgments or mort- 
 gages or in settlement or partial settlement of debts due the cor- 
 poration by any of its debtors. 
 
 6. Trustee Under Mortgages and Bonds. To act as trustee 
 under any mortgage or bond issued by any government, state, 
 municipality, body politic or corporation, and accept and execute 
 any other municipal or corporate trust not inconsistent with the 
 laws of this State. 
 
 7. Trusts for Married Women. To accept trusts from and 
 execute trusts for married women in respect to their separate 
 property, whether real or personal, and to be their agent in the
 
 116 PARK'S BANKING LAW OF GEORGIA. 
 
 management of such property, or to transact any business in rela- 
 tion thereto. 
 
 8. Guardian, etc., of Minors. To act under the order or ap- 
 pointment of any court of record as guardian, receiver, or trus- 
 tee of the estate of any minor, the annual income of which shall 
 not be less than one hundred dollars and as depository of any 
 moneys paid into court, whether for the benefit of any such minor, 
 or any other person, corporation, or party. 
 
 9. Management of Estate Property. To take, accept and exe- 
 cute any and all such legal trusts, duties, and powers in regard 
 to the holding, management and disposition of any estate and 
 property, real or personal, and the rents and profits thereof, or 
 the sale thereof, as may be granted or confided to it by the Su- 
 perior Court, or by any other court of record, or by any person, 
 corporation, municipality or other authority, and the said corpora- 
 tion shall be accountable to all parties in interest for the faithful 
 discharge of every such trust, duty, or power which it may so 
 accept. 
 
 10. Trustees Under Appointment of Persons or of Courts. 
 To take, accept and execute any and all such trusts and powers 
 of whatever nature or description, as may be conferred upon or 
 intrusted or committed to said company by any person or persons, 
 or any body politic, corporation, or other authority, by grant, as- 
 signment, transfer, devise, bequest, or otherwise or which may 
 be intrusted or committed or transferred to or invested in said 
 company by order of the Superior Court or any other court of 
 record or any ordinary, and to receive and take and hold any 
 property or estate, real or personal, which may be the subject 
 of any such trust. 
 
 11. May Deal in Stocks, etc. To purchase, invest in and sell 
 stocks, bills of exchange, bonds and mortgages, and other securi- 
 ties ; and when moneys or securities for moneys are borrowed or 
 received on deposit or for investment, the bonds or obligations 
 of the company may be given therefor, but nothing herein con- 
 tained shall be construed as giving the right to issue bills to cir- 
 culate as money. 
 
 12. May Act as Executor or Administrator, and as Committee 
 of Lunatics, etc. To be appointed and accept the appointment 
 of executor or of trustee under the last will and testament, or 
 administrator with or without the will annexed, of the estate of 
 any deceased person, and to be appointed and to act as the corn-
 
 TRUST COMPANY ACT. 117 
 
 mittee of the estates of lunatics, idiots, persons of unsound mind 
 and habitual drunkards. 
 
 Acts of 1898, p. 78. 
 
 Administrator, ordinary may appoint trust company as. 120/1080 
 (4) (48 S. E. 437). 
 
 13. May Guarantee Loans. To engage in the business of guar- 
 anteeing the payment of bonds and notes secured by mortgage or 
 deed to real estate within the State of Georgia: Provided, That 
 every such company must, before it may issue any such guarantee, 
 set apart an amount of not less than $50,000 in any case, as a 
 guaranty fund, which said guaranty fund shall be maintained un- 
 impaired so long as any guaranty is outstanding. 
 
 Acts 1917, p. 56. 
 
 14. May Guarantee Titles. To engage in the business of certify- 
 ing to the ownership of title to real property or furnishing infor- 
 mation relative thereto, or of guaranteeing such titles or of guar- 
 anteeing owners of real property or other persons interested 
 therein against loss by reason of defective titles or incumbrances 
 thereon or adverse claim of title : Provided, That every such com- 
 pany must, before it may issue any title guarantee policy or guar- 
 anteed certificate of title, set apart an amount not less than one- 
 third of its capital and surplus, and not less than $50,000 in any 
 case, as a guaranty fund, which said guaranty fund shall be main- 
 tained unimpaired so long as any title guarantee policies or guar- 
 anteed certificates of titles are outstanding. 
 
 No trust company organized under the provisions of this act 
 
 Acts 1917. p. 56. 
 
 trust company 
 
 shall exercise any of the rights and powers conferred until at least ^ ^ 
 one hundred thousand dollars of the capital stock shall have been 8. c 
 subscribed and paid in; nor shall any such company receive de- 
 posits subject to check on demand or discount commercial paper 
 unless and until such company shall have complied with the laws * 
 of this State regulating the incorporation of banks; but such * 
 company may acquire and exercise all the rights and privileges, 
 and be subject to the same liabilities and restrictions as apply to 
 banks, upon compliance with the laws of this State providing for 
 
 the incorporation and regulating the business of banks. 
 
 O 
 
 Acts 1898, p. 78.
 
 118 PARK'S BANKING LAW OF GEORGIA. 
 
 Every such company exercising the powers granted by para- 
 graph 13, or those granted by paragraph 14, aforesaid, may invest 
 the guaranty fund therein provided for in legally issued bonds or 
 securities of the United States, or of any State thereof, not esti- 
 mated above their current market value; or in legally issued 
 bonds, warrants or securities of any county, incorporated city, or 
 town, or school district in this State, not estimated above their 
 par value, or their current market value, or in lawful bonds and 
 notes secured by mortgage or deed creating first lien on real 
 estate within this State, and where buildings constitute a material 
 part of the value of the mortgage premises they shall be kept in- 
 sured against loss or damage by fire ; such guaranty fund and the 
 securities evidencing the same from time to time shall be de- 
 posited with the State Treasurer or with some trust company or 
 one of the State depositories selected by the company so deposit- 
 ing them and approved by the State Treasurer, as custodian, such 
 custodian giving proper receipts therefor. 
 
 Every such company exercising the powers granted by para- 
 graph 13 or those granted by paragraph 14, aforesaid, shall make 
 at least one report each year, and oftener if called upon by the 
 State Bank Examiner, and in the same manner and subject to 
 the same penalties as required of trust companies engaged in the 
 banking business. 
 
 Acts 1917, p. 56. 
 
 Section 3. Organization and Management. 
 
 236. ( 2818.) Trustees, Their Election. 
 
 The affairs of said company shall be managed and its cor- 
 porate powers exercised by a board of trustees of such number, 
 not less than five nor more than twenty-five, as shall from time to 
 time be prescribed by its by-laws. The persons named in the 
 declaration of organization shall constitute the first board of trus- 
 tees of the said company, and may add to their number not ex- 
 ceeding the limit of fifteen, and shall severally continue in office 
 until others are elected to fill their places. The election of trus- 
 tees shall be held annually at the office of the company, in such 
 manner and at such time as shall be prescribed in the by-laws. 
 In the case of failure to elect on the day named, the shareholders 
 may adjourn to another time, or in the event of their failing so
 
 TRUST COMPANY ACT. 119 
 
 to do the president may call a special meeting for the purpose 
 of electing trustees, of which special meeting ten days' notice 
 shall be given by publication in at least one newspaper of general 
 circulation in the city in which such company is located. The 
 vacancies occurring in the intervals of election shall be filled by 
 the board of trustees. 
 
 Act 1898. p. 78. 
 
 Amended by Act of 1917, p. 62, changing the word "fifteen" in 
 the fourth line of the section to "twenty-five." 
 
 237. ( 2819.) Powers of Trustees. 
 
 The trustees shall have power from time to time to make and 
 establish such by-laws, rules and regulations, not inconsistent 
 with the laws of this State or the United States, as they shall 
 deem expedient for the conduct and management of the business 
 affairs and property of such company. The said trustees shall 
 elect one of their number president of the board, and may elect 
 or appoint such other officer and agents as they may deem proper, 
 and fix their compensation. 
 
 Act 1898, p. 78. 
 
 238. ( 2820.) Capital Stock. 
 
 The capital stock of the trust company may be increased from 
 time to time by vote of two-thirds of the shareholders at any 
 regular annual meeting, or special meeting called for the purpose, 
 to a sum not exceeding two million ($2,000,000.00) dollars. The 
 capital stock shall be divided into shares of one hundred 
 ($100.00) dollars each, which shares shall be deemed personal 
 property and shall be transferrable in such manner as shall be 
 prescribed by the by-laws of the company. 
 
 Act 1898. p. 78. 
 
 Section 4. Other Corporations May Acquire Like Powers. 
 
 239. ( 2821.) How Other Corporations May Acquire 
 Rights. 
 
 Any savings bank, trust, security or guarantee company having 
 a paid in capital of not less than one hundred thousand ($100,- 
 000.00) dollars, heretofore incorporated by the General Assembly 
 of this State, with authority to exercise any trust powers, may ac-
 
 120 PARK'S BANKING LAW OF GEORGIA. 
 
 quire all the rights, privileges and immunities, with the same re- 
 strictions as are specified in section three hereof in the following 
 manner: The shareholders at any regular or special meeting 
 called for that purpose may, by a vote of two-thirds of the stock- 
 holders present, pass a resolution declaring their desire to ac- 
 quire the right, privileges and immunities, subject to the restric- 
 tions specified in section three of this act, which resolution shall 
 be certified by the president and secretary or treasurer of the 
 corporation, and filed with the Secretary of State. Whereupon 
 the Secretary of State shall issue a certificate declaring that such 
 resolution having been filed, such corporation has become vested 
 by law with all the rights, powers and privileges, and subject to 
 the restrictions conferred, defined and limited by section three 
 of this act. The corporation filing such resolution shall pay into 
 the treasury of the State a fee of twenty-five ($25.00) dollars, 
 and the Secretary of State shall cause said resolution and his 
 certificate to be duly recorded. 
 
 Act of 1898, p. 98. 
 
 Bank, whether or not charter of, gave authority to act as trustee 
 of bondholders secured by mortgage, this did not authorize decree, 
 rendered in foreclosure proceedings, to be treated as a nullity, at 
 instance of purchaser under sale by receivers appointed in such case. 
 136/789 (1) (72 S. E. 158). 
 
 240. ( 2821 (a).) Corporations Chartered by Superior 
 Court May Acquire Powers of Trust Companies. 
 
 Any corporation heretofore chartered by the Superior Courts 
 of this State for the purpose of engaging in the borrowing and 
 lending of money, or dealing in real estate, mortgages, bonds, 
 and other evidences of debt, or for exercising any of the privi- 
 leges granted to trust companies in this Article, and which desires 
 to avail itself of all of the privileges of this Article, shall have 
 power to do so by securing from the Secretary of State an amend- 
 ment to the charter under which such corporation now exists, 
 which amendment shall confer upon it all the privileges of this 
 Article applicable to trust companies. 
 
 Acts 1910, p. 98. 
 
 241. (2821(b).) Directors Shall Authorize. 
 
 Before such amendment can be obtained the board of directors 
 of such corporation, at a regular meeting, shall by a majority vote, 
 authorize such amendment to the charter of such corporation. 
 
 Acts 1910, pp. 98, 99.
 
 MAY ACQUIRE; TRUST COMPANY POWERS. 121 
 
 242. (2821(c).) Capital Stock. 
 
 No corporation shall avail itself of this privilege until it has 
 actually subscribed and paid in, either in actual cash, or property 
 taken at a fair valuation, a capital stock of at least $100,000.00. 
 
 Acts 1910, pp. 98, 99. 
 
 243. ( 2821 (d).) When Provisions Become Applicable. 
 
 When such amendment to the charter has been obtained, all 
 the provisions applicable to trust companies shall thereupon apply 
 to such corporation. 
 
 Acts 1910, pp. 98, 99. 
 
 244. (2821(e).) Fee for Amendment. 
 
 The corporation filing its application for such amendment shall 
 pay into the State Treasury a fee of twenty-five dollars, and the 
 Secretary of State shall cause such amendment and his certificate 
 to be duly recorded. All such amendments granted by the Sec- 
 retary of State shall be recorded on charter book in the office of 
 the clerk of the Superior Court where such original charter was 
 granted. 
 
 Acts 1910, pp. 98, 99. 
 
 BANKS MAY ACQUIRE POWERS OF TRUST 
 COMPANIES. 
 
 (Acts 1917, p. 81.) 
 
 245. Powers of Trust Companies May Be Acquired. 
 
 Any banking company, heretofore or hereafter incorporated 
 under the Constitution and laws of this State, having and exer- 
 cising the rights, powers and privileges incident to banks, and 
 having not less than one hundred thousand dollars ,($100,000.00) 
 of capital stock subscribed and paid in, may acquire all the rights, 
 powers, privileges and immunities, subject to the liabilities and 
 restrictions conferred and imposed upon trust companies by the 
 Act of the General Assembly of Georgia approved December 23, 
 1898 ( 233 et seq.), in the manner hereinafter provided.
 
 122 PARK'S BANKING LAW of GEORGIA. 
 
 246. Petition to Set Forth What. 
 
 Any such incorporated banking company, desiring to acquire 
 the aforesaid rights, powers, privileges and immunities, shall file 
 with the Secretary of State its petition setting forth : 
 
 (a) The name of such banking company, when and by what 
 authority incorporated and its principal place of business; 
 
 (b) That it has a paid-in capital of not less than one hundred 
 thousand dollars ($100,000.00) ; 
 
 (c) That a resolution has been adopted by a majority vote of 
 its board of directors expressing the desire that such banking 
 company acquire the rights, powers, privileges and immunities, 
 subject to the liabilities and restrictions, of trust companies under 
 the aforesaid act approved December 23, 1898. 
 
 And there shall be attached to said petition as exhibitions : 
 
 (1) The certificate of the ordinary of the county in which the 
 principal office of such banking company is located or, in the ab- 
 sence or disability of the ordinary, the certificate of such other 
 official as may be authorized by law to perform the duties of the 
 ordinary, to the effect that he is satisfied, after investigation, that 
 the petitioning banking company has a paid-in capital of not less 
 than one hundred thousand dollars ($100,000.00). 
 
 (2) A copy of the resolution of its board of directors, express- 
 ing the desire to acquire such rights and privileges, certified by 
 the cashier or secretary of such banking company, under its cor- 
 porate seal, to be a true and correct extract from the minutes. 
 
 And such petition shall be signed on behalf of the banking com- 
 pany by its president or a vice-president and its corporate seal 
 shall be affixed thereto, attested by its secretary or an assistant 
 secretary; and said petition shall be verified by the oath of the 
 president or a vice-president of such banking company to the 
 effect that the facts set forth therein are true. 
 
 247. Publication of Petition. 
 
 After petition has been filed with the Secretary of State as 
 hereinbefore provided, a copy of such petition, without the ex- 
 hibits, shall be published once a week for four (4) weeks in the 
 newspaper in which the sheriff's advertisements are printed in 
 the county in which the principal office of such banking company 
 is located, and, after such publication, the petitioning banking 
 company shall file with the Secretary of State the certificate of 
 the ordinary of such county, or, in his absence or disability, the
 
 MAY ACQUIRE; TRUST COMPANY POWERS. 123 
 
 certificate of such other official as may be authorized by law to 
 perform the duties of the ordinary to the effect that a copy of 
 such petition has been published as herein required. 
 
 248. Certificate by Secretary of State. 
 
 When any such banking company shall have complied with the 
 foregoing provisions, the Secretary of State shall issue to it a 
 certificate under the seal of the State declaring its charter to 
 be amended by the acquisition of, and by having vested in it, all 
 the rights, powers, privileges and immunities, and subject to all 
 the liabilities and restrictions conferred, defined, imposed and 
 limited by the Act of the General Assembly of Georgia approved 
 December 23, 1898, providing "for the incorporation of trust 
 companies, to define their rights and powers, and for other pur- 
 poses." 
 
 249. Fee for Amendment. 
 
 The banking company filing a petition for an amendment to its 
 charter under the provisions hereof shall pay into the treasury 
 of the State a fee of twenty-five dollars ($25.00), and the Secre- 
 tary of State shall cause such petition and his certificate to be 
 duly recorded. 
 
 250. Directors to Act as Trustees. 
 
 Any banking company, amending its charter by the acquisition 
 of the powers of trust companies hereunder, shall not be regarded 
 to be managed and to exercise its corporate powers by a board 
 of trustees, but the business of such corporation shall continue 
 to be under the management and control of a board of directors, 
 who shall possess all the powers, and be subject to all the duties 
 conferred and imposed upon the directors of banking companies 
 and upon the trustees of trust companies under the laws of this 
 State. 
 
 This act was not repealed by the Banking Act of 1919. Opinion 
 of the Attorney-General, February 17, 1920.
 
 124 PARK'S BANKING LAW OF GEORGIA. 
 
 NATIONAL BANKS MAY EXERCISE TRUST 
 
 POWERS. 
 
 (Acts 1917. p. 84.) 
 
 251. Lawful to Act as Trustee. 
 
 It shall be lawful for any national bank located in this State, 
 when empowered so to do by the laws of the United States, to 
 act in this State by any and every method of appointment and in 
 any capacity whatever as trustee and as executor, administrator 
 or registrar of stocks and bonds. 
 
 252. Oath. 
 
 The oath prescribed by the laws of this State to be taken by 
 executors and administrators may be taken when a national bank 
 acts in such capacity, either by the president, or a vice-president, 
 or the cashier, or some trust officer designated for that purpose 
 by the national bank proposing to so act. The oath as trustee, if 
 required, may be taken in a similar manner. 
 
 253. Bond. 
 
 Nothing herein contained shall be considered to relieve a na- 
 tional bank from giving a bond, when such bond under the laws 
 of this State is required to be given by an individual acting in any 
 of the aforesaid capacities. 
 
 The Federal Reserve Act (December 23, 1913, 9794 (k), 
 U. S. Comp. Stat.) authorized the Federal Reserve Board to permit 
 national banks to act as trustee, executor, administrator, registrar, 
 or in any other fiduciary capacity "when not in contravention of 
 State or local law." 
 
 STATE DEPOSITORIES. 
 
 (Acts 1878-9, p. 88, as amended, 1249-1262, Park's Ann. Code.) 
 
 254. ( 1249.) State Depositories Provided for in Various 
 Cities. 
 
 The GoverfTbr shall name and appoint a solvent chartered bank 
 of good standing and credit in each of the following cities and 
 towns, to wit: In Atlanta, Athens, Augusta, Columbus, Macon,
 
 STATE DEPOSITORY ACT. 125 
 
 Savannah, Rome, Americus, Albany, Hawkinsville, Gainesville, 
 Griffin, LaGrange, Thomasville, Newnan, Cartersville, Dalton, 
 Valdosta, Milledgeville, Darien, Dawson, Cordele, Marietta, 
 Richland, Millen, Warrenton, Carrollton, Elberton, Monticello, 
 Fort Gaines, Cedartown, Jackson, Harmony Grove, Thomaston, 
 Covington, Blackshear, Waycross, Brunswick, Forsyth, Jeffer- 
 son, Washington, Quitman, Greenville, Eastman, Moultrie, Toc- 
 coa, Statesboro, Tifton, Lawrenceville, Douglas, Dublin, Madi- 
 son, Tennille, Sylvania, McRae, Cornelia, Fitzgerald, Bainbridge, 
 Blue Ridge, Mt. Vernon, Barnesville, Baxley, Hartwell, LaFay- 
 ette, Louisville, Montezuma, Pelham, Sandersville, Swainsboro, 
 Thomson, Winder, Calhoun, Jesup, Lavonia, Donaldsonville, 
 Claxton, Ashburn, Nashville, Blakely, Dallas, Perry, Fort Valley, 
 Sparta, Reidsville, Comer, Fayetteville, Ludowici, Senoia, Coch- 
 ran, Conyers, Hazelhurst, Lyons, Ocilla, Talbotton, Bremen, But- 
 ler, Cairo, Franklin, Tallapoosa, Georgetown, Gibson, Jonesboro, 
 Jeffersonville, McDonough, Ringgold, Rochelle, Pembroke, Chip- 
 ley, Colquitt, Guyton, Homerville, Jasper, Summerville, Canton 
 Edison, Gordon, Alpharetta, Decatur, Eatonton, Fairburn, Lump- 
 kin, Reynolds, Rockmart, Shellman, Uvalda, Folkston, Lincoln- 
 ton, Sylvester, Temple, Boston, Douglasville, Buford, Dahlonega, 
 Wrightsville, Camilla, Ellaville, Blairsville, Woodbury, Spring- 
 field, Irwinville, Manchester, Kingsland, Alma, Metter, Rebecca, 
 Sylvester, Vidalia, Gumming, Vienna, Adel, and Soperton, [Glen- 
 wood, Greensboro, Morgan, Pearson, and Willacoochee] * which 
 shall be known as State depositories : Provided, That in each 
 of said cities having a population of sixty-five hundred and over, 
 the Governor may name and appoint not more than two solvent 
 chartered banks of good standing and credit, which shall be known 
 and designated as State depositories. [Provided further, that in 
 each of said cities in the State of Georgia having a population of 
 15,000 and over, according to the U. S. census of 1920, the Gov- 
 ernor may name and appoint not more than three solvent chartered 
 bank? in good standing which shall be known and designated as 
 State depositories.]* 
 
 Constitutional, Act of 1879 creating State depositories held to be; 
 it did not contain more than one subject matter or matter different 
 from caption. 66/609 (1). 
 
 State depositories are not public officers. 72 Ga. 501. 
 
 *Added by Act of 1920.
 
 126 PARK'S BANKING LAW OF GEORGIA. 
 
 255. ( 1249 (a).) Second Depository in Atlanta. 
 
 Whenever the Governor, from the excess in the State deposi- 
 tory heretofore existing in the city of Atlanta, or from the 
 amount of cash on hand in the treasury, may deem it to the best 
 interest of the State, he is hereby authorized to name and appoint 
 a solvent chartered bank of good standing and credit as an addi- 
 tional depository in the city of Atlanta, subject to the terms and 
 conditions of 1249 to 1262, both inclusive, of the Civil Code, 
 and the acts amendatory thereof : Provided, That no deposit 
 shall be made with this additional depository so long as the first 
 depository in the city of Atlanta has on hand belonging to the 
 State an amount less than the maximum which the law allows. 
 
 Acts of 1901, p. 29. 
 
 256. ( 1249 (b).) Third Depository in Atlanta. 
 
 Whenever the Governor, from the excess in the State deposi- 
 tories heretofore existing in the city of Atlanta, or from the 
 amount of cash on hand in the treasury, may deem it to be the 
 best interests of the State, he is hereby authorized to appoint in 
 said city a solvent chartered bank of good standing and credit 
 as a State depository, so as to make three State depositories in 
 said city. The said bank so appointed to be subject to the terms 
 and conditions of this chapter, and the acts amendatory thereof. 
 
 Acts 1908, p. 37. 
 
 257. ( 1249 (c).) Fourth Depository in Atlanta. 
 
 Whenever the Governor, from the excess in the State de- 
 positories heretofore existing in the city of Atlanta, or from the 
 amount of cash on hand in the treasury, may deem it to the best 
 interests of the State, he is hereby authorized to appoint in said 
 city a solvent chartered bank of good standing and credit as a 
 State depository, so as to make four State depositories in said 
 city. The said bank so appointed to be subject to the terms and 
 conditions of this chapter and the acts amendatory thereof. 
 
 Acts 1911, p. 58. 
 
 258. ( 1249 (d).) Fifth Depository in Atlanta. 
 
 Whenever the Governor from the excess in the State de- 
 positories heretofore existing in the city of Atlanta, or from the
 
 STATE DEPOSITORY ACT. 127 
 
 amount of cash on hand in the treasury, may deem it to the best 
 interests of the State, he is hereby authorized to appoint in said 
 city a solvent, chartered bank of good standing and credit as a 
 State depository, so as to make five State depositories in said 
 city. The said bank so appointed to be subject to the terms and 
 conditions of this chapter and the acts amendatory thereof. 
 
 Acts 1914, p. 49. 
 
 259. Sixth Depository in Atlanta. 
 
 Whenever the Governor, from the excess in the State de- 
 positories heretofore existing in the city of Atlanta, or from 
 the amount of cash on hand in the treasury, may deem it to the 
 best interests of the State, he is hereby authorized to appoint in 
 said city a solvent chartered bank of good standing and credit, 
 as a State depository, so as to make six State depositories in said 
 city. The said bank so appointed to be subject to the terms and 
 conditions of 1294 to 1262, both inclusive, of the Code of 
 Georgia of 1910 and the acts amendatory thereof. 
 
 Acts 1918, p. 141. 
 
 260. ( 1249 (e).) Third Depository in Macon. 
 
 Whenever the Governor, from the excess in the State de- 
 positories heretofore existing in the city of Macon, or from 
 the amount of cash on hand in the treasury, may deem it to the 
 best interests of the State, he is hereby authorized to appoint in 
 said city a solvent chartered bank of good standing and credit 
 as a State depository, so as to make three State depositories in 
 said city. The said bank so appointed to be subject to the terms 
 and conditions of this chapter and the acts amendatory thereof. 
 
 Acts 1912. p. 49. 
 
 261. Another Depository in Toccoa. 
 
 Section 1249 of Volume I of the Code of 1910, providing for 
 the selection by the Governor of banks in certain cities and towns 
 therein named as State depositories, and the several acts amenda- 
 tory thereof be and the same are hereby amended so as to add 
 another bank to the town of Toccoa, in the county of Stephens, 
 State of Georgia, to the list of such cities and towns. 
 
 Acts 1916, p. 35.
 
 128 PARK'S BANKING LAW OF GEORGIA. 
 
 262. ( 1250.) Section of State Depositories, etc. 
 
 Said State depositories shall be appointed for the term of four 
 years from the date of their appointment, and shall be liable to 
 be removed by the Governor, in his discretion, for any neglect 
 of their official duty, and they shall receive no salary or fees from 
 the State of Georgia. 
 
 Acts 1878-9, p. 88; 1895, p. 22 
 
 263. ( 1251.) Contracts as to Interest to Be Paid. 
 
 The Governor shall make with depositories the most advan- 
 tageous contracts for interest, to be paid by them to the State for 
 the use of the State's money which may be deposited therein, as 
 hereinafter provided by this chapter. And in the event any de- 
 pository so named shall refuse to make satisfactory contract 
 with the Governor as to interest to be paid, he shall have au- 
 thority to remove such depository and appoint another. In the 
 event only one bank is situated in any city designated as a legal 
 depository, the Governor can place deposits in the depository 
 nearest situated with whom a satisfactory contract has been 
 made : Provided, That no officer of this State shall be allowed 
 to receive any commission, interest, or reward to himself from 
 any source for the depositing of such money in such depositories, 
 or for continuing such deposits. But the receiving of any such 
 benefit by any officer shall be a felony. 
 
 Acts 1878-9, p. 88; 1895, p. 22. 
 
 Receiver of insolvent State depository liable to the State for prin- 
 cipal sum due and interest at the contract rate to the date of the ap- 
 pointment of the receiver, and also seven per cent, per annum as 
 legal interest from the date of the receivership to the date of pay- 
 ment (one dissenting). 139/54, 55 (2) (76 S. E. 587). 
 
 264. ( 1252.) Depositories to Give Bond. 
 
 Each of said depositories shall, before entering upon the dis- 
 charge of their duties by their proper officers, execute a bond 
 with good and sufficient securities, to be fixed and to be ap- 
 proved by the Governor. Said bond shall be conditioned for the 
 faithful performance of all such duties as shall be required of 
 them by the General Assembly, or the laws of this State, and for 
 a faithful account of the money or effects that may come into 
 their hands during their continuance in office. Said bond shall be 
 filed and recorded in the executive office, and a copy thereof, cer- 
 tified by one of the Governor's secretaries, under the seal of the
 
 STATE; DEPOSITORY ACT. 129 
 
 executive department, shall be received in evidence in lieu of the 
 original in any of the courts of this State. And said bonds, when 
 given, shall have the same binding force and effect as the bond 
 now required by law to be given by State Treasurers, and, in case 
 of default, shall be enforced in like manner. In fixing the bond to 
 be given by a depository under this section, the Governor shall 
 so fix the same as to make it not less than the amount of money 
 intrusted to said depository and in no case shall a larger amount 
 of money be deposited in any bank than the amount of the bond, 
 and the Governor may at any time require additional bond, if 
 necessary, to cover fully the amount deposited or intended to be 
 deposited in such bank. 
 
 Acts 1903. p. 32; 1878-9, p. 88. 
 
 Appointment as depository, execution of bond a short time be- 
 fore, held immaterial. 72/502. 
 
 Change of officers and stockholders not affect corporate existence. 
 If there was impropriety in transfer, Governor had no notice that 
 was not equally accessible to surety, and surety not relieved on ac- 
 count of such change. 72/517 (4). 
 
 Execution issued by Governor instanter as on treasurer's bond 
 ( 224, Park's Ann. Code). 66/609 (2) ; 72/511. 
 
 False representations, by Governor, surety not relieved on ground 
 of, where he lived in city where bank located and had opportunity 
 to investigate condition of bank before signing bond. 72/517 (3). 
 
 Forged, if name of surety was, State had no lien on her property 
 and purchaser of property from her obtained good title. Whether 
 name of such surety forged, and whether she ratified signing are 
 questions of fact for jury. 72/515. Forgery of signature of one 
 surety not relieve another who entrusted bond to principal to obtain 
 the signatures of the other sureties and deliver the bond, thus en- 
 abling it to deliver the bond and to receive the public funds. 72/ 
 518 (7). See President. 
 
 Insolvent at time of selection and giving of bond, though bank 
 was, surety cannot relieve himself on ground that Governor selected 
 bank as solvent and published it as one of the depositories and that 
 surety was induced to become such by this fact. State takes bond 
 for its security and does not guarantee bank's solvency to sureties. 
 72/517 (1, 2). 
 
 Lien of bond is same as lien of treasurer's bond, as provided 
 in 218, Park's Ann. Code. It extends to choses in action, dates 
 from execution of bond, and everybody is bound to take notice of 
 it. 66/609 (2) ; 72/511; 79/159 (1) (3 S. E. 646). 
 
 Money or effects received, sureties bound to see that bank makes 
 faithful account of, whether such money or effects received from 
 tax collector or treasurer. 72/518 (5). 
 
 President of bank, purchaser of property from, charged with 
 notice that he was surety on bond. 72/501 (1). President having 
 executed bond as president and signed it individually as surety 
 could not be relieved from liability because name of surety, which 
 he furnished and which appeared on bond after his own was signed, 
 was forged ; and purchasers of property from president, who were 
 charged with notice that he was surety, could make no defense 
 which he could not make. Id., 501 (2). 
 
 Public officers, depositories are not, in sense of that term as used 
 in 278-302, inclusive, Park's Ann. Code ; they are instruments 
 9
 
 130 PARK'S BANKING LAW of GEORGIA. 
 
 or agencies sui generis and sui juris, standing on their on law as 
 embodied in this chapter; principles ruled in 66/408, on law above 
 cited relating to bonds of public officers, have no application to 
 bonds of depositories. 72/501 (3). 
 
 Recording and filing, entry of, on bond not required; recital by 
 Governor under seal of State sufficient evidence of such facts 
 unless overcome by proof. 72/502. Fact that bond was not re- 
 corded on minutes of executive office, but was referred to in execu- 
 tive orders there recorded, did not relieve surety. 72/518 (6-a). 
 
 Returns to Governor according to law, surety not relieved be- 
 cause his principal did not make, nor because Governor did not re- 
 move or discontinue the principal as a depository. 72/518 (6). 
 
 State entitled to priority of payment out of assets of insolvent 
 bank which is State despository, as against individual creditors and 
 depositors ; there is nothing in law relating to State depositories 
 that changes or modifies this right of State. 66/609 (4) ; see 
 18/65 (7-9) ; 101/244 (28 S. E. 604) ; 131/750 (2) (63 S. E. 502) ; 
 134/163 (1) (67 S. E. 803) ; 139/54, 55 (2-a) (76 S. E. 587). De- 
 positors in insolvent State depository who are indebted to it by 
 promissory notes can set off against such notes the amounts justly 
 due them on their deposits. 94/95 (21 S. E. 146). Where funds 
 arising partly from oil-inspection fees, and partly from private do- 
 nations, were deposited in his own name by treasurer of board of 
 trustees of agricultural and mechanical school, in a State depository 
 which failed, this was not such a debt due the State as created a 
 lien in its favor by virtue of its general sovereignty or under the 
 law in reference to State depositories. 137/537 (73 S. E. 825). 
 
 Sufficient, bond here was. 72/501 (3), 512. 
 
 265. ( 1253.) When Governor May Appoint New De- 
 positories. 
 
 Whenever from any cause the.. State depositories in any lo- 
 cality shall cease to operate, it shall be the duty of the Governor 
 to make another appointment, either to fill out the unexpired 
 term or to enter upon a new term of four years, as the case may 
 be. Said newly appointed depository shall have all the powers, 
 perform all the duties, and be subject to all the liabilities pre- 
 scribed for State depositories, and shall furnish a like bond in 
 which each of the sureties shall bind themselves for the entire 
 amount of the bond. In selecting any depository the Governor 
 shall not be confined to banks chartered by the State, but may, 
 if he deem it best, select any bank chartered under the National 
 Bank Act of the United States doing business in this State. 
 
 Acts 1882-3, p. 138. 
 
 266. ( 1254.) Treasurer to Advise Governor of Financial 
 Condition of State Depositories. 
 
 It shall be the duty of the Treasurer to keep advised and to 
 keep the Governor advised, from time to time, of the financial 
 condition of the various State depositories, as well as of the
 
 STATS DEPOSITORY ACT. 131 
 
 financial condition and standing of the securities on the bonds of 
 such depositories, and if at any time they shall become satisfied 
 of the insolvency of any of the depositories, or that the affairs of 
 any of said depositories are in an embarrassed condition, it shall 
 be the duty of the Governor to direct the Treasurer to withdraw 
 the money of the State from such depository, and the Governor 
 may declare the position vacant and may proceed to appoint an- 
 other bank in the same locality to act as such depository for the 
 unexpired term under the rules and regulations prescribed by law. 
 In case the Governor should be advised of the insolvency of the 
 securities on the bond of any of said depositories, it shall be 
 his duty to notify such depository to strengthen said bond, and 
 if at the end of ten days said bond is not strengthened, the Gov- 
 ernor shall declare said office vacant and proceed to fill the same 
 by new appointment. 
 
 Acts 1882-3, p. 138. 
 
 267. ( 1255.) Sureties, How Relieved. 
 
 Any surety on the bond of a State depository desiring to be 
 relieved from said bond may give notice in writing to the Gov- 
 ernor of such desire, with the reasons therefor, and the Governor 
 shall have authority, in his discretion, to relieve such surety: 
 Provided, The consent of the cosureties be first obtained in writ- 
 ing. And provided further, That the principal will furnish a new 
 surety to take the place of the surety relieved, and who will as- 
 sume all his liabilities for past and future transactions. 
 
 Acts 1882-3, p. 138. 
 
 268. ( 1256.) Amount of State's Deposit Limited to 
 Amount of Bond of Depository. 
 
 The Treasurer of this State shall not deposit at any one time, 
 or have on deposit at any one time, in any one of the depositories 
 of this State for a longer time than ten days, a sum of money be- 
 longing to this State that exceeds the bond given by said de- 
 pository to the State. The Treasurer shall check from any de- 
 pository the amount of the State's money that said depository 
 holds in excess of its bond and pay the sum into the treasury : 
 Provided, That a State depository may be allowed to hold a sum 
 greater than fifty thousand dollars, but not in excess of one 
 hundred thousand dollars, upon such depository giving a new
 
 132 PARK'S BANKING LAW OF GEORGIA. 
 
 bond to cover the maximum amount to be deposited with it, and 
 when such new bond has been executed and delivered to the Gov- 
 ernor, the old bond shall be discharged and surrendered; and 
 whenever a national bank is selected as a State depository, the 
 amount of the bond shall be double the amount of money to be 
 deposited with it. The bond to be made by the State depositories 
 may be a personal bond or may be made by a deposit with the 
 State Treasurer of United States bonds, or Georgia State bonds, 
 or either one or both of said methods. 
 
 Acts 1893, p. 135. 
 
 State has prior lien for all sums deposited although in excess of 
 the bond. 101/244 (28 S. E. 604). 
 
 269. ( 1257.) Monthly Statements of Depositories. 
 
 Depositories shall render to both the Governor and the Treas- 
 urer such monthly statements as they now are required by law to 
 make to the Treasurer. 
 
 Acts 1893, p. 135. 
 
 270. ( 1258.) Governor Authorized to Sell Bonds of De- 
 faulting Bank. 
 
 Whenever any bank which has been made a State depository 
 and has deposited bonds, shall fail to faithfully perform such 
 duties as shall be required of them by the General Assembly or 
 the laws of this State, or shall fail to faithfully account for all the 
 public moneys or effects that may have come into its hands during 
 its continuance in office, the Governor shall sell a sufficiency of 
 said bonds to reimburse the State the amounts due by the State 
 depository on account of such default. 
 
 Acts 1889, p. 177. 
 
 271. ( 1259.) Funds Subject to Check, etc. 
 
 Said depositories shall hold all funds received by them for and 
 on account of the State, subject to the check or order of the 
 State Treasurer, and shall render to the State Treasurer, on the 
 first day of every month, a statement of the money on hand be- 
 longing to the State, showing the time when and from whom 
 received, together with a statement and balance sheet showing 
 the exact condition of its account with the State Treasurer on 
 that day; and whenever any tax collector shall make a deposit
 
 STATE DEPOSITORY ACT. 133 
 
 in said depositories they shall give to said tax collector a receipt, 
 which shall be a good and sufficient voucher to said collector, and 
 they shall mail to the State Treasurer a duplicate of the receipt 
 so given to said tax collector, and so soon as the Treasurer shall 
 receive said duplicate receipt he shall issue his certificate in favor 
 of the depositing tax collector, and transmit the same to the Comp- 
 troller-General, who shall pass the amount therein mentioned to 
 the credit of said tax collector, and at once mail to him a receipt 
 for said amount. 
 
 Acts 1878-9, p. 88. 
 
 272. ( 1260.) Tax Collectors May Pay Funds at De- 
 positories. 
 
 The Governor shall, at the time of appointing the State deposi- 
 tories, make a list of the counties whose tax collectors shall be in- 
 structed to pay State funds into each depository, and said tax col- 
 lectors shall pay into no other depository than the one named by 
 the Governor, and the Governor shall also make known the appor- 
 tionment of counties by a proclamation, duly published in the 
 city where such depository is located, giving the name of the 
 depository, and the name of the counties whose tax collectors 
 shall be instructed to pay into said depository all moneys collected 
 by them for and on account of State taxes. 
 
 Acts 1878-9, p. 88. 
 
 273. ( 1261.) Tax Officers May Also Pay at Treasury. 
 
 Nothing contained in this chapter shall be construed to prevent 
 tax collectors from paying State funds directly into the State 
 treasury. And it shall not be lawful for the State Treasurer to 
 deposit such funds in any bank or other depository except those 
 established under this chapter, and he shall, by check, or other 
 proper means, draw from, said depositories such amounts only, 
 and at such times only, as the necessities of his department may 
 require. 
 
 Acts 1878-9, p. 88. 
 
 Sureties bound for faithful account of public money, whether re- 
 ceived from tax collector or treasurer. 72/518 (5). 
 Treasurer may make other deposits than taxes. 72 Ga. 518.
 
 134 PARK'S BANKING LAW OF GEORGIA. 
 
 274. ( 1262.) Treasurer's Bond Not Affected. 
 
 Nothing contained in this chapter shall be held, taken or con- 
 strued as affecting, altering or changing the provisions of existing 
 laws as to the bond of the State Treasurer. 
 
 Acts 1878-9, p. 90. 
 
 COUNTY TREASURERS MAY DEPOSIT 
 COUNTY FUNDS IN STATE DE- 
 POSITORIES. 
 
 
 
 (Acts 1917, p. 199.) 
 
 275. County Treasurer May Deposit in State Depository. 
 
 The treasurers of the several counties of this State are hereby 
 authorized to deposit in any bank or banking institution which has 
 been designated by law as a depository for the funds of the State 
 the county funds which may come into their hands as county 
 treasurers. 
 
 276. Additional Bond Required. 
 
 Any depository of the State funds so selected by the county 
 treasurer to be a depository of the county funds shall, in addition 
 to the bond given to the State as security for the money of the 
 State deposited in said bank, give to the county treasurer a bond 
 in an amount sufficient to protect him from any loss, which bond 
 shall be payable to him, and shall be conditioned to fully account 
 to him for all county moneys that may be deposited by him as 
 such treasurer under the terms of this act. 
 
 277. Interest. 
 
 The said county treasurers are hereby authorized to arrange 
 with the bank to pay interest on the money so deposited with said 
 bank, but they are not required so to do, and any money received 
 by them as interest is hereby required to be paid by them into the 
 treasury of the county.
 
 TAXATION OF BANKS. 135 
 
 TAXATION OF BANKS. 
 
 (General Tax Act of 1909, p. 70, 991, Park's Ann. Code.) 
 
 278. (991.) Banks. 
 
 No tax shall be assessed upon the capital of banks, or banking 
 associations, organized under the authority of this State, or of 
 the United States, located within this State, but the shares of the 
 stockholders of the banks or banking associations, whether resi- 
 dent or nonresident owners, shall be taxed in the county where 
 the banks or banking associations are located, and not elsewhere, 
 at their full market value, including surplus and undivided profits, 
 at the same rate provided in this Article for the taxation of 
 moneyed capital in the hands of private individuals: Provided, 
 That nothing in this section contained shall be construed to re- 
 lieve such banks or banking associations from the tax on real 
 estate held or owned by them; but they shall return said real 
 estate at its fair market value, in the county where located. Pro- 
 vided further, That where said real estate is fully paid for, the 
 value at which it is returned for taxation may be deducted from 
 the market value of their shares; and if said real estate is not 
 fully paid for, only the value at which the equity owned by them 
 therein is returned for taxation shall be deducted from the 
 market value of their shares. 
 
 The banks or banking associations themselves shall make the 
 returns of the property and the shares herein mentioned, and pay 
 the taxes herein provided. Provided further, That all property 
 used in conducting or operating a branch bank shall be returned 
 for taxation in the county where such branch bank may be lo- 
 cated. The true intent and meaning of this section is that the 
 bank itself shall return for taxation and pay the taxes on the full 
 market value of all shares of said bank stock. 
 
 The States not being permitted to tax National Banks except upon 
 their real estate, but being authorized to tax the shares of stock, 
 5219, U. S. R. S., the method of taxation provided by this sec- 
 tion was adopted to put all chartered banks, State and national, 
 upon the same basis. With slight changes in phraseology, this sec- 
 tion has appeared in each of the General Tax Acts for many years. 
 
 "This statute ( 5219, U. S. R. S.) forbids assessing officers from 
 the valuing of some property at a certain percentage of its true 
 value in money, and applying another percentage to other prop- 
 erty and a larger percentage to the shares of stock of a bank. It 
 is immaterial that shares of bank stock are assessed on that basis 
 as less than their true value in money, that rule being prescribed 
 by the State law." Pelton v. Bank, 101 U. S. 143; Cummings v. 
 Bank, 101 U. S. 153.
 
 136 PARK'S BANKING LAW OF GEORGIA. 
 
 POWER OF FOREIGN EXECUTOR, ADMIN- 
 ISTRATOR OR GUARDIAN. 
 
 (Acts of 1893, p. 36, 4105, Park's Ann. Code.) 
 
 279. Transfer of Stock, Collection of Dividends, by For- 
 eign Executor, Administrator or Guardian. 
 
 A foreign executor or administrator or foreign guardian may 
 transfer the stock of any bank or other corporation in this State 
 standing in the name of the decedent or ward, and check for de- 
 posits made by him and dividends declared on his stock, first 
 filing with the bank or corporation a certified copy of his appoint- 
 ment and qualification : Provided, however, That no stock shall 
 be transferred until the foreign executor, administrator, or 
 guardian shall have given notice once a week for four weeks in 
 the paper in which the sheriff's notices are published in the county 
 of the principal office of the corporation, of his intention to make 
 said transfer. 
 
 This section applies to executors, etc., holding appointments from 
 courts in other States of the United States, and possibly in the Ter- 
 ritories.
 
 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 A. 
 
 ABSTRACTS. 
 
 Trust company may furnish and guarantee 236 
 
 ACCEPTANCES. 
 
 By bank member of Federal Reserve System 164 
 
 Foreign and domestic 164 
 
 Fraudulently making, a felony 212 
 
 Not included in limit of bank's liability 169 
 
 Power of bank to issue and sell 136 
 
 ACCOUNT, FALSE EXPENSE. 
 
 By Superintendent, Assistant or examiner, a misdemeanor 197 
 
 ACCOUNTANTS. 
 
 Superintendent may employ, to assist in liquidating bank 60 
 
 ACT, BANKING. 
 
 Repeals conflicting laws 232 
 
 Supersedes all laws on banking 231 
 
 Takes effect when 231 
 
 Wilful violation of, a misdemeanor 223 
 
 ACTION ON REPORT. 
 
 Examination by directors '. 151 
 
 ADMINISTRATOR OR OTHER FIDUCIARY. 
 
 Deposits by, payment of 186 
 
 Foreign, may check deposits and transfer stock, etc., how 279 
 
 National Bank may act as 252 
 
 Not individually liable on stock 138 
 
 Trust company may act as 236 (12) 
 
 ADVERTISE. 
 
 Falsely, that deposits are insured, a misdemeanor 207 
 
 Private bank must, as such 4 
 
 AGENT. 
 
 Loans to 155 ; 156 
 
 Power of bank to appoint 136 
 
 AGENT, STOCKHOLDERS. 
 
 Bond of 76 
 
 Election of 76 
 
 Powers and duties of 76 
 
 Successor, how chosen 77 
 
 137
 
 138 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 AGENTS TO LIQUIDATE BANK. 
 
 Compensation of 73 
 
 Superintendent may appoint 59 
 
 Bond, shall require of 61 
 
 AGRICULTURAL OR INDUSTRIAL PRODUCTS. 
 
 Loans secured by 157 
 
 ALL CONFLICTING LAWS REPEALED 232 
 
 AMENDMENT OF CHARTER. 
 
 Allowed 89 
 
 Application for 90 
 
 Published 91 
 
 Referred to Superintendent 92 
 
 Certificate of, to be issued and recorded 95 
 
 Publication of application for 94 
 
 Conferring trust company powers 246 
 
 Examination and approval by Superintendent 93 
 
 Fee for 90 
 
 Fees for examination 34 
 
 AMENDMENTS TO BANKING LAWS. 
 
 Superintendent may suggest 22 
 
 AMOUNT OF CAPITAL STOCK. 
 
 Application for charter must show 79 
 
 APPLICANTS FOR CHARTER. 
 
 Furnish information to Superintendent 82 
 
 APPLICATION FOR AMENDMENT TO CHARTER. 
 
 Contents of 90 
 
 Examination and approval by Superintendent 93 
 
 Publication of 91 
 
 Reference to Superintendent 92 
 
 APPLICATION FOR CHARTER. 
 
 Bank 79 
 
 Contents of 79 
 
 Fee for 79 
 
 Filed how 79 
 
 Publication of 80 
 
 Referred to Superintendent 81 
 
 Trust company 233 
 
 Publication of 234 
 
 APPLICATION FOR RENEWAL OF CHARTER. 
 
 Contents of 98 
 
 Publication of 99 
 
 Referred to Superintendent 100 
 
 APPLICATION TO SURRENDER CHARTER. 
 
 Contents of . 123
 
 INDEX TO STATUTES. 139 
 
 [References Are to Sections.] 
 
 APPLICATION TO SURRENDER CHARTER Continued. 
 
 Filed how 123 
 
 Publication of 124 
 
 APPOINTMENT. 
 
 Assistant Superintendent 
 
 Superintendent 
 
 APPROVAL OF SUPERINTENDENT. 
 
 Establish branch bank 3 
 
 Voluntary liquidation 118 
 
 ASSESSMENT TO RESTORE IMPAIRED CAPITAL. 
 
 Collected by suit 50 
 
 Enforced how 50 
 
 Failure to give pledgee notice of, a misdemeanor 228 
 
 Made how 49 
 
 Pledgee must be notified of 50 
 
 ASSESSMENT OF STOCKHOLDERS. 
 
 Additional, may be made 70 
 
 Contest liability for, how 70 
 
 Enforced by execution 70 
 
 Repaid out of assets 70 
 
 Superintendent's estimate, conclusive 70 
 
 Superintendent to make 70 
 
 ASSET OF BANK. 
 
 Individual liability of stockholders is 143 
 
 Liability of incorporators is 143 
 
 ASSETS. 
 
 Distribution of, to stockholders on voluntary liquidation 122 
 
 Not sufficient to pay liabilities, bank insolvent 5 
 
 Of bank in hands of Superintendent to be inventoried 62 
 
 Not subject to attachment 53 
 
 Of national bank transferred to State bank on conversion 
 
 thereof 108, 109 
 
 Of private bank, transfer of, upon incorporation 105 
 
 Placed in hands of Superintendent by directors 52 
 
 Transfer or assignment of, after notice posted or possession 
 
 taken, void 53 
 
 Transferred on consolidation or merger 115 
 
 ASSIGNMENT. 
 
 Fraudulent, of securities of bank, a felony 212 
 
 For creditors not permitted 54 
 
 Of assets, after posting notice or possession by Superintendent, 
 
 void 53 
 
 Of assets by insolvent banks, void 190 
 
 ASSISTANT SUPERINTENDENT. 
 
 Acting as Superintendent, salary and bond of 9
 
 140 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 ASSISTANT SUPERINTENDENT Continued. 
 
 Acts where vacancy occurs in office of Superintendent 9 
 
 Appointed how 16 
 
 Bond of 17 
 
 Duties and qualifications of 16 
 
 Ex-officio examiner 16 
 
 Liable on bond for nonperformance of duty 27 
 
 Oath of 17 
 
 Salary of 18 
 
 Payable from what fund 20 
 
 Superintendent, may discharge 16 
 
 Vacancies in office of, fills 9 
 
 Term of office of 16 
 
 Traveling expenses ._ 19 
 
 Payable from what fund 20 
 
 ASSOCIATIONS. 
 
 See Building and Loan Associations ; National Banks ; Volun- 
 tary Associations. 
 
 ATLANTA. 
 
 Additional depositories in 256, 257, 258, 259 
 
 ATTACHMENT. 
 
 None where possession taken by Superintendent 53 
 
 ATTORNEY GENERAL. 
 
 Advise Superintendent 29 
 
 ATTORNEYS, AGENTS AND ACCOUNTANTS. 
 
 Compensation of, how fixed, and paid 73 
 
 Superintendent may appoint, to assist in liquidating bank 60 
 
 AUDIT EXPENSES. 
 
 Superintendent must 19 
 
 B. 
 BAD DEBTS. 
 
 Deducted from profit before dividends declared 174 
 
 Meaning of 174 
 
 BANK. 
 
 Acquire trust company powers, how 246 
 
 Business methods unsafe, Superintendent may order discon- 
 tinued 45 
 
 Call for reports mailed to 42 
 
 Closed, Superintendent's report must show 22 
 
 Definition of 1 
 
 Directors, managed by 145 
 
 Dividends, must report to Superintendent 43 
 
 Examined semiannually 30 
 
 Specially 31
 
 INDEX TO STATUTES. 141 
 
 [References Are to Sections.] 
 
 BANK Continued. 
 
 Failing to make or publish report, penalty 44 
 
 Failure of, defined 141 
 
 Includes all corporations doing banking business 1 
 
 Includes branches 1 
 
 Incorporated, how 79 
 
 Incorporated as trust company, how 247 
 
 In liquidation, Superintendent to report 78 
 
 Insolvency of, defined 5 
 
 Liability, restriction of 169 
 
 Loans, limit of 157 
 
 List of, Superintendent's report to contain 22 
 
 National, may exercise trust powers 252 
 
 No lien on its stock except for unpaid installments 88 
 
 Not include building and loan association 1 
 
 National bank 1 
 
 Private banker 3 
 
 Opening, without permit, misdemeanor 199 
 
 Possession of, when Superintendent may take 51 
 
 Powers of 136 
 
 Private banker must not advertise as 4 
 
 Right to establish branches 3 
 
 Resume business, when 5 
 
 Special reports, made to Superintendent on call 41 
 
 Stated reports by 40 
 
 Call for, mailed 42 
 
 Contents of 40 
 
 Summary of condition, Superintendent's report to contain .... 22 
 
 Surrender of, to Superintendent 52 
 
 Taken possession of, Superintendent's report must show 22 
 
 Unsafe to do business, possession may be taken 51 
 
 BANK BUREAU. 
 
 Records and property of, transferred to Department of Banking 231 
 
 BANK CHARTER. 
 
 See Charter. 
 
 BANK EXAMINERS. 
 
 See Examiners. 
 
 BANK INSOLVENT. 
 
 Order of paying debts 69 
 
 When assets insufficient to pay liabilities 5 
 
 When can not meet obligations 5 
 
 When reserve not made good 5 
 
 BANKING ACT. 
 
 Repeals conflicting laws 232 
 
 When to take effect 231 
 
 Willful violation of, misdemeanor 223
 
 142 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 BANKING, DEPARTMENT OF. 
 
 Charged with execution of laws 7 
 
 Created 7 
 
 Expenses of 20 
 
 Rules for, Superintendent may make 24 
 
 Seal of 15 
 
 BANKING HOUSE, FURNITURE AND FIXTURES. 
 
 Limitation on value of 168 
 
 BANKING LAWS. 
 
 Superintendents may suggest amendments to 22 
 
 Superseded by act 231 
 
 BANKING POWERS. 
 
 How trust company may acquire 237 
 
 BANKRUPT DEPOSITOR. 
 
 Payment of check of 184 
 
 BILLS OF EXCHANGE. 
 
 Drawn against existing values not included in limit of loans . . 157 
 
 Deposits not included in limit of bank's liability 169 
 
 BLANKS FOR EXAMINATIONS AND REPORTS. 
 
 Superintendent supplies 24 
 
 BOARD OF DIRECTORS. 
 
 See Directors. 
 
 Elected annually 145 
 
 Meetings of 148 
 
 Minutes of, how kept 148 
 
 Number and election of 145 
 
 Number of, how changed 145 
 
 Quorum 148 
 
 BOND. 
 
 Assistant Superintendent and examiners', premium on 17 
 
 National bank acting as fiduciary not relieved of 254 
 
 Of agent and assistants in liquidating bank required 61 
 
 Officers of bank, custodian of 154 
 
 State depository 263, 267, 275 
 
 How sureties may be relieved 266 
 
 State Treasurer not affected by creation of State depositories . . 273 
 
 Stockholders' agent 76 
 
 Superintendent , 12 
 
 Superintendent and examiners' suit on 27 
 
 Superintendent, premium paid by State 12 
 
 BONDS. 
 
 Bank may not purchase except certain enumerated 167 
 
 Deposited by State depository may be sold when 269 
 
 May be deposited by State depository as security for deposit . . . 267
 
 INDEX TO STATUTES. 143 
 
 [References Are to Sections.] 
 
 BONDS Continued. 
 
 U. S., State, county, district or municipal loans secured by 157 
 
 And foreign government, banks may purchase 167 
 
 BOOKS. 
 
 False entries in, making, a felony 202 
 
 BORROWING BY OFFICER OR EMPLOYEE. 
 
 For himself or his firm without approval of directors, a misde- 
 meanor 213 
 
 None, except by permission of directors 155 
 
 BRANCH BANK. 
 
 Capital set aside for and amount required 3 
 
 Cashier elected by board of directors, parent bank 3 
 
 Conducted how 3 
 
 Defined 3 
 
 Directors of 3 
 
 Established, how 3 
 
 Fees for examination of 34 
 
 Included in term "bank" 1 
 
 Officers of 3 
 
 Operated under name and control of parent bank and directors 3 
 
 Taxed how 3 
 
 BUILDING AND LOAN ASSOCIATION. 
 
 Not included in term "bank" 1 
 
 BUSINESS. 
 
 Authorized to begin, may be, when 85 
 
 Conducted unsafely, possession may be taken ." 51 
 
 Methods unsafe, Superintendent may order discontinued 45 
 
 Permit to begin 86 
 
 Resumed after possession taken, when 56 
 
 To be conducted, application for charter must show 79 
 
 Transacting, by bank without permit, misdemeanor 199 
 
 When bank to begin, information to be furnished Superintendent 82 
 
 BY-LAWS. 
 
 Lien on stock, bank can not have by 88 
 
 Of trust company 239 
 
 Power of bank to make 136 
 
 c. 
 
 CALCULATION. 
 
 Of liquidation dividends 71 
 
 Profits before paying dividends 176 
 
 CALLS FOR REPORTS. 
 
 Made by Superintendent 40 
 
 Mailed to banks . 42
 
 144 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 CAPITAL. 
 
 Allowing withdrawal of, a misdemeanor 217 
 
 Branch bank, amount required 3 
 
 Dividend may not be paid from 174, 176 
 
 Falsely representing, a felony 206 
 
 Impaired and not restored, possession may be taken 51 
 
 Impaired, assessment to restore 49 
 
 How enforced 50 
 
 Impaired, how restored 48 
 
 Surplus transferred to restore 48 
 
 Increase offered to stockholders 97 
 
 Increase of, from surplus and profits 96 
 
 Not sold for less than par and for cash 97 
 
 Increased or decreased by amendment, how 89 
 
 Minimum, not subscribed, organizers of bank personally liable.. 142 
 
 Misuse of, a misdemeanor 217 
 
 Necessary to qualify bank as trust company 246 
 
 Over-issuing, a misdemeanor 218 
 
 Paid before certificate to begin business issued 86 
 
 Paid by transfer of assets of dissolved national bank 108 
 
 Paying by note, a misdemeanor 217 
 
 Payment of 85 
 
 By transfer of assets of private bank 104 
 
 How enforced 87 
 
 Power of bank to increase or decrease 136 
 
 Required of corporation seeking trust company powers 241, 244 
 
 Required to incorporate bank 79 
 
 Sales to pay installment thereof - 87 
 
 Stock, lien of bank on 88 
 
 Trust company, amount to be paid in 233 
 
 Increase of 240 
 
 Required 237 
 
 Using to purchase shares, a misdemeanor : 216 
 
 When and how to be paid in, information furnished . . . ". 82 
 
 CASH. 
 
 Directors must count 149 
 
 CASHIER. 
 
 To give bond 154 
 
 CERTIFICATE. 
 
 Deposit, of, see Certificate of Deposit. 
 
 Granting trust company powers to bank 249 
 
 Time, see Time Certificate. 
 
 CERTIFICATE OF AMENDMENT. 
 
 To be issued and recorded 95 
 
 CERTIFICATE OF DEPOSIT. 
 
 Fraudulently issuing, a felony 212
 
 INDEX TO STATUTES. 145 
 
 [References Are to Sections.] 
 
 CERTIFICATE OF DEPOSIT Continued. 
 
 Holder of, is a depositor 2 
 
 Not to be issued except for money 162 
 
 Purchasing at a discount by officer of issuing bank, a mis- 
 demeanor 215 
 
 CERTIFICATE OF INCORPORATION. 
 
 How issued, contents of 84 
 
 Of trust company 235 
 
 CERTIFICATE OF PAYMENT. 
 
 Installments of capital 85 
 
 CERTIFICATE OF PUBLICATION. 
 
 Application for charter 83 
 
 For renewal of charter 102 
 
 To amend charter 94 
 
 CERTIFICATE OF RENEWAL. 
 
 Of charter to be issued and recorded 103 
 
 CERTIFICATE OF SUPERINTENDENT. 
 
 Approving amendment of charter 93 
 
 Renewal of charter 101 
 
 CERTIFIED CHECK. 
 
 Certification must be entered on face of check 181 
 
 Charged at once to drawer's account 181 
 
 Improperly certifying, a misdemeanor 219 
 
 Obligation of the certifying bank 181 
 
 Officers authorized to certify 181 
 
 Only when drawer has funds sufficient to cover 181 
 
 CHARGED OFF. 
 
 Certain items must be 151 
 
 Superintendent may order items 152 
 
 CHARTER. 
 
 Amended, how 89 
 
 Amendment of, application for 90 
 
 Application referred to Superintendent 92 
 
 Application for, to be published 91 
 
 Certificate of publication of 94 
 
 Certificate to be issued and recorded 95 
 
 Examination and approval by Superintendent 93 
 
 Fee for 90 
 
 To confer trust company powers 246 
 
 Application for 79 
 
 How filed 79 
 
 Referred to Superintendent 81 
 
 To be published . . .- 80 
 
 What to contain 79 
 
 10
 
 146 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 CHARTER Continued. 
 
 Application to renew, referred to Superintendent 100 
 
 Certificate . of publication 102 
 
 To be published 78 
 
 Application to surrender, publication of 124 
 
 Referred to Superintendent , 125 
 
 Cause of forfeiture of 129 
 
 Certificate, of publication of application 83 
 
 Of renewal of, to be issued and recorded 103 
 
 Changes, Superintendent's report shall show 22 
 
 Fee for 79 
 
 For trust company, fee to be paid 233 
 
 Forfeited, bank liquidated, how 131 
 
 Forfeiture of, for refusal to obey orders of Superintendent 129 
 
 Issued how 84 
 
 No suit to forfeit, except by Superintendent 132 
 
 Of trust company, application for 233 
 
 Proceedings to forfeit 130 
 
 Renewed, how 98 
 
 Renewal of, examination and certificate of Superintendent 101 
 
 Application for, publication of 99 
 
 Stockholders authorize 98 
 
 Right to renew 136 
 
 Special, how amended 89 
 
 Surrender of, certificate of publication of application 127 
 
 Examination and certificate of Superintendent 126 
 
 Or forfeiture of, not affect liability of stockholders or di- 
 rectors 144 
 
 Violating, presumption against officer or director 205 
 
 Violating provision of, a felony, 204 
 
 Ground of forfeiture 129 
 
 Superintendent may order discontinuance 45 
 
 Possession, may take 51 
 
 Violation of banking law, ground of forfeiture 129 
 
 Voluntary surrender of 117, 123 
 
 CHECK. 
 
 Certified, becomes obligation of the certifying bank 181 
 
 Charged at once to drawer's account 181 
 
 Collected but not remitted, lien on bank's assets for 178 
 
 Collecting bank not liable for, until it receives proceeds of 179 
 
 Forged or raised, liability of bank paying 188 
 
 Improperly certifying, a misdemeanor 219 
 
 May be forwarded direct to payor bank 180 
 
 Not to be certified unless drawer has funds to cover 181 
 
 Of deceased, bankrupt, or insane depositor, payment of 184 
 
 Of minor against funds deposited by him. 185 
 
 Officers authorized to certify 181
 
 INDEX TO STATUTES. '147 
 
 [References Are to Sections.] 
 
 CHECKING WITHOUT FUNDS. 
 
 A misdemeanor 226 
 
 CITY OR TOWN WHERE BANK TO BE LOCATED. 
 
 Application must show 79 
 
 CLAIMS AGAINST BANK IN HANDS OF SUPERINTEN- 
 TENDENT. 
 
 How proved 63 
 
 List of, made up and filed 67 
 
 Notice to prove 63 
 
 Objections to, how passed on 66 
 
 Presented after time fixed 68 
 
 Superintendent may reject 65 
 
 CLERK, OFFICER OR DIRECTOR. 
 
 Making false entries, a felony 202 
 
 CLERKS, BANKING DEPARTMENT. 
 
 Duties of 16 
 
 Must not owe bank 16 
 
 Qualifications of 16 
 
 Salaries of 18 
 
 Payable from what fund 20 
 
 Superintendent appoints 16 
 
 May discharge 16 
 
 Terms of office of 16 
 
 CLERK'S OFFICE OF SUPERIOR COURT. 
 
 Inventory of assets of bank in hands of Superintendent to be 
 
 filed in 62 
 
 COLLATERALS. 
 
 Loans on 161 
 
 COLLATERALS COLLECTED. 
 
 Lien for on bank's assets 177 
 
 COLLECT AMOUNTS DUE BANK. 
 
 Superintendent may, when possession taken 57 
 
 COLLECTING BANK. 
 
 Due diligence by 179 
 
 May forward check or other instrument direct to payor bank . . 180 
 
 COLLECTIONS. 
 
 Liability of bank handling 179 
 
 Made by Department, Superintendent's report to show 22 
 
 On collaterals covered by trust receipt, lien for 177 
 
 COMMERCIAL PAPER RE-DISCOUNTED. 
 
 Not included in limit of bank's liability 169 
 
 COMMISSIONS. 
 
 For depositing State's fund in depository, officer receiving guilty 
 
 of felony 262 
 
 On loans, bank officer receiving, a misdemeanor 209
 
 148 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 COMMUNICATIONS FROM SUPERINTENDENT. 
 
 Must be submitted to directors 46 
 
 COMPENSATION OF ATTORNEYS, AGENTS AND AC- 
 COUNTANTS. 
 
 How fixed and paid 73 
 
 Must be approved by Judge of Superior Court ' 73 
 
 COMPROMISE CLAIMS AGAINST BANK. 
 
 Where possession taken, Superintendent may 57 
 
 CONCEALING LOANS FROM DIRECTORS. 
 
 A misdemeanor 208 
 
 CONDITION OF BANK. 
 
 Disclosing, misdemeanor 194 
 
 False statement of, a felony 200 
 
 Report of examination prima facie evidence of 39 
 
 CONSERVE ASSETS. 
 
 Where possession taken, Superintendent may 57 
 
 CONSOLIDATION OR MERGER. 
 
 Agreement submitted to stockholders 112 
 
 Affected how Ill 
 
 Effect of 115 
 
 Fee for examination 34 
 
 Must be approved by Superintendent 112 
 
 Notice of, to be published 113 
 
 Rights of creditors and others preserved 116 
 
 Surrender of old stock and issue of new 114 
 
 CONTEMPT. 
 
 Failing to appear for examination is 32 
 
 CONTRACT DEBTS. 
 
 Rank of, in paying debts of insolvent bank 69 
 
 CONTRACT FOR MERGER OR CONSOLIDATION. 
 
 Submitted to stockholders 112 
 
 CONVERSION. 
 
 National bank info State bank 107 
 
 Private bank into State bank 104 
 
 COPARTNERSHIP. 
 
 Banks, not included in term J 
 
 CORPORATE POWERS. 
 
 Banks 136 
 
 Trust companies 236 
 
 CORPORATE STOCKS. 
 
 Bank can not invest in 166, 167 
 
 Limit of loans secured by 161
 
 INDEX TO STATUTES. 149 
 
 [References Are to Sections.] 
 
 CORPORATIONS. 
 
 Chartered by, legislature may acquire trust company powers . . 241 
 
 Superior Court may acquire trust company powers 242 
 
 CORRUPTION IN OFFICE. 
 
 Superintendent, examiner or clerk, a misdemeanor 196 
 
 COTTON EXPORTING CORPORATION. 
 
 Bank may subscribe for stock in 167 
 
 COUNTY, DISTRICT AND MUNICIPAL VALIDATED 
 BONDS. 
 
 Bank may purchase 167 
 
 Loans secured by, no limit to amount of 157 
 
 COUNTY FUNDS. 
 
 State depositories to give bond to protect 276 
 
 COUNTY TREASURERS. 
 
 May deposit in State depositories 275 
 
 To pay interest from State depositories into county treasury . . 277 
 
 CREDITORS. 
 
 Assignment for, not permitted 54 
 
 Liability of bank - to 137 
 
 Of bank in hands of Superintendent, notice to prove claims ... 63 
 
 Of national bank not affected by its conversion into State bank 110 
 
 Private bank, not affected by its incorporation 106 
 
 Paid, stockholders decide as to how liquidation completed 75 
 
 Rights of, preserved on consolidation or merger 116 
 
 CRIMES AND MISDEMEANORS. 
 
 Accepting employment from bank by Superintendent or ex- 
 aminer 198 
 
 Accepting note in payment of capital 217 
 
 Allowing capital to be withdrawn 217 
 
 Certifying checks improperly 219 
 
 Checking without funds 226 
 
 Concealing loans from directors 208 
 
 Declaring unearned dividends 217 
 
 Disclosing condition of bank by examiner 194 
 
 Embezzlement 212 
 
 Examination, false report of 195 
 
 Giving notice of 193 
 
 False entries, in books, reports or statements 202 
 
 Expense account, rendering 197 
 
 Oath on examination 201 
 
 Statement of condition 200 
 
 Falsely advertising that deposits are insured 207 
 
 Representing capital stock 206 
 
 Insolvency of bank deemed fraudulent 220
 
 150 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 CRIMES AND MISDEMEANORS Continued. 
 
 Lending to officer, director or employee without approval of di- 
 rectors 214 
 
 Libel of bank 224 
 
 Loans or gratuities to Superintendent or examiners 198 
 
 Misappropriating funds or property of bank 210-212 
 
 Misdemeanor, punishment for 230 
 
 Misuse of capital stock 217 
 
 Neglect of duty or misconduct of Superintendent, examiner 
 
 or clerk 196 
 
 Officer' or employee borrowing for himself or his firm 213 
 
 Opening bank without permit 199 
 
 Overdrafts of officers, directors or employees 211 
 
 Over-issue of capital 218 
 
 Private banker, using unauthorized name, failing to provide 
 
 signs, etc., 227 
 
 Purchasing bank's obligations at a discount 215 
 
 Shares with capital 216 
 
 Receiving commission on loans 209 
 
 Deposits by insolvent bank 221 
 
 Refusing to make statements or reports 203 
 
 Slander of bank 225 
 
 Stockholder failing to give pledgee notice of assessment 228 
 
 Transfers to hinder, delay or defraud creditors 222 
 
 Violating charter of bank 204 
 
 Presumption against officer 205 
 
 Wilful violation of banking act 223 
 
 D. 
 
 DAMAGES, CLAIMS FOR. 
 
 Rank of, in paying debts of insolvent bank 69 
 
 DEATH OF SUPERINTENDENT. 
 
 Assistant acts 9 
 
 DEBTS. 
 
 Bad, to be deducted from profits before dividends declared .... 174 
 
 Due county or city, rank of 69 
 
 State, priority of 69 
 
 Of insolvent bank, order of paying 69 
 
 DECEASED DEPOSITOR. 
 
 Payment of deposit of 192 
 
 Check of 184 
 
 DECLARING UNEARNED DIVIDENDS. 
 
 A misdemeanor 217 
 
 DECREASE CAPITAL STOCK 
 
 Power of bank to . 136
 
 INDEX TO STATUTES. 151 
 
 [References Are to Sections.] 
 
 DEFINITION OF. 
 
 Bad debts 174 
 
 Bank 1 
 
 Branch bank 3 
 
 Demand deposits 171 
 
 Failure of bank 141 
 
 Insolvency 5 
 
 Surplus 6 
 
 Undivided profits 6 
 
 DEMAND. 
 
 Certificates, holders of, depositors 2 
 
 Deposits, meaning of 171 
 
 DEPARTMENT OF BANKING. 
 See Banking, Department of. 
 
 DEPOSIT. 
 
 Certificate of, not to be issued except for money 162 
 
 Demand, meaning of 171 
 
 Of funds, by Superintendent 20 
 
 Trust funds, trust company may accept 236 
 
 DEPOSITOR. 
 
 Assessment of stockholders to pay 70 
 
 Deceased, bankrupt, or insane, payment of check of 184 
 
 Payment of deposit of 192 
 
 Definition of 2 
 
 Holder of certificate of deposit is 2 
 
 Liability of stockholders to 137 
 
 Of bank in hands of Superintendent, notice to turn in pass 
 
 books 64 
 
 Rank of, in paying debts of insolvent bank 69 
 
 Right of, preserved on consolidation or merger 116 
 
 DEPOSITORIES. 
 
 See State Depositories. 
 DEPOSITS. 
 
 Bank in voluntary liquidation must deposit funds to cover 121 
 
 Bank in liquidation, Superintendent to report 78 
 
 By agent or fiduciary, payment of 186 
 
 Corporation receiving, included in term bank 1 
 
 Foreign administrator or executor may check 279 
 
 In bank in hands of Superintendent, list made and filed 67 
 
 Insolvent bank for itself or its stockholders, void 190 
 
 Unclaimed, shall be deposited for owners 74 
 
 Insured, falsely advertising, a misdemeanor 207 
 
 In State depositories limited to amount of bond 267 
 
 In two names, payment of 183 
 
 Minors 185 
 
 Not included in limit of bank's indebtedness . 169
 
 152 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 DEPOSITS Continued. 
 
 On pass books agreeing with books of bank, prima facie correct 64 
 
 Power of bank to receive and pay out 136 
 
 Receiving, by insolvent bank, a felony 221 
 
 Savings, rules governing 191 
 
 Special, power of bank to receive 136 
 
 Trust company may not receive unless incorporated as bank . . 237 
 
 Trust, payment of *. 187 
 
 Unclaimed, Superintendent's report must show 22 
 
 DILIGENCE, DUE. 
 
 On part of collecting bank ^ 179 
 
 To forward check direct to payor bank 180 
 
 DIRECTORS. 
 
 Action on report of examination to be certified to Superin- 
 tendent 151 
 
 Board of, see Board of Directors. 
 
 Communications from Superintendent must be submitted to ... 46 
 
 Concealing loans from, a misdemeanor 208 
 
 Elected annually 145 
 
 Examination, action on report of 151 
 
 Report of, spread on minutes 149 
 
 What to contain 150 
 
 Failure to make 152 
 
 Falsely representing capital stock, guilty of felony 206 
 
 First, those named in application for charter 86 
 
 Forfeiture of office 146 
 
 Liability of, for, allowing excess loan 158 
 
 Not affected by surrender or forfeiture of charter 144 
 
 Loans to, must be secured 156 
 
 Making loan or gratuity to, or employing Superintendent or 
 
 examiner, guilty of misdemeanor 198 
 
 False entries guilty of a felony 202 
 
 May call meeting of stockholders for voluntary liquidation 117 
 
 Declare dividends, when 173 
 
 Surrender possession to Superintendent 52 
 
 Meeting of 148 
 
 Quorum 148 
 
 Minutes, how kept 148 
 
 Must be submitted to examiners 148 
 
 Must acknowledge orders of Superintendent 45 
 
 Examine bank semiannually 149 
 
 Expressly authorize loans to officers and employees 155 
 
 Names of first, to be furnished Superintendent 82 
 
 Number and election 145 
 
 Of, application for charter must show 79 
 
 How changed 145 
 
 Oath of 147 
 
 Filed with Superintendent 147
 
 INDEX TO STATUTES. 153 
 
 [References Are to Sections.] 
 
 DIRECTORS Continued. 
 
 Obligation of bank cannot purchase for less than face value . . 170 
 
 Of bank with trust powers act as trustees 251 
 
 Of branch bank 3 
 
 Officers of bank, bond, shall require of * 154 
 
 Power of bank to increase or decrease number of 136 
 
 To merge or consolidate Ill 
 
 Presumed to know of violation of charter 205 
 
 Qualifications of 146 
 
 Refusing to make reports of statements, guilty of misdemeanor 203 
 
 Set aside surplus 6 
 
 To call meeting to assess to restore impaired capital 49 
 
 To elect officers 153 
 
 Transacting business before permit issued to bank, guilty of 
 
 misdemeanor 199 
 
 Verification of reports by 40 
 
 Verifying false statement of condition, guilty of a felony 200 
 
 Violating charter, guilty of a felony 204 
 
 DISABILITY OF SUPERINTENDENT. 
 
 Assistant acts 9 
 
 DISCLOSING CONDITION OF BANK. 
 
 Obtained by examination, a misdemeanor 194 
 
 DISCOUNT. 
 
 Its obligation at more than legal rate, bank can not 170 
 
 Of commercial paper owned by borrower not included in his 
 
 line of credit 157 
 
 Paper for officer, director or employee without approval of 
 
 directors, a misdemeanor 214 
 
 Power of bank to 136 
 
 DISCOUNTING. 
 
 Bank paper, a misdemeanor, when 215 
 
 DISQUALIFIED TO 'HOLD OFFICE. 
 
 Superintendent or examiner who accepts loan, gratuity or em- 
 ployment from bank, is 198 
 
 DISSOLUTION. 
 
 Bank 128 
 
 Not affect liability of stockholders or directors 144 
 
 National bank for conversion into State bank 107 
 
 DIVIDENDS. 
 
 Declaring, unearned, a misdemeanor 217 
 
 Foreign administrator or executor may check for, how 279 
 
 How profits must be calculated before paying 176 
 
 Liquidation, disputed claims included in calculation of 71 
 
 How paid 71 
 
 Unclaimed, deposited for creditors 74
 
 154 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 DIVIDENDS Continued. 
 
 Must be reported to Superintendent 43, 173 
 
 Not declared, if reserve not maintained 172 
 
 Except from profits 174, 176 
 
 Not paid when surplus impaired 175 
 
 Paid to creditors, Superintendent's report must show 22 
 
 Unearned, prohibited 174 
 
 When may be declared 173, 174, 175, 176 
 
 DOMESTIC ACCEPTANCES. 
 
 By bank members Federal Reserve System 164 
 
 Foreign and 164 
 
 DOUBLE LIABILITY OF STOCKHOLDERS. 
 
 To depositors 137 
 
 DRAFT COLLECTED BUT NOT REMITTED. 
 
 Lien on bank's assets for 178 
 
 DUTIES. 
 
 Neglect of, by Superintendent, assistant, or examiner, a misde- 
 meanor 196 
 
 DUTIES AND POWERS. 
 
 Of stockholders' agent 76 
 
 E. 
 EFFECT OF. 
 
 Consolidation or merger 115 
 
 Conversion of national bank into State bank 109 
 
 Posting notice or possession by Superintendent 53 
 
 ELECTION. 
 
 Directors 145 
 
 Stockholders' agent 76 
 
 EMBEZZLEMENT. 
 
 By officer or employee, a felony 212 
 
 EMERGENCY. 
 
 Bank may be authorized to borrow in excess of limit to meet . . 169 
 
 EMPLOYEES OF BANK. 
 
 Loans to 155, 156 
 
 Overdrafts, liability for 160 
 
 Power of bank to appoint - 136 
 
 Superintendent may remove 47 
 
 EMPLOYMENT OF SUPERINTENDENT OR EXAM- 
 INER. 
 By bank, misdemeanor 198 
 
 ENDORSEMENTS OF CHECKS AND DRAFTS. 
 
 Not included in limit of bank's liability 169
 
 INDEX TO STATUTES. 155 
 
 {References Are to Sections.] 
 
 ENFORCEMENT. 
 
 Of payment of capital 87 
 
 ENTRIES. 
 
 False, in books, statements or reports, making, a felony 202 
 
 Fraudulently omitting, a felony 202 
 
 ESTATES. 
 
 Liable on stock assessments 138 
 
 Trust company may manage 236 
 
 EVIDENCE. 
 
 Of debt, purchasing, at a discount by officer of issuing bank, 
 
 a misdemeanor 215 
 
 Paper under seal of department as 15 
 
 Reports of examination, prima facie 39 
 
 Reports of Superintendent and examiners, prima facie 26 
 
 EXAMINATION. 
 
 By directors 149 
 
 Action on report of 151 
 
 Contents of report of 150 
 
 Failure to make 152 
 
 Report of, must be furnished Superintendent 149 
 
 Report of, spread on minutes 149 
 
 By Superintendent before amendment of charter 93 
 
 Before renewal of charter granted 101 
 
 Court, contempt of, witness failing to appear 32 
 
 Expenses of, record of, Superintendent must keep 36 
 
 False report of, by examiner, a felony 195 
 
 Fees for 34 
 
 Collected, how 35 
 
 Record of, Superintendent must keep 36 
 
 Giving notice of, misdemeanor 193 
 
 "Information obtained by, kept secret 38 
 
 Not at stated times 37 
 
 Of bank in voluntary liquidation 120 
 
 What to include 30 
 
 Of branch bank, fees for 34 
 
 On oath, examiners may make : 32 
 
 Private bank seeking incorporation 104 
 
 Refusing to permit, possession may be taken 51 
 
 Reports of, filed in Superintendent's office 25 
 
 Given to Federal Reserve Bank 38 
 
 Prima facie evidence 39 
 
 Written, filed 33 
 
 Special fees for 34 
 
 May be ordered, when 31 
 
 Summary of, published in Superintendent's report 38 
 
 Time of, kept secret 37
 
 156 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 EXAMINATION Continued. 
 
 To be made before permit to begin business issued 86 
 
 Semi-annually 30 
 
 EXAMINER. 
 
 Accepting loan, gratuity or employment from bank, guilty of 
 
 misdemeanor 198 
 
 Bond of 17 
 
 Disclosing condition of a bank, guilty of a misdemeanor 194 
 
 Duties of 16 
 
 Ex-officio Assistant Superintendent is 16 
 
 Giving notice of examination, guilty of a misdemeanor 193 
 
 Liable on bond for non-performance of duty 27 
 
 Making false report of examination of a bank, guilty of a 
 
 felony 195 
 
 May compel attendance for purpose of examination 32 
 
 Minute book submitted to 148 
 
 Must not owe bank 16 
 
 Neglect of duty, or misconduct by, a misdemeanor 196 
 
 Not disclose information obtained by examination 38 
 
 Oath of 17 
 
 Oaths, may administer 32 
 
 Qualifications of 16 
 
 Rendering false expense account, guilty of a misdemeanor .... 197 
 
 Reports, prima facie evidence 26 
 
 Salary of 18 
 
 Scope of investigation 30 
 
 Special, Superintendent may appoint 24 
 
 Superintendent appoints 16 
 
 May discharge 16 
 
 To keep time of visit for examinations secret 37 
 
 Traveling expenses of 19 
 
 Payable from what fund 20 
 
 EXCESS LOAN. 
 
 Liability'of directors for allowing 158 
 
 Superintendent may order reduced to legal limit 157 
 
 EXCHANGE. 
 
 Power of bank to buy and sell T 136 
 
 EXECUTION. 
 
 Superintendent may issue, for fees 35 
 
 To collect assessment of stockholders 70 
 
 EXECUTORS OR OTHER FIDUCIARIES. 
 
 Deposits by, payment of 186 
 
 Foreign, may check deposits and transfer stock, etc., how 279 
 
 National bank may act as 252 
 
 Not individually liable on stock 138 
 
 Trust company may act as 236 (12)
 
 INDEX TO STATUTES. 157 
 
 [References Are to Sections.] 
 
 EXPENSE ACCOUNT. 
 
 False, Superintendent or examiner rendering, guilty of misde- 
 meanor 197 
 
 EXPENSE OF PUBLISHING AND MAILING. 
 
 Superintendent's reports 23 
 
 EXPENSES. 
 
 Must be deducted from profits before dividend declared 176 
 
 Of department, how paid 20 
 
 Of liquidation, rank of, in distribution of assets 69 
 
 Of Superintendent's office paid by State 14 
 
 Traveling, of officers of department 19 
 
 Payable from what fund 20 
 
 F. 
 FAILURE OF BANK. 
 
 Denned 141 
 
 FAILURE OF DIRECTORS. 
 
 To make examination 152 
 
 FALSE EXPENSE ACCOUNT. 
 
 Superintendent or examiner rendering, guilty of misdemeanor.. 197 
 
 FALSE ENTRIES. 
 
 In books, reports or statements, making, a felony 202 
 
 FALSE OATH. 
 
 On examination, making, a felony 201 
 
 FALSE STATEMENT. 
 
 As to solvency of bank, a misdemeanor 224, 225 
 
 Of condition, verifying, a felony 200 
 
 FALSELY ADVERTISING. 
 
 That deposits are insured, a misdemeanor 207 
 
 FALSELY REPRESENTING. 
 
 Capital stock, a felony 206 
 
 FEDERAL RESERVE BANK. 
 
 Bank may purchase stock in 167, 182 
 
 Banks, members of system, may conform to requirements of ... 182 
 Report of examinations of member given to 38 
 
 FEDERAL RESERVE SYSTEM. 
 
 Acceptances by member bank 164 
 
 Reserve required of member bank 171 
 
 FEES. 
 
 Attorneys, agents and accountants, how fixed and paid 73 
 
 Collected used for expenses of department 11 
 
 Examination, how collected 35 
 
 Of branch bank 34 
 
 Schedule of . 34
 
 158 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 FEES Continued. 
 
 For amendment of special charter 90 
 
 Granting trust company powers to bank 250 
 
 Powers to other corporations 241, 246 
 
 Issuing charter of bank 79 
 
 Renewal of charter 98 
 
 Record of, Superintendent must keep 36 
 
 Special examination 34 
 
 Solicitors general for representing Superintendent 28 
 
 Superintendent shall not receive 11 
 
 Trust company charter 233 
 
 FIDUCIARIES. 
 
 Liabilities for unauthorized investments in bank stock 138 
 
 Not individually liable on stock 138 
 
 FIDUCIARY DEBTS. 
 
 Rank of 69 
 
 FIDUCIARY DEPOSITS. 
 
 By payment of 186 
 
 FISCAL AGENT. 
 
 Trust company may act as 236 
 
 FOREIGN ACCEPTANCES. 
 
 By bank member of Federal Reserve Sytem 164 
 
 FOREIGN AND DOMESTIC ACCEPTANCES 164 
 
 FOREIGN GOVERNMENTS. 
 
 Bonds of, banks may purchase 167 
 
 FORFEITS OFFICE. 
 
 Superintendent or examiner accepting loan, gratuity or employ- 
 ment from bank 198 
 
 FORFEITURE OF CHARTER. 
 
 Causes of 129 
 
 Liquidation in cases of 131 
 
 No suit for, except by Superintendent 132 
 
 Not affect liability of stockholders or directors 144 
 
 Proceedings for 130 
 
 FORM OF REPORT. 
 
 Prescribed by Superintendent * 40 
 
 FORMS. 
 
 Prescribed by Superintendent 24 
 
 FORGED OR RAISED CHECKS. 
 
 Liability of bank paying 188 
 
 FRAUDULENT. 
 
 Check, giving of, a misdemeanor 226 
 
 Insolvency of bank deemed to be 220 
 
 Transfers, a misdemeanor 222
 
 INDEX TO STATUTES. 159 
 
 [References Are to Sections.] 
 
 FRAUDULENTLY. 
 
 Issuing certificate of deposit, draft, acceptance or other paper, 
 a felony 212 
 
 Obtaining funds or property of bank by officer or employee, a 
 felony 212, 210 
 
 Transferring paper of bank, a felony 212 
 
 FUNDS OF DEPARTMENT. 
 
 Used for expenses only 20 
 
 Where deposited 20 
 
 FUNDS OF INSOLVENT BANK. 
 
 To be deposited 72 
 
 G. 
 
 GIFTS OR GRATUITIES. 
 
 Receiving, for procuring loan, a misdemeanor 209 
 
 GOVERNOR. 
 
 Appoints State depositories 255 
 
 Superintendent 8 
 
 Contracts with State depository for interest 262 
 
 Designates counties whose collectors deposit in State de- 
 positories 271 
 
 May remove from office Superintendent, examiner or clerk for 
 
 neglect, misconduct or corruption 196 
 
 State depositories 261 
 
 Superintendent, when 10-13 
 
 Superintendent's reports made to 21 
 
 GRAND JURIES. 
 
 Superintendent to submit violations of laws to 229 
 
 GRATUITY. 
 
 For procuring loan, receiving, a misdemeanor 209 
 
 To Superintendent or examiner, granting, a misdemeanor 198 
 
 GUARANTEE. 
 
 Real estate loans, trust company may 236 
 
 Titles to real estate, trust company may 236 
 
 GUARANTY FUND. 
 
 Of trust company, how invested 236 
 
 GUARDIAN. 
 
 Deposits by, payment of 186 
 
 For minors, trust company may act as 236 
 
 Not individually liable on stock 138 
 
 I. 
 IMPAIRED CAPITAL. 
 
 Assessment to restore 49 
 
 Enforced how . 50
 
 160 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 IMPAIRED CAPITAL Continued. 
 
 Must be restored 48 
 
 Not made good, possession may be taken 51 
 
 Where stock sold to pay installment 87 
 
 INCORPORATION. 
 
 Certificate of, contents of 84 
 
 Effect of 105 
 
 Method of 79 
 
 Not affect creditors or depositors 106 
 
 Of private bank 104 
 
 Term of 136 
 
 INCORPORATORS. 
 
 Liability of, enforced only by Superintendent 143 
 
 Is asset of bank 143 
 
 Number required 79 
 
 INCREASE OF CAPITAL. 
 
 From surplus and profits 96 
 
 Offered to stockholders 97 
 
 Power of bank to 136 
 
 Sold only for cash and not less than par 97 
 
 INDEBTEDNESS OF BANK. 
 
 Limitation of 169 
 
 INDIVIDUAL LIABILITY. 
 
 Of stockholders to depositors 137 
 
 INDUSTRIAL PRODUCTS. 
 
 Loans secured by 157 
 
 INFORMATION. 
 
 To be furnished Superintendent by applicants for charter 82 
 
 INJUNCTION. 
 
 Against Superintendent 58 
 
 INSANE DEPOSITOR. 
 
 Payment of check of 184 
 
 INSOLVENCY OF BANK. 
 
 Defined 5 
 
 Deemed fraudulent 220 
 
 Transfers after or in contemplation of, void 190 
 
 INSOLVENT BANK. 
 
 Funds of, to be deposited 72 
 
 Order of paying debts of 69 
 
 Receiving deposits, a felony 221 
 
 Transfers to hinder, delay or defraud by, a misdemeanor 222 
 
 INSTALLMENTS OF CAPITAL. 
 
 Lien on stock for, unpaid 88 
 
 Payment of 85
 
 INDEX TO STATUTES. 161 
 
 [References Are to Sections.] 
 
 INSURED. 
 
 Falsely advertising that deposits are, a misdemeanor 207 
 
 INTEREST. 
 
 Accrued but unpaid, not included in profits 176 
 
 Contract with State depository for 262 
 
 On county funds deposited with State depositories 277 
 
 On unclaimed liquidation dividends and deposits, how applied . . 74 
 Paid or accrued on bank's obligations deducted from profits be- 
 fore dividend declared 176 
 
 Rate not exceeding eight per cent 163 
 
 INVENTORY OF ASSETS. 
 
 Of bank in hands of Superintendent to be made and filed 62 
 
 Subject to inspection 62 
 
 INVESTIGATION OF APPLICATION FOR CHARTER. 
 
 By Superintendent 81 
 
 INVESTMENTS. 
 
 Unauthorized, corporate stocks and commercial products are.. 166, 167 
 
 J. 
 JANUARY FIRST, 1920. 
 
 Banking Act takes effect on 231 
 
 JUDGE SUPERIOR COURT. 
 
 To issue subpoena for bank officer and punish for contempt, 
 
 when 32 
 
 JUDGMENTS. 
 
 Failure to pay, possession may be taken 51 
 
 Liens and, against insolvent bank, order of paying 69 
 
 Permitted by insolvent bank, void .... 190 
 
 L. 
 LAND. 
 
 Limit on loans on 15S 
 
 Purposes for which bank may purchase and hold 168 
 
 LAWS. 
 
 All banking repealed and superseded by Banking Act 231, 232 
 
 Banking, Superintendent may suggest amendment to 22 
 
 Conflicting with Banking Act repealed 232 
 
 Violation of, possession may be taken 51 
 
 To be reported to grand jury 229 
 
 LEGAL PROCEEDINGS AGAINST BANK. 
 
 Not lie when possession taken by Superintendent 53 
 
 LEND MONEY. 
 
 Power of bank to ^ 136 
 
 LENDING TO OFFICER. 
 
 Director or employee without approval of directors, a misde- 
 meanor '. 214 
 
 II
 
 162 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 LIABILITIES. 
 
 Bank unable to meet, insolvent 5 
 
 LIABILITY OF BANK. 
 
 Limit of bank 169 
 
 Paying forged or raised checks 188 
 
 To creditors 137 
 
 LIABILITY OF DIRECTORS. 
 
 For allowing excess loan 158 
 
 LIABILITY OF STOCKHOLDERS. 
 
 Asset of bank 143 
 
 Enforced only by Superintendent 143 
 
 Not included in limit of bank's indebtedness 169 
 
 On failure of bank 140 
 
 To depositors 137 
 
 LIBEL OF BANK. 
 
 A misdemeanor 224 
 
 LIEN ON BANK'S ASSETS. 
 
 For check collected, but not remitted 178 
 
 For collaterals collected but not remitted 177 
 
 LIEN ON STOCK. 
 
 Bank has none, except for installments due thereon 88 
 
 For unpaid installments thereon 88 
 
 LIMIT OF LOANS. 
 
 On corporate stock 161 
 
 On real estate 159 
 
 Secured and unsecured 157 
 
 LIMITATION ON LIABILITY. 
 
 Of bank 169 
 
 LIQUIDATE BANK. 
 
 Where possession taken, Superintendent may 57 
 
 LIQUIDATION. 
 
 Agent, etc., appointed, Superintendent shall require bond 61 
 
 Attorneys, etc., necessary, Superintendent may employ 60 
 
 Dividends, how paid 71 
 
 Expenses, rank of, in distribution of assets of insolvent bank . . 69 
 
 Fees for examination 34 
 
 No suit for, except by Superintendent 132 
 
 Voluntary, and dissolution, how accomplished 117 
 
 Approval of Superintendent necessary 118 
 
 Assets distributed to stockholders 122 
 
 Examination of and reports by bank in 120 
 
 Notice of, to be published 119 
 
 Unpaid deposits and claims, deposit of funds to cover 121 
 
 Where charter forfeited 131
 
 INDEX TO STATUTES. 163 
 [References Are to Sections.] 
 
 LIST OF CLAIMS. 
 
 Against bank in hands of Superintendent, made and filed by 
 
 Superintendent 67 
 
 LIST OF OFFICERS. 
 
 To be furnished Superintendent 153 
 
 LIST OF STOCKHOLDERS. 
 
 To be sent to Superintendent 189 
 
 LIVE STOCK. 
 
 Loans secured by 157 
 
 LOANS. 
 
 Bank may not make, if reserve below limit required 172 
 
 Upon security of its own stock 165 
 
 Concealing from directors, a misdemeanor 208 
 
 Excess, liability of directors for allowing 158 
 
 Superintendent may order reduced to legal limit 157 
 
 Limit of 157 
 
 Not apply to discount of commercial paper owned by bor- 
 rower 157 
 
 Where secured by agricultural, manufactured, industrial 
 
 products or live stock 157 
 
 Where secured by bonds of United States, State, 
 
 county, districts or municipalities 157 
 
 Not include discount of bills drawn against existing values 157 
 Not include liability of endorsers or drawers of checks or bills 
 
 deposited or cashed 157 
 
 On agricultural, manufactured, industrial products or live stock, 
 
 limit of : 157 
 
 On bonds of United States, State, counties, districts or munici- 
 palities, no limit on 157 
 
 On corporate stock, limit of 161 
 
 On real estate, limit of 159 
 
 Or personal property, trust company may make 236 
 
 On stock when loans to corporation included in limit of 161 
 
 Receiving commission on, a misdemeanor 209 
 
 Secured, limit of 157 
 
 To officer include loans to partnership of which he is member.. 155 
 
 To officers or employees of banks 155, 156 
 
 A misdemeanor, when 214 
 
 None, except on security 156 
 
 To person include those to partnership of which he is a member 157 
 To Superintendent or examiner, bank officer making, guilty of 
 
 misdemeanor 198 
 
 LOSSES. 
 
 Charged to surplus, when 175 
 
 Deducted from profits before declaring dividends 176 
 
 Include certain past-due debts 176
 
 164 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 M. 
 MACON. 
 
 Additional depositories in 260 
 
 MANDAMUS. 
 
 Against Superintendent 133 
 
 Exceptions 135 
 
 Trial and judgment 134 
 
 MANUFACTURED PRODUCTS. 
 
 Loans secured by 157 
 
 MARRIED WOMEN. 
 
 Trusts for, trust company may execute 236 
 
 .MEETINGS OF STOCKHOLDERS. 
 
 For election of directors 145 
 
 To assess to restore impaired capital 49 
 
 When creditors of bank taken charge of by Superintendent paid 75 
 
 MEETINGS OF DIRECTORS 148 
 
 How called 148 
 
 MERCHANDISE. 
 
 Farm or manufactured products, bank can not invest in 166 
 
 MERGER OR CONSOLIDATION. 
 
 Agreement submitted to stockholders 112 
 
 Effect of 115 
 
 How effected Ill 
 
 Must be approved by Superintendent 112 
 
 Notice of, to be published 113 
 
 Rights of creditors and others preserved 116 
 
 Surrender of old stock and issue of new 114 
 
 MINORS. 
 
 Deposits by 185 
 
 MINUTE BOOK. 
 
 Must be submitted to examiners 148 
 
 MINUTES. 
 
 Communications from Superintendent must be entered on 46 
 
 Of directors, how kept 148 
 
 Orders of Superintendent must be entered on ' 45 
 
 Report of directors' examination must contain 149 
 
 MISAPPROPRIATION. 
 
 Of funds or property, a felony 210, 212 
 
 MISCONDUCT OR NEGLECT OF DUTY. 
 
 By Superintendent, examiner or clerk, a misdemeanor 196 
 
 MISDEMEANOR. 
 
 Punishment for 230
 
 INDEX TO STATUTES. 165 
 [References Are to Sections.] 
 
 MISUSE OF CAPITAL. 
 
 A misdemeanor 217 
 
 MUNICIPAL, COUNTY AND DISTRICT BONDS. 
 
 Bank may purchase 167 
 
 Loans secured by, no limit to amount of 157 
 
 MUNICIPAL OR CORPORATE BONDS. 
 
 Trust company may act as trustee for 236 
 
 N. 
 NAME. 
 
 Application for charter must show 79 
 
 How changed 89 
 
 Of private bank 4 
 
 NATIONAL BANK. 
 
 Acting as fiduciary, bond of 254 
 
 As State depository, bond of 267 
 
 Authorized to act as trustee, executor, administrator or regis- 
 trar 252 
 
 Conversion into State bank, examination by Superintendent . . . 108 
 
 Converted into State bank, still subject to suit on claim against it 110 
 
 Directors become directors of State bank 109 
 
 Creditors of, not affected by conversion into State bank 110 
 
 Effect of conversion into State bank 109 
 
 How converted into State bank 107 
 
 May be State depository 264, 267 
 
 Not included in term "bank" 1 
 
 Oath as fiduciary, by whom taken 253 
 
 Suits against, not abate by its conversion into State bank 110 
 
 NEGLECT OF DUTY. 
 
 Or misconduct of Superintendent, examiner or clerk, a misde- 
 meanor .' 196 
 
 NEGOTIABLE PAPER. 
 
 Power of bank to buy and sell 136 
 
 NOTE, IN PAYMENT OF CAPITAL. 
 
 Accepting, a misdemeanor 217 
 
 NOTICE. 
 
 Assessment to restore capital must be given pledgee 50 
 
 Call for reports, mailing is 42 
 
 Examination, of, misdemeanor 193 
 
 Merger or consolidation to be published 113 
 
 Stockholders' meeting after' creditors paid, how given 75 
 
 Surrender of possession to Superintendent 52 
 
 Effect of 53 
 
 Taking possession of, bank Superintendent must give 55 
 
 Voluntary dissolution to be published 119
 
 166 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 NOTICE TO. 
 
 Claimant or depositor of rejection of claim 65 
 
 Creditor of bank in hands of Superintendent to be given 63 
 
 NUMBER OF DIRECTORS. 
 
 Application for charter must show 79 
 
 How changed 145 
 
 Power of bank to change 136 
 
 NUMBER OF SHARES. 
 
 Application for charter must show 79 
 
 Required to qualify directors 146 
 
 O. 
 OATH. 
 
 Examination on, made by examiners 32 
 
 False, on examination, making, a felony 201 
 
 Of Assistant Superintendent 17 
 
 Directors 147 
 
 Filed with Superintendent 147 
 
 Officer of national bank acting as fiduciary 253 
 
 Superintendent 12 
 
 OBJECTIONS TO ALLOWANCE OF CLAIMS. 
 
 Against bank in hands of Superintendent 66 
 
 OBLIGATIONS. 
 
 Bank may not purchase its own, at less than par 170 
 
 Purchasing at a discount, a misdemeanor 215 
 
 OFFICE OF SUPERINTENDENT 14 
 
 Open daily 14 
 
 OFFICE. 
 
 Superintendent's, term of 8 
 
 OFFICE, PRINCIPAL. 
 
 How changed 89 
 
 OFFICERS. 
 
 Agents and employees, power of bank to appoint 136 
 
 Superintendent may retain in liquidating bank 60 
 
 Authorized to certify check 181 
 
 Bond, must give 154 
 
 Borrowing by, a misdemeanor, when 213 
 
 Directors to elect 153 
 
 Or clerks making false entries, guilty of a felony 202 
 
 Refusing to make statements or reports, guilty of mis- 
 demeanor 203 
 
 Discounting bank paper, a misdemeanor, when, 215 
 
 Embezzlement by, a felony 212 
 
 Liability of, for allowing overdraft 160 
 
 List of, furnished Superintendent 153
 
 INDEX TO STATUTES. 167 
 [References Are to Sections.] 
 
 O FFICERS Continued. 
 
 Loans to 155, 156 
 
 A misdemeanor, when, 214 
 
 May not purchase bank's obligations at less than par 170 
 
 Making loan, or gratuity to or employing Superintendent or ex- 
 aminer, guilty of misdemeanor 198 
 
 Misappropriation by, a felony 210 
 
 Of branch bank 3 
 
 Of trust company, election of 239 
 
 Or directors, falsely representing capital stock, guilty of a 
 
 felony 206 
 
 Presumed to know of violation of charter 205 
 
 Transacting business as such before permit issued to bank, 
 
 guilty of misdemeanor 199 
 
 Verifying false report of condition, guilty of a felony 200 
 
 Violating charter, guilty of a felony -. 204 
 
 Overdrafts by, a misdemeanor 211 
 
 Refusing to be examined, possession may be taken 51 
 
 Superintendent may remove 47 
 
 OFFICIAL COMMUNICATIONS. 
 
 Must be entered on minutes 46 
 
 OPENING BANK. 
 
 Without permit, misdemeanor 199 
 
 ORDER DISSOLVING BANK 128 
 
 ORDER OF PAYING DEBTS. 
 
 Of insolvent bank 69 
 
 ORDERS OF SUPERINTENDENT. 
 
 Failure to observe, possession taken 51 
 
 Must be read by directors 45 
 
 Original must be returned 45 
 
 Refusal to obey, ground of forfeiture ; . . 129 
 
 Removal of officer or employee for violation of 47 
 
 ORDINARY. 
 
 Certificate of publication of application for charter 83 
 
 Renewal of charter 102 
 
 Surrender of charter 127 
 
 To amend charter 94 
 
 ORGANIZATION BEFORE STOCK SUBSCRIBED. 
 
 Liability for 142 
 
 OVERDRAFT. 
 
 Board of directors only may authorize 160 
 
 By officer, director or employee, a misdemeanor 211 
 
 Liability of officer, permitting 160 
 
 OVER-ISSUING CAPITAL. 
 
 A misdemeanor N 218
 
 168 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 P. 
 PARTNERSHIP. 
 
 Loans to member of, included in his line of credit 157 
 
 See Copartnership. 
 
 PASS BOOKS. 
 
 Entries on agreeing with bank's books, prima facie correct ... 64 
 
 Of bank in hands of Superintendent called in 64 
 
 Savings rules in 191 
 
 PAYMENT OF CAPITAL. 
 
 By transfer of assets of national bank 108 
 
 How enforced 87 
 
 Within what time 85 
 
 PAYMENT OF CHECK. 
 
 Forged or raised 188 
 
 Of agent or fiduciary 186 
 
 Of deceased bankrupt, or insane depositor 184 
 
 Of minor 185 
 
 PAYMENT OF DEPOSIT. 
 
 In trust 187 
 
 In two names 183 
 
 Of deceased depositor 192 
 
 PAYMENT SUSPENDED. 
 
 Possession may be taken 51 
 
 PAYOR BANK. 
 
 Check may be forwarded direct to 180 
 
 PENALTIES. 
 
 Deposited as other funds of department 44 
 
 Execution for, collection of 44 
 
 For failure to make or publish reports 44 
 
 PERMIT FOR VOLUNTARY LIQUIDATION. 
 
 Required 118 
 
 PERMIT TO BEGIN BUSINESS. 
 
 Fees for examination 34 
 
 Opening bank without, misdemeanor 199 
 
 Record and copy of 86 
 
 PETITION OF BANK TO BE INCORPORATED AS 
 
 TRUST COMPANY. 
 Contents of 247 
 
 PLACE OF BUSINESS. 
 
 Application for charter must show 79 
 
 How changed 89
 
 INDEX TO STATUTES. 169 
 [References Are to Sections.] 
 
 PLEDGEE OF STOCK. 
 
 Failure of stockholder to give notice of assessment to, a mis- 
 demeanor 228 
 
 Stockholder must notify, of assessment to restore capital 50 
 
 POSSESSION OF BANK BY SUPERINTENDENT. 
 
 Agent, Superintendent may appoint to assist him '. 59 
 
 Bond, shall require of 61 
 
 Assignment by surrendering possession to Superintendent 54 
 
 Collects money due bank 57 
 
 Directors may surrender to Superintendent 52 
 
 Effect of 53 
 
 Enjoined, when 58 
 
 Notice of taking, must be given 55 
 
 To creditors published 63 
 
 Pass books called in 64 
 
 Taken when bank is unsafe to continue business 51 
 
 Refuses to submit to examination 51 
 
 Violates charter, or law, or regulation or order of Super- 
 intendent 51 
 
 When business conducted unsafely 51 
 
 Capital impaired and not made good 51 
 
 Final judgment remains unpaid 51 
 
 Officer refuses to be examined on oath 51 
 
 Payment suspended 51 
 
 POWERS. 
 
 Of banks, enumeration of 136 
 
 Stockholders' agent 76 
 
 Trust companies 236 
 
 Banks may acquire 246 
 
 Other corporations may acquire 241, 242 
 
 PREFERENCES. 
 
 By insolvent bank, void 190 
 
 PREMIUM ON BONDS. 
 
 Of officers to be paid by bank 154 
 
 Superintendent, paid as expense of Department 12 
 
 Assistant Superintendent and examiners, paid as expense of de- 
 partment 17 
 
 PRESIDENT. 
 
 Must be director 153 
 
 PRESUMPTION. 
 
 Against officers 205 
 
 Check, drawing, without funds, presumed fraudulent 226 
 
 Insolvency presumed fraudulent 220 
 
 PRINCIPAL OFFICE. 
 
 Changed only by unanimous vote of stockholders 90
 
 170 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 PRIORITIES IN PAYING DEBTS. 
 
 Of insolvent bank 69 
 
 PRIVATE BANK. 
 
 Becoming incorporated, transfer of assets 105 
 
 Converted into State bank, how 104 
 
 Effect of incorporation of 105 
 
 Incorporated, suits against, not abate 106 
 
 Still liable to suit 106 
 
 Incorporation of, not affect creditors or depositors 106 
 
 Must advertise as such 4 
 
 Not use name importing corporation 4 
 
 Not advertising as such, a misdemeanor 227 
 
 Not included in term "bank" ' 1 
 
 Not required to change its name 4 
 
 Not supervised by Superintendent 4 
 
 Using unauthorized name, a misdemeanor 227 
 
 PROFITS. 
 
 How calculated before paying dividend 176 
 
 Increase of capital from surplus and 96 
 
 What to be deducted from, before dividends declared 176 
 
 PROFITS UNDIVIDED. 
 
 Definition of 6 
 
 PROOF OF CLAIMS. 
 
 Against bank in hands of Superintendent 63 
 
 PROPERTY OF BANK IN POSSESSION OF SUPERIN- 
 TENDENT. 
 
 How sold 57 
 
 PROPERTY. 
 
 Real and personal, power of bank to purchase, hold and sell . . 136 
 
 PUBLICATION. 
 
 Notice of consolidation or merger 113 
 
 Voluntary dissolution 119 
 
 Of application for acquisition of trust company powers 248 
 
 Amendment of charter 91 
 
 Certificate of 94 
 
 Charter 80 
 
 Certificate of 83 
 
 Renewal of charter 99 
 
 Certificate of 102 
 
 Trust company charter 234 
 
 Reports by banks 40 
 
 PUNISHMENT FOR MISDEMEANORS 230 
 
 PURCHASE. 
 
 Its own obligations at less than par, bank may not 170 
 
 Stock, bank can not, except to prevent loss 165
 
 INDEX TO STATUTES. 171 
 
 [References Are to Sections.] 
 
 PURCHASER OF STOCK. 
 
 Sold to pay assessment gets good title 50 
 
 PURCHASING BANK'S OBLIGATIONS. 
 
 At a discount, a misdemeanor 215 
 
 PURCHASING SHARES WITH CAPITAL. 
 
 A misdemeanor 216 
 
 Q. 
 
 QUALIFICATIONS. 
 
 Of Assistant Superintendent and examiner 16 
 
 Of directors 146 
 
 Of Superintendent 10 
 
 QUORUM OF BOARD OF DIRECTORS 148 
 
 R. 
 
 RAISED OR FORGED CHECKS. 
 
 Liability of bank paying 188 
 
 RATE OF INTEREST. 
 
 Not to exceed 8 per cent 163 
 
 REAL ESTATE. 
 
 Limit of loans on 159 
 
 Loans and titles, trust company may guarantee 236 
 
 Power of trust company to buy and sell 236 
 
 Purchased to prevent loss, sale of 168 
 
 Purposes for which may purchase and hold 168 
 
 Taxation, when owned by bank 278 
 
 RECEIVING COMMISSIONS ON LOANS. 
 
 A misdemeanor 209 
 
 RECEIVING DEPOSITS AFTER INSOLVENCY. 
 
 A felony 221 
 
 RECEIVER OF BANK. 
 
 Suit for, only by Superintendent 132 
 
 RECOMMENDATIONS BY SUPERINTENDENT. 
 
 Must be submitted to directors 46 
 
 RECORD OF FEES AND EXPENSES. 
 
 Superintendent shall keep 26 
 
 RECORD OF INCORPORATION PROCEEDINGS 84 
 
 REDISCOUNTS. 
 
 Not included in limit of bank's liability 169 
 
 REFUSING TO MAKE STATEMENTS OR REPORTS. 
 
 A misdemeanor 203 
 
 REGISTRAR OF STOCKS AND BONDS. 
 
 National bank may act as 252
 
 172 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 REGULATION OF DEPARTMENT. 
 
 Violation of, possession may be taken 51 
 
 REMOVAL FROM OFFICE. 
 
 Assistant Superintendent 16 
 
 For neglect of duty, misconduct, or corruption, of Superin- 
 tendent, examiner or clerk 196 
 
 Officer or employee by Superintendent 47 
 
 Superintendent, Assistant, acts 9 
 
 By Governor 10 
 
 RENEWAL OF CHARTER. 
 
 Application, referred to Superintendent 100 
 
 Certificate of publication 102 
 
 To be published 99 
 
 Certificate of, to be issued and recorded 103 
 
 Examination and certificate of Superintendent 101 
 
 Fee for 98 
 
 Method of 98 
 
 Right of 136 
 
 " Secretary of State grants -. 98 
 
 Stockholders must authorize .- 98 
 
 REPORT OF CONDITION. 
 
 False, a felony 195 
 
 Verifying, a felony 200 
 
 REPORT OF DIRECTORS. 
 
 Action on 151 
 
 Examination of bank must be spread on minutes 149 
 
 REPORT OF DIVIDENDS. 
 
 How certified 43 
 
 REPORT OF EXAMINATION. 
 
 By directors, what to contain 150 
 
 Action on 151 
 
 To be in writing 33 
 
 REPORT OF SUPERINTENDENT. 
 
 Contain summary of condition of banks 38 
 
 Made to Governor 21 
 
 Mailed to banks 23 
 
 Prima facie evidence 26 
 
 Publication of 23 
 
 To show banks in liquidation 78 
 
 What to contain ." 22 
 
 When to be made 21 
 
 REPORTS BY BANKS. 
 
 Burned after five years 25 
 
 Calls for, mailed to banks 42 
 
 Contents of 40
 
 INDEX TO STATUTES. 173 
 [References Are to Sections.] 
 
 REPORTS BY BANKS Continued. 
 
 Failure to make, penalty 44 
 
 Filed in Superintendent's office 25 
 
 Furnish Superintendent 40 
 
 In voluntary liquidation 120 
 
 Of condition 40 
 
 Publication of 40 
 
 Refusing to make, a misdemeanor 203 
 
 Special, may be called for 41 
 
 REPORTS OF DIVIDENDS. 
 
 Made to Superintendent 43 
 
 REPORTS OF EXAMINERS. 
 
 Prima facie evidence 26 
 
 REPORTS OF EXAMINATIONS. 
 
 Contents of 33 
 
 Filed in Superintendent's office 25 
 
 Prima facie evidence 39 
 
 RESERVE. 
 
 Amount required 171 
 
 Failure to make good, bank insolvent 5 
 
 Not maintained, effect 172 
 
 What to consist of 171 
 
 RESERVE BANK, STATE. 
 
 Bank may purchase stock in 167 
 
 RESERVE SYSTEM, FEDERAL. 
 
 Banks may become members of 182 
 
 RESIDENCE OF SUPERINTENDENT 14 
 
 RESIGNATION OF SUPERINTENDENT. 
 
 Assistant acts 9 
 
 RESUME BUSINESS. 
 
 After possession taken, bank may, when 56 
 
 Superintendent may permit bank to 5] 
 
 RULES AND REGULATIONS. 
 
 Superintendent may make 24 
 
 RULES GOVERNING SAVINGS DEPOSITS 191 
 
 S. 
 SALARIES. 
 
 Agents appointed to liquidate bank 59 
 
 Assistant Superintendent 18 
 
 Clerks of department 18 
 
 Examiners 18 
 
 Officers of department, how paid 20 
 
 Superintendent 11 
 
 How paid 11
 
 174 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 SALE OF STOCK. 
 
 Purchased by bank to prevent loss 165 
 
 To pay assessment to restore impaired capital 50 
 
 Installment 87 
 
 Cumulative of other remedies 87 
 
 SAVINGS BANKS. 
 
 May purchase corporate stocks, bonds, etc., 166, 167 
 
 And hold real estate 168 
 
 Reserve required of 171 
 
 SAVINGS DEPOSITS. 
 
 Rules and regulations governing 191 
 
 SCHEDULE OF FEES FOR EXAMINATION 34 
 
 SEAL OF BANK. 
 
 Power to adopt and to alter at pleasure 136 
 
 SEAL OF BANKING DEPARTMENT. 
 
 Paper under, as evidence 15 
 
 Provided for 15 
 
 SECRETARY OF STATE. 
 
 Amendments to charters, applications for, file with 90 
 
 Certifies copy of to the applicants 91 
 
 Transmits copy to Superintendent of Banks 92 
 
 Charter of bank filed in office of 79 
 
 Certifies copy to applicants 80 
 
 Transmits copy to Superintendent of Banks 81 
 
 Grants renewal of charter 98 
 
 Issues certificate of amendment of charter and records 95 
 
 Incorporation 84 
 
 May grant trust company powers to banks 247 
 
 Order dissolving bank by 128 
 
 Surrender of charter to 123 
 
 SECURED. 
 
 All loans to officers or employees must be 156 
 
 SECURITY. 
 
 Bank can not take its own stock as 165 
 
 Power of bank to take 136 
 
 SELL PROPERTY OF BANK. 
 
 Where possession taken, Superintendent may, how 57 
 
 SHARES OF STOCK. 
 
 Application for charter must show number of 79 
 
 Purchasing with capital, a misdemeanor 216 
 
 SLANDER OF BANK. 
 
 A misdemeanor 225
 
 INDEX TO STATUTES. 175 
 
 [References Are to Sections.] 
 
 SOLICITOR GENERAL. 
 
 Advise Superintendent 29 
 
 Fees of, for representing Superintendent 28 
 
 Represent Superintendent 28 
 
 SOLVENCY OF BANK. 
 
 False statement as to, a misdemeanor 224, 225 
 
 SPECIAL CHARTER. 
 
 How amended 89 
 
 SPECIAL DEPOSITS. 
 
 Power of bank to receive 136 
 
 SPECIAL EXAMINATION. 
 
 Fees for 34 
 
 Superintendent may make 31 
 
 SPECIAL EXAMINERS. 
 
 Superintendent may appoint 24 
 
 SPECIAL REPORTS. 
 
 May be called for 41 
 
 STATE BONDS. 
 
 Bank may purchase 167 
 
 Loans secured by, no limit to amount of 157 
 
 STATE DEPOSITORIES. 
 
 Appointed for four years 261 
 
 Appointment of, not affect Treasurer's bond 273 
 
 Bond to protect county funds 275 
 
 Bonds deposited by, may be sold when 269 
 
 Of 263, 267, 276 
 
 May be deposited as security for deposits 267 
 
 Ceasing to act, Governor to appoint others 264 
 
 Contract for payment of interest 262 
 
 County treasurers may deposit in 275 
 
 Deposits in, limited to amount of bond 267 
 
 By tax collectors with 270, 271 
 
 Governor appoints 255 
 
 May remove 261 
 
 To designate counties whose collectors deposit therein, re- 
 spectively 271 
 
 Interest on county funds 277 
 
 List of places in which located 255 
 
 Monthly statement to Governor and Treasurer 268, 270 
 
 National banks may be appointed 264 
 
 Officer receiving commission for depositing in, guilty of felony 262 
 
 Paid no salary or fees 261 
 
 Refusing to pay interest, removed 262 
 
 Required to strengthen bond when 265 
 
 Sureties on bond, how relieved 266 
 
 Treasurer to keep Governor advised as to financial condition of 265
 
 176 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 STATE TREASURER. 
 
 Bond not affected by creation of State depositories 273 
 
 Deposits only in State Depositories 272 
 
 Delivery of property and funds to Superintendent 231 
 
 STATE TREASURY. 
 
 Tax collectors may deposit in 272 
 
 STATEMENT OF AMOUNTS COLLECTED. 
 
 Superintendent's report to contain 22 
 
 STATEMENT OF CONDITION. 
 
 False, verifying, a felony 200 
 
 STATEMENT OF EXPENSES OF EXAMINERS. 
 
 Must be itemized and filed 19 
 
 STATEMENTS FILED MONTHLY TO GOVERNOR AND 
 TREASURER. 
 
 By State depositories 268, 270 
 
 STATEMENTS OR REPORTS. 
 
 Refusing to make, a misdemeanor 203 
 
 STOCK. 
 
 Amount of, and number of shares, application for, charter must 
 
 show 79 
 
 Bank can not lend on its own 165 
 
 Purchase its own, except to prevent loss 165 
 
 Capital stock, see Capital. 
 
 Falsely representing, a felony 206 
 
 Liability after transfer of 139 
 
 Lien on, for unpaid installments 88 
 
 No lien on, except for unpaid installments 88 
 
 Not sold for less than par and for cash 97 
 
 On consolidation or merger, surrender of old and issue of new 114 
 
 Pledgee of, must be notified of assessment on 50 
 
 Power of bank to increase or decrease 136 
 
 Sale of, to pay assessment or restore impaired capital 50 
 
 Sold to pay installment thereon 87 
 
 Subscribed, organizing before, liability for 142 
 
 Transfer, foreign administrator or executor may, how 279 
 
 STOCK CERTIFICATE. 
 
 Cancelled where stock sold to pay assessment 50 
 
 STOCK AND BONDS. 
 
 Bank can not invest in 166, 167 
 
 Trust company may deal in 236 
 
 STOCK IN FEDERAL RESERVE BANK. 
 
 Bank may purchase 167 
 
 STOCK IN STATE RESERVE BANK. 
 
 Bank may purchase 167
 
 INDEX TO STATUTES. 177 
 
 [References Are to Sections.] 
 
 STOCK OF CORPORATION. 
 
 Limit* of loans secured by 161 
 
 STOCK OF COTTON CORPORATION. 
 
 Bank may subscribe for 167 
 
 STOCKHOLDERS. 
 
 Agent, see Stockholders' Agent. 
 
 Assessment of, to pay depositors 70 
 
 To restore impaired capital 49 
 
 Decide whether Superintendent continue in charge of bank after 
 
 creditors paid 75 
 
 Distribution of assets to, on voluntary liquidation 122 
 
 Elect board of directors 145 
 
 Failing to give pledgee notice of stock assessment, a misde- 
 meanor 228 
 
 Increase of capital offered to 97 
 
 Insolvent, transf errer liable when 140 
 
 Liability enforced only by Superintendent 143 
 
 Is asset of bank 143 
 
 Not affected by surrender or forfeiture of charter 144 
 
 Of, after transfer of stock 139 
 
 Of, to depositors 137 
 
 List of, kept on file at office 189 
 
 To be sent to Superintendent 189 
 
 May contest his liability to assessment, how 70 
 
 Be sued to pay assessment to restore capital 50 
 
 Surrender charter 123 
 
 Meeting of, to be called when creditors paid 75 
 
 To make assessment to restore impaired capital 49 
 
 Must authorize amendment of charter 90 
 
 Authorize renewal of charter 98 
 
 Notify pledgee of assessment to restore capital 50 
 
 Ratify consolidation or merger 112 
 
 Primarily liable whose name appears as such 140 
 
 Reimbursed for assessment out of debts 70 
 
 Two-thirds vote may liquidate bank 117 
 
 STOCKHOLDERS' AGENT. 
 
 Bond of 76 
 
 Election of 76 
 
 Powers and duties of 76 
 
 Successor of, how chosen 77 
 
 SUBSCRIBERS TO STOCK. 
 
 Names, residence and number of shares to be furnished Su- 
 perintendent 82 
 
 SUCCESSOR TO STOCKHOLDERS' AGENT. 
 
 How chosen 77 
 
 12
 
 178 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 SUE AND BE SUED. 
 
 Right of bank to "... 136 
 
 SUITS. 
 
 Against bank not abate on consolidation or merger 116 
 
 National bank not abate by its conversion into State bank. . 110 
 
 Private bank, not able when incorporated 106 
 
 By or against Superintendent, solicitors general to represent . . 28 
 
 Costs, how paid 28 
 
 For forfeiture of charter or liquidation, only by Superintendent 132 
 
 On bond of Superintendent or examiners 27 
 
 On rejected claim or deposit, when and where brought 65 
 
 To collect assessment to restore impaired capital 50 
 
 SUPERINTENDENT. 
 
 Accepting loan, gratuity or employment from bank, guilty of 
 
 misdemeanor 198 
 
 Annual report of 120 
 
 Application for amendment of charter referred to 92 
 
 Application for charter referred to 81 
 
 Information furnished 82 
 
 Renewal of charter referred to 100 
 
 Appointed by Governor 8 
 
 Appoints assistant 16 
 
 Clerks 16 
 
 Examiners 16 
 
 Special 24 
 
 Approval of voluntary liquidation required 118 
 
 Assesses stockholders 70 
 
 Assistant, see Assistant Superintendent. 
 
 Attorney and Solicitors General to advise 29 
 
 Audits traveling expenses of examiners 19 
 
 Blanks, must supply 24 
 
 Bond of 12 
 
 Capital stock, payment in installments, approval of 85 
 
 May inforce payment of 87 
 
 Call for reports by 40 
 
 Mailed to banks 42 
 
 Special 41 
 
 Chief officer of department 8 
 
 Claims, against banks, objections to, hears, when 66 
 
 Clerks, expenses of, payable by Superintendent 20 
 
 Completes liquidation at request of stockholders 75 
 
 Declares and pays liquidation dividends 71 
 
 Defines duties of assistant and examiners 16 
 
 Deposits funds of insolvent bank 72 
 
 Unclaimed liquidation dividends and deposits for creditors 74 
 
 Disclosing condition of a bank, guilty of a misdemeanor 194 
 
 Disclose information obtained from examination, must not 38
 
 INDEX TO STATUTES. 179 
 
 [References Are to Sections.] 
 
 SUPERINTENDENT Continued. 
 
 Dividends declared must be reported to 173 
 
 Engage in banking, must not 10 
 
 Enjoined, how 58 
 
 Examination and certificate on surrender of charter 126 
 
 Examines and approves amendment to charter 93 
 
 Private bank applying for charter as State bank 104 
 
 Expenses, traveling, of department, payable by 20 
 
 Fixes compensation of agents, attorneys and accountants 73 
 
 Forms, shall prescribe 25 
 
 Gives notice to prove claims against bank in his hands 63 
 
 Giving notice of examination, guilty of misdemeanor 193 
 
 Governor, removes, when 10 
 
 Grounds of removal of 10-13 
 
 Issues permit to begin business 86 
 
 Liable on bond for non-performance of duty 27 
 
 List of officers sent to 153 
 
 Stockholders to be sent to 189 
 
 Mails copy of call for reports to banks 42 
 
 Making false report of examination of a bank, guilty of a felony 195 
 
 Mandamus against 133 
 
 Exceptions 135 
 
 Trial of 134 
 
 May appoint agent to liquidate bank 59 
 
 Attorneys, accountants and assistants in liquidating 
 
 bank 60 
 
 Special examiners 24 
 
 Authorize bank to borrow in excess of limit to meet emer- 
 gency 169 
 
 Call for special reports 41 
 
 On applicants for charter for information 82 
 
 Enforce stockholders' liability 143 
 
 Have warrant to arrest violators of laws issued 229 
 
 Institute suit for forfeifure of charter or liquidation of bank 132 
 
 Issue execution for fees 35 
 
 For penalty 44 
 
 Make rules and regulations 24 
 
 Order assessment to restore impaired capital 49 
 
 Directors to make examination 152 
 
 Discontinuance of illegal practice 45 
 
 Excess loan reduced to legal limit 157 
 
 Items charged off 152 
 
 Special examination of bank 31 
 
 Permit bank to resume business 51-56 
 
 Require bank to make good reserve 172 
 
 Reject claims against bank in his hands 65 
 
 Remove officer or employee of bank 47
 
 182 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 SWEARING FALSELY ON EXAMINATION. 
 
 A felony 201 
 
 SYNDICATE UNDERWRITINGS. 
 
 Trust companies may engage in 167 
 
 T. 
 TAX COLLECTORS. 
 
 Depositing with State depository 270, 271 
 
 May deposit in State Treasury 272 
 
 TAXATION OF BANKS 278 
 
 Of branch banks 3 
 
 TAXES, RANK OF. 
 
 In paying debts of insolvent bank 69 
 
 TEMPORARY EMERGENCY. 
 
 Bank may be authorized to borrow in excess of limit to meet. . . 169 
 
 TIME CERTIFICATES. 
 
 Holders of depositors 2 
 
 TIME OF REGULAR EXAMINATIONS. 
 
 Kept secret 37 
 
 TRANSFER. 
 
 After or in contemplation of insolvency 190 
 
 TRANSFER OF ASSETS. 
 
 After notice posted or possession taken, void 53 
 
 TRANSFER OF STOCK. 
 
 By foreign administrator or executor 279 
 
 Failure within six months, stockholder liable 140 
 
 Stockholders' liability after 139 
 
 TRANSFER OF SURPLUS. 
 
 To restore impaired capital 48 
 
 TRANSFERS TO HINDER, DELAY OR DEFRAUD. 
 
 By insolvent bank, a misdemeanor 222 
 
 TRAVELING EXPENSES. 
 
 Of Superintendent, assistant, and examiners 19 
 
 TREASURER, STATE. 
 
 To advise Governor as to financial condition of State de- 
 positories 265 
 
 TRUST COMPANIES. 
 
 Amount of capital required 237 
 
 Application for charter, publication of 234 
 
 Banks, included in term 1 
 
 Board of trustees of, election of 238 
 
 By-laws of 239 
 
 Certificate of incorporation 235
 
 INDEX TO STATUTES. 183 
 
 [References Are to Sections.] 
 
 TRUST COMPANIES Continued. 
 
 Fee for granting charter 233 
 
 Governed by board of trustees 238 
 
 How incorporated 233 
 
 Increase of capital of 240 
 
 May acquire banking powers 237 
 
 May purchase corporate stocks, bonds, etc 166, 167 
 
 Not to receive deposits 237 
 
 Officers of 239 
 
 Powers of 236 
 
 TRUST COMPANY POWERS. 
 
 Banks may acquire 246 
 
 National bank may exercise 252 
 
 Other corporations may acquire 241, 242 
 
 How 243 
 
 TRUST. 
 
 Payment of deposits in 187 
 
 TRUST RECEIPT OF BANK. 
 
 Lien against bank for collections on collateral covered by 177 
 
 TRUSTEE. 
 
 Deposits by, payment of 186 
 
 National bank may act as, or other fiduciary 252 
 
 Under bonds or mortgages, trust company may act as 236 
 
 TRUSTEES AND OTHER FIDUCIARIES. 
 
 Not individually liable on stock 138 
 
 TRUSTEES. 
 
 Board of, for trust company 238 
 
 Directors of bank with trust powers act as 251 
 
 TRUSTS OF ALL KINDS. 
 
 Trust company may execute 236 
 
 U. 
 
 UNAUTHORIZED INVESTMENTS. 
 
 Corporate stocks, merchandise or products are 166, 167 
 
 UNDIVIDED PROFITS. 
 
 Ascertained, how 176 
 
 Capital increased from 96 
 
 Definition of 6 
 
 UNITED STATES BOND. 
 
 Bank may purchase . . .' 167 
 
 Loans secured by, no limit to amount 157 
 
 UNITED STATES. 
 
 Rank of debts to . 69
 
 184 INDEX TO STATUTES. 
 
 [References Are to Sections.] 
 
 USING BANK'S FUNDS. 
 
 Officer or employee without approval of directors, a misde- 
 meanor 213 
 
 USING CAPITAL. 
 
 To purchase shares of stock, a misdemeanor 216 
 
 V. 
 
 VACANCY IN OFFICE OF SUPERINTENDENT. 
 
 How filled 9 
 
 VALIDATED BONDS. 
 
 Of counties, districts and municipalities, bank may purchase . . 167 
 Loans secured by, no limit to amount of 157 
 
 VERIFICATION OF REPORTS. 
 
 By banks 40 
 
 VIOLATING CHARTER. 
 
 Felony 204 
 
 Presumption against officer or director 205 
 
 VIOLATION OF BANKING ACT. 
 
 Wilful, a misdemeanor 223 
 
 VIOLATION OF CHARTER. 
 
 Law, regulation or order, possession may be taken for 51 
 
 VIOLATION OF LAW OR ORDERS. 
 
 Officers or employees may be removed for 47 
 
 Orders to discontinue 45 
 
 VIOLATION OF LAWS. 
 
 To be submitted to grand juries by Superintendent 229 
 
 VOLUNTARY ASSOCIATION. 
 
 Banks not included in term 1 
 
 VOLUNTARY DISSOLUTION OF BANK 128 
 
 VOLUNTARY LIQUIDATION. 
 
 Accomplished how 117 
 
 Assets distributed to stockholders 122 
 
 Fees for examination 34 
 
 Notice of, to be published 119 
 
 Superintendent's approval of, necessary 118 
 
 Unpaid deposits and claims, deposit of funds to cover 121 
 
 VOUCHERS. 
 
 Must be filed with expense accounts of examiners , 19 
 
 W. 
 WARRANTS. 
 
 Superintendent mav have issued to arrest violators of law 229 
 
 WILFUL VIOLATION OF BANKING ACT. 
 
 A misdemeanor 223 
 
 WITHDRAWAL OF CAPITAL. 
 
 A misdemeanor 217 
 
 WRITTEN REPORTS OF EXAMINATION . 33
 
 PART II. 
 
 Digest of Decisions of the Supreme Court and 
 the Court of Appeals of Georgia on 
 Banks and Banking.
 
 Digest of Decisions 
 of the 
 
 Supreme Court and Court of Appeals 
 of Georgia 
 
 On Banks and Banking 
 
 Accountant and General 
 Manager. 
 
 Accountant and general man- 
 ager of bank not presumed to 
 have authority or be charged 
 with duty of discounting pa- 
 pers for the bank. 110/494 
 (35 S. E. 780). 
 
 Advances. 
 
 Agreement to advance money 
 to cover margins in cotton 
 futures, on deposit of collat- 
 erals, not enforced. 102/808 
 (30 S. E. 267). 
 
 Contract between bank and 
 manufacturer whereby bank 
 agreed to advance him certain 
 sum, manufacturer not being 
 bound to take whole or any 
 part unless it was necessary in 
 conducting his business, was 
 unilateral, there being no bind- 
 ing obligation to borrow any 
 definite sum. 121/714 (49 S. 
 E. 673). 
 
 Advances made by bank to 
 cotton buyer under agreement 
 that bank to have title to goods 
 until reimbursed by payment of 
 drafts drawn by buyer upon his 
 customers, held that where pur- 
 chase made and goods deliv- 
 ered to buyer himself, bank 
 paying price thereof on his 
 check without having obtained 
 
 185 
 
 actual or constructive posses- 
 sion of goods, title passed to 
 buyer. 101/345 (2) (28 S. E. 
 863). 
 
 Attachment. 
 See Bill of Lading. 
 
 Attorney. 
 
 Attorney for bank whose 
 duties were to act as general 
 adviser of bank's officers and to 
 collect overdue claims had no 
 authority to make sale of land 
 belonging to bank. Nor could 
 cashier or director ratify such 
 sale. 108/376 (33 S. E. 1003). 
 
 Answer to action on note 
 that plaintiff's attorney was di- 
 rector of plaintiff bank and in- 
 terfered with defendants' ef- 
 forts to meet their indebtedness 
 to bank was demurrable, in ab- 
 sence of showing that attorney 
 was acting within scope of his 
 employment or authority from 
 bank. 141/565, 566 (4) (81 
 S. E. 886). 
 
 See Cashier. 
 
 Bank Notes. 
 
 Statutes passed for protec- 
 tion of bank notes liberally con- 
 strued. 18/66 (6). 
 
 While bank notes occupy for 
 some purposes the position of
 
 186 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 securities, yet, in addition they 
 are considered as and subserve 
 the purposes of money. 13/ 
 298. 
 
 Loser of bank notes can re- 
 quire payment by bank upon 
 offering suitable indemnity. 
 18/67 (17); see R. M. Charl. 
 193. 
 
 Setting apart of bank bills as 
 a pledge was not an issuing of 
 such bills as circulating cur- 
 rency. 1/435. 
 
 Circulation of bank notes 
 when below par not illegal; 
 holder may collect in full 
 though he obtained notes at a 
 discount. 26/17 (1, 2). 
 
 Statute of limitations does 
 not apply to bank bills. 13/ 
 288 (4); see 49/419 (2). 
 
 In suit against assignee upon 
 bills of the bank, where there 
 is no plea of non est factum, it 
 is not necessary to prove the 
 execution of the bills. 30/77C 
 (1). 
 
 In suit on bank notes, it is 
 not necessary to describe them 
 by numbers and letters. 7/79. 
 
 Nor is it necessary to aver 
 and prove a demand. 8/469. 
 
 But where a bank note is 
 payable on demand at a par- 
 ticular time and place, demand 
 must be averred and proved. 
 13/287. 
 
 Where issued and circulated, 
 paid in capital stock must be 
 first applied to payment of bank 
 notes. 24/273 (1). 
 
 Directors issuing notes be- 
 fore required amount of capi- 
 tal stock paid in, if bank be- 
 came insolvent, bill holders and 
 creditors might proceed at once 
 against stockholders and di- 
 rectors. 24/273 (2). 
 
 Bill of Lading. 
 
 Where goods shipped upon 
 bill of lading attached to draft, 
 delivery of goods without pay- 
 ment of draft was conversion 
 subjecting bank to action of 
 trover. 98/576 (25 S. E. 584). 
 
 Where consignor deposited 
 with bank bill of lading attached 
 to draft on consignee and amount 
 was entered to his credit under 
 circumstances entitling him to 
 draw upon bank at once for 
 proceeds, jury could infer that 
 intention was to make equitable 
 assignment from consignor to 
 bank of fund representing pur- 
 chase price of goods. 91/307 
 (18S. E. 188). 
 
 Draft and attached bill of 
 lading endorsed in blank and 
 deposited, amount being cred- 
 ited to depositor and drawn 
 against by him, became prop- 
 erty of bank, and the bank's 
 title to the goods sold is su- 
 perior to subsequent lien 
 against seller. 136/372 (71 S. 
 E. 660). 
 
 Bank not liable as joint ven- 
 dor with consignor who 
 shipped goods and drew draft 
 with bill of lading attached in- 
 dorsing it in blank and deliver- 
 ing it with draft to bank, in- 
 dorsing draft for deposit to his 
 own credit. 89/108 (2) (14 
 S. E. 891). 
 
 No such relation between 
 consignee of goods and bank 
 arises simply upon the pur- 
 chase by the bank of a draft 
 and bill of lading as will entitle 
 consignee to recover of bank 
 for a breach of duty imposed 
 
 by law upon the seller. 
 
 App. - - (101 S. E. 6). 
 
 Where sellers drew draft on 
 buyers, with bill of lading at-
 
 DIGEST OF DECISIONS. 
 
 187 
 
 tached, and it was deposited to 
 their credit, and they drew 
 checks against same, title to 
 goods and to proceeds of draft 
 vested in bank. 15 App. 319 
 (5). 
 
 Proceeds of draft attached to 
 bill of lading not subject to at- 
 tachment taken out by drawee 
 of draft against drawer after 
 collection by bank which had 
 purchased same. 142/265 (1) 
 (82 S. E. 658). 
 
 Evidence here held not in 
 conflict with positive testimony 
 that draft had been sold at dis- 
 count to bank in which it was 
 deposited and that proceeds 
 were deposited to drawer's 
 credit. 142/265 (2) (82 S. E. 
 658). 
 
 Indorsement by bank guar- 
 anteeing all previous indorse- 
 ments of draft has no reference 
 to bill of lading attached and 
 bank not liable to drawee upon 
 payment of draft where bill of 
 lading was forged. 20 App. 
 242 (92 S. E. 968). 
 
 Bills of Exchange. 
 See Checks. 
 
 Bond. 
 
 Where bank authorized to 
 appoint necessary officers and 
 make by-laws and rules, and 
 by-laws provided that every of- 
 ficer should perform such 
 duties as should be required of 
 him, and where book-keeper 
 gave bond to faithfully per- 
 form all duties of his office and 
 all other duties required of 
 him, held that such bond was 
 authorized by charter, and that 
 where book-keeper in discharge 
 of "other duties" in the bank 
 took money therefrom, the 
 
 sureties were liable. R. M. 
 Charl. 29. 
 
 Bank teller could be appoint- 
 ed assistant cashier without no- 
 tice to surety company, under 
 terms of bond in this case. 97 / 
 634 (1) (25 S. E. 392). 
 
 Notice of employee's default 
 required, but no duty of super- 
 vising his conduct imposed, 
 knowledge of co-employee not 
 imputable to bank. 97/635 
 (2) (25 S. E. 392). 
 
 Plea alleging knowledge, but 
 not alleging failure to notify, 
 stricken. 97/635 (3) (25 S. 
 E. 392). 
 
 Building and Loan Asso- 
 ciation. 
 See Savings Bank. 
 
 By-Law Lien. 
 See Stock. 
 
 Capital Stock. 
 
 Where single amount is 
 named in charter, it is both the 
 maximum and the minimum 
 amount. 148/764 (98 S. E. 
 466). 
 
 Organizers transacting busi- 
 ness before minimum capital 
 stock paid in, liable to creditors. 
 148/764 (98S. E. 466). 
 
 Banks can not use any part 
 of their capital stock in order 
 to purchase their own shares : 
 discussion of the law and its 
 history. 133/332 (2), 337 (65 
 S. E. 859) and citations. 
 
 See Insolvency. 
 
 Cashier. 
 
 Authority of. 
 
 The cashier is the receiving 
 officer and agent of the bank. 
 7/196. 
 
 Cashier may do, independ- 
 ently of directors, whatever
 
 188 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 properly appertains to his of- 
 fice; one of the acts which 
 properly appertains to his of- 
 fice is to pay debts of bank by 
 transfer of negotiable securi- 
 ties. 10/10 (4). 
 
 Usually question of discount- 
 ing paper comes before direct- 
 ors, and cashier is only execu- 
 tive officer to carry out their 
 decision; but, beyond his in- 
 herent powers, cashier may be 
 authorized to act for bank by 
 the organic law, by action of 
 stockholders, by vote of the 
 board, or by usage and tacit ap- 
 proval. 109/12, 21 (34 S. E. 
 378). 
 
 Provision in charter requir- 
 ing all contracts to be signed 
 by president and countersigned 
 by cashier not apply to such 
 dealings and transactions as 
 are usually and necessarily per- 
 formed by cashier. 1/418; 7 / 
 84. 
 
 Charter providing that con- 
 tracts should be signed and 
 countersigned by president and 
 cashier, held that bills signed 
 by vice-president and counter- 
 signed by assistant cashier, 
 there being in office at the time 
 a president and cashier, were 
 not binding. 31/371 (2). 
 
 Evidence that cashier fre- 
 quently issued certificates of 
 deposit, admissible to show he 
 had authority to do so. 20/ 
 276 (6). 
 
 Cashier had no authority to 
 ratify unauthorized sale by 
 bank's attorney of land belong- 
 ing to the bank. 108/376 (33 
 S. E. 1003). 
 
 Promise by cashier without 
 consideration, to drawer of 
 draft, to pay same out of funds 
 of customer on whom draft 
 drawn held not enforceable 
 
 against bank, unless customer 
 assents that bank shall make 
 such application of funds 
 placed to his credit. 121/527 
 (49 S. E. 615) ; 23 App. 279 
 (4) (98 S. E. 112). 
 
 Where bank directors, 
 chargeable with knowledge of 
 transaction, acquiesced in cash- 
 ier's acceptance of new notes, 
 in satisfaction of note previ- 
 ously given, they were estopped 
 to assert cashier's lack of au- 
 thority. 15 App. 772 (3) (84 
 S. E. 157). 
 
 Bank directors are charge- 
 able with knowledge of act of 
 cashier in accepting new notes 
 in satisfaction of note previ- 
 ously given to bank. 15 App. 
 772 (3) (84 S. E. 157). 
 
 Authority of cashier to com- 
 promise or discharge debts due 
 bank, without payment or re- 
 ceipt of other securities, must 
 be shown by implication or 
 usage, or there must have been 
 ratification by bank. 15 App. 
 815 (1) (84 S. E. 232). 
 
 Cashier can not bind bank by 
 lending money to himself, 
 whatever may be his general 
 authority as to making loans. 
 126/702,709 (56 S. E. 55). 
 
 Agency of cashier to assign 
 bank's assets in his custody not 
 extend to assets held as collat- 
 eral for loan made to anoi:her 
 person for the cashier's benefit, 
 the collaterals not belonging to 
 such other person but to the 
 cashier himself. 92/735 (2) 
 (19S. E. 38). 
 
 Bank paying unauthorized 
 draft made by one as cashier of 
 another bank, after he had 
 ceased to be cashier, could as- 
 sume, without inquiry, that he 
 acted with authority, under
 
 DIGEST OF DECISIONS. 
 
 189 
 
 facts here. 20 App. 236 (92 S. 
 E.,953). 
 
 Cashier has no authority to 
 lend bank's money, unless au- 
 thorized so to do by charter or 
 by-laws; bank not liable for 
 breach of his contract to lend 
 money without authority and 
 in violation of the banking 
 laws. 3 App. 364 (2) (60 S. 
 E. 13). 
 
 Act of cashier in delivering 
 up to subscriber his note for 
 stock upon transfer of the 
 stock to third person, held to 
 have been ratified by bank. 24/ 
 540, 546. ' 
 
 Where cashier performed il- 
 legal act for benefit of bank 
 and it was known to directors, 
 or would have been known to 
 them if they had bestowed or- 
 dinary attention on affairs of 
 their office, and they did not re- 
 pudiate it, it was the act of the 
 bank. 20/276 (8). 
 
 Cashier's contract to lend 
 money in violation of the bank- 
 ing laws of the State could not 
 be rendered legal by ratification 
 or binding by estoppel. 3 App. 
 364 (3) (60S. E. 13). 
 
 Cashier held not liable in 
 damages for failure to notify 
 customer of insolvency of bank. 
 77/152. 
 
 Cashier's character for hon- 
 esty proven good when em- 
 ployed, bank can not rely on 
 presumption that he remains 
 honest. 95/394, 396 (22 S. E. 
 628). 
 
 Dealings With and By. 
 
 Where draft payable to, and 
 indorsed by one as cashier, the 
 indorsement is prima facie that 
 of the bank. 16/458. 
 
 Note indorsed to cashier as 
 such, bank may sue thereon. 
 
 Declaration should allege that 
 such person is cashier and that 
 ownership of note is in bank. 
 97/524 (1) (25S. E. 348). 
 
 Suit by bank on note payable 
 to person as cashier amendable 
 by alleging such person is cash- 
 ier and that bank owns note. 
 102/109 (29S. E. 144). 
 
 Testimony as to whether 
 transactions were with cashier 
 as such, or as individual, is in- 
 admissible. 18 App. 610 (89 
 S. E. 1095). 
 
 Fact that cashier acted for 
 bank in making loan and also 
 sold borrower an automobile, 
 receiving therefor the proceeds 
 of the loan, not render bank li- 
 able for breach of the seller's 
 warranties where bank not 
 shown to have furthered or 
 participated in the sale. State- 
 ment by cashier that bank 
 would guarantee terms of sel- 
 ler's warranty not render bank 
 liable since such undertaking 
 would be ultra vires and void. 
 -App. - - (101 S. E. 196). 
 
 Where cashier, together with 
 other officers, for the purpose 
 of concealing the true financial 
 condition of the bank, give 
 their individual notes for 
 money borrowed, such an ar- 
 rangement, if known to the 
 lender, is contrary to public 
 policy, and the bank is not li- 
 able on the notes although the 
 money realized therefrom was 
 placed to its credit with the 
 lender. 146/799, 802 (92 S. E. 
 525). 
 
 Borrower for secret use of 
 cashier could not hold bank li- 
 able for collaterals belonging to 
 cashier deposited to secure the 
 loan and abstracted by the 
 cashier. 92/735 (1) (19 S. E. 
 38).
 
 190 
 
 PARK'S BANKING LAW of GEORGIA. 
 
 Notice to. 
 
 Notice to cashier is notice to 
 bank. 6/44 (1); 17/100 (3); 
 see 113/527 (2) (38 S. E.947). 
 
 Bank not bound by conduct 
 and knowledge of cashier in 
 making loan for his own benefit 
 on note of another and stock as 
 collateral, such other person 
 having notice of rule of bank 
 that officer could not become its 
 debtor. 73/223; see 75/149; 
 92/735 (1) (19 S. E. 38); 
 110/827,848 (36S. E. 256). 
 
 Where president and cashier 
 of bank were members of part- 
 nership and, without knowl- 
 edge of other member thereof, 
 executed and delivered to bank 
 a note in partnership name for 
 purpose of raising money they 
 had agreed to put into partner- 
 ship business, partnership not 
 liable on note, though money in 
 fact used for purpose stated. 
 Under these circumstances 
 knowledge of president and 
 cashier was knowledge of bank. 
 97/527 (25 S. E. 360) ; see 3 
 App. 287 (1) (59 S. E. 844); 
 5 App. 600 (3) (63S. E. 648). 
 
 Bank required to notify 
 bonding company of employee's 
 default, but no duty of super- 
 vising his conduct imposed, 
 knowledge of cashier not im- 
 putable to bank. 97/634 (2) 
 (25 S. E. 392). 
 
 Where an individual has an 
 interest in note which he knows 
 was given without considera- 
 tion and such individual as 
 cashier having control of dis- 
 counts of bank discounts such 
 note with funds of bank, the 
 latter is not a bona fide holder. 
 109/12 (2) (34 S. E. 378). 
 
 See Deed; Directors; Na- 
 tional Banks; Presi- 
 dent. 
 
 Cashier's Check. 
 
 See Check. 
 Certificate of Deposit. 
 
 See Cashier; Deposit; Di- 
 rector. 
 
 Certified Check. 
 See Check. 
 
 Charter. 
 
 Charters of banks held to be 
 contracts. Each stockholder by 
 his acceptance of charter, be- 
 comes party to contract and is 
 bound by its provisions. 19/ 
 325 (1, 2); see 37/411; 53/ 
 512. 
 
 Charter of bank granted by 
 General Assembly, is public 
 law, and courts take cognizance 
 thereof. 31/69; 66/177; 15 
 App. 520 (5) (83 S. E. 891); 
 18 App. 402 (7) (89 S. E. 
 625). 
 
 From time that certificate is 
 made and filed to organize 
 banking association, every party 
 to action is precluded from de- 
 nying corporate existence of 
 association. 16 App. 820, 821 
 (86 S. E. 644). 
 
 Certificate made and filed to 
 organize banking association is 
 evidence that statute has been 
 complied with and company 
 duly organized. 16 App. 820, 
 821 (8) (86S. E. 644). 
 
 Certificate to organize bank- 
 ing association is revocable for 
 fraud in its procurement only 
 in direct proceeding brought by 
 State. 16 App. 820, 821 (8) 
 (86 S. E. 644). 
 
 Check. 
 
 As Payment. 
 
 Check payment, when itself 
 paid. 58/258.
 
 DIGEST OF DECISIONS. 
 
 191 
 
 Bank check tendered in pay- 
 ment is not such until paid. 
 138/73 (1) (74 S. E. 770). 
 
 Check given in payment of 
 note, holder of note not bound 
 to surrender it unless there is 
 an agreement that check be re- 
 ceived as payment. 8 App. 513 
 (3) (69S. E. 923). 
 
 Charging depositor with 
 amount of check by bank on 
 which drawn and to which sent 
 for collection, equivalent to 
 payment. 117/772 (54 S. E. 
 47) ; and see 95/277 (21 S. E. 
 717). 
 
 Where amount of check is 
 charged to drawer's account by 
 the drawee bank, drawer is dis- 
 charged and bank cashing 
 check for payee is subrogated 
 to his rights and has action 
 against drawee bank. 8 App. 
 182 (2) (68 S. E. 872). 
 Bill of Exchange. 
 
 Difference between check and 
 bill of exchange. 46/487, 491 ; 
 92/732 (19S. E. 55). 
 
 Cashier's Check. 
 
 Banker's check means check 
 drawn by banker as distin- 
 guished from check drawn on 
 bank by depositor. 8 App. 714 
 (3) (70 S. E. 151). 
 
 Holder of cashier's check 
 may sue bank as maker without 
 joining payee or indorser. 143/ 
 293 (1) (84S. E. 966). 
 
 Cashier's check is primary 
 obligation of the bank. 143/ 
 293 (1) (84S. E. 966). 
 
 Holder in good faith ' of 
 cashier's check payable to ficti- 
 tious payee is entitled to sue 
 bank as maker thereon. 143/ 
 293 (2). 
 
 Cashier's check, payable to 
 order of person having no 
 knowledge of the transaction 
 
 or interest in the check, and not 
 intended to be party to the 
 transaction, may be deemed 
 payable to fictitious payee.- 143/ 
 293 (2). 
 
 Where dishonored check de- 
 clared on is attached to petition 
 and alleged to have been signed 
 by an individual as cashier, au- 
 thority of cashier to make 
 check is sufficiently alleged. 
 144/120 (3) (86S.E. 317). 
 
 Certified Check. 
 
 A certified check is a check 
 drawn by depositor upon his 
 funds in the bank, which the 
 proper officer of the bank certi- 
 fies will be paid when duly pre- 
 sented. 8 App. 714 (3) (70 S. 
 E. 151). 
 
 Collection. 
 
 Where unauthorized collec- 
 tion of check ratified by payee's 
 conduct, bank not liable. 97/ 
 383 (23 S. E. 823). 
 
 Bank receiving from depos- 
 itor check upon another bank 
 and crediting it on his pass 
 book, not as cash, but as a 
 check, not held to be an abso- 
 lute purchaser of the check. 
 95/277 (1) (21 S. E. 717); 
 see 136/372 (71 S. E. 660). 
 
 Where drawee bank, to which 
 check had been sent for collec- 
 tion, charged depositor with 
 amount thereof, this was 
 equivalent to payment. Drawee 
 then held proceeds as agent of 
 payee and drawer was dis- 
 charged from liability on debt 
 for which check given. 117/ 
 772 (45 S. E. 47). ^ 
 
 Where check indorsed to 
 bank "for collection and credit 
 for deposit" to payee's account, 
 bank is payee's agent to collect 
 and title to check does not pass
 
 192 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 to bank in absence of agree- 
 ment evidenced otherwise than 
 by language of indorsement. 
 Such agency revocable by payee 
 at any time before collection 
 and may be terminated by in- 
 structing drawee bank to with- 
 hold payment. 10 App. 716 
 1,2 (74S. E. 78). 
 
 Where owner of check de- 
 livers it to bank for collection 
 and, before proceeds remitted, 
 bank fails, owner not entitled 
 to priority over general credit- 
 ors of bank. 10 App. 716 (3) 
 (74 S. E. 78) and citations. 
 
 Consideration. 
 
 Check is a contract in writ- 
 ing and not mere request on 
 third party to pay money ; it 
 imports a consideration and 
 none need be alleged in suit to 
 collect amount due thereon. 
 135/865 (1) (70 S. E. 798). 
 
 Check imports its own con- 
 sideration in the sense that con- 
 sideration will be presumed 
 until contrary appears. 4 App. 
 253 (3) (61 S. E. 138). 
 
 As between immediate par- 
 ties, check must be supported 
 by consideration, in order to be 
 enforceable aganist maker. 4 
 App. 253 (2) (61 S. E. 138). 
 
 When sued by payee, maker 
 can show by parol that check 
 is without consideration or that 
 consideration has failed. 4 
 App. 253 (2-a) (61 S. E. 138). 
 
 Plea that check given by de- 
 fendant without consideration 
 but with understanding that, if 
 third person would turn certain 
 money over to defendant in fu- 
 ture, check would be paid out 
 of it, and that money has never 
 been turned over to defendant, 
 sets out good defense. 4 App. 
 253 (2-a) (61 S. E. 138). 
 
 Check sued on, prima facie 
 case made by proof of execution 
 and delivery, presentment to 
 drawee, and refusal to pay. 4 
 App. 253 (3) (61 S. E. 138). 
 
 Declaration setting out check 
 and alleging that it was given 
 by defendant to pay for goods 
 delivered by plaintiff to third 
 person, and that check was 
 duly presented and payment re- 
 fused, set out cause of action. 
 4 App. 253 (1) (61 S. E. 138). 
 
 Dishonor. 
 
 Indorser of check discharged 
 from liability if check not pre- 
 sented with reasonable dili- 
 gence. Drawer not discharged 
 if presentation made any time 
 before suit is brought, unless 
 he is injured thereby, and then 
 only to extent of his injury. 
 1/304; 5/245; 44/406; 95/ 
 376 (22 S. E. 543) ; 100/147 
 (3) (27 S. E. 979) ; 1 App. 
 244 (4) (58 S. E. 212). 
 
 Drawer of check not held li- 
 able if check dishonored by 
 reason of insolvency of drawee 
 bank, and loss resulted, unless 
 check presented within reason- 
 able time; what is reasonable 
 time depends upon circum- 
 stances. 99/585 (27 S. E. 
 147). 
 
 In order to hold payee of 
 check liable for failure to pre- 
 sent it, in event of failure of 
 drawee, maker must have in 
 bank at all times after drawing 
 check either funds of his own 
 or some agreement with bank 
 which will guarantee payment 
 at such time as holder may 
 choose to present the check. 
 And it must appear that payee 
 has accepted check from draw- 
 er or that he is under some ob-
 
 DIGEST OF DECISIONS. 
 
 193 
 
 ligation to do so. 1 App. 244 
 (1,2) (58 S. E. 212). 
 
 Issuance of check includes 
 two guarantees' on part of 
 maker, that drawee is solvent 
 and that check will be paid on 
 presentation. 1 App. 244 (3), 
 (58 S. E. 212). 
 
 Check bearing direction of 
 maker that it is payable through 
 named bank, drawee not bound 
 to pay, unless check presented 
 through bank specified. Third 
 bank holding check protesting 
 for non-payment upon refusal 
 of drawee to pay, liable there- 
 for to drawer. 134/486 (68 S. 
 E. 85). 
 
 "Subject to check" means 
 subject to payment without lim- 
 itation or restriction, except 
 that the check must be pre- 
 sented on banking days within 
 banking hours. 114/788 (2) 
 (40 S. E. 825). 
 
 Refusal of bank to pay de- 
 positor's check in other, funds 
 than Confederate notes, which 
 was all he had on deposit, not 
 such wanton or fraudulent re- 
 fusal to pay holder of check as 
 would make bank liable. 42/ 
 244. 
 
 Where assignment of deposit 
 made after depositor had given 
 check to a different person 
 whether facts warranted pay- 
 ment of check first, though as- 
 signment first presented, was 
 question for jury. 109/682 (34 
 S. E.-998). 
 
 Where check sent to drawee 
 bank, drawer having sufficient 
 funds on deposit at the time to 
 pay it, and it was returned un- 
 paid, this was a refusal to pay, 
 though there was no protest 
 nor wilful dishonor of paper, 
 but refusal due to negligent 
 mistake of employee. In such 
 13 
 
 case bank liable for temperate 
 damages without proof of spe- 
 cial damage. 96/334 (I, 2) 
 (23 S. E. 190) ; 128/30 (2) 
 (57 S. E. 78). 
 
 Verdict for $200 held not too 
 large. 96/334 (3) (23 S. E. 
 190). 
 
 In suit to recover for wrong- 
 ful dishonor of check evidence 
 relating to customer's financial 
 credit and standing is allowable 
 though no claim made for spe- 
 cial damages. 128/30 (1) (57 
 S. E. 78). 
 
 Forged Check. 
 
 Bank cashing forged check 
 not relieved from liability be- 
 cause it did so in good faith, 
 believing from inquiry of per- 
 son presenting check that he 
 was authorized to sign deposit- 
 or's name. 85/293 (11 S. E. 
 616); see 81/597 (7 S. E. 
 738); 114/683 (40 S. E. 720); 
 see Savings Banks. 
 
 Where agent having broad 
 power of attorney to collect 
 and pay out money for princi- 
 pal, and generally to attend to 
 principal's business, deposited 
 money to principal's credit and 
 afterwards drew it out on 
 checks purporting to be signed 
 by principal and believed by the 
 bank to be genuine, held that 
 bank was discharged whether 
 checks in fact genuine or not. 
 57/283 (1). 
 
 Bank cannot recover from 
 bona fide holder for value 
 money paid on check of de- 
 positor to which drawer's name 
 was forged, unless holder neg- 
 ligently contributed to fraud, 
 or conduct tended to mislead 
 drawee, who was free from 
 fault. 17 App. 572 (1) (87 S. 
 E. 825).
 
 194 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 Payee of check whose in- 
 dorsement forged has no right 
 of action against drawee bank 
 because bank, supposing in- 
 dorsement genuine, charged 
 amount of check to depositor, 
 credited correspondent from 
 whom check received with 
 equal amount, and on discovery 
 of forgery returned check to 
 correspondent and made entries 
 on books cancelling former en- 
 tries. The check was neither 
 paid nor accepted. 88/252 ( 14 
 S. E. 577). 
 
 Post-Dated Check. 
 
 A post-dated check cannot 
 be paid or certified in advance 
 of its date; drawer does not 
 undertake to have funds in 
 drawee's hands until the time 
 of its date arrives. 8 App. 288 
 (3) (68 S. E. 1092). 
 
 Revocation. 
 
 Check in ordinary form may 
 be revoked at any time before 
 bank has paid it or committed 
 itself to pay it. 146/96 (90 S. 
 E. 718). 
 
 Bank is bound by notice of 
 revocation, orally or in writing, 
 and liable to the drawer to the 
 amount thereafter paid on the 
 check. 146/96 (90 S. E. 718). 
 
 Where debtor turned over to 
 another stock of goods to be 
 sold for benefit of creditors 
 and such other sold them and 
 mailed checks to creditors, after 
 which he was garnished by one 
 of the creditors, he was under 
 no legal duty to countermand 
 the checks, and could not coun- 
 termand them without incur- 
 ring liability to holders. 1 App. 
 628 (57S. E. 1074). 
 
 Where debtor sends check by 
 mail, title thereto remains in 
 
 sender until received by cred- 
 itor, unless creditor instructs 
 debtor to send check by mail. 
 1 App. 646 (57 S. E. 1033). 
 
 Maker of check cannot, in 
 absence of fraud or mistake, 
 countermand payment without 
 incurring liability to payee or 
 bona fide holder thereof. 17 
 App. 482 (1) (87S. E. 717). 
 
 Check, unaccepted, not de- 
 scribing particular fund or 
 using words of transfer of 
 whole or part of amount, not 
 an assignment of money to 
 drawer's credit. 120/714 (48 
 S. E. 122) ; 96/254 (2) (22 S. 
 E. 1001) and citations; 146/ 
 96 (90 S. E. 718), (98 S. E. 
 112) (23 Ga. App. 279) (3). 
 
 See Crimes and Misde- 
 meanors; Savings 
 Banks. 
 
 Clearing House. 
 
 Component banks of clear- 
 ing-house entitled to sue col- 
 lecting bank on dishonored 
 check of such bank, though 
 such bank was partnership. 
 144/120 (1) (86 S. E. 317). 
 
 Manager and cashier of 
 clearing-house association are 
 neither necessary nor proper 
 parties in such action. 144/120 
 (2). 
 
 See Insolvency. 
 
 Collateral. 
 
 Law giving lien upon "assets 
 of bank for collections on col- 
 laterals constitutional. 147/ 
 273 (93 S. E. 880). 
 
 Return of collateral pledged 
 not required before payment of 
 debt, even if the transfer was 
 illegal. 19 App. 435 (91 S. E. 
 509). 
 
 Bank is liable to owner for
 
 DIGEST OF DECISIONS. 
 
 195 
 
 unlawful disposition by one of 
 its officers contrary to terms of 
 contract, of collateral security 
 held by it. 20 App. 39 (92 S. 
 S. E. 398). 
 
 Collections. 
 
 Where bank took solvent bill 
 for collection and was instruct- 
 ed to allow it to be renewed, on 
 condition that solvent indorser 
 given, and where renewal al- 
 lowed without such indorser, 
 bank liable for damages sus- 
 tained by holder. 59/667 (1). 
 
 Law implies contract on part 
 of bank to obey instructions, 
 and on part of bailor to pay rea- 
 sonable compensation. 59/668 
 (3). 
 
 Acceptance by bank of 
 amount less than called for by 
 draft sent for collection, under 
 special instructions renders 
 bank liable for difference be- 
 tween amount called for and 
 amount remitted. Indebtedness 
 existing between drawer and 
 drawee no defense to bank. 101 
 S. E. 194 (Ga. App.). 
 
 Bank acting only as collect- 
 ing agent not liable in action 
 for money had and received for 
 amount paid on unauthorized 
 indorsement. 20 App. 811 (93 
 S. E. 542). 
 
 Accepted draft paid by check 
 on collecting bank, which for- 
 warded its own check to drawer 
 and then failed, drawee not li- 
 able. 137/23 (72S. E. 415). 
 
 Where drawee has on gen- 
 eral deposit with bank sufficient 
 funds to pay draft held by it 
 for collection and instructs the 
 bank to pay it, and the collect- 
 ing bank agrees to pay it by 
 charging same to his account, 
 the transaction constitutes pay- 
 ment of the draft as between 
 
 the drawer and drawee, and 
 the drawee is not liable if the 
 collecting bank subsequently 
 fails although it may have been 
 insolvent at the time, unknown 
 to the drawee. 18 App. 377 
 (89 S. E. 454). See also, 18 
 App. 599 (89 S. E. 1094). 
 
 Where bank in violation of 
 instructions deposited collec- 
 tions to credit of bank sending 
 notes, and used money, such 
 money was not impressed with 
 trust in favOr of sending bank 
 so as to give it priority over 
 general creditors and depositors 
 of collecting bank. 144/490 
 (1) (87 S. E. 399). 
 
 Draft paid ; remittance 
 stopped by examiner; priority 
 over general creditors not al- 
 lowed as to proceeds of draft 
 collected. 146/786 (92 S. E. 
 625). 
 
 Title to drafts and checks de- 
 posited for collection, bank to 
 be responsible only as agent for 
 collection, remains in depositor. 
 15 App. 319(2) (83S. E. 149). 
 
 Collecting bank holding draft 
 "for collection and credit" is 
 agent of drawer. 18 App. 599 
 (89 S. E. 1094). See 18 App. 
 377 (89 S. E. 454). 
 
 Wher> check or draft is de- 
 posited presumption is that it is 
 deposited merely for collection, 
 unless it is drawn in favor of 
 bank. 15 App. 319 (3). 
 
 Mere fact that note was made 
 payable at certain bank, would 
 not, in absence of special cir- 
 cumstances showing such au- 
 thority, constitute the bank col- 
 lecting agent for the holder and 
 authorize it to collect same, the 
 bank not being in possession of 
 the note itself. 21 App. 200 
 (93 S. 7. 1009). 
 
 Such an agency might be im-
 
 196 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 plied from a previous course of 
 dealings between the parties 
 wherein similar payments had 
 been either authorized or rati- 
 fied by the principal. 21 App. 
 200 (93 S. E. 1009). 
 
 Credit made by bank in an- 
 ticipation of collecting paper 
 deposited may be cancelled by 
 bank if paper is not paid. 15 
 App. 319 (4) (83S. E. 149). 
 
 See Check. 
 
 Consolidation. 
 
 Consolidation of one bank 
 with another requires consent 
 of two-thirds of the stock of 
 each . 2303 , Park's Ann . Code ; 
 22 App. 348 (5) (95 S. E. 
 1025). 
 
 Where bank itself can not 
 discharge its liabilities in due 
 course, directors may borrow 
 money or arrange for payment 
 of such liabilities by another 
 bank. 22 App. 348 (5) (95 S. 
 E. 1025). 
 
 See Directors. 
 
 Corporate Existence. 
 
 Where there was nothing to 
 show that bank had ceased to 
 be corporation, its continued 
 corporate existence will be pre- 
 sumed, though there were no 
 returns to State Treasurer nor 
 tax returns to county tax col- 
 lector. 145/458 (3) (89 S. E. 
 427). 
 
 Crimes and Misdemeanors. 
 Embezzlement. 
 
 One may be accessory in em- 
 bezzlement by officer or em- 
 ployee of bank or other cor- 
 porate body under 186, Park's 
 Penal Code, who is not himself 
 an officer or employee. 118/ 
 799 (3) (45 S. E. 614). 
 
 Evidence as to defendant's 
 
 straitened circumstances, show- 
 ing necessity for large sums of 
 money, admissible in indict- 
 ment against officer of bank 
 for embezzlement. 10/47 : but 
 see 108/60, 62 (33 S. E. 829). 
 Where money of principal is 
 knowingly used by agent for 
 his own private benefit and in 
 violation of duty to principal, 
 intention to restore money not 
 prevent act from being embez- 
 zlement. 11 App. 427 (1) (75 
 S. E. 512). 
 
 Fraudulent Insolvency. 
 
 Punishment provided by 
 204, Park's Penal Code, for 
 fraudulent insolvency of bank 
 does not amount to imprison- 
 ment for debt. 7 App. 101 (2), 
 108 (66 S. E. 383). 
 
 Intentional fraud and dis- 
 honesty of bank officials pun- 
 ishable under 204 Park's 
 Penal Code, not mere misman- 
 agement resulting in insolvency. 
 7 App. 101 (2), 108 (66 S. E. 
 383). 
 
 It was competent for the leg- 
 islature to legalize as evidence 
 a presumption that the insolv- 
 ency of a bank was caused by 
 the fraudulent act of the of- 
 ficers directly charged with its 
 affairs and also to place upon 
 such officers the burden of re- 
 butting such presumption. 7 
 App. 101 (3), 110 (66 S. E. 
 383) ; and see 124/15 (5) (52 
 S. E. 74; 128/668 (5) (57 S. 
 E. 889; 19 App. 36 (3) (90 S. 
 E. 1029). 
 
 Either insolvency or failure 
 to redeem bills raises presump- 
 tion that crime committed in 
 mismanagement of bank. 7 
 App. 101 (1) (66S. E. 383). 
 
 Burden of proof that trust 
 company named in indictment
 
 DIGEST OF DECISIONS. 
 
 197 
 
 is a chartered bank in prosecu- 
 tion for fraudulent insolvency, 
 under 204 Park's Penal Code 
 is upon the State, and this bur- 
 den can not be successfully car- 
 ried unless it appears that the 
 company has obtained a char- 
 ter authorizing it to exercise 
 the privileges of a bank. 13 
 App. 314(9) (79S. E. 170). 
 
 Section 204 Park's Penal 
 Code is not violation of the 
 fifth or fourteenth amendment 
 to the Constitution of the 
 United States, nor of Art. 1, 
 Sec. 1, Par. 3 of the State Con- 
 stitution. 142/636 (1, 2, 3) 
 (83 S. E. 540; 15 App. 520 (1, 
 2, 3) (83 S. E. 891) ; 148/758 
 (4) (98 S. E. 267). 
 
 Within the meaning of 204 
 Park's Penal Code insolvency 
 of bank is that condition in 
 which its entire property and 
 assets are insufficient to pay ail 
 of its debts, and 2306 Park's 
 Ann. Code does not furnish, a 
 definition of insolvency to be 
 applied in construing that sec- 
 tion. 142/636, 637 (4) (83 S. 
 E. 540) ; 15 App. 520 (4) (83 
 S. E. 891). 
 
 The capital stock of a bank 
 issued and paid for is not a lia- 
 bility that should be included 
 and taken into account in de- 
 termining the question of sol- 
 vency or insolvency of the 
 bank, on the trial of one of its 
 officers indicted under 204 
 Penal Code. 48/758 (6) (98 
 S. E. 267). 
 
 Solvency or insolvency is 
 matter admitting of opinion 
 evidence. 8 App. 129 (16) (68 
 S. E. 849); 20 App. 61 (11 
 (92 S. E. 555). 
 
 Immaterial whether bank is 
 bank of issue or not either in 
 prosecution for fraudulent in- 
 
 solvency of bank or for declar- 
 ing fraudulent dividends. 7 
 App. 101 (1) (66 S. E. 383); 
 8 App. 129 (3) (68S. E. 849). 
 
 Illegal Dividends. 
 
 Evidence to show existence 
 of conditions which made dec- 
 laration of dividend illegal, for 
 some time prior thereto, is rele- 
 vant, as tending to establish 
 condition of bank's affairs on 
 day in question, as well as to 
 show opportunities for knowl- 
 edge of these conditions. 8 
 App. 129 (10) (68 S. E. 849). 
 
 Charter and by-laws may be 
 highest evidence as to who 
 should control bank, yet it is 
 competent for witness to tes- 
 tify that designated person in 
 fact controlled it. 8 App. 129 
 (11) (68S. E. 849). 
 
 Expert accountant may give 
 summarized statement of what 
 books, containing multifarious 
 details, show provided the 
 books themselves are made ac- 
 cessible to the court and the 
 parties. 8 App. 129 (14) (68 
 S. E. 849); 20 App. 61 (10) 
 (92 S. E. 555). 
 
 Indictment against president 
 or one of directors need not set 
 out the names of other direct- 
 ors not indicted, though they 
 have participated in declaration 
 of dividend ; offense of presi- 
 dent or director is several 
 rather than joint. 8 App. 129 
 (2) (68 S. E. 849). 
 
 Motives of officers imma- 
 terial if they did those acts 
 which which are penal under 
 208, Park's Penal Code. 8 App. 
 129 (7) (68S. E. 849). 
 
 Evidence as to transactions 
 had by partnership with bank 
 admissible in connection with 
 other evidence tending to show
 
 198 
 
 PARK'S BANKING LAW of GEORGIA. 
 
 defendant was member of part- 
 nership. 8A PP . 129 (21) (68 
 S. E. 849). 
 
 Worthless Checks. 
 
 In order to sustain the valid- 
 ity of 718 (d), -Park's Penal 
 Code, relating to passing worth- 
 less checks, it will be construed 
 as requiring fraudulent intent 
 to constitute such an act a 
 crime. 17 App. 811 (1) (88 
 S. E. 687). 
 
 Drawing post-dated check 
 and failure to have funds in 
 bank at date set does not con- 
 stitute offense of passing worth- 
 less check. 17 App. 811 (2) 
 (88 S. E. 687). 
 
 See Insolvency. 
 
 Deed. 
 
 Deed made by president of 
 bank and countersigned by 
 cashier was valid, charter pro- 
 viding that all contracts should 
 be signed by president and 
 countersigned by cashier. 17/ 
 99; see 134/627 (2) (68 S. E. 
 436). 
 
 Deposits. 
 In General. 
 
 Deposit being general and 
 not evidenced by any regular 
 certificate of deposit or other 
 writing fixing time of payment, 
 statute of limitations not com- 
 mence to run in favor of bank 
 until demand and refusal, de- 
 mand not being delayed until 
 right has become stale. 88/333 
 (14S. E. 554); see 98/5 18 (25 
 S. E. 572). 
 
 Bank not liable for interest 
 on funds held on general de- 
 posit in absence of special con- 
 tract therefor. 81/597 (7 S 
 E. 738). 
 
 If bank pays interest to de- 
 positors, it may agree with 
 them at what time and in what 
 amounts interest will be paid. 
 114/788 (3) (40 S. E. 825). 
 
 Where vendor of cotton re- 
 ceived check in payment there- 
 for, delivered up check, had 
 amount placed in pass book, 
 and took possession of book, 
 sale was complete and relation 
 of debtor and creditor existed 
 between vendor and bank. 66/ 
 394. 
 
 General deposit of money in 
 bank is loan to bank by de- 
 positor and not distinguishable 
 from ordinary loan from one 
 man to another, payable on de- 
 mand. 52/496; 78/610 (3 S. 
 E. 772) ; 96/254, 259 (22 S. 
 E. 1001; 126/136, 145 (54 S. 
 E. 977) ; see 12 App. 488 (77 
 S. E. 589). 
 
 Deposit of money in bank, 
 creates chose in action. 146/ 
 447 (91 S. E. 487). 
 
 Where A deposits money 
 with direction that it is to be 
 paid on check which he has 
 given or will give to C, the 
 money belongs to A until the 
 bank either pays it or promises 
 C to pay it, unless it be de- 
 posited at the instance or pro- 
 curement of C, or under ar- 
 rangement with him. 51/325 
 (2). 
 
 Deposits are of two kinds, 
 viz : those in which banker be- 
 comes bailee, title remaining 
 with depositor, and those where 
 depositor parts with title and 
 lends money to banker, who, in 
 consideration of use of loan, 
 agrees to refund same amount 
 or any part thereof on demand. 
 121/278, 280 (48 S. E. 945) ; 
 see 12 App. 48 (77 S. E. 589). 
 
 Statement of account ren-
 
 DIGEST OF DECISIONS. 
 
 199 
 
 dered depositor showing bal- 
 ance due him held sufficient evi- 
 dence of bank's indebtedness to 
 him. 11/434. 
 
 Liability of bank to deposi- 
 tors under Scaling Ordinance 
 of 1865. 52/515. 
 
 Where money deposited by 
 grandmother was gift from 
 mother to child, whether after 
 notice of that fact to bank, 
 mother's assent to payment of 
 money on grandmother's check 
 could be inferred from fact that 
 bank sent for mother and she 
 and grandmother conversed 
 about the deposit and grand- 
 mother's right to draw it out 
 and she did not then or after- 
 wards give notice that she still 
 objected to payment to grand- 
 mother, she having previously 
 given express notice of objec- 
 tion, was question of fact for 
 jury. 89/218 (15 S. E. 482). 
 
 Deposit by husband in wife's 
 name, with agreement, that he 
 might draw it out on checks 
 signed with her name by him- 
 self ; bank not liable to her for 
 money so drawn. 21 App. 183 
 (94 S. E. 90). 
 
 Absence of entry on books 
 of bank has evidential value as 
 tending to show that no deposit 
 made, where cashier testified 
 that deposit slips were always 
 entered on books on day of de- 
 posit. 137/285 (6-a) (73 S. E. 
 387). 
 
 Deposit may be shown by 
 parol proof. 18 App. 654 (2) 
 (90 S. E. 225) ; 18 App. 610 
 (89 S. E. 1095). 
 
 That deposit not to be en- 
 tered on books does not neces- 
 sarily extend the transaction 
 beyond the scope of the cash- 
 ier's authority and the effect of 
 such transaction may amount 
 
 to a deposit in the bank itself. 
 20 App. 121 (2) (92 S. E. 
 759). 
 
 Title to money placed on 
 general deposit passes to bank 
 the moment deposit is made. 
 128/577 (1) (58 S. E. 28); 
 see 108/602, 611 (34 S. E. 
 160) ; 12 App. 488 (77 S. E. 
 589). 
 
 Where checks deposited by 
 plaintiff in ordinary course of 
 business were credited as cash, 
 and he was entitled to draw 
 against deposit at once, check 
 so deposited became property 
 of bank, which was not entitled 
 to recharge the same on its sub- 
 sequently becoming lost in the 
 mail in process of collection. 
 142/236 (82 S. E. 625). 
 
 Where draft is deposited by 
 payees in bank other than that 
 on which it is drawn, "for de- 
 posit * * * to the credit 
 of" payees, prhna facie title to 
 draft and proceeds thereof is in 
 payees. 144/181 (1) (86 S. 
 E. 538). 
 
 Whether parties intended 
 that title to draft should be in 
 bank in which deposited, rather 
 than in payees, was for jury 
 under evidence here. 144/181 
 (1) (86S. E. 538). 
 
 Where evidence did not show 
 that title to draft was in plain- 
 tiff bank, error to direct ver- 
 dict for plaintiff. 144/181 (1) 
 (86 S. E. 538). 
 
 Title to checks and drafts re- 
 ceived on deposit as cash cre- 
 ates relation of debtor and 
 creditor between bank and de- 
 positor. 15 App. 319 (1) (83 
 S. E. 149). 
 
 Where parties intend that 
 title to paper shall pass to bank, 
 that bank is understood to have 
 right to charge amount back if
 
 200 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 it shall prove uncollectible, will 
 not change relation of debtor 
 and creditor. 15 App. 319 (4) 
 (83 S. E. 149). 
 See Bill of Lading. 
 
 Certificate of Deposit. 
 
 Certificate of deposit is debt 
 within meaning of charter pro- 
 vision making directors person- 
 ally liable for indebtedness in 
 excess of given amount. 30/ 
 580. 
 
 Certificate of deposit payable 
 to order is negotiable, and in- 
 dorser thereon is liable on his 
 indorsement. 7/84. 
 
 Certificate of deposit payable 
 to order is negotiable ; not ren- 
 dered indefinite by condition as 
 to interest payment. 147/637 
 (95 S. E. 223). 
 
 Certificate of deposit payable 
 to order, but indicating no time 
 of payment other than can be 
 inferred from words "interest 
 at the rate of 7 per cent, on 
 call, and 10 per cent, per an- 
 num," is payable on demand 
 and due immediately. 56/605 
 (3); see 64/42 (1). 
 
 Certificate of deposit payable 
 to order "on return of this cer- 
 tificate properly endorsed" not 
 due until payment actually de- 
 manded. 108/357 (33 S. E. 
 985); 147/638 (95 S. E. 223). 
 
 Certificate of deposit certify- 
 ing that sum deposited to credit 
 of third person subject to check 
 of such person, and reserving 
 no control to depositor is prom- 
 ise of bank to pay to third per- 
 son upon presentation of cer- 
 tificate; but if deposit subject 
 to check only on certain condi- 
 tions, promise to pay depends 
 upon compliance with condi- 
 tions ; general allegation of 
 compliance subject to special 
 
 demurrer. 127/448 (56 S. E. 
 486). 
 
 Certificate of deposit is sub- 
 sisting chose in action and rep- 
 resents fund it describes, so 
 that delivery of it as gift is an 
 equitable assignment of fund 
 for which it calls. 3 App. 742 
 (1) (60 S. E. 480). 
 
 Delivery of certificate of de- 
 posit was valid gift causa mor- 
 tis. Subsequent deposit of cer- 
 tificate by donor and giving 
 check for its amount did not 
 affect validity of gift but was 
 means adopted to perfect it. 
 Such check operated as equita- 
 ble assignment of certificate 
 and therefore of fund it rep- 
 resented. Failure of donee to 
 present check until after death 
 of donor not revocation of gift. 
 3 App. 742 (2) (60S. E. 480). 
 
 Sending certificate of deposit 
 through mails to party to whom 
 payer had previously expressed 
 an intention to give it is a suf- 
 ficient delivery to consummate 
 the gift although certificate not 
 indorsed. 18 App. 182 (89 S. 
 E. 161). 
 
 Unsigned notation on certifi- 
 cate of deposit that in 'event of 
 death of the payee it was to be 
 paid to two named parties does 
 not constitute a gift of the cer- 
 tificate where there was no de- 
 livery. 18 App. 418 (89 S. E. 
 492)". 
 
 Certificate of deposit payable 
 "to order of administrator, 
 12 months after date, on re- 
 turn of certificate properly in- 
 dorsed, with interest at the rate 
 of six per cent, per annum. In- 
 terest will cease at maturity," 
 is not due until it is returned to 
 bank properly indorsed and 
 payment thereof is actually de-
 
 DIGEST OF DECISIONS. 
 
 201 
 
 manded. 145/508 (1) (89 S. 
 E. 516). 
 
 Garnishment. 
 
 Bank under summons of gar- 
 nishment receiving deposits of 
 defendant and paying them out 
 on his check, held liable to the 
 garnishing creditor for amount 
 deposited up to time of filing 
 answer. 51/325 (1). 
 
 Where agent deposited in 
 bank to his own credit money 
 belonging to principal and 
 creditor of agent garnished 
 bank, principal could file claim 
 affidavit and bond and have the 
 money paid to him on agent's 
 check. 52/494. 
 
 Money deposited to credit of 
 "P, agent," could be reached by 
 garnishment at instance of 
 creditor of P, and if bank knew 
 of creditor's contention that 
 money belonged to P individu- 
 ally, it could not, except at its 
 peril, pay the money to the al- 
 leged principal. Creditor could 
 not obtain injunction to prevent 
 bank from so paying the 
 money, though the debtor was 
 insolvent. 99/300 (25 S. E. 
 697). 
 
 Deposit of check, in name of 
 one who had received it to take 
 up his note to the maker of the 
 check when the note should be 
 presented by an indorsee, was 
 a trust fund for that purpose, 
 and not subject to garnishment 
 by another creditor. 19 App. 
 61 (90S. E. 975). 
 
 A principal may follow .his 
 money deposited by an agent in 
 the latter's name, and recover 
 the same wljerever found, un- 
 less the rights of innocent third 
 persons have intervened. 
 3577, Park's Ann. Code. 52/ 
 497. 
 
 Generally payee of bill of ex- 
 change indorsing it "for deposit 
 to credit of" himself retains 
 ownership of bill and its pro- 
 ceeds until so deposited and 
 proceeds in hands of collecting 
 bank are subject to garnish- 
 ment as his assets. 87/45 (1) 
 (13 S. E. 160); see 73/383; 
 89/108 (3) (14 S. E. 891); 
 10 App. 716 (74S. E. 78). 
 
 Bet-Off. 
 
 Against suit to recover bal- 
 ance due on general deposit ac- 
 count, bank may set off matured 
 debt due to it by depositor. 
 129/582 (2) (59 S. E. 291). 
 See 19 Ga. App. 575 (91 S. E. 
 904). 
 
 But the exercise of this right 
 is optional. Too late to exer- 
 cise right of set-off after ap- 
 praisers appointed to set apart 
 year's support to widow of de- 
 positor. 12 App. 488 (77 S. E. 
 589). 
 
 Deposit made by debtor of 
 bank in name of "R. & Co." 
 competent for bank to show 
 funds really money of R and 
 claim application of fund to in- 
 debtedness. 129/582 (1) (59 
 S. E. 291). 
 
 Bank having money on de- 
 posit with another and becom- 
 ing insolvent, being then in- 
 debted to depositary on notes 
 exceeding amount of deposit, 
 depositary could appropriate 
 deposit, though notes not due. 
 96/254 (1) (22S. E. 1001). 
 
 Fact that bank which owned 
 note failed to exercise its right 
 of set-off and allowed principal 
 debtor to check out all money 
 on deposit not discharge surety 
 on the note. 126/136 (54 S. E. 
 977). 
 
 Bank being payee and owner
 
 202 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 of accepted bill, under no duty 
 to acceptor to apply funds of 
 drawer on general deposit to 
 payment of bill. 78/222 (6) 
 (2 S. E. 547); s. c. 79/810 
 (6) (2 S. E. 547). 
 
 State depositary becoming 
 insolvent while indebted to 
 State, and being put in hands 
 of receiver, depositors who are 
 indebted to bank on notes can 
 set off against such notes in 
 hands of receiver amounts due 
 them on their deposits. 94/95 
 (21 S. E. 146). 
 
 Wife of president of bank 
 sued as depositor on overdraft 
 could set off money her hus- 
 band had collected for her and 
 deposited to his own credit. 
 108/400 (33 S. E. 987). 
 
 Bank's claim against assignee 
 could not be set off against sub- 
 sequent assignee. 19 App. 575 
 (91 S. E. 904). 
 
 Bank may apply deposit to 
 matured debt due it regardless 
 of depositor's insolvency and of 
 whether he is liable as principal 
 or only secondarily, and though 
 check has been drawn against 
 deposit for money previously 
 collected by depositor for 
 payee. 14 App. 240 (80 S. E. 
 703). 
 
 Where receiver was appoint- 
 ed for bank placed in exami- 
 ner's hands pursuant to 2290, 
 Park's Ann. Code, debtor could 
 not by securing transfer to him- 
 self of depositor's account after 
 posting of notice have same set 
 off at its face value against in- 
 debtedness. 144/78 (86 S. E. 
 231). 
 
 Special Deposit. 
 
 By habitually receiving spe- 
 cial gratuitous deposits through 
 cashier, national banks will in- 
 
 cur liability for gross negli- 
 gence in respect to such depos- 
 its. 58/369 (1). 
 
 Bank liable for special de- 
 posit of bonds, though acting 
 without pay, stolen by cashier, 
 unless bank shows it did its full 
 duty in selecting such officer, 
 and did not disregard indica- 
 tions of dishonesty. 93/503 
 (21 S. E. 55) ; 95/394 (22 S. 
 E. 628). 
 
 Special deposit consisting of 
 stocks and bonds, written au- 
 thority, indorsed on the certifi- 
 cate of deposit to pay out the 
 dividends and coupons, no au- 
 thority for surrendering the 
 stocks and bonds themselves. 
 58/369 (3). 
 
 Special deposit withdrawn by 
 person with authority from de- 
 positor, bank not liable, though 
 neither corporation nor its of- 
 ficer had any knowledge of the 
 authority. 58/369 (2). 
 
 Deposit may be for a specific 
 purpose; such a deposit while 
 partaking of the nature of a 
 "special" deposit more accu- 
 rately falls within a class of its 
 own and may be defined as one 
 in the making of which a trust 
 is constituted with a special 
 duty as to its application as- 
 sumed by the bank. 21 App. 
 356,364 (94S. E. 611). 
 
 A deposit of part of the pro- 
 ceeds of a loan made by the 
 bank under a requirement that 
 such fixed amount be left on 
 deposit with the bank can not 
 properly be regarded as either 
 a special deposit or one for a 
 specific purpose, but is an en- 
 forced deposit and renders the 
 loan transaction usurious. 21 
 App. 356, 365 (94 S. E. 611). 
 
 Deposit to pledgee's credit to 
 protect him from possible loss
 
 DIGEST OF DECISIONS. 
 
 203 
 
 on account of releasing goods 
 pledged, held to be general, not 
 special deposit, though bank 
 had notice of depositor's pur- 
 pose. 119/901 (47 S. E. 208). 
 Bank is agent of debtor to 
 pay over money deposited for 
 creditor. 20 App. 122 (92 S. 
 E. 759) . 
 
 Deposit by debtor in bank to 
 account of his creditor not con- 
 stitute payment to creditor, un- 
 less he consents to deposit ; if 
 made without his consent, bank 
 is merely debtor's agent to pay 
 money to creditor. 116/45 
 (2) (42 S. E. 475). 
 See Bill of Lading; Di- 
 rectors. 
 
 Directors. 
 In General. 
 
 Control of all property of 
 bank is generally vested in di- 
 rectors. 7/196. 
 
 Agreement entered into by 
 directors of a bank with a trust 
 company, which assumes all the 
 liabilities of the bank upon a. 
 transfer of all of its assets, to 
 indemnify the trust company 
 against loss thereon is enforce- 
 able. 22 App. 348 (95 S. E. 
 1025). 
 
 Authority of officers, by reso- 
 lution of directors, to give notes 
 and collaterals for borrowed 
 money, extended to renewals, 
 where no revocation. 147/273 
 (93 S. E. 880). 
 
 Directors not repudiating 
 legal act of cashier, done for 
 benefit of bank, held that such 
 act was act of the bank. 20/ 
 276 (8). 
 
 Director had no authority to 
 ratify unauthorized sale by 
 bank's attorney of land belong- 
 ing to bank. 108/376 (33 S. E. 
 1003). 
 
 Directors are agents of cor- 
 poration not of stockholders; 
 but if they stipulate for ulti- 
 mate redemption of bills of 
 bank, if bank be bound by acts 
 of agent, the stockholders are 
 liable upon their special agree- 
 ment. 18/412 (13). 
 
 Benefit from deposit not such 
 as would disqualify director 
 from voting as councilman to 
 make the bank the city's de- 
 pository. 22/278-9 (4) (96 S. 
 E. 14). 
 
 Liability of. 
 
 Directors made individually 
 liable for excess of bank's in- 
 debtedness over amount al- 
 lowed by charter, held that 
 their liability was not penal but 
 remedial ; joint and not sev- 
 eral; and that neither absence 
 nor dissent would relieve di- 
 rector from liability. 18/318 
 (2); 20/275 (3); 30/580. 
 
 Directors not relieved from 
 liability imposed by charter for 
 loss arising from waste or neg- 
 lect of assignee of bank. 30/ 
 580 (4). 
 
 Such liability did not expire 
 ivith expiration of act of in- 
 corporation. 30/581 (7). 
 
 Directors' liability under 
 charter for excess of debts of 
 bank over given amount was 
 statutory liability and not 
 barred until after twenty years. 
 30/580; 12/104. 
 
 Certificate of deposit is debt 
 within meaning of charter pro- 
 vision making directors person- 
 ally liable for indebtedness in 
 excess of given amount. 30/ 
 580. 
 
 Director of bankrupt bank 
 cannot buy up claims against it 
 at a discount and entitle him- 
 self to credit therefor at full
 
 204 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 face value in settlement with 
 creditors on his personal liabil- 
 ity as a stockholder. 60/174. 
 
 Notice to. 
 
 Notice or knowledge of fail- 
 ure of consideration of note 
 which director sells to bank be- 
 fore maturity is not imputable 
 to bank, where seller acted only 
 for himself and bank was rep- 
 resented by another official. 
 112/823 (1) (38 S. E. 103). 
 
 See Cashier; National 
 Bank. 
 
 Discount. 
 
 The import of the word "dis- 
 count" necessarily carries with 
 it the charging of interest in 
 advance and is within the ex- 
 press granted power of na- 
 tional banks. 21 App. 356, 361 
 (94 S. E. 611). 
 
 See Accountant and Gen- 
 eral Manager; Presi- 
 dent; Usury. 
 
 Dividends. 
 
 Dividends can be declared 
 only out of net profits. 103/ 
 145 (1) (29 S. E. 695); 130/ 
 515 (5) (61 S. E. 117). 
 
 See Crimes and Misde- 
 meanors. 
 
 Fraudulent Organization. 
 
 Fraudulent organization of a 
 bank not set up as defense 
 against payment of an accept- 
 ance. 25/534. 
 
 Charges in bill that small 
 sum was paid in money for 
 bank stock and balance paid in 
 notes, and that purchasers be- 
 came president and directors 
 and reported to Governor that 
 one-fourth of stock was paid 
 in, which they knew was un- 
 
 true, require answer and ex- 
 planation. 24/273 (8). 
 
 Garnishment. 
 
 See Bill of Lading; De- 
 posit. 
 
 Gift Causa Mortis. 
 See Deposit; Savings 
 
 Bank. 
 Guaranty. 
 
 Guaranty by bank solely for 
 benefit of another, ultra vires. 
 But agreement to "guarantee" 
 payment of draft, may be orig- 
 inal and not a collateral under- 
 taking and binding upon the 
 bank. 19 App. 177 (91 S. E. 
 251); 22 App. 700 (97 S. E. 
 205). 
 
 See National Banks. 
 
 Husband and Wife. 
 See Married Woman. 
 
 Insolvency. 
 
 Where insolvent bank gave a 
 note of one of its customers in 
 payment of a check, instead of 
 cash, it was not necessarily a 
 fraud against creditors and did 
 not constitute a preference. 
 147/436 (94 S. E. 554). 
 
 2360, Park's Ann. Code, 
 prohibiting conveyances and as- 
 signments by bank in contem- 
 plation of insolvency or after 
 insolvency except for the bene- 
 fit of* all creditors and stock- 
 holders has no application 
 against an innocent assignee for 
 value without knowledge of the 
 condition of the bank. 19 App. 
 271 (91 S. E. 339). 
 
 Meaning of notice or knowl- 
 edge discussed. 107/565, 569 
 (33 S. E. 802) ; see 12 App. 
 186, 189 (76S. E. 1077).
 
 DIGEST OF DECISIONS. 
 
 205 
 
 Depositor or bona fide cred- 
 itor who draws check on the 
 bank or receives effects there- 
 from without notice of or rea- 
 son to suspect insolvency is a 
 bona fide purchaser. 86/284 
 (3-2) (12S. E. 635). 
 
 Evidence here authorized 
 holding that trustees of clear- 
 ing house association were not 
 chargeable with notice of in- 
 solvency of bank at time of is- 
 suance and delivery to it of 
 clearing house certificates. 
 132/100 (8) (63 S. E. 907). 
 
 Depositor checking out 
 money in regular course of 
 business, without notice of in- 
 solvency of bank protected ; 
 but if it has notice and bank 
 pays check with intent to create 
 a preference, he is liable to re- 
 pay difference between amount 
 paid and his pro rata share of 
 bank's assets. 128/577 (2) 
 (58 S. E. 28). 
 
 Assignment to pay existing 
 debt not void because amount 
 assigned larger than reasonably 
 sufficient to pay debt and be- 
 cause there is stipulation that 
 excess shall be returned to 
 bank. 10/10 (5). 
 
 Preference is unlawful only 
 when transfer is made to sat- 
 isfy antecedent debt. 132/100, 
 103 (63 S. E. 907). 
 
 Fraudulent transfer by bank 
 in contemplation of insolvency, 
 not made by pledge of collat- 
 eral, unless for purpose of se- 
 curing an antecedent debt. 19 
 App. 435 (3) (91 S. E. 509). 
 
 Creditor holding collateral is 
 entitled to share in distribution 
 of assets of insolvent bank on 
 amount of his debt reduced by 
 value of collateral. 147/74 (92 
 S. E. 868). 
 
 Individual liability of stock- 
 
 holders to depositors is asset 
 of insolvent bank. 2249, 
 Park's Arm. Code. 141/227 
 (3) (80 S. E. 1085) ; 148/663 
 (98 S. E. 86) ; 148/719 (98 
 S. E. 343) ; 148/854 (98 S. E. 
 491). 
 
 Capital stock not a liability to 
 be taken into account in deter- 
 mining the question of a bank's 
 insolvency on the trial of one 
 of its officers for the penal of- 
 fense of permitting it to be- 
 come fraudulently insolvent. 
 148/758 (98 S. E. 26). 
 
 Stockholder is not a creditor 
 in determining the question of 
 solvency or insolvency. 148/ 
 758, 761 (98 S. E. 267) ; 20 
 App. 61 (92 S. E. 555). 
 
 Receivership, injunction 
 against creditors and other 
 equitable relief, not ordinarily 
 to be granted on suit by di- 
 rectors. But stockholders will 
 not be allowed to complain 
 thereof collaterally in suit 
 brought by receivers to enforce 
 their individual liability to de- 
 positors. 148/858 (98 S. E. 
 491). 
 
 Same defenses available 
 against receiver as against bank 
 itself. 20 App. 36 (92 S. E. 
 '397). 
 
 See Crimes and Misde- 
 meanors; Cashier; De- 
 posit. 
 
 Interest. 
 See Discount. 
 
 Loans. 
 
 Charter provisions limiting 
 amount of loans, requiring two 
 or more- good indorsers on 
 notes and bills discounted, and 
 providing that all notes dis- 
 counted at the bank should be 
 renewed annually, were direct-
 
 206 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 ory only, and debt could be col- 
 lected though contracted in dis- 
 regard of these provisions. 2/ 
 92 (9). 
 
 Married Woman. 
 
 Where bank did not know or 
 have reason to know that 
 money used by husband in pay- 
 ment of debt due by him to it 
 was money of wife, wife will 
 be bound. 20 App. 220 (2) 
 (92 S. E. 964). 
 
 Messenger. 
 
 Messenger whose business 
 was only to collect commercial 
 papers, notice to, of dissolution 
 of partnership, not notice to 
 bank. 97/582 (3) (25 S. E. 
 362). 
 
 National Banks. 
 
 Comptroller of Currency. 
 
 Comptroller of Currency ; 
 authority of deputy and of act- 
 ing Comptroller. 146/118 (90 
 S. E. 965). 
 
 Jurisdiction of State Courts. 
 
 Non-resident national bank 
 giving attachment bond could 
 be sued on it in this State in the 
 court to which the attachment 
 was returnable. Service in 
 such suit. 78/449 (3 S. E. 
 269). 
 
 Judgment rendered in State 
 court against national bank, re- 
 turn of nulla bona made, and 
 bank ceasing to discharge func- 
 tions as fiscal agent of United 
 States and disposing of assets 
 among stockholders, injunction 
 granted and receiver appointed. 
 63/549. 
 
 Until receiver appointed by 
 Federal court, neither law nor 
 comity requires State court to 
 suspend its equitable remedy 
 
 until former shall act. 63/549. 
 
 State court could not enter- 
 tain stockholders' suit to wind 
 up affairs of national bank, 
 where no other relief is prayed. 
 143/627 (85 S. E. 881). 
 
 Where directors of insolvent 
 national bank undertake to 
 liquidate its affairs and consoli- 
 date it with another bank, 
 stockholders' suit attacking such 
 consolidation, but praying no 
 relief against the directors of 
 the absorbing bank, though 
 praying to wind up affairs of 
 liquidating bank, must be 
 brought in Federal court. 143/ 
 627 (85 S. E. 881). 
 
 National bank, having gone 
 into voluntary liquidation, li- 
 able to actions as domestic cor- 
 poration. 65/603. 
 
 Seizure of property belong- 
 ing to national bank before 
 final judgment, by virtue of 
 any attachment issued under 
 State law, is void, and bond 
 given by bank to dissolve such 
 attachment served by summons 
 of garnishment is also void. 
 91/264 (18 S. E. 137). 
 
 National bank can not be en- 
 joined from selling land under 
 power in mortgage transferred 
 to it. 147/753 (95 S. E. 246). 
 
 National bank can not be en- 
 joined from prosecuting suit 
 on note before final judgment. 
 148/498 (97 S. E. 70). 
 
 Powers. 
 
 A national bank is a corpora- 
 tion, powers of which are de- 
 fined and limited by acts of 
 Congress authorizing creation 
 of such banks. 10 App. 270 
 (1). (73 S. E. 405). 
 
 Decisions of the United 
 States Supreme Court are of 
 paramount authority as to pow-
 
 DIGEST OF DECISIONS. 
 
 207 
 
 ers and liabilities of national 
 banks. 10 App. 270 (2) (73 
 S. E. 405). 
 
 Government alone is entitled 
 to complain of violation by na- 
 tional bank of National Bank 
 Act. 18 App. 564 (90 S. E. 
 91). 
 
 National bank is not prohib- 
 ited by National Bank Act from 
 taking mortgage on real estate 
 by way of security on debt pre- 
 viously contracted. 18 App. 
 564 (90S. E. 91). 
 
 A national bank cannot au- 
 thorize or ratify an absolutely 
 ultra vires act of its agents or 
 officers. 10 App. 270 (3) (73 
 S. E. 405). 
 
 Neither the directors nor 
 officers or agents of a national 
 bank have authority to institute 
 prosecutions for violations of 
 the laws of the State, or to 
 cause requisition papers to be 
 issued for alleged criminals. 10 
 App. 270 (4) (73S. E. 405). 
 
 National bank, in negotiating 
 its paper, can bind itself for 
 payment thereof by its indorse- 
 ment thereon ; but it cannot 
 guarantee payment of paper of 
 others, or become surety there- 
 on, solely for benefit of latter. 
 135/614 (1) (69 S. E. 1123). 
 See 18 Ga. App. 151 (89 S. E. 
 994-999). 
 
 National bank could not 
 ratify cashier's act in obtaining 
 from third person a loan to a 
 borrower from the bank of 
 amount greater than that al- 
 lowed by the Federal statute, 
 and was not estopped to set up 
 invalidity of bank's guaranty 
 of payment by such borrower 
 to the third person, extended 
 by the cashier. 135/614 (2) 
 (69 S. E. 1123). 
 
 National bank cannot have 
 
 lien on shares of stockholders. 
 115/608 (1) (41 S. E. 983). 
 
 Sale of stock in national bank 
 to pay assessment under Rev. 
 Stat., 5205, void if price ob- 
 tained does not equal assess- 
 ment. 103/851 (31 S. E. 78). 
 
 Note given to prevent prose- 
 cution for officer's violation of 
 national bank law, void. 19 
 App. 208 (91 S. E. 346). 
 
 Under the National Bank 
 Act, cashiers of national banks 
 hold their office subject to dis- 
 missal at the pleasure of the 
 board of directors, and al- 
 though elected for a fixed term 
 cashier may be dismissed be- 
 fore expiration thereof with- 
 out cause. 23 App. 441 (2) 
 (98 S. E. 402). 
 
 Taxation. 
 
 Business of a national bank 
 can not be taxed by municipal- 
 ity. 59/648'; see 105/567 (32 
 S. E. 617). 
 
 National banks are not sub- 
 ject to license tax by state or 
 municipalities. 62/645. Tax 
 imposed on presidents of all 
 banks doing business in this 
 State is inoperative when ap- 
 plied to presidents of national 
 banks. 105/567. 
 
 Usury. 
 
 Section of national banking 
 act providing that debtor who 
 has paid bank more than legal 
 interest may recover twice the 
 amount of the interest paid, 
 construed. 135/687 (70 S. E. 
 246). 
 
 Penalty imposed upon na- 
 tional banks for charging usury 
 is exclusive; law of this State 
 that homestead waiver when 
 part of usurious contract is 
 void, not applicable to national
 
 208 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 banks. 112/232 (37 S. E. 
 381); see 12 App. 472 (77 S. 
 E. 320) ; 21 App. 356 (94 S. 
 E. 611); 22 App. 58 (1) (95 
 S. E. 381). 
 
 Though no interest collecti- 
 ble where usury charged, plea 
 praying that excess be deduct- 
 ed, and deduction made, de- 
 fendant can not complain of 
 verdict. 109/573 (1) (35 S. 
 E. 61). 
 
 State statutes relating to 
 usury have no application to 
 negotiable instruments held by 
 national banks. Remedy given 
 by Act of Congress against na- 
 tional banks for taking usurious 
 interest is exclusive. 12 App. 
 472 (1) (77 S. E. 320). 
 
 The rule is applicable in all 
 cases where negotiable instru- 
 ment infected with usury is 
 made payable to such bank 
 originally, or where it has been 
 discounted by the bank, and the 
 bank as holder, is endeavoring 
 to collect the face thereof with 
 knowledge of the usury. 12 
 App. 472 (2) (77 S. E. 320). 
 
 Not usury for national bank 
 to take interest in advance at 
 highest legal rate by way of 
 discount. 21 App. 356 (94 S. 
 E. 611). 
 
 Penalty on national banks 
 prescribed by 4198, U. S. R. 
 S., for the taking of usury can 
 not be recovered unless the 
 usurious interest has been ac- 
 tually paid. 21 App. 356, 366 
 (94 S. E. 611). 
 
 When usury on notes for 
 loan is charged by national 
 bank, the bank can not recover 
 on a renewal note more than 
 amount of original loan, though 
 only legal interest be charged 
 on the renewal. 22 App. 58 
 (2) (95 S. E. 381). 
 
 Limitation of two years, in 
 National Bank Act, applies 
 only to suits for penalty of 
 double the interest paid, and 
 not to defense of usury to de- 
 feat recovery of interest; and 
 it begins to run from time of 
 payment. 22 App. 58 (3) (95 
 S. E. 381). 
 
 Set-off not allowed as to al- 
 ledged interest actually paid 
 national bank, as the only rem- 
 edy in such case is an action 
 of debt under the National 
 Banking Act to recover twice 
 the amount of the interest paid. 
 22 App. 58 (4) (95 S. E. 381). 
 
 Payment on usurious debt to 
 national bank applied to princi- 
 pal, not interest, in absence of 
 direction. 22 App. 58 (5) (95 
 S. E. 381). 
 
 Attorney's fees for collec- 
 tion, provision for, in note to 
 national bank, not usurious. 
 22 App. 59 (6) 62 (95 S. E. 
 381). 
 
 A surety or guarantor of a 
 debt to a national bank is not 
 discharged because the bank 
 charged or received usury. 12 
 App. 472 (3) (77 S. E. 320) ; 
 22 Ga. App. 58 (1) (95 S. E. 
 381). 
 
 See Discount. 
 
 Notary Public. 
 
 Notary rightfully employed 
 by bank, bank generally not li- 
 able for malicious protest made 
 by ; immaterial that notary is 
 also employee of bank. 88/308 
 (2,3) (14 S. E. 552). 
 
 Notice to Officers When No- 
 tice to Bank. 
 
 See Cashier; Directors; 
 Messenger; President.
 
 DIGEST OF DECISIONS. 
 
 209 
 
 Officers of Banks. 
 
 See Accountant and Gen- 
 eral Manager; Bond; 
 Cashier; Directors; Na- 
 tional Bank; President. 
 
 Partnership. 
 
 That checks frequently drawn 
 by partnership to discharge in- 
 dividual debts of its members 
 did not constitute such a course 
 of dealing as would justify 
 bank in assuming that it was 
 within scope of partnership 
 business to give its note in sat- 
 isfaction of debt due by one of 
 the partners to the bank. 1 147 
 185 (3) (39S. E.920). 
 
 Application of collections on 
 collateral securities for debts of 
 partnership to debts of indi- 
 vidual partners unlawful. 101/ 
 134 (28S. E. 644). 
 
 Pass Book. 
 
 Entry on pass book equiva- 
 lent to a receipt for money, and 
 establishes the relation of 
 debtor and creditor between the 
 bank and the depositor. 58/62. 
 
 Pass book given to depositor 
 in savings bank, entries in 
 which are shown to have been 
 made by officer of bank, prima 
 facie evidence that bank is in- 
 debted to depositor for balance 
 shown by book. 115/939 (42 
 S. E.269). 
 
 Pass book not conclusive evi- 
 dence of amount due depositor. 
 129/582 (3) (59 S. E. 291); 
 21 Ga. App. 183 (1) (94 S. E. 
 90). 
 
 Where entry in pass book 
 purporting to show that owner 
 of book had credit in bank for 
 specified balance was ab initio 
 false and third person contem- 
 plating purchase of interest in 
 14 
 
 owner's business applied to 
 banker for information as to 
 genuineness and accuracy of 
 the credit and the truth was 
 concealed from him and he was 
 defrauded and suffered loss, 
 held that the banker was liable 
 in damages for such loss. 97 '/ 
 673 (25 S. E. 754). 
 See Savings Bank. 
 
 Post-Dated Check. 
 See Check. 
 
 President. 
 Powers. 
 
 The president of a bank is its 
 chief executive officer, and, in 
 the absence of any showing to 
 the contrary, will be presumed 
 to be the agent in charge of its 
 affairs. 20 App. 35 (92 S. E. 
 394). 
 
 President of bank has no 
 power to bind it, except in dis- 
 charge of his ordinary duties; 
 and it is not one of his ordinary 
 duties to release debtors of the 
 bank from payment of their ob- 
 ligations to it. 3 App. 364 (5) 
 (60 S. E. 13). 
 
 Ratification of unauthorized 
 release of debtor by president 
 relied on, specific acts of ratifi- 
 cation must be alleged; if ac- 
 quiescence and receiving bene- 
 fits relied on as estoppel, knowl- 
 edge by directors and benefits 
 to bank must be alleged and 
 proved ; delay in enforcing 
 payment does not show ratifi- 
 cation. 3 App. 365 (6) (60 S. 
 E. 13). 
 
 Bank president negotiating to 
 third person, for his own bene- 
 fit, accommodation note pay- 
 able to cashier and indorsed in 
 blank, not notice to such third 
 person of impropriety or ille-
 
 210 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 gality of his conduct. 99/258 
 (1) (25 S. E. 620). 
 
 President of bank, even if 
 clothed with general authority 
 to lend its money, cannot bind 
 bank by lending its funds to 
 himself or to the cashier, when 
 latter knows that the loan is 
 made for the president's own 
 benefit. 126/702, 709 (56 S. 
 E. 55). 
 
 Where charter provided that 
 contracts should not bind bank 
 unless signed by president and 
 countersigned by cashier, presi- 
 dent sued on his indorsement 
 of bill drawn by himself as 
 president in his own favor 
 could not object to regularity 
 of contract, nor was he protect- 
 ed on his indorsement by want 
 of conformity to the charter. 
 3/185 (3). 
 
 Whether or not note fraudu- 
 lently altered by inserting after 
 name of payee the letters "Ft." 
 as abbreviation of "president," 
 payment to that person dis- 
 charged makers, it appearing 
 that even treating the paper as 
 property of the bank of which 
 he was president, he had, as 
 such, full authority to collect 
 the paper in its behalf . 110/780 
 (1) (36 S. E. 201). 
 
 Where president had general 
 authority to take in settlement 
 of paper due it property other 
 than cash, his so doing in par- 
 ticular instance was binding 
 upon bank. 110/780 (2) (36 
 S. E. 201). 
 
 President has inherent power 
 to dismiss suit brought by bank, 
 where his power to control liti- 
 gation by bank was not limited 
 by statute, charter, by-law, or 
 order of directors. 17 App. 
 420 (1) (87S. E. 606). 
 
 Notice to. 
 
 Notice to president concern- 
 ing untrustworthiness of cash- 
 ier is notice to bank, unless 
 president is accomplice of cash- 
 ier. 93/503,509 (21 S. E.65). 
 
 While generally discounting 
 of bills and notes is not within 
 scope of duty of president and 
 therefore notice to him would 
 not generally be notice to bank 
 in relation to such transactions, 
 yet where it appears that "offi- 
 cers of the bank" consulted and 
 acted on question whether note 
 should be accepted as collat- 
 eral, notice to any of such offi- 
 cers would be notice to bank, 
 and in absence of proof as to 
 what officers were in consulta- 
 tion, it might be inferred that 
 president and directors were 
 those referred to. 105/116 
 (2), 121 (31 S. E. 141). 
 
 Knowledge of president of 
 bank that certain stock not fully 
 paid up imputable' to bank if 
 he, acting for it, accepted trans- 
 fer of the stock to it and it 
 thereunder retained same. 110/ 
 827 (3) (36S. E. 256). 
 
 Bank not chargeable with 
 notice of facts of which its 
 president acquires knowledge 
 while dealing in his private ca- 
 pacity with third persons; nor 
 is knowledge on his part thus 
 acquired imputable to the cor- 
 poration when, acting through 
 another official, it deals with 
 him at arm's length. 116/820 
 (3) (43 S. E. 269) ; 22 App. 
 693 (97 S. E. 111). 
 
 Depreciation of stock held 
 by bank as collateral, by presi- 
 dent and stockholder, with view 
 to purchasing controlling in- 
 terest in corporation, did not-
 
 DIGEST OF DECISIONS. 
 
 211 
 
 without more render bank lia- 
 ble in damages. 68/637 (4). 
 See Cashier; Deed. 
 
 Ratification. 
 
 A bank, by bringing action 
 on contract made in its behalf 
 by officer, ratifies his action in 
 making the contract, and is 
 chargeable with knowledge of 
 whatever he knew at the time 
 of so doing. 113/527 (2) (38 
 S. E. 947). 
 
 See Cashier; Directors; 
 National Bank; Presi- 
 dent. 
 
 Savings Bank. 
 
 Whether particular bank has 
 shown itself to be a savings 
 bank which pays interest on de- 
 posits and whose deposits are 
 not subject to check, held to be 
 question for jury. 1 14/788 ( 1 ) 
 (40 S. E. 825). 
 
 "Subject to check" means 
 subject to payment without lim- 
 itation or restriction, except 
 that the check must be present- 
 ed on banking days within 
 banking hours. 114/788 (2) 
 (40S.E. 825). 
 
 Savings b a'n k depositor 
 bound by reasonable rules as- 
 sented to in writing. 121/105 
 (48 S. E. 708) ; 99 S. E. 239 
 (Ga.App.). 
 
 Rule that payment to person 
 presenting pass book shall be 
 good, unless book lost and writ- 
 ten notice given to bank before 
 payment, is reasonable. 121/ 
 105 (48 S. E. 708) ; 99 S. E. 
 239 (Ga. App.). 
 
 Where person other than de- 
 positor presents pass book with 
 forged check bearing signature 
 similar to that of depositor and 
 there is nothing to put teller on 
 inquiry and bank in good faith 
 
 pays check, it is not liable. 12 1/ 
 105 (48 S. E. 708). 
 
 That depositor is unable to 
 write and signs name by mark 
 no defense to enforcement of 
 this rule. - App. - - (99 S. 
 E. 239). 
 
 Principle not affected by an- 
 other rule prescribing that de- 
 positors must always present 
 pass book in depositing or with- 
 drawing money and that if not 
 present personally properly 
 executed order must accom- 
 pany book in case of with- 
 drawal. 121/105 (48 S. E. 
 708). 
 
 Gift of deposit in savings 
 bank consummated by delivery 
 of pass book to donee, with in- 
 tention to give deposits repre- 
 sented by book, accompanied 
 by appropriate words of gift, 
 without an assignment or trans- 
 fer in writing. - App. - 
 (99 S. E. 160). 
 
 A pass book issued by a sav- 
 ings bank is the record of the 
 customer's account and its pro- 
 duction authorizes control of 
 the deposit. - App. (99 S. 
 E. 160). 
 
 Provisions of law in regard 
 to building and loan associa- 
 tions apply to savings banks. 
 2881, Park's Ann. Code. 
 
 Trust company powers may 
 be acquired by savings banks. 
 2821, Park's Ann. Code. 
 
 See Pass Book. 
 
 Set-Off. 
 
 See Deposit; Directors; 
 National Bank. 
 
 Stock. 
 By-Law Lien. 
 
 By-law asserting lien on 
 stock for debts due company
 
 212 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 valid as between corporators. 
 1/43. 
 
 Judgment against stockhold- 
 er inferior to existing by-law 
 lien, though plaintiff had no no- 
 tice thereof at time he made 
 loan, secured judgment, or 
 gave notice under 6036, 
 Park's Ann. Code. If stock 
 was subject to lien when rights 
 of judgment creditor attached, 
 and notice was given at sheriff's 
 sale, purchaser could not com- 
 pel transfer without paying 
 amount due company by stock- 
 holder. 122/521 (2, 3) (50 S. 
 E. 279). 
 
 Stock, by-law lien on, in- 
 ferior to lien of pledgee bona 
 fide and without notice. Notice 
 given at pledgee's sale not af- 
 fect rights of purchaser. 1477 
 150 (95 S. E. 286) ; App. 
 
 (101 S. E. 203). 
 
 Notice of lien given in face 
 of certificate, transferee takes 
 subject to debt due by stock- 
 holder to corporation or which 
 may become due before cor- 
 poration has notice of transfer. 
 120/575 (1,2) (48 S. E. 226). 
 
 Where no reference to lien 
 in certificate pledgee or trans- 
 feree not affected by terms of 
 by-law of which he had no no- 
 tice; statement in certificate 
 that "same transferable only on 
 books of the corporation" not 
 charge transferee with notice. 
 120/575 (3, 4) (48 S. E. 226) ; 
 
 App. -- (101 S. E. 203); 
 and see 7 App. 472 (3) (67 S. 
 E. 205. 
 
 A bank, the charter of which 
 provides that the total liability 
 to it of any person "for bor- 
 rowed money * * * shall 
 at no time exceed one-tenth 
 part of the capital stock of said 
 bank paid in," and also declar- 
 
 ing a lien on the stock of any 
 stockholder for any indebted- 
 ness due it by such stockholder 
 which shall be superior to all 
 other liens, has by virtue of its 
 charter, a lien of highest dig- 
 nity upon the stock of a stock- 
 holder to an amount not ex- 
 ceeding ten per cent, of the 
 capital stock of the bank actu- 
 ally paid in, notwithstanding it 
 may have violated the terms of 
 its charter by loaning to such 
 stockholder a sum largely in 
 excess of that which it was 
 thereby authorized to permit 
 him to borrow. 116/820 (1) 
 (43 S. E. 269). 
 
 When stock of bank pro- 
 vides that no assignment of 
 stock shall be valid, as against 
 it, unless a formal transfer of 
 the same be made on its books, 
 it has the right to treat stock- 
 holder as true owner, and deal 
 with him accordingly, until it 
 receives notice of the assign- 
 ment, aliter, after notice is 
 brought home to the bank, even 
 though there has been no at- 
 tempt on his part to secure a 
 formal transfer of the stock 
 upon its books. 116/820 (2) 
 (43 S. E. 269). 
 
 By-law lien not attach to 
 stock assigned with knowledge 
 of president and directors for 
 indebtedness to bank incurred 
 subsequently by original hold- 
 er. 21 App. 620 (4) (94 S. E. 
 819). 
 
 Lien of mortgage on stock 
 is inferior to by-law lien on 
 such stock where debt secured 
 by by-law lien was incurred be- 
 fore notice to the bank of the 
 mortgage of the stock even 
 though debt to bank was cre- 
 ated subsequent to mortgage. 
 Record of mortgage is not no-
 
 DIGEST OF DECISIONS. 
 
 213 
 
 tice to the bank. 22 App. 
 (97 S. E. 107). 
 
 Transfer. 
 
 Right of buyer at execution 
 sale to have transfer of stock 
 on books. 147/750 (95 S. E. 
 286). 
 
 Illegal refusal of bank to 
 transfer stock on books of the 
 corporation to owner and hold- 
 er of certificate renders bank 
 liable for resulting damages. 
 Existence of by-law lien no de- 
 fense against transferee with- 
 out notice. - App. (101 
 S. E. 203). 
 
 See National Bank. 
 
 Stockholders Individual 
 Liability of. 
 
 In General. 
 
 Prior to 1893 there was no 
 general law declaring individual 
 liability of stockholders in 
 banks, and whether such liabil- 
 ity existed depended upon -pro- 
 visions of charter in given case. 
 125/710 (3) (54 S. E. 626) ; 
 and see 123/787 (51 S. E. 
 770); 147/548 (94 S. E. 
 1025). 
 
 Provisions of Act of 1894 
 that individual liability of 
 stockholders shall .be considered 
 an asset of the bank and in- 
 forced by the receiver applica- 
 ble to bank previously char- 
 tered. 148/663 (98 S. E. 86) ; 
 106/556 (32S. E. 647 (2). 
 
 Amount of individual liabil- 
 ity of all stockholders limited 
 in charter to their stock and 
 equal additional amount of 
 money, and whole stock 
 amounting only to $50,000, 
 creditors cannot collect more 
 than that sum from all nor 
 from any one more than his 
 
 equal and ratable share. 99/ 
 801 (5) (27 S. E. 790). 
 
 Holders of certificates of de- 
 posit are depositors within the 
 provision of a bank charter im- 
 posing on stockholders a statu- 
 tory liability, in addition to the 
 full payment of the amount of 
 their subscriptions, for the pay- 
 ment of depositors. 141/227, 
 228 (6) (SOS. E. 1085). 
 
 Interest, plaintiff seeking to 
 enforce individual liability of 
 stockholders, entitled to, from 
 date of suit. 125/710 (18) (54 
 S. E. 626). 
 
 Stockholder of bank sued on 
 his ultimate liability on bills of 
 bank liable for interest only 
 from time of demand of pay- 
 ment made on him. 10/162 
 (2). 
 
 Interest will be added to the 
 principal of the deposit, not 
 exceeding the statutory limit, 
 in an action to enforce the stat- 
 utory liability of stockholders 
 for the payment of depositors. 
 141/227, 228 (7), (80 S. E. 
 1085). 
 
 Interest begins to run on de- 
 posits subject to check from the 
 date of the bank's insolvency 
 and appointment of a receiver. 
 141/227, 228 (7) (80 S. E. 
 1085). 
 
 Property, individual, of 
 stockholders made liable by 
 charter for ultimate payment 
 of debts, liability is imposed 
 which may result in personal 
 judgment binding all of the 
 stockholder's property at date 
 of judgment and any that may 
 be thereafter acquired; not 
 necessary to allege in petition 
 that stockholder had property, 
 or of what his property con- 
 sisted. 125/710 (23), (54 S. 
 E. 626).
 
 214 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 Value of stock to be esti- 
 mated according to valuation 
 placed on it by charter, where 
 charter provided that stock- 
 holders should be individually 
 liable in proportion to amount 
 of shares held by each and 
 value thereof. 10/162 (3) ; 
 11/459 (3). 
 
 Directors made liable by 
 charter for overissue of bank 
 notes, individual liability of 
 stockholders was not secondary 
 and collateral to that of direc- 
 tors. 18/444 (3). 
 
 Liability of stockholders un- 
 der charter arises when bank 
 refuses or ceases to redeem 
 bills and is notoriously and con- 
 tinuously insolvent. 92 U. S. 
 156 (23 L.Ed. 537). 
 
 Proportion to amount of 
 shares and value thereof, where 
 stockholders bound in, for ulti- 
 mate redemption of bills of 
 bank, held that aggregate body 
 of stockholders is bound for 
 all the bills issued by the bank 
 and that as whole capital stock 
 is to entire outstanding circula- 
 tion, so is each stockholder's 
 share to his part to be re- 
 deemed. 19/338 (5) ; see 19/ 
 325 (4); 16/217 (4). 
 
 Creditor may recover entire 
 debt out of one stockholder 
 provided the debt does not ex- 
 ceed his proportion of entire 
 indebtedness of company, the 
 individual liability of the char- 
 ter providing that stockholders 
 shall be liable pro rata for 
 debts of company to amount of 
 stock they respectively hold. 
 56/563 (4). 
 
 Transfer of stock by stock- 
 holder on transfer book of bank 
 is evidence against him that he 
 once owned stock to amount 
 transferred. 20/275 (1). 
 
 In action against stockhold- 
 er, transfer made on books by 
 cashier, defendant being mem- 
 ber at time and free access se- 
 cured to him, is prima facie 
 evidence of his ownership of 
 the shares. 11/461 (16). 
 
 Evidence of declarations of 
 officers and agents of bank not 
 competent in fixing ownership 
 of stock. 19/338 (6). 
 
 Mere fact that no certificate 
 was to be issued to subscriber 
 for part of the stock for which 
 he subscribed did not prevent 
 him from being stockholder of 
 the entire number of shares, 
 nor relieve him from liability 
 as a stockholder. 140/625, 631 
 (79 S. E. 536). 
 
 Transfer of stock in bank 
 here, though made after failure 
 of bank, did not prevent trans- 
 feree from being stockhold- 
 er, and as such from being lia- 
 ble under bank's charter. 26/ 
 17(5). 
 
 Charter providing that "indi- 
 vidual property of stockholders 
 at the time of suit shall be lia- 
 ble for the ultimate payment of 
 debts of company in proportion 
 to amount owned by each" 
 makes liable only those who are 
 stockholders at the time suits 
 brought against company by 
 creditors. 125/710 (1-7) (54 
 S. E. 626) overruling cases 
 above cited so far as conflict- 
 ing; see also 192 U. S. 386 (48 
 L.Ed. 491, 24 Sup. Ct. 314). 
 
 Charter providing that stock- 
 holders should be individually 
 liable "to the extent of the 
 amount of their stock, at the 
 par value thereof, respectively, 
 at the time the debt was cre- 
 ated, in addition to the amount 
 invested in such shares," held 
 that stockholder was individu-
 
 DIGEST of DECISIONS. 
 
 215 
 
 ally liable for his pro rata part 
 of debts created before he ac- 
 quired his shares by transfer as 
 well as for like part of those 
 created during his ownership 
 of the shares ; and that he was 
 also liable for debts created 
 after he transferred his shares, 
 unless he gave notice of trans- 
 fer as prescribed in 1496 of 
 Code of 1882, which was of 
 force at the time. 99/801 (3, 
 4) 27 S. E. 790), affirming 95/ 
 505 (22 S. E. 277). 
 
 Pledgee holding bank stock 
 as collateral not liable as stock- 
 holder for bank's indebtedness 
 created after stock re-trans- 
 ferred on books on payment of 
 loan, though pledgee failed to 
 give notice as required by 
 1496 of Code of 1882, stock- 
 holder's individual liability un- 
 der charter being limited to par 
 value of his stock at time debt 
 created. 192 U. S. 386 (48 L. 
 Ed. 491,24 Sup. Ct. 314). 
 
 Collateral security, where 
 stock transferred as, individual 
 liability under charter attached 
 to transferee as well as to one 
 who purchased stock outright. 
 99/801 (2) (27S. E. 790). 
 
 Individual liability under Act 
 of 1893 not confined to original 
 subscribers or purchasers of 
 stock from the corporation, but 
 extends to transferees of such 
 stockholders. 147/548 (94 S. 
 E. 1025). 
 
 One holding stock in an in- 
 solvent bank as life tenant is 
 subject to the individual liabil- 
 ity imposed by statute upon 
 stockholders for the benefit of 
 depositors. 22 App. 203 (95 
 S. E. 756). 
 
 Discharge of Liability. 
 
 Stockholder is discharged 
 when he has once paid the 
 
 amount for which he is liable 
 under charter. 18/67 (15), 
 109, 110; 16/217 (4); 53/502. 
 
 Stockholder sued on indi- 
 vidual liability may defend by 
 showing that before beginning 
 of suit he paid other depositors 
 than plaintiff an amount equal 
 to full proportion his stock 
 bears to whole amount due de- 
 positors. Suit cannot be de- 
 feated by paying to other de- 
 positors than plaintiff after suit 
 begun. Evidence to prove pay- 
 ment. 42/575; 40/392. 
 
 Assignee chosen by corpora- 
 tion and over whom corpora- 
 tion had coordinate control 
 with creditors, not proper to 
 prove in order to screen stock- 
 holder from liability, that assets 
 sufficient to pay creditor were 
 turned over to. 19/338 (7). 
 
 Suit on notes of bank 
 brought against stockholder in- 
 dividually liable, held that 
 stockholder would be estopped 
 to deny that there had been 
 compliance with terms of char- 
 ter or that bank had never been 
 legally organized and had no 
 authority to contract. 18/444 
 (2). 
 
 Stockholder who participated 
 in illegal organization of bank 
 cannot, under individual liabil- 
 ity clause, maintain suit upon 
 unpaid bills of bank against an- 
 other stockholder ; evidence 
 admissible to show fraudulent 
 manner in which bank put into 
 operation. 19/337 (1); see 
 18/411. 
 
 Director of bankrupt bank 
 cannot buy up claims against 
 the bank at a discount and en- 
 title himself to credit therefor 
 at full face value in settlement 
 with creditors on his personal 
 liability ; at least, he cannot do
 
 216 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 this so as to defeat action 
 brought before such claims ac- 
 tually applied. Where stock- 
 holder sued as such and he de- 
 fends on such claims, his legal 
 disability as director to pur- 
 chase at discount may be urged 
 by plaintiff without any allega- 
 tion in pleadings. 60/174. 
 
 Settlement made by bill- 
 holder with stockholder, 
 amount received not material 
 to ascertainment of proportion- 
 ate liability of another stock- 
 holder. 20/276 (7). 
 
 Stockholders not relieved of 
 liability to assessment to pay 
 debts of national bank by deliv- 
 ery of stock certificates to cash- 
 ier as vendee where transfer 
 not actually made. 146/55 (90 
 S. E. 467). 
 
 Stockholder is relieved of 
 liability to assessment to pay 
 debts of national bank by deliv- 
 ery of stock certificate contain- 
 ing transfer signed in blank to 
 cashier as vendee with instruc- 
 tions to fill blank and enter 
 transfer on books of bank, al- 
 though transfer not actually 
 made, where cashier is only of- 
 ficer of bank whose duty it was 
 to make such transfer. 20 App. 
 767 (93 S. E. 284). 
 
 Enforcement of Liability. 
 
 Not necessary before suing 
 stockholders on individual lia- 
 bility for ultimate redemption 
 of bills of bank, to exhaust as- 
 sets of bank by legal proceed- 
 ings. 92 U. S. 156 (23 L. Ed. 
 537). 
 
 Petition need not show char- 
 acter of debt on which judg- 
 ment founded or other particu- 
 lars in reference thereto. 
 Stockholder is let into all de- 
 fenses appropriate to one in his 
 
 position and also to all de- 
 fenses corporation might have 
 set up in suit against it. 125/ 
 710 (8-12) (54 S. E. 626) and 
 citations. 
 
 Judgment against corpora- 
 tion in favor of creditor not 
 conclusive against stockholder 
 in suit to enforce individual lia- 
 bility. Such judgment estab- 
 lishes prima facie amount and 
 validity of debt. When stock- 
 holder not party to suit against 
 corporation and had no notice 
 or opportunity to defend in 
 that suit, he may, in suit against 
 himself, set up not only any 
 fact which would absolve him 
 under charter, but any fact 
 which would negative liability 
 of corporation. In suit against 
 stockholder it is only necessary 
 to allege that judgment has 
 been rendered against corpora- 
 tion; judgment, fi. fa. and re- 
 turn of nulla bona in suit 
 against corporation, was suffi- 
 cient to authorize billholder of 
 bank to proceed against stock- 
 holder personally. 11/459(3); 
 see 16/217 (3). 
 
 Judgment and execution un- 
 satisfied are evidence of insol- 
 vency; fact may be estab- 
 lished, however, by other evi- 
 dence, as for example, by as- 
 signment and continued sus- 
 pension of business, or by other 
 notorious indications. 92 U. S. 
 156 (23 L. Ed. 537). 
 
 Ultimate liability of share- 
 holders as fixed by charter here 
 did not attach to judgment 
 against corporation but to the 
 bank bills; and when such lia- 
 bility sought to be enforced, 
 bills had to be set out and de- 
 scribed notwithstanding prior 
 judgment or decree for their 
 payment had been rendered
 
 DIGEST OF DECISIONS. 
 
 217 
 
 against corporation or its as- 
 signee. 61/613 (3) ; dis- 
 tinguished in 125/710, 725 (54 
 S. E. 626). 
 
 Action by receivers of bank 
 against stockholders held here 
 not to have been prematurely 
 brought, though all the assets 
 of the corporation had not been 
 exhausted. 141/227, 228 (5) 
 (80 S. E. 1085). 
 
 Authority from creditors to 
 sue, receiver not required to 
 show. 125/710 (21) (54 S. E. 
 626). 
 
 Proceedings under which re- 
 ceiver appointed need not be 
 exhibited with petition ; allega- 
 tions describing petition suffi- 
 cient. 125/710 (22) (54 S. E. 
 626). 
 
 Courts of law have jurisdic- 
 tion on proper petition and 
 proof to render judgment in 
 suit on stockholder's liability. 
 106/556 (5) (32 S. E. 647) ; 
 see 19/325. 
 
 Parties defendant, all stock- 
 holders may be joined as. in 
 one action by receiver under- 
 taking to collect from stock- 
 holders on their individual lia- 
 bility. Corporation not neces- 
 sary party defendant. 106/556 
 (3, 4) (32 S. E. 647) ; see also 
 95/505 (2) (22 S. E. 277). 
 
 In suit to enforce individual 
 liability, allegations that some 
 are dead, some beyond juris- 
 diction, and that others are de- 
 funct corporations set forth 
 sufficient reasons for omitting 
 certain stockholders as parties 
 defendant. 125/7 '10 (24) (54 
 S. E. 626) ; see 95/505 (2) 
 (22 S. E. 277). 
 
 In* suit to enforce stockhold- 
 ers' individual liability to de- 
 positors, all the stockholders so 
 
 liable may be joined in one ac- 
 tion. 148/663 (98S. E. 86). 
 
 In a suit of the character 
 just indicated, (a) no demand 
 by depositors as a condition 
 precedent to suit is necessary ; 
 (b) the liability of the stock- 
 holders need not be actually 
 fixed and determined; (c) the 
 assets, legal and equitable, of 
 the corporation need not have 
 been first completely exhaust- 
 ed; and (d) the action to en- 
 force the statutory liability of 
 the stockholders may be 
 brought at any time within 
 twenty years after the right of 
 action accrues. 148/663 (98 
 S. E. 86). 
 
 Stockholder assessed by 
 Comptroller of Currency for 
 debt of insolvent national bank 
 can not collaterally attack order 
 of assessment. 146/118 (90 S. 
 E. 965). 
 
 Limitation period of, for en- 
 forcing individual liability of 
 stockholders is twenty years. 
 Where charter provides that in- 
 dividual property of stockhold- 
 ers "at time suit is filed" shall 
 be liable for debt of corpora- 
 tion, period begins to run upon 
 filing of such suit. 125/710 
 (19, 20) (54 S. E. 626; 148/ 
 663 (98S. E. 86). 
 
 Statute of limitations begins 
 to run on individual liability of 
 stockholders to redeem bills of 
 bank from time when bank re- 
 fuses or ceases to redeem bills 
 and is notoriously and continu- 
 ously insolvent. 92 U. S. 156 
 (23 L. E. 537) ; see 95 U. S. 
 628 (24 L. Ed. 365) ; see 88 
 Fed. 607; s. c., 99 Fed. 635, 40 
 C. C. A. 22. 
 
 Distribution of assets of in- 
 solvent bank, rule of, with re- 
 gard to stockholders individu-
 
 218 
 
 PARK'S BANKING LAW OF GEORGIA. 
 
 ally liable under charter. 40/ 
 392 (5,6). 
 
 Stock assessment where capi- 
 tal impaired, binding; notice 
 by Assistant State Bank Ex- 
 aminer sufficient. 147/636 (95 
 S. E. 222). 
 
 See Insolvency. 
 
 Stopping Payment. 
 
 See Check. 
 Surety. 
 
 See Guaranty. 
 
 Taxation. 
 
 State bank is subject to spe- 
 cial license or business tax 
 levied by State or municipality. 
 60/133. 
 
 No injunction against arbi- 
 tration of tax return on suit of 
 person showing no interest. 
 147/62 (92 S. E. 871). 
 
 See National Banks. 
 
 Telegram. 
 
 Probability that drawer of 
 check will request drawee to 
 withhold payment when in- 
 structed so to do by payee, and 
 that drawee will comply with 
 such request, is so legally cer- 
 tain as to support action for 
 damages against telegraph com- 
 pany for failure to deliver mes- 
 sage from payee to drawer, 
 containing such instruction. 10 
 App. 716(4) (74S. E. 78). 
 
 Trust Company. 
 
 Provision of 2817 (12), 
 Park's Ann. Code, is legislative 
 declaration that company or- 
 ganized under the act is not to 
 be regarded as a bank unless it 
 applies for and has granted to 
 it a charter as a bank. 13 App. 
 314 (6) (79 S. E. 170). 
 
 Trust company incorporated 
 under 2815, et seq. of Park's 
 Ann. Code is not a chartered 
 bank, though it exercises as an 
 incident to the main object of 
 its creation power to receive 
 trust funds on deposit and 
 power to lend money. 13 App. 
 314 (4,5) (79 S. E. 170). 
 
 Trust company may obtain 
 charter as bank, and, after hav- 
 ing done so, may exercise, in 
 addition to its other powers, all 
 the functions of a bank. 13 
 App. 314 (7) (79S. E. 170). 
 
 See Savings Bank. 
 
 Trustee. 
 
 Trustee depositing trust 
 money to his credit as agent 
 may sue for it as trustee. 88/ 
 333 (1) (14 S. E. 554). 
 
 Check signed by trustee as 
 agent and presented by payee is 
 sufficient demand for repay- 
 ment of deposit, and upon re- 
 fusal to pay, trustee's right of 
 action becomes complete. 88/ 
 333 (2) (14S. E. 554). 
 
 Not a conversion for trustee 
 to deposit trust money to his 
 credit as agent, though bank 
 may have knowledge of the 
 trust. 88/333 (4) (14 S. E. 
 554). 
 
 Deposit by administrator not 
 properly made when in indi- 
 vidual name followed merely 
 by "adm'r :" such deposit treat- 
 ed as individual deposit, ren- 
 dering the depositor individu- 
 ally liable for money of estate 
 so deposited, when lost by fail- 
 ure of bank. 19 App. 74 (90 
 S. E. 973). 
 
 Payment by bank to trustee 
 on his checks will discharge it, 
 whether checks signed with 
 designation of trustee or not. 
 88/335 (5) (14 S. E. 554).
 
 DIGEST OF DECISIONS. 
 
 219 
 
 Bank not liable to trustee 
 upon contract of deposit, where 
 he checked out trust funds for 
 his own benefit with bank's 
 knowledge. If party to misap- 
 plication of trust funds, bank 
 liable to beneficiaries on their 
 equitable title, not on contract 
 of deposit with trustee. 94/ 
 356 (21 S. E. 575). 
 
 Generally bank may assume 
 that trustee will apply trust 
 money deposited to its proper 
 purposes and is not accountable 
 for misappropriation, but it can 
 not knowingly appropriate to 
 satisfaction of debt due it by 
 another trust funds deposited 
 with it by him after creation of 
 debt. 102/202 (29 S. E. 182). 
 
 Bank having notice that 
 breach of trust is being com- 
 mitted by improper withdrawal 
 of funds is liable. Where funds 
 alleged to have been diverted 
 were assets of insolvent cor- 
 poration deposited by receiver 
 under order of court providing 
 that funds should be paid out 
 
 only on checks signed by re- 
 ceiver and countersigned by 
 judge, and bank had notice of 
 order, creditors of corporation 
 could enforce liability of bank 
 incurred by paying out funds 
 upon checks not countersigned 
 as provided. 129/126 (58 S. 
 E. 867). 
 
 Where bankers loaned money 
 as agents of a customer, fact 
 that trustee to whom money 
 loaned deposited it in the bank 
 and afterwards drew checks 
 upon it for his own use with 
 the knowledge of the bankers, 
 did not affect their former prin- 
 cipal. 66/638 (3-a). 
 
 Usury. 
 
 Receiving interest in advance 
 by a bank at the highest legal 
 rate of interest on a loan, 
 whether it be a short or a long 
 time loan, is usurious. 143/ 
 302. 
 
 See National Bank; Dis- 
 count.
 
 PART III. 
 
 Opinions of the General Counsel of the 
 
 Georgia Bankers* Association, 
 
 1910-1920.
 
 FOREWORD. 
 
 Since 1910, as General Counsel of the Georgia Bankers' Asso- 
 ciation, there have been submitted to me by members of the As- 
 sociation numerous questions of banking law, negotiable instru- 
 ments, and allied subjects. The questions have come in the form 
 of letters, asking my opinion on statements of fact more or less 
 complicated. To these letters I have replied, endeavoring to base 
 my answer upon recognized authorities from which I have often 
 quoted. I have not undertaken, however, more than a simple 
 statement of the law as I understood it, my purpose being to give 
 to the inquirer an opinion upon which he could act rather than to 
 encumber it with a citation of authority or with a discussion of 
 the principles of law upon which the opinion was based. 
 
 Three little volumes of these opinions were published by the 
 Association and distributed to its members. More recently a con- 
 siderable number of them have been published in The Southern 
 Banker, Atlanta, Georgia. From the large number of these opin- 
 ions published and unpublished I have endeavored to select those 
 which appeared to me of more general interest and which are still 
 applicable, notwithstanding the changes in the law. 
 
 For the topics discussed I have no apology. They were selected 
 by the bankers themselves, who desired assistance on problems 
 which confronted them. The opinions do not constitute a sys- 
 tematic treatise on banking law, but attempt to give practical an- 
 swers to practical questions arising in actual experience of Georgia 
 Bankers. In preparing the manuscript for publication little has 
 been done save to reduce the letters of inquiry to the form of 
 questions, and the replies, to answers to these questions, eliminat- 
 ing as far as possible specific facts and names so as to make the 
 opinions general and impersonal. 
 
 The manuscript was prepared by direction of the Executive 
 Council of the Georgia Bankers' Association, it being intended to 
 publish and distribute the book among the members of the Asso- 
 ciation, as had been done with the previous publications. Having 
 
 221
 
 222 FOREWORD. 
 
 undertaken to annotate the Banking Law, it was decided to in- 
 clude the opinions in the same volume. 
 
 Lawyers do not need to be cautioned, but bankers may, that 
 these opinions, while for the most part based on authority, are 
 nevertheless the opinions of a lawyer. Whether the Courts would 
 reach the same conclusion on- the same state of facts, no one can 
 say. And the layman should also bear in mind that a slight change 
 in the facts often makes the greatest difference in the application 
 of legal principles. O. A. P.
 
 ACCOMMODATION INDORSERS. 
 
 Are Discharged by Extension Except by Consent. 
 
 The maker of a note indorsed by two accommodation indorsers applies 
 for an extension, stating that the indorsers have agreed to the extension. 
 The extension is made and interest paid. Before the expiration of the ex- 
 tension the maker fails. Are the indorsers discharged? 
 
 This would depend on whether or not they were parties to the 
 extension. The general rule is that any act which would change 
 the contract of an accommodation indorser releases him from 
 liability. An extension of time to a definite date at the instance 
 of the maker would be such a chance in the contract. Bunn v. 
 Commercial Bank, 98 Ga. 647. It would increase the risk of the 
 sureties, or at least might have that effect, and they would not be 
 bound. Of course, if the maker's statement is correct, and it 
 can be proved that the indorsers agreed to the extension, they 
 would not be released, since no man can complain of an act to 
 which he himself has assented. 
 
 AGENCY. 
 
 Bank Must Look to Authority of Agent to Indorse Checks. 
 
 A bank cashed a check indorsed by an agent of the payee. The agent 
 had acted as such for some time and it was customary for him to collect 
 for his principal. The agent appropriated the proceeds of this check to his 
 own use. Is the bank liable to the principal? 
 
 The rule is, that "when a bank pays a check indorsed by an 
 agent it must assure itself of his authority or accept the conse- 
 quences of acting without sufficient knowledge, as his authority 
 to indorse can be implied only when such action is needful to 
 perform the duties of his agency effectively. In other cases it 
 must be clearly known to yield the paying bank perfect protec- 
 tion." Bolles Modern Law of Banking, p. 730. 
 
 If it was customary for the agent to collect for the principal, 
 the bank would be protected in paying the check on his indorse- 
 
 223
 
 224 PARK'S BANKING LAW of GEORGIA. 
 
 ment, and the principal would be estopped from setting up his 
 want of authority. The length of time during which he had 
 acted for his principal and the amount of business of this char- 
 acter done by him would have a material bearing on the question. 
 If it was customary for him to indorse checks payable to his 
 principal and this custom had continued for a considerable period 
 so as to be well known to the principal, the latter could not set up 
 his want of authority. Of course, if this was the first transaction 
 of the kind or if the agent had only cashed a few checks in this 
 way and his principal could not be fairly chargeable with knowl- 
 edge, the rule would be different. 
 
 Deposit in Name of Agent; Liability of Bank to Principal. 
 
 Can a traveling salesman, having authority to indorse and collect checks 
 in favor of his house, place such checks to his own account and send his 
 checks to the house? 
 
 An agent or traveling salesman, having authority from his 
 company to collect and indorse checks, unless there are some re- 
 strictions on his authority as to the purpose for which collection 
 or indorsement can be made or on the manner in which he can 
 handle the funds of the company which he represents, can law- 
 fully deposit such checks to his own credit, especially where 
 checks on his own account are sent to the company. The receipt 
 by the company of the checks and cashing same without objec- 
 tion would be a ratification of the act of the salesman in deposit- 
 ing, even though he had no authority to make deposit to his own 
 credit. 
 
 But while a salesman or agent may have the authority so 
 to deposit checks payable to the company, and while the bank 
 would be protected in crediting his personal account with them 
 where they are properly indorsed in accordance with the authority 
 given him, the practice is not to be commended and is a very dan- 
 gerous one. It is so^easy to mix the funds of the company and 
 those of the salesman and the temptation to use the company's 
 money for his own purposes is so great that the practice should 
 be discouraged. 
 
 In fact, unless the company authorized the deposit either in its 
 instructions to the salesman or by permitting it to be done and 
 accepting checks without question, I should be inclined to refuse 
 to handle the account in that way. This is not only best for the
 
 OPINIONS OF THE; GENERAL COUNSEL. 225 
 
 bank but for the salesman also ; for where he mingles the funds 
 of his principal with his own, the principal would be entitled to 
 hold the entire deposit if the funds could not be separated. Of 
 course if the bank has any reason to suspect that the agent is 
 using the company's money for his own benefit, it could not ac- 
 cept the deposit of the company's money for the account of the 
 agent without becoming liable as assisting him in misappropriat- 
 ing funds. 
 
 Deposit in Name of Agent; Liability of Principal for 
 
 Overdraft. 
 
 The agent of a corporation, contrary to instructions from his superior 
 officers, opens an account with a bank under his own name as manager, 
 deposits checks payable to the company to the credit of this account for 
 several months, and draws checks in favor of the employees of the com- 
 pany and other expense items against this account. An overdraft is cre- 
 ated, which the company refuses to pay because the agent had no authority 
 to open the account, and because the bank was not authorized to allow 
 an overdraft. Can the company be required to pay the overdraft? 
 
 Since an overdraft is simply a loan by a bank to the customer 
 whose checks are paid, the question is whether or not the agent in 
 this instance had the authority to make the loan. It appears that 
 he had no express authority for this purpose, ad in fact that he 
 was violating his instructions when he did business with the 
 bank. However, if it can be shown that the company knowingly 
 got the benefit of the money which was paid out on these checks, 
 it would be liable for money advanced for its use and benefit. It 
 could not plead want of authority in its agent to make the loan, 
 where the money was actually used in its own business, and it re- 
 ceived the benefit thereof. If the agent carried the account with 
 the bank for a suffcient length of time, and under such circum- 
 stances that his superior officers knew or ought to have known 
 that the account was being carried, this, of course, would tend 
 to support the contention that the company had ratified his act 
 in opening the account. If it can be shown that the money was 
 used for the benefit of the corporation, and with its knowledge, 
 the corporation would be liable regardless of any private instruc- 
 tions or understanding which it had with its agent.
 
 226 PARK'S BANKING LAW otf GEORGIA. 
 
 Bank Paying to Supposed Agent of Payee Does so at its Peril. 
 
 A check is drawn in favor of three payees and is sent to their attorney. 
 Before its receipt one of the payees dies. The attorney, however, indorses 
 the check in the name of the three, and deposits it with a bank to his own 
 account. The bank forwards the check for collection, guaranteeing in- 
 dorsements. It is advised by its correspondent that the check is paid, but 
 some thirty days afterwards the bank on which the check is drawn ad- 
 vises that -the drawer of the check refuses to recognize the indorsement 
 of the attorney, and the check is, therefore, charged to the account of the 
 forwarding bank by its correspondent. Is this bank authorized to charge 
 the check to the attorney? Whose is the loss in the event proper indorse- 
 ment of the check can not be had? 
 
 A check is an order by the drawer on the bank to pay out of 
 the funds to his credit a given amount to a named person. The 
 bank must pay to this person or to his order. It is not authorized 
 to pay to any one else. When, therefore, a bank undertakes to 
 pay to a person who assumes to be the agent of the payee, it does 
 so at its peril, the burden being upon the bank to show that this 
 agent is duly authorized by the payee to indorse the check in the 
 payee's name and collect the amount thereof. Quoting from 
 Michie on Banks and Banking: 
 
 "A bank at its peril pays checks drawn upon it to any other 
 than the person to whose order they are made payable. A bank, 
 paying a check upon the unauthorized indorsement of the payee 
 and charging the amount thereof to the drawer's account, is liable 
 to the payee for the amount of the check, unless the payee's con- 
 duct excuses sucji payment or prevents him from asserting such 
 liability." Michie on Banks and Banking, p. 1124. 
 
 The Supreme Court of Georgia, in the case of Atlanta Na- 
 tional Bank v. Burke, 81 Ga. 589, says : 
 
 "Where one deposits money in a bank on general deposit, the 
 bank immediately becomes the debtor of the depositor for the 
 money deposited and undertakes impliedly to pay that money 
 either to the depositor or to some person to whom he directs it 
 paid, and in order to discharge itself from this liability to the 
 depositor the bank must pay the money to the depositor or as di- 
 rected by him. The liability can not be discharged in any other 
 way." 
 
 Applying this principle to the facts as stated : The drawer of 
 the check directed payment to the three named payees. The bank 
 had no right, therefore, to pay the check to any one else, although 
 the person presenting it was the attorney-at-law of the payees 
 and may have had an interest in the check on account of his fee. 
 In this instance the attorney could not have been authorized to 
 sign the names of the payees as one of them was dead. The 
 bank having cashed the check without authority did so at its 
 peril, and the correspondent to whom it had guaranteed the in-
 
 OPINIONS of THE GENERAL COUNSEL. 227 
 
 dorsement had the right to charge the check to its account, and if 
 the check went through several banks before reaching the bank 
 upon which it was drawn, each one of these in turn would have 
 had the right to charge the check to the account of the bank from 
 which it received it. As between the bank and the attorney, the 
 loss should, of course, fall on the attorney, as he undertook with- 
 out authority to indorse and collect the check. 
 
 I do not think the question of delay in reporting on the check 
 or in objecting to the unauthorized indorsement can, under the 
 facts as stated, make any difference. As I understand it, the 
 drawer of the check refused to recognize the indorsement as soon 
 as the matter was brought to his attention. He did nothing to 
 mislead or to cause the bank or any of its correspondents to 
 change their position. The drawer, therefore, was clearly within 
 his rights when he declined to recognize the indorsement and in- 
 sisted on the signature of the drawees themselves. The fact 
 that the bank's correspondents accepted the check as cash and 
 advised that it had been paid, I think, makes no difference, as they 
 acted on the guarantee of the forwarding bank that the indorse- 
 ment was authorized. 
 
 Payment of Draft to Messenger of Bank, Who Does Not 
 Produce It, Is at Risk of Payor. 
 
 A draft is sent to a bank for collection. It is presented to the drawee 
 by the bank's messenger. The drawee states that he can not pay the 
 draft then, but will do so in a few days. The draft is returned by the 
 bank with the usual notation. A few days thereafter, according to the 
 drawee, he pays the draft to the messenger, who promises to mail him 
 the draft. The messenger denies this, and the bank does not receive the 
 money, and it is not advised of the claim of the drawee that he paid the 
 draft for several months. Is the bank liable to the drawee for the amount 
 which he claims to have paid the messenger? 
 
 Section 3578 of Park's Ann. Code provides: 
 
 "Where money is due on a written evidence of debt, payment 
 to an agent of the creditor who fails to produce the obligation 
 is at the risk of the debtor. Nonproduction of the security rebuts 
 the implication of authority arising from the agent's employment, 
 and it must be otherwise established." 
 
 And the Supreme Court has held : 
 
 "If the debtor by promissory note makes a payment thereon to 
 one claiming to be an agent for collection, it is incumbent on the 
 former to see that the latter is in possession of the security ; for, 
 if he is not, the debtor will be liable to pay again, unless the person
 
 228 PARK'S BANKING LAW OF GEORGIA. 
 
 making the collection had authority to collect the sums due his 
 principal, or the money actually reached the owner." Walton 
 Guano Co. v. McCall, 111 Ga. 114. 
 
 The Court also held : 
 
 "The inference that an agent is authorized to collect a written 
 security for a debt because it is in his custody, ceases when the 
 security is withdrawn by the creditor ; and this, even though the 
 debt may have been contracted through the agent. 
 
 "If the debtor pay such a claim to one who is not in possession 
 of the security, it is incumbent on him to show that the person 
 receiving payment had authority to collect the debt." Guilford 
 v. Stacer, 53 Ga. 618. 
 
 From these authorities it seems clear that the bank is not liable, 
 even though the money was actually paid to the messenger, unless 
 the money was turned over by the messenger to the bank. The 
 bank is not liable for the unauthorized act of an agent or em- 
 ployee, unless from a course of dealing or otherwise it has led 
 the party dealing with the agent to believe that the act in ques- 
 tion is within the scope of the agent's authority. While a mes- 
 senger is authorized to collect papers in his hands, and a person 
 paying to such messenger a paper presented to him would be 
 protected in so doing, the failure of the messenger to produce the 
 draft in the case under consideration rebutted any presumption 
 which might otherwise exist that he had authority to collect. It 
 was incumbent upon the drawee of the draft to ascertain the au- 
 thority of the messenger when the messenger failed to produce 
 the draft. If he had inquired he would have ascertained that the 
 agent did hot have authority as a matter of fact, because the 
 draft in question had been returned to the drawer. The agent 
 having no authority to collect and any presumption of authority 
 being rebutted by his failure to produce the draft, the drawee 
 took all the risk of paying, and, therefore, as between him and 
 the bank he will have to lose the amount paid. 
 
 Note Signed by Named Party as Agent Is the Individual 
 Undertaking of the Maker. 
 
 Can suit be entered against the undisclosed principal and the indorser 
 a "pte under seal, the note being payable to a named party with the 
 word Agent added and indorsed in the same way? 
 
 "An instrument, signed by one as agent, trustee, guardian, ad- 
 ministrator, executor, or the like, without more, is the individual
 
 OPINIONS OF THS GENERAL COUNSEL. 229 
 
 undertaking of the maker, such words being generally words of 
 description." Park's Ann. Code, 3570. 
 
 "It is generally true at common law that a suit could be main- 
 tained against an undisclosed principal on a written contract, but 
 there were exceptions to this rule, among which were that undis- 
 closed principals could not be held liable upon a suit upon nego- 
 tiable instruments, nor upon instruments .under seal, and this is 
 now the law as ruled by this and other courts, and announced by 
 many text writers. This is true where the words 'as agent' or 
 'as trustee' occur after the signature of the maker of a negotiable 
 instrument without disclosing the name of the principal or with- 
 out sufficiently indicating on the face of the instrument who the- 
 principal is." ' Coaling Coal Co. v. Howard, 130 Ga. 807, 811. 
 
 This decision of our Supreme Court is abundantly supported by 
 a number of cases cited in the opinion, and seems to be conclusive 
 of the question. 
 
 It has been held where credit has Seen extended to the principal 
 and a note is given signed by the principal's agent that as between 
 the orignial parties the facts might be shown and the principal 
 held on the contract. Burhalter v. Perry, 127 Ga. 438. But this 
 seems not to apply to instruments under seal. Van Dyke v. 
 Van Dyke, 123 Ga. 686. 
 
 Notes Signed by Administrator Bind Maker Personally, but 
 Do Not Bind the Estate. 
 
 Can a note signed by, or an overdraft in the name of an administrator 
 be enforced against the estate for which he is acting? If not, may it be 
 enforced against him personally? 
 
 From Section 3570 of Park's Ann. Code, it will be seen that 
 a paper signed by an administrator is generally taken to be the in- 
 dividual undertaking of the administrator on which he would be 
 personally liable, but for which the estate could not generally be 
 held. As a general proposition, an administrator has no authority 
 to borrow money for an estate, and a note signed by him is re- 
 garded as his individual undertaking. As an administrator 
 usually has no authority to borrow money for the estate, he could 
 not bind the estate by an overdraft. There may be some circum- 
 stances, as for instance, where an administrator is temporarily 
 carrying on the business of the estate under the orders of the 
 court, in which he might have authority to borrow money and 
 bind the estate by a note. In taking such a note it should always 
 be clearly shown that it is an obligation of the estate and not of 
 the administrator.
 
 230 PARK'S BANKING LAW OF GEORGIA. 
 
 ATTACHMENT. 
 
 Foreign Creditor of Georgia Bank Can Subject Its Account 
 with a Bank in Another State by. 
 
 Can a creditor in New York of a bank in Georgia, in order to enforce 
 payment of his debt, attach the Georgia bank's account with a New York 
 bank? 
 
 Under the law of Georgia, an attachment may issue against a 
 nonresident and may be served by process of garnishment issued 
 to any one who may be indebted to the nonresident or may have 
 in his possession or control any property, money, or effects of 
 such nonresident. While the process differs somewhat in the 
 different states, in all of them, so far as I am aware, some such 
 means is provided for reaching property of a nonresident, ~or 
 money due to him, at the instance of a local creditor, and it is 
 not usually necessary to obtain a judgment before beginning such 
 proceedings. Of course, it would not be possible to secure a 
 personal judgment against a nonresident, but any property of 
 such nonresident can be subjected to his indebtedness under the 
 process of attachment and garnishment as above indicated. 
 
 Without undertaking to state precisely the procedure in New 
 York, there is no doubt that an attachment could be issued against 
 the Georgia bank and any money due to it by its New York cor- 
 respondent or any deposit with such correspondent could be seized 
 by garnishment or some similar process. 
 
 Amount Paid on Draft, with Order Notify Bill of Lading At- 
 tached, Not Subject to Attachment When Discounted by 
 Drawer. 
 
 A car of corn was shipped by a dealer in another state on order notify 
 bill of lading to a merchant in Georgia. The bill of lading was attached 
 to a draft which was deposited by the shipper with a bank in that state 
 to his general account subject to check. On arrival the corn was found 
 to be short weight, and the merchant who received it having paid the draft, 
 sued out an attachment against the shipper and served the local bank 
 with summons of garnishment for the purpose of subjecting the fund paid 
 on the draft. The fund is claimed by the bank which discounted the 
 draft, that bank claiming to be the owner. Is the fund subject to the 
 attachment ? 
 
 The Supreme Court has passed on the question several times. 
 Possibly the best statement is in the case of National Bank v. 
 Everett, 136 Ga. 372, from which I quote:
 
 OPINIONS OF THE GENERAL COUNSEL. 231 
 
 "Where a customer of a milling company orders flour, which 
 is consigned by the milling company to itself with a memorandum 
 on the bill of lading to notify the customer, and contemporane- 
 ously the milling company draws a draft for the price of the 
 flour on the customer, payable to a bank, to which is attached the 
 bill of lading endorsed in blank, and deposits with the bank the 
 draft with bill of lading attached, and the amount of the deposit is 
 credited to the depositor's general account and drawn against by 
 him, the bank becomes the purchaser and owner of the draft and 
 bill of lading ; and the title of the bank to the flour is superior to 
 a subsequent lien against the milling company." 
 
 Under a similar state of facts, the Supreme Court in the case 
 of Merchants National Bank v. Parker, 142 Ga. 265, said that 
 "the proceeds of the draft belonged to the bank (which had dis- 
 counted it) and were not subject to an attachment taken out by the 
 drawee of the draft against the shipper." 
 
 Under the facts as stated and under these decisions of the 
 Supreme Court, the fund is not subject to the attachment against 
 the shipper, but belongs to the bank which discounted the draft. 
 I do not think, however, that the local bank would be safe in pay- 
 ing over the fund to the other bank without some understanding 
 from it as to its protection in so doing. The nonresident bank 
 should file a claim to the fund and dissolve the garnishment by. 
 giving bond. The local bank should not be put to the burden of 
 proving that the fund belongs to the other bank. Possibly if the 
 latter will agree to be responsible to the former in the event the 
 fund should be held to belong to the shipper, it might be safe 
 for this bank to pay over the fund and answer not indebted on the 
 garnishment. The answer would probably be traversed, and on 
 this traverse the court would have to decide whether the fund be- 
 longed to the shipper or to the nonresident bank, and of course the 
 burden would be on the merchant who purchased the corn to 
 establish his contention that the fund belongs to the shipper. 
 
 But, as above stated, I think by far the best way to handle the 
 matter is to insist on the nonresident bank's claiming the fund 
 and dissolving the garnishment, taking on itself the burden of 
 establishing its ownership.
 
 232 PARK'S BANKING LAW OF GEORGIA. 
 
 ATTESTATION OF INSTRUMENTS. 
 
 Employees of bank are not disqualified to attest papers in 
 bank's favor unless pecuniarily interested as stockholders 
 or otherwise. 
 
 Can a notary public who is an officer of a bank attest papers in its 
 favor? Can he protest papers handled by the bank? 
 
 "A notary public is disqualified from attesting a deed or bill 
 of sale, so as to entitle it to record, if he is pecuniarily or bene- 
 ficially interested in the transaction. 
 
 "A stockholder of a corporation bears such financial relation 
 to it that he is disqualified, on account of interest, from attesting 
 as a notary a deed or bill of sale to which the corporation is a 
 party." Sou. Iron & Equip. Co. v. Voyles, 138 Ga/258. 
 
 But an agent or employee of a bank who is not a stockholder is 
 competent as an attesting witness if he has no personal financial 
 interest in the transaction. I quote from a decision by the Court 
 of Appeals in the case of Stimpson Computing Scale Company v. 
 Holmes-Hartsfield Company, 6 Ga. App. 569: 
 
 "An agent of a corporation is competent as an attesting wit- 
 ness upon a mortgage or other similar instrument executed in 
 favor of the corporation, if he has no personal financial interest 
 in the transaction." 
 
 The court in the earlier case of Betts-Evans Company v. Bass, 
 2 Ga. App. 718, says : 
 
 "We do not see that a clerk who has no interest conditional 
 upon the profits might not as notary public attest deeds, mort- 
 gages, or conditional bills of sale in behalf of his employer, or that 
 a cashier or other officer of a bank who owns no stock therein 
 might not do the same thing, though this would be of doubtful 
 propriety." 
 
 But in the case of Barrow v. E. Tris Napier Co., 16 Ga. App. 
 309, it was held that : 
 
 "A mortgage attested by a notary public, who is secretary and 
 treasurer of the corporation to which it is given, is not properly 
 executed, and therefore not admissible for record." 
 
 The court cites in support of its decision the Bass case, supra, 
 in which case, it will be seen, the court had taken just the opposite 
 view. 
 
 The Barrow case is a headnote or memorandum decision, the 
 court not attempting to discuss the question at all. The decision 
 seems to be out of line with other cases decided both by the 
 Supreme Court and the Court of Appeals.
 
 OPINIONS OP THE GENERAL COUNSEL. 233 
 
 The Supreme Court has decided that a stockholder is not in- 
 competent to act as a nonofficial witness to the signature of the 
 corporation to mortgages or deeds. Peagler v. Davis, 143 Ga. 
 11 (3). And in a recent decision following the Peagler case it 
 was said : 
 
 "A stockholder or officer, though incompetent to take an ac- 
 knowledgment of a mortgage on realty as a notary, because he is 
 a stockholder or officer of the mortgagee corporation, is not in- 
 competent as a nonofficial witness to the signature of the mort- 
 gagee. Peagler v. Davis, 143 Ga. 11, 84 S. E. 59, Ann. Cas. 
 1917A, 232." Hastey v. Roberts, Ga. , 100 S. E. 569. 
 
 This is a mere obiter statement. The question is still open so 
 far as the Supreme Court is concerned. But in view of the de- 
 cision of the Court of Appeals in the Barrow case it is certainly 
 not safe for an officer, although not a stockholder, to attest mort- 
 gages or other similar papers in favor of his corporation. 
 
 Notary Public in Georgia Not Required to State When Com- 
 mission Expires. 
 
 Must a notary in Georgia, when he attests a paper, state when his com- 
 mission expires? 
 
 There are statutes in many of the States which require such a 
 statement, but there is no such statute in Georgia. 
 
 BANKRUPTCY. 
 
 Proof of Joint Note Not Necessary to Hold Co-debtor. 
 
 Would a bank be safe in not proving in bankruptcy a joint note, where 
 one of the makers is in bankruptcy, the other being solvent and fully able 
 to pay the note? 
 
 Section 16 of the Act of Congress establishing a uniform 
 system of bankruptcy is as follows : 
 
 "The liability of a person who is a co-debtor with or guarantor 
 or in any manner a surety for a bankrupt shall not be altered by 
 the discharge of such bankrupt." 
 
 Mr. Collier, one of the leading writers on bankruptcy, in dis- 
 cussing this section, says : 
 
 "It makes no difference under this section whether the creditor 
 proves his claim and gets his dividend. The co-debtor or surety
 
 234 PARK'S BANKING LAW otf GEORGIA. 
 
 may protect himself by proving the claim, and can not complain 
 if the debtor [creditor?] does not." Collier on Bankruptcy, 10th 
 Edition, p. 375. 
 
 It seems under this authority optional with the creditor whether 
 he proves his claim or not. The joint debtor is not released by the 
 bankruptcy of his co-debtor. While this is true, it would gener- 
 ally seem to be best for a bank to consult the wishes of the solvent 
 debtor. If he desires the claim proved, the bank ordinarily should 
 make the proof and collect the dividend. While it is not bound 
 to do so, proper regard for its customers would seem to suggest 
 that the bank protect them as far as it can by collecting from the 
 bankrupt's estate and thus relieve the co-debtor, at least in part. 
 
 Waiver of Right to Go into Bankruptcy in Face of Note Is 
 
 Not Valid. 
 
 Can the right to go into bankruptcy be waived by a provision embodied 
 in the face of a note? 
 
 One can not waive his right to go into bankruptcy voluntarily, 
 and certainly he can not make such a waiver as will preclude his 
 creditors from forcing him into bankruptcy if he becomes insol- 
 vent ; nor can the maker of a note waive as to that particular note 
 the effect of his subsequent bankruptcy. That is to say, a pro- 
 vision in a note to the effect that the note should not be affected 
 by the maker's subsequent bankruptcy, would be invalid. The 
 purpose of the Bankruptcy Act is to protect creditors as well 
 as the debtor. Such a provision in a note if allowed to be 
 effective, would injuriously affect the rights of other creditors 
 than the one holding the note. 
 
 Of course, a waiver of homestead in a note is valid, and if the 
 maker of such a note afterwards goes into bankruptcy, he can not 
 then take a homestead as against the holder of the note. 
 
 Securities for Advances Made in Good Faith Are Not Pref- 
 erences, Although Given Within Four Months of Bank- 
 ruptcy. 
 
 A bank advances funds to a customer to pay for cotton to be purchased 
 by him and the customer turns over to the bank from time to time ware- 
 house receipts and insurance policies covering the cotton so purchased. In 
 the event this customer should be adjudged a bankrupt, could the bank
 
 OPINIONS OF THE GENERAI, COUNSEL. 235 
 
 hold the receipts? If the bankruptcy occurred within four months, could 
 the trustee recover the receipts and reduce the status of the bank to that 
 of an unsecured creditor? 
 
 Preference implies taking security for a debt already ex- 
 isting. A bona fide transaction where security is taken for 
 advances made at the time, does not constitute a preference. 
 The Bankruptcy Act was not intended to prevent the giving of 
 security for money borrowed or advances made, but was only 
 intended to prevent an insolvent from preferring one creditor 
 over another. Where warehouse receipts are turned over to a 
 bank at the time the advances are made, it could hold such re- 
 ceipts, no matter how shortly thereafter the bankruptcy of the 
 customer occurred. Even if it knew that the customer was in bad 
 financial condition, it would be entitled to security for advances 
 actually made, and such transactions where in good faith are not 
 inimical to the Bankruptcy Act and do not constitute preferences 
 within the meaning of that act. Bailey v. Baker Ice Machine 
 Co., 239 U. S. 268, 60 L. Ed. 275. 
 
 Note Waiving Homestead Is a Debt Dischageable in 
 Bankruptcy. 
 
 Will bankruptcy discharge an indebtedness evidenced by a note waiving 
 homestead and exemption under the Constitution and laws of Georgia or 
 of the United States? 
 
 Bankruptcy completely discharges all provable debts. A debt 
 evidenced by a note is a provable debt in bankruptcy. Where the 
 bankrupt enters the name of the creditor on his schedule the 
 debt would be discharged by the bankruptcy, and if a suit was 
 entered on the note afterwards the discharge granted by the 
 Bankruptcy Court would be a complete bar to the action. 
 
 The waiver of homestead contained in the note would be good, 
 and if the bankrupt claimed a homestead the holder by bringing 
 suit in the State Court could have a receiver appointed, who 
 would take charge of and administer the homestead set apart by 
 the Bankruptcy Court for the benefit of the creditors holding 
 notes waiving homestead; but so far as the debt itself is con- 
 cerned, bankruptcy would be a complete discharge.
 
 236 PARK'S BANKING LAW OF GEORGIA. 
 
 Mortgaged Property Can be Sold by Trustee in Bankruptcy 
 Freed of Lien and Mortgagee Be Paid Out of Proceeds. 
 
 Where a bank holds a mortgage on property of a bankrupt, can the 
 property be sold freed of the lien of the mortgage and the bank get its 
 money out of the proceeds? 
 
 It is customary after a trustee in bankruptcy has been elected 
 for the trustee to apply to the referee for leave to sell the property 
 of the bankrupt. Where property is covered by a mortgage or 
 other lien, the usual practice is for the trustee to apply for leave 
 to sell the property freed of liens, the liens to attach to the pro- 
 ceeds of sale. I quote from Remington on Bankruptcy, p. 1223 : 
 "The property may be sold free from liens and incumbrances, 
 and the liens be transferred to the proceeds." Where this is 
 done, the mortgage creditor can intervene in the bankruptcy cause 
 and have the mortgage satisfied out of the proceeds of the sale. 
 
 Under the Bankruptcy Act the trustee can offer the property 
 for sale subject to the lien, but as it is usually best for all parties 
 that the unincumbered title to the property should be sold rather 
 than the equity after the payment of the mortgage, the other 
 practice is generally resorted to. Where this is done, unless it 
 is upon the application of the mortgage creditor or at his in- 
 stance, he is entitled to receive the full amount of his mortgage 
 debt without the payment of costs, unless the property brings less 
 than the mortgage debt, in which event it is usually taxed with 
 the expenses of the sale. 
 
 A Bank Has the Right to Set Off an Indebtedness Due it 
 Against Deposit of a Bankrupt. 
 
 Has a bank the right, under the Bankruptcy Act, to set off amounts 
 collected on notes deposited with it for collection as against notes of the 
 depositor held by the bank? 
 
 The Bankruptcy Act expressly authorizes the set-off of mutual 
 accounts. This has been repeatedly held to include deposits in 
 bank as against notes of the depositor. There are numerous de- 
 cisions to this effect. I do not recall a case in which has been 
 decided the precise question as to the right of a bank receiving 
 notes for collection to set-off the proceeds of the collections as 
 against the notes of the depositor, but in the case of Continental 
 & Commercial Trust & Savings Bank v. Chicago Title & Trust 
 Company, 229 U. S. 435, 57 L. Ed. 1268, the United States
 
 OPINIONS OF THE GENERAL COUNSEL. 237 
 
 Supreme Court practically decided the question. I quote the third 
 head-note : 
 
 "A balance left in a deposit subject to check for specific 
 purposes may be applied by the bank to the payment of the de- 
 positor's indebtedness to it without violating the prohibitions of 
 the Bankruptcy Act of July 1, 1898, section 60 a and b, against 
 preferential transfers, although the transaction was within four 
 months of the bankruptcy proceedings against the depositor, and 
 the bank at the time had reasonable cause to believe him insolv- 
 ent." 
 
 BILL OF LADING. 
 
 Railroad delivering goods shipped on order notify bill of 
 lading without requiring surrender thereof is liable to 
 the transferee. 
 
 A dealer ships a car of corn on order notify bill of lading and draws 
 draft on his customer, attaching bill of lading to the draft. This draft is 
 discounted by a bank. The railroad by mistake bills the car open, and it 
 is delivered to the customer without the surrender of the bill of lading. Is 
 the railroad liable for such delivery? 
 
 "For the purpose of obtaining payment for the goods before 
 delivery to the person for whom they are intended, it is frequently 
 the custom for the shipper, on delivering his goods to the carrier, 
 to take a bill of lading calling for a delivery to his own order and, 
 after attaching a draft drawn upon the person for whom the 
 goods are intended, to forward the same to a bank at the point of 
 delivery where the drawee, on payment of the draft, may secure 
 the bill of lading. When such a course is taken the carrier will 
 be liable to the consignor if loss ensue through a delivery of the 
 goods to the drawee before he has paid the draft and obtained 
 possession of the bill of lading from the bank." Hutchinson on 
 Carriers, 183. 
 
 "The practice is also common in commercial circles for the 
 shipper of goods to take from the carrier a bill of lading provid- 
 ing for a delivery to his own order, and pledge it as collateral 
 security for money advanced upon the faith of its representing 
 the goods. The usual custom in such a case is for the shipper to 
 draw a draft upon the person for whom the goods are intended, 
 attach it to the bill of lading, and secure a discount of the draft 
 by indorsing the bill of lading to a bank. The bank thus becomes 
 the lawful holder of the bill of lading as pledgee and may retain 
 the same in its possession until payment of the draft is made ; 
 and if the carrier makes delivery of the goods to the drawee of 
 the draft before he has obtained possession of the bill of lading 
 from the bank, such delivery will be wrongful and the carrier 
 will be liable to the bank as for a conversion." Ibid., 184.
 
 238 PARK'S BANKING LAW OF GEORGIA. 
 
 These two quotations from a recognized authority on the sub- 
 ject correctly state the law as I understand it. On the facts 
 stated the railroad, having delivered the corn without requiring 
 the surrender of the bill of lading and the payment of the draft, 
 would be liable to the bank for having converted the corn, title 
 to which by the transfer of the bill of lading passed from the 
 shipper to the bank. 
 
 BOND FOR TITLE. 
 
 Rights of Vendor Upon Default. 
 
 Can the vendor of land, having given a bond for title, sell the land to 
 another purchaser notwithstanding the fact that the bond for title is still 
 outstanding, the vendee of the land having defaulted in his payments? 
 
 A very good general statement of the rights of a vendee of 
 land holding a bond for title, is the following, from Powell's 
 Actions for Land, p. 502 : 
 
 "The vendee under bond for title, * * * * acquires an 
 equitable title to the land, charged with the payment of the pur- 
 chase money. In substance and apart from the merely formal 
 and strictly legal phase of the matter, he is the owner of the land. 
 The vendor has elected to exchange his land for the promised 
 money represented by the notes given by the vendee. If the 
 property goes down in value, the loss is the vendee's, for he is, 
 nevertheless, bound to pay the notes in full ; if it goes up in value 
 the profit should be his. The vendee, therefore, acquires rights 
 which are presumptively valuable and which the law will not 
 lightly forfeit." 
 
 Upon the failure of the purchaser holding a bond for title 
 to pay his installments as they mature, it is the right of the vendor 
 to reduce the purchase money notes to judgment, file a deed, and 
 sell the land, or he can bring ejectment against the vendee to re- 
 cover the land. If the land is vacant the vendor can reenter and 
 take possession of it. But if the vendor reenters and takes pos- 
 session of the land, he thereby elects to rescind the trade, and 
 there is then an implied obligation on his part to restore to the 
 purchaser the amount of the purchase money which he has paid, 
 less such an amount as would prevent actual loss to the vendor by 
 reason of the vendee's nonperformance of the contract, and if the 
 vendor does not return the purchase money already paid the 
 vendee can recover it from him by suit. McDaniel v. Gray 69 
 Ga. 434.
 
 OPINIONS of THE; GENERAL COUNSEL. 239 
 
 As a general rule time is not of the essence of a contract, but it 
 can be made so by agreement. This applies to bonds for title as 
 well as to other contracts. Quoting again from Powell's Actions 
 for Land, p. 502 : 
 
 "Bonds for title generally contain a condition that they shall 
 be void if the purchase money notes are not paid promptly at 
 maturity. Such a condition is in the nature of a penalty or an 
 agreement for a forfeiture. Ordinarily time is not of the essence 
 in a contract, and penalties and forfeitures are not favored. 
 Usually the measure of the damage flowing from the failure to 
 pay money promptly at maturity is the interest thereon. There- 
 fore, except in rare cases where time is expressly made of the 
 essence of the contract, when the vendee defaults in his pay- 
 ments his interests in the land do not ipso facto terminate, the 
 condition of the bond to the contrary notwithstanding. He may, 
 nevertheless, pay the purchase money with interest." 
 
 In this connection it should be noted, as said by Judge Powell 
 (Actions for Land, p. 503, note 3) : 
 
 "Even in cases where time is made of the essence of the con- 
 tract, a waiver of the vendor's right to enforce a forfeiture of 
 the vendee's privilege of paying up and keeping the land will be 
 readily presumed and enforced by the courts. Any effort on the 
 part of the vendor to insist upon the payment of the purchase 
 money after the time set in the contract will be construed to be 
 a waiver. If the vendor is going to rescind for lack of prompti- 
 tude of performance on the vendee's part, he himself must mani- 
 fest his election so to claim by acting promptly ; else he will waive 
 his right to do so." 
 
 So, that even in a contract where time is made of the essence 
 the vendor must act promptly upon the failure of the vendee to 
 pay, and if he makes any effort at all to collect the money due 
 after it is due he waives his right to insist upon a forfeiture by 
 the vendee. 
 
 Even where time is of the essence and the vendor has the right 
 to declare a forfeiture by the vendee, it would be necessary for 
 the vendor to return to the vendee the money which he had al- 
 ready paid under the contract. 
 
 Where it is expressly provided in the bond for title that time 
 shall be of the essence of the contract and that if the notes are 
 not paid at the time specified the obligation shall be void and of 
 no effect, and possession shall be surrendered upon demand, the 
 vendor would be entitled to declare a forfeiture in case the notes 
 were not paid at maturity, provided he had done nothing toward 
 collecting the notes after they became due. Then if the vendor 
 takes possession of the .land and returns to the vendee the pur-
 
 240 PARK'S BANKING LAW OF GEORGIA. 
 
 chase money paid, he can convey the title to a third person. But 
 it would be decidedly safer, if not necessary, for him to get 
 possession of the bond for title, and it would probably be better 
 to insert in the bond a statement that, in case of default, the 
 vendee is to surrender the bond as well as the property. In the 
 event this is done, I think the title conveyed would be good. 
 
 Of course, the ordinary method provided in the Code could be 
 adopted to clear the title of the outstanding bond and recover 
 possession of the property: 
 
 "In cases where a contract to purchase has been made or bond 
 for title made, or the purchase money has been partly paid, or in 
 cases where a deed to secure debt has been executed and the 
 purchase money or secured debt has been reduced to judgment, 
 by the payee, assignee or holder of said debt, the holder of the. 
 legal title, or, if dead, his executor or administrator, shall without 
 order of any court make and execute to said defendant in fi. fa., 
 or if he be dead to his executor or administrator, a quit claim con- 
 veyance to such real or personal property, and file and have the 
 same recorded in the clerk's office, and thereupon the same may 
 be levied upon and sold as other property of said defendant and 
 the proceeds shall be applied to the payment of such judgment; 
 or if there be conflicting claims, then the same shall be applied 
 as determined in proceedings had for that purpose." Park's Ann. 
 Code, 6037. 
 
 Under this section, suit is filed on the notes covered by the 
 bond, judgment obtained, a quit claim deed to the vendee filed 
 and recorded, and the property levied upon and sold by the sheriff 
 as that of the vendee. At the sale the vendor can buy it in or 
 have some one do so for him. If the proceedings are regular and 
 in accordance with the statute, he can then convey a good title to 
 a third person. 
 
 Method to Be Pursued by Vendor in Recovering Possession 
 of Land Under Bond for Title Upon Default in Payment. 
 
 When the holder of a bond for title has defaulted, what is the quickest 
 way in which the vendor of the property can recover possession? 
 
 If the bond contains the provisions discussed in the foregoing 
 opinion and the owner complies with the conditions therein 
 stated, possession could be obtained at once, otherwise there is 
 no legal way in which it can be obtained except through the 
 regular processes of the court. Probably the simplest way is to 
 bring suit on the notes, secure judgment, and after filing and re- 
 cording a deed to the purchaser, levy on and sell the land. Where
 
 OPINIONS OF THE GENERAI, COUNSEL,. 241 
 
 a person enters into possession of property under a bond for title, 
 he can not be summarily dispossessed by a dispossessory warrant 
 or other similar summary remedy. Griffith v. Collins, 116 Ga. 
 420. 
 
 When Holder of Bond for Title Executes and Delivers a 
 Mortgage on the Land Described Therein and Subse- 
 quently Transfers the Bond for Title, the Lien of the 
 Mortgage Is Superior to the Lien of the Transferred 
 Bond. 
 
 The owner of land secures a long loan on the same, executing a deed 
 to secure debt to the lender and taking a bond for title. He then gives a 
 second mortgage covering the same property. This mortgage is recorded. 
 Afterwards he transfers his bond for title as security for a debt. Which 
 security takes precedence, the second mortgage or the transferred bond 
 for title? 
 
 It is well settled that "the assignee of a bond for title acquires 
 all the rights and equities to which the assignor was entitled there- 
 under." Walker v. Maddox, 105 Ga. 254. 
 
 But in this case the obligee in the bond for title, that is, the 
 original owner of the land, has already mortgaged or incumbered 
 his equity or interest in the land described in the bond, and the 
 transferee of the bond, the mortgage having been recorded, had 
 notice of this incumbrance at the time he took the bond as se- 
 curity. He would, therefore, I think, take subject to the rights 
 of the mortgage creditor The Supreme Court has practically 
 decided the question, holding as follows : 
 
 "Where land is conveyed by deed to secure a loan, bond for 
 title being given for a reconveyance to the debtor upon payment 
 of the debt, and the latter transfers the bond to another, who pays 
 the debt and takes a reconveyance from the creditor, the right of 
 a mortgagee to enforce his mortgage, given upon the land by the 
 debtor after the execution of the security deed, depends, in the 
 absence of an attack upon the bona fides of the transfer of the 
 bond for title, upon whether the mortgage antedates the transfer." 
 Rountree v. Finch, 120 Ga. 743. 
 
 In the opinion in this case the court says : 
 
 "If the bond was transferred to her prior to the execution of 
 the mortgage, then, of course, she took the title unincumbered 
 by the mortgage. It was, therefore, essential to petitioner's case 
 that the petition should show that the execution of the mortgage 
 antedated the transfer of the bond for title." 
 
 This clearly implies that the converse of the proposition is true, 
 that is, that if the mortgage was given prior to the transfer of the 
 16
 
 242 PARK'S BANKING LAW OF GEORGIA. 
 
 bond for title, it would be superior to the rights of the transferee. 
 
 The Supreme Court has also held that the transfer of a bond 
 for title is superior to a judgment against the owner of the land, 
 and that the judgment creditor does not have the right to sub- 
 ject the land to the payment of the judgment after the payment 
 of the secured debt by the transferee of the bond and the can- 
 cellation of the security deed, it not being shown that the holder 
 of the judgment was a creditor when the transfer was made. 
 Burney Tailoring Co. v. Cuzzort, 132 Ga. 852. 
 
 These cases both hold that the right of the transferee of the 
 bond is superior where the transfer is made prior to the mortgage 
 or judgment, and the implication is strong that if the mortgage or 
 judgment were older than the transfer of the bond, they would be 
 superior to it. 
 
 BY-LAWS. 
 
 Election of Directors Are Governed by. 
 
 Is a by-law valid which requires a two-thirds vote of the stockholders 
 to elect a board of directors? 
 
 Such a by-law provision with regard to the election of directors 
 is most unusual. The statutes relating to banks and other cor- 
 porations require in some instances that two-thirds and some- 
 times three-fourths of the stockholders must concur in order to 
 authorize amendments to the charter or other fundamental 
 changes in the corporation, and it is not unusual in charters 
 granted by the superior courts to provide that the stockholders 
 by a two-thirds vote may dissolve the corporation, accept amend- 
 ments to its charter, or do other things of like character. But 
 while it is unusual to provide by the by-laws that a two-thirds vote 
 of the stockholders shall be required for the election of directors, 
 there is no reason why such a provision can not be made. The 
 law certainly does not fix the number of votes or the proportion 
 of stockholders required, and, therefore, the matter is left to the 
 stockholders themselves, who may make any limitations on their 
 own rights which they may deem fit and proper. 
 
 In the recent work of Machen on the Modern Law of Cor- 
 porations, 1240, it is said: 
 
 "A majority of the members present, provided they be a 
 quorum, and unless a heavier preponderance be expressly required
 
 OPINIONS of THE GENERAL, COUNSEL. 243 
 
 by statute or the company's regulations, determines the action of 
 the meeting." 
 
 Quoting from- the Supreme Court of Pennsylvania : 
 
 "A corporation is a voluntary association of persons engaged in 
 a common enterprise. When the methods of voting are not 
 fixed by general law, the corporators may make the law for 
 themselves, subject to the qualification that such laws and regu- 
 lations as they make shall not conflict with the laws of the State 
 or of the United States. [The by-law regulation in this case was 
 that the stockholders should have one vote for each share of stock 
 up to ten, and a certain proportion beyond that number. The 
 court continues.] This is a reasonable regulation, it is uniform 
 in its operation, it conflicts with no law, and it is binding on all 
 the stockholders." Detwiler v. Commonwealth, 18 Atl. 990. 
 
 I see no reason, therefore, why the stockholders cannot adopt 
 a by-law which requires a vote of two-thirds in order to elect 
 directors ; and such a by-law when regularly adopted would be- 
 come the law of the corporation by which all stockholders would 
 be bound. 
 
 Lien Created by By-law Cannot Be Asserted Against Holder 
 Without Notice Thereof. 
 
 Is the stock of a corporation upon which there is a by-law lien good 
 collateral security in the hands of an innocent holder, no notice being 
 given to such holder that the corporation reserves said lien? 
 
 A by-law lien cannot be asserted on stock in the hands of an 
 innocent holder who had no notice of the lien. Section 3375 
 of Park's Ann. Code provides that such lien "is binding upon the 
 corporators themselves, and upon all creditors giving credit with 
 notice, or purchasers at public or private sale purchasing with 
 notice." It has been held by the Supreme Court that notice of 
 the lien is essential to render it valid as against a creditor. I 
 quote from the decision in the case of Bank of Culloden v. Bank 
 of Forsyth, 120 Ga. 575 : 
 
 "Where notice of a by-lav/ lien is given in the face of a stock 
 certificate, the transferee takes subject to any debt due by the 
 stockholder to the corporation at the time of the transfer, or 
 which may arise before the corporation has notice of the transfer 
 of the scrip. 
 
 "But where the certificate makes no reference to the existence 
 of the lien, a pledgee or transferee of corporate stock is not af- 
 fected by the terms of a by-law lien of which he has no notice. 
 
 "A statement in a stock certificate that the same is 'transferable 
 only on the books of the corporation, in person or by attorney, on
 
 244 PARK'S BANKING LAW OF GEORGIA. 
 
 surrender of the certificate' does not charge the transferee with 
 notice of what is on the books of the company, or of the exist- 
 ence of the lien, or of the fact of the stockholder's indebtedness to 
 the company." 
 
 This decision and the section of the Code seem to settle the 
 question. 
 
 Transferror of Stock Subject to By-law Lien Is not Liable 
 to Criminal Prosecution. 
 
 Is a stockholder transferring as collateral to a third person stock upon 
 which there is a by-law lien, liable to prosecution for making the transfer? 
 
 I do not think a stockholder transferring as collateral stock 
 upon which there exists a by-law lien would be subject to a crimi- 
 nal prosecution at the instance of the bank or corporation. It 
 would take a statute to make such a transfer criminal, and I know 
 of no statute on the subject. 
 
 By-law Lien Does not Affect Purchaser at Judicial Sale 
 Unless He Has Notice. 
 
 A stockholder owes the bank in which he holds stock. The by-laws of 
 the bank create a lien on its stock in its favor. The stock certificate makes 
 no reference to the by-law lien. What are the rights of the bank under its 
 by-law lien .as against a purchaser of the stock at a judicial sale under a 
 fi. fa. obtained against the stockholder before he bought the stock? 
 
 The provision of law applicable is as follows : 
 
 "The by-laws of a corporation may create a lien upon the 
 shares or other property of the stockholders in favor of the com- 
 pany; such lien is binding upon the corporators themselves and 
 upon all creditors giving credit with notice, or purchasers at public 
 or private sale purchasing with notice." 3375 Park's Ann. 
 Code. 
 
 It will be seen from this section that the rights of the purchaser 
 of the stock at the sheriff's sale depend upon whether or not he 
 had notice of the by-law lien. Of course, if the bank gave him 
 notice at the sale that it had a lien upon the stock, or if he ac- 
 quired notice in any other way, then he would buy subject to the 
 lien of the bank. If, however, the purchaser had no notice 
 prior to the sale, by reference in the stock certificate or otherwise, 
 that the by-laws of the bank gave it a lien on the stock, his rights 
 would be superior to the rights of the bank under its lien. 
 
 NOTE. Under 88 of the Banking Act of 1919, ( 10, Art. 8), a 
 bank incorporated under that act can not retain or enforce a lien on its 
 stock by by-law or otherwise except for unpaid installments due thereon.
 
 OPINIONS OF THE; GENERAL COUNSEL. 245 
 
 CASHIER. 
 
 Has no Power by Virtue o His Office to Bind Bank by Con- 
 tract Except in the Discharge of His Ordinary Duties. 
 
 Has a cashier power to bind a bank by ordinary contracts made on its 
 behalf by him? 
 
 The power of a cashier to make contracts for a bank is rather 
 fully stated in Michie on Banks and Banking, p. 737, from which 
 I quote: 
 
 "In order to bind the bank by any contract that he may make, 
 the cashier must keep within the usual and apparent scope of his 
 authority. Without special authority from the board of directors, 
 express or implied, he can not make for his bank a contract in 
 regard to a subject matter outside the usual and customary busi- 
 ness of the bank, and outside the business usually performed by 
 cashiers. The actual powers and duties of the cashier, like those 
 of all other agents, may be more or less qualified, restricted or 
 enlarged by the corporation, institution or party for whom he acts. 
 Any restriction upon his usual and customary authority, to be 
 binding upon third persons dealing with the bank through him. 
 must be brought to their knowledge, for where a party deals 
 with the cashier of a bank in good faith, without notice of any 
 want of authority on his part, and the act done is within the 
 apparent scope of his authority, the bank is bound by the contract. 
 On the other hand, Contracts not within the scope of the powers 
 ordinarily incident to the office of a cashier will be binding upon 
 the bank where authority to enter into such contracts on behalf 
 of the bank has been expressly conferred, or where he has been 
 held out to the public as having * such authority by a previous 
 course of dealing. In short, any contract is binding on a bank, 
 made by its cashier acting within the reasonable or apparent 
 scope of his authority, or made by him when acting with the 
 knowledge and approval of the directors, or like others which he 
 had been accustomed to make with their approval, or that was 
 afterwards ratified by the bank's availing itself of the benefits of 
 such contract. And where the directors of a bank allow the 
 cashier to take the general charge and management of the busi- 
 ness and contracts of the bank, all his contracts made within the 
 scope of the powers of the bank are binding upon it." 
 
 On page 742 of the same work is the following succinct state- 
 ment of the power of the cashier of a bank to bind it by a con- 
 tract for the payment of money : 
 
 "A cashier of a bank has no power, by virtue of his office, to 
 bind the corporation except in the discharge of his ordinary 
 duties, and the ordinary business of a bank does not comprehend
 
 246 PARK'S BANKING LAW OF GEORGIA. 
 
 a contract made by a cashier without delegation of power by 
 the board of directors involving the payment of money not 
 loaned by the bank in the customary way." 
 
 These quotations state the rule as generally accepted and an- 
 swer the question. 
 
 Cashier Has no Authority to Draw Checks on Bank's Cor- 
 respondents in His Own Favor. 
 
 Is it legal for a cashier to draw on the bank's New York correspondent, 
 making the check payable to himself individually? 
 
 It is a general and well recognized rule that an offcer can not 
 occupy a dual position and represent both himself and the bank 
 in any transaction with it. Thus, though a cashier or other officer 
 may have power to make loans for the bank, he can not lend to 
 himself, and it has been held frequently that a cashier can not 
 certify a check payable to himself, and that where he attempts 
 to do so there can not be a bona fide holder of such check. I 
 quote (substantially) from Michie on Banks and Banking, p. 
 1172: 
 
 "Where the face of the check shows the officer's attempt to use 
 his official character for his private benefit, every one to whom it 
 comes is put upon inquiry, and when the certificate is false no one 
 can recover against the bank as a bona fide holder." 
 
 This principle is applicable to the bank's checks drawn in favor 
 of the cashier. While the cashier may have authority to draw 
 checks on the bank's correspondents, he would not have author- 
 ity to draw checks for his own .benefit, and any one taking such a 
 check would do so at his own risk, being put on inquiry by the 
 fact that the officer drawing the check appears to be acting in his 
 own interest in so doing. 
 
 While I have found no case in which the precise question has 
 been decided, nor any discussion of it by the text writers, the 
 principle stated, which is well established in the case of dealings 
 between bank officers and the bank, undoubtedly controls. 
 
 Cashier can not Make Certificate of Deposit Payable to 
 
 Himself. 
 
 What would be the legal status of a time certificate of deposit issued 
 by a cashier to himself for which no deposit was made and no entry 
 whatever made on the books of the bank? Would the fact that the cer- 
 tificate is signed by the cashier and made payable to his own order be
 
 OPINIONS OF THE GENERAL COUNSEL. 247 
 
 sufficient to put another bank on notice and prevent it from being a bona 
 fide holder of such certificate? 
 
 Under the principles stated in the foregoing opinion, a cashier 
 cannot issue a certificate of deposit payable to himself and there 
 can be no bona fide holder of such a certificate. 
 
 Of course the directors of a bank might give to the cashier 
 authority to certify his own check or to issue to himself certifi- 
 cates of deposit, and this authority might be given by implication 
 by recognizing his certification or his certificates for a consid- 
 erable period of time. Where such authority is given, either ex- 
 pressly or by implication, the bank might be compelled to pay a 
 certificate although it was fraudulently issued. But where no 
 authority had been given in any way and the certificate of deposit 
 was issued without any deposit having been made, I do not think 
 the bank would be liable or that any one taking the certificate 
 could claim successfully to be a bona fide holder. 
 
 CASHIER'S CHECK. 
 
 Good in Hands of Bona Fide Holder Although Obtained by 
 Misrepresentations. 
 
 A bank issues its cashier's check, which the payee cashes at another 
 bank. The bank cashing the check forwards it to the bank on which it is 
 drawn. This bank refuses payment, on the ground that the check was 
 obtained by misrepresentation. Can the bank which cashed the check 
 collect it from the bank which issued it ? Would suit have to be brought 
 first against the original payee, who indorsed the check? 
 
 A cashier's check is a negotiable instrument, and like other 
 negotiable instruments is not subject to defenses between the 
 original parties where held by a bona fide purchaser for value 
 without notice of such defenses. There is nothing peculiar or 
 sacred about a cashier's check. It stands on the same footing 
 as the check of an ordinary person, the drawer being liable where 
 the check is in the hands of a bona fide holder. A bank could not 
 plead as against such holder that its cashier's check was obtained 
 by false representations. Of course, if the circumstances were 
 such as to arouse the suspicions of the purchasing bank and to in- 
 dicate that there was something fraudulent in the transaction, the 
 bank would not be a bona fide holder. 
 
 It is not necessary that suit should be brought against the in- 
 dorser before suing the drawer of a check. Indeed, the drawer
 
 248 PARK'S BANKING LAW o? GEORGIA. 
 
 is the party primarily liable, and while both can be sued in the 
 same action, it would be proper to exhaust the drawer before 
 going on the indorser, though it is not necessary that this should 
 be done. 
 
 CERTIFICATE OF DEPOSIT. 
 
 Certificate of Deposit of Insolvent Bank Ranks as General 
 
 Deposit. 
 
 Do certificates of deposit of an insolvent bank rank as deposits? Is there 
 any distinction between certificates of deposit and general deposits, in the 
 payment of dividends? 
 
 The Supreme Court has held that the holders of certificates of 
 deposit are depositors within the meaning of the statute, imposing 
 on stockholders a statutory liability for the payment of the de- 
 positors. Lamar v. Taylor, 141 Ga. 227 (6). Under this de- 
 cision, there is no distinction between certificate holders and 
 general depositors. Dividends should be paid on all deposits 
 whether represented by certificate or by pass book, pro rata, 
 without distinction or priority. 
 
 NOTE. Under the Banking Act of 1919, 2, the term "depositor" in- 
 cludes the holders of demand and time certificates of deposit lawfully is- 
 sued. 
 
 Deposit in Name of Husband to Be Paid to His Wife in the 
 Event of His Death Must Be Paid to His Administrator 
 and not to Wife. 
 
 A person deposits a sum in bank, taking an interest-bearing certificate of 
 deposit, payable to the order of himself, or in the event of his death, to his 
 wife. The depositor dies intestate. Can the widow draw the money on 
 the certificate, or can the money be drawn only by the administrator of 
 the depositor? 
 
 I quote from Michie on Banks and Banking, Volume II, p. 
 1283: 
 
 "A certificate of deposit payable to the order of the depositor 
 or his wife may be paid to the wife. But where the depositor de- 
 posited money in a bank and received a certificate of deposit 
 payable to the order of himself, or his wife, on the return of the 
 certificate, the bank is liable for paying to the wife after notice 
 of the death of the depostor; and notice to the paying teller is 
 notice to the bank."
 
 OPINIONS OF THE GENERAL COUNSEL. 249 
 
 This statement is based on the case of Second National Bank v. 
 Wrightston, 63 Md. 81. 
 
 The precise question has been decided by the Court of Appeals 
 of New York in the case of Sullivan v. Sullivan, 56 N. E. 116. I 
 quote the headnotes in this case : 
 
 "The deposit of money in a bank, and the issuance of a certifi- 
 cate payable to the depositor, or, in case of her death, to an- 
 other, do not, where there is no consideration therefor, constitute 
 a valid contract between the depositor and the bank for the benefit 
 of the other, which the latter can enforce on the depositor's death 
 before the sum is withdrawn. 
 
 "The deposit of a fund in a bank, and the issuance of a cer- 
 tificate payable to the depositor, or, in case of her death, to an- 
 other, do not create a trust in favor of the other, where there is 
 no intention, express, or implied, to immediately transfer the title 
 to the fund to the latter or to the bank, except as the depositary 
 and debtor of the depositor." 
 
 The Supreme Court of Iowa in the case In Re Brown's Estate, 
 113 Iowa 351, 86 N. W. 617, also decided that a certificate issued 
 jointly in the names of the depositor and his wife, the depositor 
 stating to the bank at the time that the certificate was so taken to 
 enable the wife to draw the money on his death, did not create a 
 trust in favor of the wife, and that the fund belonged to the hus- 
 band's estate. 
 
 I do not think the question has been decided in Georgia, but 
 the principles upon which the cases above referred to were de- 
 cided are well recognized in this State. 
 
 Of course, a special contract based on a valid consideration 
 might be made, by which the title to the deposit would pass to 
 a third person, and the bank under such circumstances would be 
 authorized to pay regardless of the death of the depositor. Again, 
 a husband might make a valid gift to his wife in the form of a 
 deposit in bank, which she could draw after his death. In such 
 case, however, it would' be necessary that the title to the fund 
 should vest in the wife at the time the gift is made, and not at 
 the death of the depositor. A gift to take effect at the death of the 
 donor can only be made by will, and a bank could not be ap- 
 pointed an agent to transfer to another a deposit after his, the 
 depositor's death, because death would revoke the agency. 
 
 NOTE. Under the Banking Act of 1919, 183, when a deposit is made in 
 the names of two persons, payable to either or the survivor, the deposit 
 may be paid to either whether the other be living or not.
 
 250 PARK'S BANKING LAW OF GEORGIA. 
 
 Certificate of Deposit Should not Be Paid Without Production 
 and Surrender of Certificate. 
 
 The payee of a time certificate payable to order dies before its maturity. 
 Can the administrator of the payee enforce payment of the certificate with- 
 out producing and surrendering it? 
 
 The bank should decline to pay the amount until the certificate 
 is produced and delivered. The certificate being payable to order 
 is negotiable, and if it should have gotten into the hands of an 
 innocent holder before its maturity, payment to the administrator 
 of the deceased holder would be no protection. If the adminis- 
 trator cannot produce the certificate, the bank should decline to 
 pay it unless it is established in the way provided by law. Before 
 a lost paper of this character could be established the court would 
 require satisfactory proof that the certificate was, in fact, lost, 
 and that it had not been transferred and was not in the hands of 
 an innocent holder. And a bond sufficient to protect the bank 
 in the payment would be required. This is the only safe course 
 to be pursued under the circumstances. 
 
 Bank Must Know Signature of Payee of Certificate of Deposit. 
 
 Is a bank bound to know the signature of the payee of a certificate of 
 deposit issued by the bank itself? 
 
 A bank is bound to know the signature of the payee of a cer- 
 tifiicate of deposit. I quote from Magee on Banks and Banking, 
 p. 377: 
 
 "It (a certificate of deposit) must be paid to the owner. The 
 instrument being transferable, if presented for payment by a 
 person other than the person named in the certificate as payee, 
 the bank must, before payment, satisfy itself that the transfer 
 and assignment is genuine, that the signature is the signature of 
 the payee named in the certificate. The bank is held to the same 
 degree of care in payment of a certificate as it is in payment 
 of checks. If it pays a forged check, the money is not trans- 
 ferred. If the assignment on the certificate is a forgery, the true 
 owner of the certificate can recover." 
 
 And it has been held that "a bank is bound to know the hand- 
 writing of the payee of a certificate of deposit issued by it, and 
 is liable for all forged signatures accepted as genuine." Stout v. 
 Benoist, 39 Mo. 277, 90 Am. Dec. 468. In this case, which seems 
 to be inline with the rulings of the courts of last resort in other 
 States, it is said that "considerations of convenience and public
 
 OPINIONS OF THE GENERAL COUNSEL. 251 
 
 policy imperatively demand and require this rule. Bankers have 
 the means in their own hands, by acquiring an intimate knowledge 
 of the signatures of their customers, of protecting and securing 
 themselves against impositions and forgeries. They alone possess 
 the means of knowing, when paper is presented to them, whether 
 the signatures or indorsements are genuine. And if these means 
 are not employed, it is evidence of a neglect of duty which the 
 public has a right to require of them for its safety." 
 
 Bona Fide Holder of Certificate of Deposit Is Protected. 
 
 A bank is a bona fide holder of a certificate of deposit issued by an- 
 other bank. The issuing bank is garnished as a debtor of the person to 
 whom the certificate was issued after the first bank acquires the certificate. 
 How can the bank holding the certificate protect itself? 
 
 The bank, as the purchaser of a negotiable instrument without 
 notice, helds the same superior to any equities which may exist 
 between the issuing bank and the original holder of the certificate, 
 and would be protected against a garnishment sued out against 
 such holder. If the issuing bank refuses to pay the certificate on 
 account of the garnishment, the other bank can claim the money 
 in the garnishment proceedings and have the garnishment released 
 by the filing of a claim bond. There would be no risk in giving 
 such a bond under the circumstances, and this would be the 
 simplest and certainly the quickest way of getting the money on 
 the certificate. The issuing bank would probably be justified in 
 refusing to pay the certificate so long as the garnishment is out- 
 standing and undissolved, as it would not feel like assuming the 
 burden of deciding whether the other bank is a bona fide holder. 
 
 CERTIFICATION OF CHECKS. 
 
 Check Can Not Be Certified by Telephone or Telegraph. 
 
 Can a check be certified by telephone or telegraph? 
 
 I direct attention to a few of the leading authorities on bank- 
 ing: 
 
 "The act by which the bank places itself under obligation to 
 pay to the holder the sum called for by a check must be the ex- 
 pressed promise or undertaking of the bank signifying its intent
 
 252 PARK'S BANKING LAW OF GEORGIA. 
 
 to assume this obligation, or some act from which the law will im- 
 peratively imply such valid promise or undertaking. The most 
 ordinary form which such an act assumes is the acceptance by the 
 bank of the check, or, as it is perhaps more often called, the cer- 
 tifying of the check. A check is not an instrument which in the 
 ordinary course of business calls for acceptance. The holder can 
 never claim acceptance as his legal right. He can present for 
 payment, and only for payment. But on the other hand there is 
 nothing in the nature of a check which intrinsically precludes its 
 acceptance in like manner and with like effect as a bill of ex- 
 change or draft may be accepted. The bank may accept if it 
 chooses ; and it is frequently induced by convenience, by the exi- 
 gencies of business, or by the desire to oblige customers, volun- 
 tarily to incur the obligation. * * * The law in England 
 used to allow parol acceptance; but the Statutes, Ibt and 2d 
 George IV, and 20th Viet, require an acceptance in writing. 
 Some of the States of the Union have enacted laws to a similar 
 effect. In New York a statute requires acceptance of a bill of 
 exchange to be made in writing, and the courts h^ve held that 
 a check is so far like a bill of exchange as to fall within this stat- 
 ute, and that the verbal promise of the bank to pay it is of no ef- 
 fect." Morse on Banks and Banking, 404, 407. 
 
 "When the statute of a State does not provide that an accept- 
 ance of a bill of exchange or check shall be made in writing, a 
 verbal acceptance, when proved, is good. * * * The courts 
 say that it is fully settled, both in England and in the United 
 States, that in the absence of a statute an oral acceptance of a 
 bill of exchange will bind the acceptor." Magee on Banks and 
 Banking, 197. 
 
 This quotation is taken from a general discussion of certified 
 checks : 
 
 "An acceptance is generally in writing, and in some States 
 such an acceptance is required by the statute of frauds; other- 
 wise this may be done verbally." Bolles on the Modern Law of 
 Banking, p. 699. 
 
 The statute of frauds of Georgia requires the acceptance of a 
 bill of exchange to be in writing. 3222 (8) Park's Ann. Code. 
 
 The Supreme Court of Georgia has not been called on to decide 
 whether or not the certification of a check must be in writing, but 
 all the authorities treat the certification of a check as practically 
 the same as the acceptance of a bill of exchange, and the courts 
 generally have held that where the statute of frauds requires the 
 acceptance of a bill of exchange to be in writing, the certification 
 must also be in writing. 
 
 Whatever doubt may have existed on the question was removed 
 by the Act of 1907 (Park's Ann. Code, 2301, reenacted in the
 
 OPINIONS of THE GENERAL COUNSEL. 253 
 
 Banking Act of 1919, 181), which provided that "Such certifi- 
 cation shall be entered on the face of such check, draft or order." 
 Certainly since this act there can be no certification by telephone 
 or telegraph. 
 
 Agreement Among Banks to Certify by Telephone. 
 
 Can the banks of a particular city make an agreement that certification 
 of checks by telephone, by the proper officers, shall be as binding on the 
 banks as if the certification was in writing? 
 
 I do not think banks can certify in this way. The certifica- 
 tion of a check, as I understand it, is more than an agreement to 
 pay. In effect it is a statement by the bank that the check is 
 genuine and that the drawer has sufficient funds on hand to meet 
 it, as well as an agreement on the part of the bank to pay the 
 check. I do not see how a bank can certify, technically, without 
 seeing the check, as it cannot possibly know whether the check is 
 genuine. But I see no reason why the banks of a particular city 
 might not agree to make themselves liable one to another to pay 
 checks of their customers when requested to do so by telephone. 
 They could undoubtedly make themselves liable to pay under such 
 an agreement. What position a bank under such circumstances 
 might occupy with the depositor is another question. The de- 
 positor might take the position that the bank had no right to 
 certify a check unless the check itself was presented for the 
 purpose, and that, having no right to certify, it would have no 
 right to charge the amount to the depositor's account. I am in- 
 clined to think that the bank could hold a suffcient amount of the 
 deposit to cover checks which it had agreed to pay in this way. 
 but the diffculty can be readily appreciated. On the whole, such 
 certification being irregular and unauthorized, I doubt whether 
 the convenience would justify the banks in making such an agree- 
 ment as that suggested. 
 
 It would seem better for the banks to agree among themselves 
 to a quasi certification subject to prior withdrawal by the de- 
 positor, the certification being also conditioned upon the paper 
 being genuine and regular in all respects. What a bank generally 
 wants to know is whether the customer has the money to his 
 credit at the time the question is asked, and I think the banks 
 might agree to give this information ; but I do not believe it 
 would be best to enter into a binding obligation to pay the check 
 unless it is certified regularly.
 
 254 PARK'S BANKING LAW of GEORGIA. 
 
 Payment Can Not Be Stopped on Certified Check. 
 
 . Can payment be stopped on a certified check? 
 
 The certification of a check makes the bank liable for its pay- 
 ment, and relieves the drawer of all obligation thereon. The 
 check is immediately charged to the drawer's account, and to all 
 intents and purposes is paid so far as he is concerned. He would 
 not have the right to stop payment on such check, and as the bank 
 by certifying the check becomes primarily liable for its payment, 
 and as it has the funds with which to pay it, it is hard to imagine 
 any circumstance which would authorize the bank to stop pay- 
 ment. This does not mean that there might not be some circum- 
 stances under which a bank would be authorized to refuse to pay 
 a certified check. For instance, if the person getting the check 
 certified was guilty of some fraud on the bank, the bank would 
 be authorized to refuse payment so long as the check remained in 
 the hands of the fraudulent holder. I understand the question to 
 be, however, whether the drawer of a check can stop payment 
 after the same has been certified. As stated, the drawer is no 
 longer liable on the check and has no control over it. 
 
 Notice by Drawer to Payee that Payment Would Be Stopped 
 Would not Prevent Bank from Certifying. 
 
 A gives a check to B in connection with a business transaction between 
 the two. A becomes dissatisfied and notifies B that he (A) is going to 
 stop payment on the check. B gets to the bank before A does and has the 
 check certified. Can the bank be compelled to pay the check thus certi- 
 fied? 
 
 The law requires that as soon as a check is certified it shall be 
 charged at once to the drawer's account. The check then becomes 
 the primary obligation of the bank. The drawer cannot stop pay- 
 ment of it, and the bank is liable for it to the same extent that it 
 would be if it was the bank's own check. The fact that the 
 drawer may have told the payee that he intended to stop pay- 
 ment would not change the situation at all, the check having been 
 certified by the bank without any notice of the drawer's inten- 
 tion to revoke or stop payment. Nor would the fact that the 
 check was obtained by fraud, or that the original transaction out 
 of which it was given was fraudulent, make any difference. 
 
 I do not think the bank could do otherwise than pay the check 
 when presented.
 
 OPINIONS ' of THE GENERAL COUNSEL. 255 
 
 Payment Can Not Be Stopped on Check Certified After 
 Business Hours. 
 
 If a bank certifies a check after business hours, can the drawer stop 
 payment on it? 
 
 I know of no reason why a bank may not certify a check after 
 business hours, nor any reason why the drawer of the check has 
 any more right to stop payment on a check issued after banking 
 hours than he has on one issued during such hours. The certifica- 
 tion of a check as between the bank and depositor is equivalent to 
 paying the check, and there is no reason why a bank cannot pay a 
 check out of banking hours. Certainly if a bank can pay a check 
 out of business hours, it would have the right to do what is 
 equivalent to its payment. Of course a bank is not obliged to 
 certify or pay a check after banking hours. It has a perfect right 
 to transact all of its business within such reasonable hours as it 
 may fix, and its customers, or other parties dealing with it, have 
 no right to insist on any business being transacted except during 
 these hours ; but I do not think there is anything in the contract 
 between the depositor and the bank which would require the bank 
 to fix certain definite hours and transact business only within 
 those hours. 
 
 Drawer Has Right to Stop Payment on Check After Bank Has 
 Notified Payee by Telephone or Telegraph that Check 
 Is Good, but Before It Is Paid. 
 
 Where a bank has wired its correspondent that the check of a given 
 party for a given amount is "O. K.," but before payment the drawer noti- 
 fies the bank not to pay the check, is the bank authorized to hold the 
 amount and pay the check in spite of the notice to stop payment, and can 
 the drawer of the check hold the bank liable for so doing? Would bank 
 be liable to holder for refusing to do so? 
 
 I quote from Michie on Banks and Banking, p. 1101 : 
 
 "An ordinary, uncertified check on a general account is simply 
 an order which may be countermanded and payment forbidden 
 by the drawer at any time before it is actually paid or accepted 
 by the bank on which it is drawn. After acceptance or payment, 
 however, by the bank, the drawer's right of revocation is lost." 
 
 This is the generally accepted rule. It is also generally recog- 
 nized that a check can only be certified in writing, and must be 
 actually presented to the bank for that purpose. I quote again 
 from the same author, p. 1171 :
 
 256 PARK'S BANKING LAW OF GEORGIA. 
 
 "A parol representation by a bank that a check drawn on it is 
 'all right' is not equivalent to a certification, and binds the bank 
 to nothing more than that the statement was true at the time it 
 was made. While an affirmative answer by the bank to a general 
 inquiry whether checks of a person named, for a specified sum, 
 are good, is information that such person has on deposit, subject 
 to check, money to that amount, it does not constitute a certifica- 
 tion of, or otherwise create an obligation on, the bank to pay 
 checks which the inquirer may then hold." 
 
 I do not think the telegram to the bank's correspondent that the 
 check was "O. K." is equivalent to certification or that it ren- 
 dered the bank liable to pay the check when presented. Therefore 
 the drawer of the check had the right to stop payment at any time 
 before it was actually paid, and if the check was paid in spite of 
 his direction not to pay it, the bank would be liable for such pay- 
 ment. This is true even though the check actually reached the 
 drawee bank through the mail before the drawer gave notice to 
 stop payment. The mere reception of the check could not be 
 treated as payment. If it had been charged to the drawer's ac- 
 count, or if the bank had actually remitted for it, of course, 
 payment could not be stopped, but the mere receipt of the check 
 without more could hardly be regarded as payment. 
 
 Having no authority to charge a check certified in this manner 
 to the drawer until the check is actually presented and paid, the 
 bank would not be liable to the holder of the check unless it had 
 made itself liable by a direct and positive promise to pay the 
 check, not on the theory of certification, but because it had itself 
 assumed a direct obligation. Whether or not such liability exists 
 would depend upon the promise made. Merely stating that the 
 check was "O. K." or "good" would not be equivalent to a prom- 
 ise to pay the check at all events, but is only intended to mean that 
 the drawer had suffcient funds on deposit at the time stated to 
 cover the check and that if the check was presented in due course 
 it would be paid out of the funds of the drawer provided, of 
 course, that those funds should remain to his credit until the 
 actual presentation of the check. 
 
 It will be seen, however, that a bank runs considerable risk in 
 advising its correspondents and others that checks are good, and 
 that they will be paid. Any communication of this character 
 should always be carefully guarded so as to clearly indicate that 
 the bank assumes no direct responsibility, and that it does not 
 undertake to protect the check in the event the drawer should stop 
 payment or check out his balance.
 
 OPINIONS OF THE GENERAL COUNSEL. 257 
 
 CHECKS. 
 
 Drawee Bank Has Generally no Right to Recover of Payee 
 Money Paid on Forged Check. 
 
 Can a bank, which has paid a check drawn on it to one of its depostors, 
 charge it back to his account when the check is discovered to have been a 
 forgery ? 
 
 The general rule, supported by the weight of authority, is thus 
 stated in 2 Morse on Banks and Banking, p. 80 : 
 
 "A bank cannot recover money paid on a forgery of the draw- 
 er's name, from the person to whom it was paid. The bank is 
 bound to know the signature of the drawer." 
 
 This rule is recognized as the law in Georgia by both the Su- 
 preme Court and the Court of Appeals. Ga. R. R. & Banking Co. 
 v. Love and Good Will Society, 85 Ga. 293 ; Swan Edwards Co. 
 v. Union Savings Bank, 17 Ga. App. 572. 
 
 Formerly the courts enforced this rule strictly, and when a 
 bank paid money on a forged check or gave another customer 
 credit for a forged check deposited with it, the loss was held to 
 be the loss of the bank and it was not permitted to recover the 
 money from or charge the check back to the customer deposit- 
 ing it. 
 
 There has been a tendency, however, in the later decisions of 
 the courts to relax the stringency of this rule, on the ground that 
 it is unreasonable to require the bank to know at all events the 
 signature of its depositor and to make the loss fall on the bank 
 regardless of the circumstances. The conduct of the party for 
 whom the check was cashed and his actual loss are now con- 
 sidered in determining the question of ultimate liability. 
 
 "The rule that a drawee is persumed to know his drawer's sig- 
 nature, and hence cannot recover back money paid through a mis- 
 take of fact upon a bill to which the drawer's signature was 
 forged, is not available in favor of a holder who by his own negli- 
 gence contributed to the success of the fraud practiced, and whose 
 conduct had a tendency to mislead the drawee, who was himself 
 free from fault." Woods v. Colony Bank, 114 Ga. 683 (2). 
 
 In the case cited a draft, and not a check, was involved but the 
 rule seems to be the same. The court cites with approval a 
 Massachusetts case where it was held that 
 
 "The responsibility of the drawee who pays a forged check, for 
 the genuineness of the drawer's signature, is absolute only in 
 favor of one who has not by his own fault or negligence con-
 
 258 PARK'S BANKING LAW on GEORGIA. 
 
 tributed to the success of the fraud or to mislead the drawee ; and 
 if the payee took the check, drawn payable to his order, from a 
 stranger or other third person, without inquiry, although in good 
 faith and for value, and gave it currency and credit by indorsing 
 it before receiving payment of it, the drawee may recover back 
 the money paid." Bank v. Bangs, 106 Mass. 441. 
 
 The Court of Appeals of Georgia states the law as follows : 
 
 "A bank is presumed to know the signature of one of its de- 
 positors, and, therefore, cannot recover from a bona fide holder 
 for value money paid by the bank upon a check to which the draw- 
 er's signature was forged, unless it appears that the holder by his 
 own negligence contributed to the success of the fraud practiced, 
 or his conduct had a tendency to mislead the drawee which was 
 itself free from fault." Swan Edwards Co. v. Union Savings 
 Bank, 17 Ga. App. 572. 
 
 The question whether the party receiving payment of the check 
 would be actually injured in the event he were forced to make 
 it good is also material. The rule covering this phase of the ques- 
 tion as well as the one above discussed is thus stated in 2 Morse 
 on Banks and Banking, p. 86 : 
 
 "If the payee, holder, or presenter of the forged paper has 
 himself been in default, if he has himself been guilty of a negli- 
 gence prior to that of the banker, or if by any act of his own he has 
 at all contributed to induce the banker's negligence, then he may 
 lose his right to cast the loss upon the banker. * * * The in- 
 teresting question has now come to be, whether or not the payee 
 has done his full duty, or if he has, and the negligence is with the 
 bank alone, whether the payee will be worse off by correcting the 
 error than if payment had been refused." 
 
 The rule, therefore, as at present enforced by the courts seems 
 to be that although the bank is bound to know the signature of its 
 depositors, it is not liable in paying a forged check where the 
 holder of the check by his negligence has in any way contributed 
 to the perpetration of the fraud or where he will not be injured in 
 case the bank is allowed to recover back the money paid. 
 
 NOTE. The Banking Act, 188, provides that no bank which has in good 
 faith paid a forged or raised check and charged the same to a depositor's 
 account shall be liable to the depositor unless the depositor shall notify the 
 bank within sixty days after his pass book is balanced that the check is a 
 forgery.
 
 OPINIONS of THE GENERAL, COUNSEL,. 259 
 
 Drawee Bank Paying Forged Check of Customer Can Not 
 Recover of Merchant who Accepted the Check in Due 
 Course of Business Though from Unidentified Stranger. 
 
 A customer of the M Bank, accepted as cash two checks drawn on L 
 Bank and signed by W. These checks were deposited by C in the M 
 Bank, and on the same day were transferred by the M Bank to the F 
 Bank, which bank undertook to collect from the L Bank. On the fol- 
 lowing day they were presented to the L Bank and by that bank charged 
 to the account of W, and the F Bank was given credit for them. Fifteen 
 days after the L Bank had accepted the checks as genuine and charged 
 them to its customer's account, the L Bank notified the F Bank that the 
 checks were claimed to be forgeries. The F Bank promptly notified the 
 M Bank, and the M Bank as promptly notified C. C takes the position 
 that inasmuch as the bank on which the checks were drawn accepted them 
 as genuine and the party who issued the checks has in the meantime been 
 lost sight of, the money cannot be recovered back notwithstanding its 
 guarantee of the endorsement when it negotiated the checks. C explains 
 that the checks were given to it in due course in payment for work done 
 by a person who represented himself to be W and who it had every reason 
 to believe was W. On whom should the loss fall? 
 
 The position of C seems to be sound and he cannot be re- 
 quired to make the checks good. It follows, of course, that 
 neither the F Bank nor the M Bank can be required to make good 
 the checks, and that the L Bank cannot charge these checks back 
 to the account of the F Bank. 
 
 The rule is fully discussed in the preceding opinion. 
 
 The L, Bank had the right to refuse to pay these checks when 
 they were presented. Having paid them, it cannot now deny the 
 genuineness of the signature. C was not bound to know W's 
 signature or the identity of the man who represented himself to 
 be W. It had the right to take these checks and present them 
 to the L, Bank, directly or indirectly. When that bank by paying 
 ing the checks represented to C that the signatures were genuine, 
 C had no further interest in the matter. Certainly, after fifteen 
 days had passed and C's customer had been entirely lost sight of, 
 it would be an injustice to' require C to lose the amount of these 
 checks. 
 
 The relaxation of the rule that a bank must know its depositor's 
 signature is in cases where the party presenting the checks for 
 payment is himself in some way a party to the forgery or knows 
 that the checks are forged, or has acted in bad faith, or has been 
 so grossly negligent that his conduct has had a tendency to mis- 
 lead the bank on which the checks are drawn. Nothing of that 
 kind appears in this case. 
 
 A merchant doesn't have to require that his customers be 
 identified. If the L Bank had promptly denounced the checks 
 as forgeries, C might have been able to collect his money out of
 
 260 PARK'S BANKING LAW OF GEORGIA. 
 
 tke drawer. It seems that there was little if any negligence on 
 C's part, but that there was negligence on the part of the L Bank 
 in paying the forged checks. 
 
 Drawee Bank Can Recover Amount Paid on Forged Check 
 of Illiterate Where Signature (by mark) Is Witnessed 
 by Person Cashing Check for Stranger. 
 
 At the request of a merchant, a bank telephoned to another bank in a 
 neighboring town, asking whether or not the check of a particular party 
 was good. The bank replied that it was. On the strength of this informa- 
 tion, the merchant cashed the check, which was forwarded in due course to 
 the bank upon which drawn, and the forwarding bank credited with the 
 amount. Some days later the drawee bank in making settlement with its 
 customer is advised that the check is a forgery. The check was signed 
 by the drawer's mark, which was witnessed by the merchant, who had no 
 personal acquaintance with the drawer. Can the bank upon which the 
 check is drawn charge the check back to the forwarding bank? 
 
 The forwarding bank handled this check in the due course of 
 business, and there were no suspicious circumstances surround- 
 ing the transaction so far as it was concerned, and it had no 
 reason to suspect that the check was not genuine. If this is the 
 case, as between it and the bank upon which the check was drawn, 
 the loss would have to fall on the drawee bank. It -seems, how- 
 ever, that the merchant did not exercise proper caution in cash- 
 ing the check. He should not have accepted the check, of one 
 who could not sign his name, without having the party posi- 
 tively identified. The drawee bank was doubtless misled by the 
 fact that the merchant witnessed the drawer's signature, and it 
 was on the strength of the fact that the signature was so wit- 
 nessed that the check was paid. Therefore, as between the mer- 
 chant and the drawee bank, the loss should properly fall upon 
 the merchant rather than upon the bank. In a leading case, it was 
 said: 
 
 "Where a loss which must be borne by one of two parties alike 
 innocent of the forgery can be traced to the neglect or fault of 
 either, it is reasonable that it should be borne by him, even if 
 innocent of any intentional fraud, through whose means it has suc- 
 ceeded. To entitle the holder to retain money obtained by a 
 forgery, he should be able to maintain that the whole responsi- 
 bility of determining the validity of the signature was placed upon 
 the drawee, and that the vigilance of the drawee was not lessened 
 and that he was not lulled into a false security by any disre- 
 gard of duty on his own part, or by the failure of any precau- 
 tions which from his implied assertion in presenting the check as
 
 OPINIONS 01? THE GENERAL COUNSEL. 261 
 
 a sufficient voucher the drawee had a right to believe he had 
 taken." Danvers Bank v. Salem Bank, 151 Mass. 280, 24 N. E. 
 44. 
 
 Under this rule, which seems to be generally recognized, the 
 merchant, not having exercised proper precaution before cashing 
 the check and having misled the drawee bank by witnessing the 
 signature of the drawer, should bear the loss rather than that 
 the bank should do so. 
 
 Bona Fide 'Holder of Check Protected. 
 
 A bank cashed a check drawn by a responsible person on a bank in a 
 neighboring town. Before mailing it to its correspondent for collection, 
 the bank was advised by the drawee bank that the bank and the drawer of 
 the check had been garnished for all money due the payee of the check. 
 Was the drawee justified in refusing to honor the check when it was sub- 
 sequently presented? 
 
 I understand from the question that the bank actually parted 
 with the money called for by the check, and that it did not simply 
 receive it from the payee for collection. If so, the paying bank 
 is a bona fide holder for value of the check, and the drawee bank 
 was not justified in refusing to pay it. 
 
 A check is a negotiable instrument like a note or bill of ex- 
 change, and the holder of a check who takes it bona fide and for 
 value is just as much entitled to protection as is the bona fide 
 holder of a promissory note or other negotiable instrument. The 
 courts are loath to interfere with the rights of bona fide holders 
 of any form of commercial paper. Negotiable instruments play 
 an all important part in the world of commerce, and it is most 
 essential to safeguard the rights of those who take them for value 
 and without notice, in the ordinary course of business. 
 
 The paying bank is, therefore, entitled to have the check paid 
 by the drawee bank. If a bank upon which a check is drawn 
 could refuse to honor it under such circumstances, a bank would 
 never be safe in cashing a check though received by it in the usual 
 course of business. 
 
 I quote from Fourth National Bank v. Mayer, 89 Ga. 108 : 
 
 "Where a regular customer of a bank deposits with the bank 
 his draft payable to his own order and indorsed, 'For deposit to 
 the credit of the drawer, and the same is entered to his credit on 
 the books of the bank and forwarded by the bank to another bank 
 for collection, the drawer, by the course of dealing, -having the 
 right to check against such deposit and in fact checking against
 
 262 PARK'S BANKING LAW OF GEORGIA. 
 
 it, and his checks being honored, the title to the draft passes to 
 the first bank, and when collected by the second, the proceeds are 
 not subject to garnishment at the instance of a creditor of the 
 drawer, such proceeds being the property not of the drawer but 
 of the first bank." 
 
 The facts of this case are somewhat different from those 
 stated in the question, but the principle is the same. When a bank 
 cashes a check for the payee, title to the check passes to it, and 
 it cannot be interfered with by garnishment served upon the 
 drawer and the drawee to hold up the funds of the payee. 
 
 Drawer of check payable to bearer is liable to bona fide holder 
 for value, though check may have been lost or stolen. 
 
 A bank issues its check on its New York correspondent. The payee in- 
 dorses it in blank and delivers it to another holder. The check is lost or 
 stolen while in the possession of this holder. It is then indorsed by an- 
 other person, presumably the person who found it, and in due course and 
 for value comes into the hands of an innocent holder. As soon as the loss 
 of the check is discovered, the owner notifies the bank and requests it to 
 stop payment, which is done. The check is presented to the drawee in 
 New York, and payment refused under instructions, and the check is pro- 
 tested. After stopping payment the bank issues a duplicate, which is paid. 
 The holder of the original check is now demanding payment of the bank 
 as the drawer of the check. Is the bank liable? 
 
 The fact that the check in question is a cashier's check or that 
 the check is the check of a bank on its correspondent makes no 
 difference. The bank is in the same position as any other drawer 
 of a check, and is liable to the same extent as any other drawer 
 would be. In answer to the question, I quote from a few of the 
 leading authorities. 
 
 "If a check be lost by the lawful owner thereof, and subse- 
 quently come into the hands of a bona fide holder for value and 
 without notice, he will be entitled to receive the amount from the 
 bankers. If they refuse to pay him, by reason of instructions to 
 this effect given them by the drawer, the holder may recover the 
 amount from the drawer." Morse on Banks and Banking, 395. 
 
 "Although the robber or finder of a negotiable instrument can 
 acquire no title against the legal owner, still, if it be indorsed in 
 blank, or payable or indorsed to bearer, a third party acquiring it 
 from the robber or finder, bona fide, for a valuable consideration, 
 and before (but not so, if after) maturity, without notice of the 
 loss, may retain it, as against the true owner, upon whom the loss 
 falls, and enforce payment by any party liable thereon, upon the 
 principle that, whenever one of two innocent persons must suffer 
 by the act of a third, he who has enabled such a third person to
 
 OPINIONS otf THE GENERAL COUNSEL. 263 
 
 occasion the loss must sustain it." Daniel on Negotiable Instru- 
 ments, 1469. 
 
 "A man may draw his check in complete form and leave it 
 upon his desk. It may be blown from the window and picked up 
 on the street, or a thief may enter and carry it off. There is no 
 actual delivery in such a case. But, if the check happens to be 
 drawn payable to bearer, so that it may be disposed of without 
 forging the payee's indorsement, and it is negotiated to a holder 
 in due course, or is paid by the drawee bank without negligence, a 
 valid delivery is conclusively presumed and the drawer will be 
 held liable." Brady on The Law of Bank Checks, 26. 
 
 "Where the payee of a bank check indorses it in blank and it is 
 lost, he cannot recover of the bank for paying it to a bona fide 
 purchaser, though he had notified the bank of its loss." Michie 
 on Banks and Banking, 146. 
 
 It will be seen from the above that under the facts stated, the 
 bank would be liable as the drawer of this check, the check being 
 in the hands of a bona fide holder for value in due course of busi- 
 ness, although it may have been lost or even stolen from an in- 
 termediate holder. 
 
 Bank may Require the Signature to a Check of an Illiterate 
 Depositor to Be Witnessed. 
 
 Is there any law which requires the mark of an illiterate person used 
 as a signature of a check to be witnessed by some party other than the 
 payee, and is a bank justified in refusing to pay a check and in protesting 
 the same where the mark is witnessed by the payee? 
 
 Under our Code "signature or subscription includes the mark 
 of an illiterate or infirm person." 5, Park's Ann. Code. 
 
 There is no requirement that such a signature be witnessed, and 
 the Supreme Court has held that a signature by mark is good 
 though not witnessed. While this is true it is a reasonable re- 
 quirement that such a signature should be witnessed. I quote 
 from Magee on Banks and Banking, p. 310: 
 
 "The place of the signature is immaterial, provided it appears 
 to have been intended as a signature. It may be written in pencil. 
 Or it may be printed or stamped. Or it may be the drawer's 
 mark. In which case, however, when executed by the maker 
 by mark, it should be executed in the presence of an officer of the 
 bank, or witnessed by a person who could, if called upon by the 
 bank, verify the authenticity of the check." 
 
 This is in line with the other authorities on the subject. 
 As a bank has no way to determine whether or not a check 
 signed by the depostor's mark is genuine unless it is witnessed by
 
 264 PARK'S BANKING LAW OF GEORGIA. 
 
 some person whose signature is known to the bank, and as it is 
 responsible to the depositor in the event it pays a forged check, 
 the bank would have a right to decline to pay a check signed by 
 the depositor's mark which was not witnessed by a person whose 
 signature was known to the bank, unless the genuineness of the 
 check was in some other way established. Where payment of a 
 check is refused for any reason the indorsers are relieved unless 
 protest is made and notice given as required by the statute. There- 
 fore, where a bank is obliged to decline to pay a check because it 
 is signed by the depositor's mark, and there is nothing from which 
 the bank can determine whether or not the check is genuine, it 
 would be proper to protest the check. 
 
 When an illiterate person opens an account the bank should 
 agree* with him at the time that his checks must be witnessed by 
 some officer of the bank or some other person with whose signa- 
 ture the bank is acquainted. While it is unusual to require that 
 these checks be witnessed by someone other than the payee, such 
 a requirement is not unreasonable, for if the payee is the only 
 witness to the genuineness of a check there is a considerable 
 temptation to forge the drawer's signature, and the bank would, 
 of course, have the right to protect itself against this risk. 
 
 I have not been able to find any case in which the question has 
 been decided, or any discussion of the question by any writer on 
 the subject of banks and banking, but on principle it seems to me 
 that the bank would be justified in declining to pay a check of 
 an illiterate depositor signed by his mark, where there was no 
 other proof of the genuineness of the check that the attestation 
 of the payee, particularly where the bank did not know the sig- 
 nature of this attesting witness. 
 
 Where Depositor's Balance Is Insufficient to Pay Check in 
 Full, the Safer Rule Is for the Bank to Decline to give 
 any Information as to the State of the Account and Re- 
 fuse to Allow the Holder to Deposit Difference. 
 
 Where a depositor gives a check which overdraws his account, can the 
 payee deposit to the credit of the drawer a sufficient amount to bring the 
 depositor's balance up to the amount of the check, and would the bank be 
 authorized to pay the check out of a deposit made up in this way? 
 
 The precise question does not seem to have been decided by any 
 of the courts so far as I have been able to find. The nearest ap-
 
 OPINIONS OF THE GENERAL COUNSEL. 265 
 
 proach to it is a case decided by one of the lower courts in Phila- 
 delphia, where it was held : 
 
 "Where the payee of a bank check offers to take a smaller sum 
 than the amount called for, the bank should pay to him whatever 
 funds the drawer may have to his credit and indorse the pay- 
 ment on the check." Bromley v. Commercial National Bank, 9 
 Phila. 522. 
 
 This case is referred to by most of the writers on banks and 
 banking. 
 
 The general rule is thus stated by Michie on Banks and Bank- 
 ing, 140 (5) : 
 
 "A bank is under no obligation to pay anything on a check to 
 the drawee or holder when the drawer has not sufficient money 
 on deposit to his credit to pay the check in full, and can not be 
 held liable in an action by the payee or holder thereof. A check 
 for a greater amount than one has on deposit does not pass to the 
 holder any title to the deposit, nor does it create a lien upon or 
 give the payee a right to the actual balance, until the bank has 
 agreed to pay it pro tanto." 
 
 However, Michie also says, on the authority of Bromley v. 
 Commercial National Bank, above cited: 
 
 "Where the payee of a bank check offers to take a smaller 
 sum than the amount called for, the bank should pay to him what- 
 ever funds the drawer may have to his credit, and indorse the 
 payment on the check." 
 
 Morse on Banks and Banking, which is an old standard au- 
 thority, says: 
 
 "If the bank has not funds enough to the credit of the drawer 
 to pay his check in full, it is not obliged to make payment in part. 
 Whether or not it would be justified in doing so, may be ques- 
 tioned. There is no authority on the point. Nor would banks 
 often try to exercise such a right. If they can do so, they are ob- 
 viously bound to indorse the amount of the payment on the 
 check, which would, of course, still remain in the payee's hands, 
 and which would otherwise on its face appear still to be good for 
 the full value named in it, to the possible deception and loss of 
 the drawer, or of innocent third parties. But the better rule 
 perhaps would be, to save misunderstandings and complications, 
 that, if a bank can not pay in full, it not only may not, but must 
 not, pay at all. The drawer has not requested it to make a part 
 payment. He has demanded that it do a certain act ; to wit, pay 
 a certain sum of money on his account. If it will not do this act 
 according to the terms of the authority embodied in the request, it 
 by no means follows that it is authorized to substitute for it a 
 partial performance, or in fact a materially different act. Power
 
 266 PARK'S BANKING LAW of GEORGIA. 
 
 to pay only a part of a sum is not necessarily implied in an order, 
 expressed without alternative, to pay that specific sum. 
 
 "A device whereby the checkholder may seek to obtain pay- 
 ment, where his check calls for a larger amount than the drawer's 
 balance at the time of presentment, is that the holder may himself 
 pay in, or cause to be paid in, the amount of the deficiency, and 
 have the same placed to the drawer's credit. The drawer's ac- 
 count being thus made good, the check might perhaps be safely 
 honored by the bank. But the bank is not justified in informing 
 the holder what is the amount of the deficiency, or what the 
 state of the drawer's account. He must find it out elsewhere if 
 he can, since the bank can give such information only at its own 
 peril." Morse on Banks and Banking, 446. 
 
 Bolles, in his Modern Law of Banking, takes the same view as 
 Morse does. He says : 
 
 "Not infrequently a depositor, through forgetfulness or other- 
 wise, draws his check for a larger sum than he has on deposit. In 
 such a case the bank may decline to pay whatever it may have. 
 On the other hand, it may pay over the insuffcient amount, credit- 
 ing it on the holder's check. No reason is perceived, if the holder 
 is willing to give up his check for whatever may be due to the de- 
 positor, why the bank should refuse to pay it. The reason usually 
 given, that this is not a fulfillment of the drawer's order, is not 
 satisfactory, for it is quite as reasonable to presume that the 
 drawer supposed at the time of drawing his check that his de- 
 posit was suffcient. If so, is not the presumption fair that he 
 would be pleased to have the bank pay, and the depositor receive, 
 the sum in the bank ?" Bolles on Modern Law of Banking, 27. 
 
 Zane on Banks and Banking, p. 255, says : "A bank may refuse 
 to pay a part of a check, but may agree to pay pro tanto," also 
 citing the Bromley case. 
 
 It appears from these authorities that the bank is certainly 
 under no obligation to apply toward the payment of a check a 
 depositor's balance which is less than the amount of the check, 
 and it is doubtful whether it has the right to do so, though these 
 authors seem to think that it has the right but is not compelled 
 so to do. It has been held by one of the English courts that a 
 bank has no right to inform the holder of a check as to the state 
 of a depositor's account. If the bank can not safely tell the 
 holder of a check the amount of the depositor's balance, of course, 
 the holder could not know what amount to deposit in order to 
 make the check good. I think the safer rule is for the bank to de- 
 cline to pay or to give the holder of the check any information 
 about the account other than that there are not suffcient funds 
 to meet it.
 
 OPINIONS of THE GENERAL COUNSEL. 267 
 
 Where Depositor's Balance Is Insufficient to Pay All Checks 
 Presented Simultaneously, None Should Be Paid. 
 
 A depositor draws a number of checks in favor of different individuals, 
 which in the aggregate are more than the customer's balance. These 
 checks are all presented at the same time to the bank on which they are 
 drawn, through another bank. Should the drawee bank refuse to pay 
 any of the checks or should it pay all of those which can be paid out of the 
 money on deposit to the credit of the drawer? 
 
 The rule as generally announced under such circumstances is 
 well stated by Mr. Morse, who is generally regarded as the lead- 
 ing authority on banks and banking. 
 
 "The payment of checks may be affected by the use of the 
 clearing house in one important particular. Checks, as has been 
 seen, must be paid in the order of presentment. But when the 
 deputy of the bank takes from its drawer in the clearing house 
 all the checks which it has to pay, he may receive a considerable 
 number of checks of the same depositor. It is clear that there 
 can be no priority among these. They are all received at pre- 
 cisely the same moment. For the'order in which they are placed 
 in the drawer has nothing to do with the presentment of them 
 to or receipt of them by the bank, indeed is in nearly all cases 
 unknown to the bank. The bank cannot look at their dates ; for 
 priority of presentment, not of date, secures priority of payment. 
 So, if the bank cannot pay all the checks of any individual de- 
 positor then coming through clearing, it must pay none of them. 
 It has no legal power or right to select or choose from among 
 them certain ones which it will honor, or certain ones which it 
 will dishonor. All or none must be paid. Any other course 
 would render .the bank liable to the holders of the dishonored 
 paper. A check presented at the counter for payment must be 
 paid at once, if there are funds enough to the drawer's credit to 
 pay it alone; but if it is sent through clearing it must take its 
 chance that his funds shall be suffcient to pay not only it, but all 
 his other checks which shall be sent through clearing on the same 
 day ; and failing this, it must be dishonored." 1 Morse on Banks 
 and Banking, 354. 
 
 There is, however, some authority for the proposition that the 
 bank is authorized, if not required, under the circumstances, to 
 pay all the checks which can be paid out of the depositor's bal- 
 ance. In the recent work of Michie on Banks and Banking, it is 
 said: 
 
 "Where checks are presented by different individuals, at the 
 same time, of an amount greater than the fund of the drawer in 
 the bank, the offcers of the bank are not bound to settle the con- 
 flicting claims of the holders of the different checks to priority of 
 payment. 
 
 "Where a number of checks variously dated are presented to a 
 bank simultaneously through the clearing house for payment, and
 
 268 PARK'S BANKING LAW OF GEORGIA. 
 
 the aggregate amount of the checks is greater than the amount 
 of the deposit, the bank is bound to pay the checks, but in any 
 order that it may choose, until the deposit is exhausted, if there is 
 no rule of the clearing house or custom of the banking community 
 to the contrary." Michie on Banks and Banking, Vol. 2, p. 1139. 
 
 A similar statement is made in Brady on Bank Checks, p. 243. 
 The only authority, however, for these statements appears to be 
 the case of Reinisch v. Consolidated National Bank, decided by 
 a Superior Court in Pennsylvania and reported in 45 Pa. Supr. 
 Ct. 236. 
 
 Mr. Bolles, in his Modern Law of Banking, says : 
 
 "On the presentation of two or more checks simultaneously 
 several practices among banks prevail ; the more general is to 
 send all the checks back, a step that is likely to be followed by a 
 separate presentation with the chances of payment in favor of 
 the nearest bank, unless the representative of some other can 
 overcome the natural advantage by running faster or flying. 
 Another practice, having legal sanction, is to pay the smaller 
 checks, covered by the drawer's deposit." Bolles' Modern Law of 
 Banking, Vol. 2, p. 612. 
 
 The authority cited in support of this statement that the bank 
 may pay the smaller checks covered by the drawer's deposit is 
 the case of Sherburne v. Rickards, decided by a Superior Court 
 in Chicago and reported in 15 Banking Law Journal, p. 536. 
 
 It will be seen from the above that the law on the question ap- 
 pears not to be well settled. Mr. Morse cites no authority in 
 support of his position, and the other authors seem to rely on 
 Superior Court cases, which at best are very poor authority. The 
 question has not been decided in Georgia! 
 
 The rule as laid down by Mr. Morse is, I believe, the better 
 one. 
 
 Payment of Checks When Drawer Has Insufficient Funds to 
 Cover First Check, but Sufficient Funds to Cover a Sub- 
 sequent Smaller Check, the First Check Being Held by 
 the Bank for Collection. 
 
 A depositor has $20.00 to his credit in a bank, and draws a check for 
 825.00, which the bank refuses to pay. The payee asked the bank to hold 
 the check for collection. Subsequently another check signed by this de- 
 positor for $10.00 is presented. Has the bank the right to refuse payment 
 on the $10.00 check on the ground that the $20.00 to the credit of the de- 
 positor must be applied on the $25.00 check? 
 
 Checks are payable in the order of their presentation. It seems 
 to be the rule, also, that where several checks are presented at
 
 OPINIONS OF THE GENERAL COUNSEL. 269 
 
 once and the depositor has not enough money to his credit to 
 pay them all, the bank may refuse to pay any of the checks. 
 It would seem, however, that that principle cannot be made to 
 apply in a case of this kind. The $25.00 check was presented for 
 payment, and payment was refused. When the $10.00 check was 
 subsequently presented, the bank then had an order to pay and 
 a fund sufficient to comply with the order. Notwithstanding the 
 fact that it still held the $25.00 check for the purpose of collec- 
 tion, it was bound to pay the $10.00 check. After the refusal 
 to pay the $25.00 check, the bank could not hold the balance to 
 pay it thereafter, but was bound to honor other checks on the 
 account to the extent of the depositor's balance. 
 
 The Mere Identification of a Stranger Will Not Make One 
 Liable if Check Cashed for Him Proves Worthless. 
 
 A customer identifies a stranger, who cashed a check upon another 
 bank. This check afterwards is returned with the notation "no ac- 
 count." The check having been cashed on the strength of the identification, 
 is the party identifying the stranger liable for the amount of the check? 
 
 Under the case as stated, I do not see that there would be any 
 liability. This assumes, of course, that the customer acted in 
 good faith and simply identified the stranger as being the person 
 whom he represented himself to be, and did not make any repre- 
 sentation as to the check or the financial standing of the drawer 
 of the check. One does not make himself liable by simply in- 
 troducing a third party. Of course, if he acts in bad faith or 
 introduces a party as some one other than he really is or makes 
 any false statement as to the person whom he introduces, he might 
 be liable in an action for deceit. If he was concerned in getting 
 the money on the worthless check, he might be liable criminally 
 for cheating and swindling, but the mere identification of a 
 stranger would not make the party identifying liable. 
 
 Check Is Revoked by Death. 
 
 Should a bank refuse payment of a check issued by a person who died 
 before presentation of the check for payment? 
 
 The rule, in the absence of statute, is thus stated in Michie on 
 Banks and Banking, p. 1098 : 
 
 "The death of the drawer operates as a revocation of a check, 
 so that if the bank pays it after notice of that fact, it does so' at
 
 270 PARK'S BANKING LAW OF GEORGIA. 
 
 its peril. A bank paying a check with notice of the drawer's death 
 is liable to his estate." 
 
 NOTE. Section 184 of the Banking Act of 1919 provides : "The death or 
 bankruptcy of a depositor unknown to the bank shall not revoke a check 
 given by him, and a bank shall be authorized to pay through regular chan- 
 nels a check regularly drawn upon it by a depositor therein, notwithstand- 
 ing the death or bankruptcy of such depositor unknown to the bank at the 
 time of such payment." 
 
 Death of Payee After Negotiation Does Not Revoke a Check. 
 
 Is a bank authorized to pay a cashier's check where after indorsement 
 the payee has died? In other words, does the death of the payee of the 
 check after its indorsement cancel the indorsement or affect in any way 
 the negotiability of the check? 
 
 The question has not been decided, I think, in Georgia, but the 
 general rule is well stated by the Supreme Court of Michigan, in 
 the case of Brennan v. Merchant and Manufacturers Bank, 62 
 Mich. 343, 28 N. W. 881, in which the court says : 
 
 "The death of a payee or indorser after a check has been ne- 
 gotiated cannot affect its negotiability further or prevent the 
 drawee from safely paying it." 
 
 This case is frequently referred to in the textbooks, and seems 
 to be recognized as authority. I am of the opinion that the bank 
 would be authorized to pay the check on the indorsement of the 
 payee although the payee may have died since he indorsed and 
 negotiated it. Of course, if the check had not been negotiated, it 
 could only be paid to the duly authorized representative of the 
 payee, that is, to his executor or administrator. 
 
 Payment of Check by Drawee Bank Is Final as Against 
 "Insufficient Funds." 
 
 A check drawn on the bank of A was cashed by the bank of B, which 
 bank sent it to the bank of C for collection. The bank of C sent it to the 
 bank of A, along with a number of other items. The check was stamped 
 paid, and remitted by the bank of A to the bank of C. On the same day 
 the bank of A discovered that the account of the depositor was overdrawn, 
 and thereupon notified the bank of C, returning the check and asking that 
 bank to give it credit for the amount paid through error, which was done. 
 Ine check was returned in due course to the bank of B. Is the bank of 
 A liable for the amount of the check under the circumstances? 
 
 The general rule is that a bank is bound to know the stale of 
 the account of its customers, and that where it pays a check of 
 one of its depositors it cannot claim that the payment was made
 
 OPINIONS OF THE GENERAL COUNSEL. 271 
 
 by mistake where the account is ovedrawn or the depositor has 
 insufficient funds to cover the check. The payment is in such 
 cases due to the bank's own negligence in failing to ascertain the 
 condition of the account, and, therefore, the bank cannot plead in 
 defense that the check was paid by mistake. The rule is thus 
 stated by Michie in his work on Banks and Banking: 
 
 "In the absence of a fraud on the part of the holder, the pay- 
 ment of a check by a bank is regarded as a finality, and the fact 
 that the drawer has not funds on deposit will not give the bank 
 any remedy against the holder." 
 
 "A mistake in regard to the amount of a customer's deposit is 
 not such a mistake of fact as entitles a bank paying a check to 
 recover back the amount from the payee. Such transaction is not 
 a mistake of fact in a legal sense, only laches. Banks are sup- 
 posed to be informed of a depositor's financial standing, and to 
 know the condition of his account with them at the time of 
 presentation of checks for payment. They are required, and for 
 their own safety are compelled, to know at all times the balance 
 to the credit of each individual customer, and they accept and 
 pay checks at their own risk and peril. If from negligence or 
 inattention to their own affairs banks improvidently pay when the 
 account of a customer is not in a condition to warrant it, and if 
 by mistake a check is paid when the drawer has no funds, the 
 bank must look to the customer for rectification, not to the party 
 to whom the check was paid. Michie on Banks and Banking, pp. 
 1145-1146. 
 
 And it has also been held : 
 
 "Where a check was offered and received by the drawee bank 
 as a deposit, credited to the depositor's account, and charged to 
 the account of the drawer, the transaction constituted complete 
 payment of the check and could not be rescinded except for fraud 
 or mutual mistake." American National Bank of Nashville, 
 Tenn., v. Miller, 185 Fed. 339. 
 
 Under these authorities, the Bank of B can recover the amount 
 either from the Bank of C or from the Bank of A. The Bank of 
 A paid the check to an agent of the holder which was the same in 
 effect as paying it to the holder. Under the law, this payment was 
 final and irrevocable, and the bank cannot defend against its 
 liability on the ground of mistake. 
 
 Nor does it make any difference that the Bank of A got the 
 money back before it actually reached the Bank of B. The Bank 
 of C was the agent of the Bank of B, and payment to an agent is 
 payment to the principal. Furthermore, the Bank of C was an 
 agent of the Bank of B to collect this check and remit the pro- 
 ceeds, and had no authority to do anything else. It was acting
 
 272 PARK'S BANKING LAW OF GEORGIA. 
 
 outside of the scope of its authority in giving the Bank of A credit 
 for the check, and the Bank of B would not be bound by that act. 
 
 Bank Given Credit to Depositor for Checks Drawn on Itself 
 Can Not Charge Back for Insufficient Funds in Absence 
 of Contract or Well Known Custom. 
 
 Can a bank receive on deposit checks on other banks and on itself, sub- 
 ject to be charged back and returned to the depositor in case they are not 
 paid or in case there are not sufficient funds to cover the check when it 
 happens to be upon the bank itself? 
 
 Where a bank receives checks on deposit drawn on itself 
 by another depositor, the. checks are treated as paid as soon as 
 credit is given to the depositor. 
 
 The law on the subject is thus stated in Brady on The Law of 
 Bank Checks, pp. 269 to 271 : 
 
 ''In many instances it seems to be the practice of banks, when 
 one depositor offers for deposit a check drawn on the same bank 
 by another depositor, to credit the amount of the check in the 
 depositing customer's pass book, and ascertain afterwards whether 
 or not the check is drawn against sufficient funds. In cases of 
 this kind it is held by the weight of authority that, where the 
 deposit is made in good faith, and credit is duly given, the bank 
 cannot afterwards revoke the credit, upon discovering the check 
 to be an overdraft. These decisions take the view that there is 
 no difference, in such a case, between requesting payment of the 
 check in money and requesting payment by a transfer to the 
 credit of the holder. In either event the bank has the option to 
 receive or reject the check upon presentment, or to receive it upon 
 such conditions as may be agreed upon. If it pays the check in 
 cash to a bona fide holder, the transaction is closed so far as the 
 holder is concerned ; the bank cannot recover the money back 
 from him. And the same is true if it credits his account with the 
 amount of the check; there is a final payment which cannot be 
 revoked. The holder, however, must act in good faith in order to 
 be entitled to retain the benefit which the law accords him upon 
 depositing a check to his credit in the drawee bank. Thus, it has 
 been held that, where the holder of a check deposited it in the 
 drawee bank, knowing that the drawer had no funds there to meet 
 it, the crediting of the check to the holder did not constitute a 
 payment of the check and the depositor could not recover the 
 amount from the bank." 
 
 The bank, however, could make a contract with a depositor that 
 checks were to be returned if it was. subsequently ascertained that 
 the drawers did not have suffcient funds on deposit to cover the
 
 OPINIONS OF THE GENERAL COUNSEL. 273 
 
 checks. And if it were the custom of the bank to return such 
 checks and the depositor knew of such custom, he would be bound 
 by it, and the bank would in that event be authorized to return 
 such checks. As was said by the Court of Appeals of Missouri : 
 
 "No one will contend for a moment that it is not within the 
 province of the depositor presenting the check and the bank on 
 which the check is drawn to expressly agree that the payment 
 shall be deferred for a reasonable time until the bank may ascer- 
 tain whether or not there are suffcient funds of the drawer of the 
 check in its hands to pay it. Such an agreement instead of 
 operating an infringement of the established rule of law 
 * * amounts to no more than a reasonable modification of 
 its application in the interests of justice. If it were competent for 
 the parties to thus expressly agree with respect to the matter, 
 it would seem to be competent, too, for them to tacitly do so 
 under the established custom, well known to both, which obtained 
 in good faith throughout an extended course of dealing." Pollack 
 v. National Bank of Commerce, 151 S. W. 774. 
 
 An appropriate statement on deposit tickets and in pass books 
 would probably be held to constitute a contract which would re- 
 lieve the bank from liability. 
 
 Bank Is Not Required to Pay Check Stamped "Not Payable 
 Through (named) Bank" When Presented by that Bank. 
 
 Can a bank refuse to pay checks stamped "not payable through a named 
 bank" when presented through said bank? 
 
 The precise question has not been decided by our courts. The 
 nearest case in point is that of Farmers Bank of Nashville v. 
 Johnson, King & Co., 134 Ga. 486. In that case it was decided, 
 where checks drawn by Johnson, King & Co., of Macon, on the 
 Farmers Bank of Nashville, had stamped on them "Payable 
 through the Citizens Bank of Valdosta," that the Farmers Bank 
 had the right to refuse to pay the checks when presented by an- 
 other bank not coming through the Citizens Bank of Valdosta. 
 
 The court says that the drawer of a check has a right to direct 
 the channel through which it shall be presented for payment, and 
 that the payee of the check is bound to respect this direction. He 
 can refuse to take the check at all on account of its direction, but 
 if he takes it he must present it through the channels directed. 
 
 While the courts have held that it is competent to direct through 
 what particular channel a check must be presented, they have 
 18
 
 274 PARK'S BANKING LAW OF GEORGIA. 
 
 not decided whether it would be proper to forbid the holder of a 
 check from presenting it through some named bank or other 
 institution. In principle this would seem to be covered by the 
 decision, and if a customer should stamp on his checks "Not pay- 
 able through a named bank," a bank would be authorized to de- 
 cline payment if the check should be presented through the bank 
 named. 
 
 Recovery by Bank of Payment Made on Raised Check. 
 
 Where a bank cashed a raised check and charged it to the customer's 
 account, what steps can be taken to recover the customer's money? 
 
 The person who raises or otherwise alters a check, or who 
 knowingly passes an altered check, is guilty of a felony. If such 
 person can be located, he could be prosecuted. The bank 
 could also recover the amount in a suit against the person to 
 whom the money was paid. The diffculty in such cases usually 
 is that the person who would alter a check is not responsible 
 financially. 
 
 As between the bank and the customer, there might be a very 
 nice question as to who should lose the money. As to this, see 
 next opinion. 
 
 Drawer of Raised Check Must Stand Loss Where His Neg- 
 ligence in Preparing Check Occasioned the Fraud. 
 
 If a drawer of a check writes it with pen and ink, and the check is suc- 
 cessfully raised, is the drawer, and not the bank which pays the check, 
 liable? How far is the drawer liable for failing to make his check proof 
 against raising? 
 
 There is no rule of law which makes the drawer of a check 
 written with pen and ink absolutely liable where it has been 
 raised, simply because it was written with pen and ink. The 
 rule is if the drawer of a check has been so negligent in drawing 
 it as that it can be easily raised, he rather than the bank will be 
 held liable. The rule is thus stated in Michie on Banks and 
 Banking, pp. 1221 and 1222 : 
 
 "Although, as has been seen, banks are held to a strict lia- 
 bility in the payment of forged checks, yet where the drawer of 
 a check has been guilty of negligence facilitating the forgery or 
 alteration or influencing the bank in the payment of such forged 
 or altered paper, the bank is ordinarily relieved from its liability. 
 A check may be so carelessly executed by the depositor as to
 
 OPINIONS OF THE GENERAL COUNSEL. 275 
 
 invite or give opportunity for forgery, and make him liable for 
 a loss ensuing and excuse the bank. Thus, where the drawer of 
 a check has prepared his check so negligently that it can be easily 
 altered without suspicion, and alterations are afterwards made, 
 the bank can not be held liable for paying the check so altered." 
 
 Another good statement of the rule is found in the case of Crit- 
 ten v. Chemical National Bank, 171 N. Y. 219, 57 L. R. A. 529, 
 decided by the Court of Appeals of New York. In this opinion 
 the court says : 
 
 "To relieve itself from liability to make good the amounts 
 which it has paid on raised checks, a bank must affrmatively es- 
 tablish negligence on the part of the drawer which facilitated the 
 commission of the fraud. 
 
 "The drawer of a check is not bound to prepare it so that no 
 one else can successfully tamper with it, to charge the bank with 
 the loss in case it pays it after its amount has been fraudulently 
 raised. 
 
 "Whether or not the drawer of a check was negligent in sign- 
 ing it in the condition in which it was prepared is a question of 
 fact to be determined largely by an inspection of the check itself." 
 
 In the case of Espy v. First National Bank, 18 Wall. 604, 21 
 L. Ed. 947, the Supreme Court of the United States says : 
 
 "Where money is paid on a raised check by mistake, neither 
 party being in fault, the general rule is, that it may be recovered 
 back as paid without consideration. 
 
 "But if either party has been guilty of negligence or careless- 
 ness, by which the other has been injured, the negligent party 
 must bear the loss." 
 
 It will be seen from these quotations that it is a question of 
 negligence whether the drawer is liable in case of the payment 
 of a raised check. Generally, it would not be a question of law, 
 but in each case it would be a question of fact for determination 
 by the jury as to whether the drawer was negligent. 
 
 NOTE. Under 188 of the Banking Act of 1919, a depositor is required 
 to notify the bank of the forgery .or raising within sixty days after the 
 voucher has been returned to him or within sixty days after notice has 
 been given him to have his pass book balanced and call for his vouchers. 
 
 Drawer of check written in pencil and fraudulently altered, 
 which is paid by bank in good faith, must stand the loss. 
 
 K. and M. draw a check on Bank of A., the check being written with an 
 ordinary lead pencil. The check is delivered to J., an irresponsible negro, 
 to be delivered to the payee. J. erases the name of the payee, fills in his 
 own name, indorses the check, and cashes it at F. Bank. F. Bank, in due 
 course, collects the amount from Bank of A. Can Bank of A. recover the
 
 276 PARK'S BANKING LAW OF GEORGIA. 
 
 amount from F. Bank, and, if so, can F. Bank recover from K. and M. 
 because of their drawing the check in such way as that it could be readily 
 altered without detection and because of the delivery of such check to an 
 irresponsible person? 
 
 The rule is well settled that "a bank which pays to any person 
 the amount of a check fraudulently altered after signature may 
 recover back from such person the amount so paid by it." Morse 
 on Banks and Banking, 479. 
 
 "A bank is not bound to know the signature of an indorser, and 
 besides the holder of the check, whether he indorses it or not, 
 warrants the genuineness of all prior indorsements. Therefore, 
 if the bank pay a check upon which the name of a prior indorser 
 is forged, it may recover back the amount from the party to 
 whom it was paid or from any party who indorsed it subsequent 
 to the forgery." Daniels on Negotiable Instruments, 1663. 
 
 "Where a bank in good faith and without negligence pays, even 
 to an innocent holder, a check drawn upon it which has been 
 fraudulently and materially altered, it may recover from such 
 holder the amount paid, under the general rule that money paid 
 under a mistake of fact may be recovered back." Brady on Bank 
 Checks, 124. 
 
 Under these authorities, I am of the opinion that the Bank of 
 A. may recover the amount paid on this check from the F. Bank. 
 
 The general rule is that a bank paying a forged or altered 
 check can not recover the amount so paid from the drawer, but 
 where the drawer by his own negligence or carelessness has in 
 any way contributed to the fraud which has been perpetrated, 
 the bank can recover, upon the theory that where one of two inno- 
 cent persons must suffer by the wrong of a third person, he must 
 stand the loss who put it in the power of the third person to 
 commit the wrong. 
 
 "Although banks are held to a strict liability in the pay- 
 ment of forged checks, yet where the drawer of a check has 
 been guilty of negligence, facilitating the forgery or altera- 
 tion or influencing the bank in the payment of such forged or 
 altered paper, the bank is ordinarily relieved from its liability. A 
 check may be so carelessly executed by the depositor as to invite 
 or give opportunity for forgery and make him liable for loss en- 
 suing and excuse the bank. Thus, where the drawer of a check 
 has prepared his check so negligently that it can be easily altered 
 without suspicion, and alterations are afterwards made, the bank 
 can not be held liable for paying the check so altered." Michie 
 on Banks and Banking, page 1221.
 
 OPINIONS of THE GENERAL COUNSEL. 277 
 
 "When the drawer has drawn his check in such a careless or 
 incomplete manner that a material alteration may be readily ac- 
 complished without leaving a perceptible mark or giving the in- 
 strument a suspicious appearance, he, himself, prepares the way 
 for fraud, and then if it is committed he, and not the bank, 
 should suffer." Daniel on Negotiable Instruments, 1659. 
 
 The question, whether the depositor or the bank paying forged 
 or altered checks was negligent, is usually a question of fact to 
 be determined from the circumstances of each particular case. 
 A check or other negotiable instrument may be written or signed 
 with a pencil, and an instrument so written is valid. But as a 
 check written in pencil can be easily altered, and such alterations 
 can not be readily detected even by a careful observer, it would 
 seem under the authorities above quoted, that the drawer of the 
 check would be liable to a bank which innocently and in good faith 
 cashed the check, believing it to be genuine and unaltered. Of 
 course, if there was anything suspicious about the appearance of 
 the check or the circumstances under which it was cashed, the 
 bank ought not to have cashed it, and if it did so, could not hold 
 the drawer of the check. But if the alteration was in such way 
 that the bank in exercising proper care did not detect it and 
 cashed the check in due course of business, the drawer of the 
 check, who put it in the power of the forger to alter the check, 
 should stand the loss rather than the bank. It has been held, too, 
 that where the drawer of a check turns it over to an irresponsible 
 person who might be suspected of altering it, and such alteration 
 is, in fact, made, that this, itself, is such negligence on the- part 
 of the drawer as to make him liable rather than the bank which 
 innocently cashes the check. 
 
 Drawer of Check Is Liable to Holder Where Payment Is 
 Refused for Insufficient Funds. 
 
 Is the drawer of a check liable where payment is refused by the drawee 
 bank, for want of sufficient funds? Would the bank cashing the check be 
 justified in garnishing the drawer's salary or his account with another 
 bank? 
 
 A check is a bill of exchange drawn on a bank. The drawer of 
 a bill of exchange is liable where the drawee refuses to accept 
 or to pay, and the same rule holds with regard to the drawer of 
 a check. I quote from Tiedeman on Commercial Paper, 455:
 
 278 PARK'S BANKING LAW OF GEORGIA. 
 
 "A check is no evidence of the liability of the drawer until it 
 is shown that it has been presented for payment and dishonored. 
 But when this is shown the drawer may be held liable on the 
 check without direct proof of consideration. The law presumes 
 that the check was given in satisfaction of some debt due by the 
 drawer." 
 
 The law reads into a check substantially these words: There 
 is in the hands of the bank on which this check is drawn the 
 amount of money called for by the check belonging to me, which 
 amount the bank will pay to you, or to any one you order the 
 bank to pay it to, upon presentation of this paper. If the bank 
 does not so pay to you or to any one to whom you indorse the 
 check, I will pay the amount. 
 
 It will be understood, of course, that a check must be pre- 
 sented promptly to the bank on which it is drawn; otherwise, 
 under some circumstances, the drawer is relieved of liability. 
 If the check was presented promptly, and if the drawer refused 
 to pay the same, the bank would be justified in bringing suit on 
 the check and garnishing any funds which might be due to the 
 drawer. 
 
 Section 226, Banking Act of 1919, making it a misdemeanor to 
 draw a check on a bank where drawer has no funds, ap- 
 plies to national banks. 
 
 Does 34, Article 20, of the Georgia Banking Law ( 226), making it a 
 misdemeanor to draw or utter a check upon a bank or other depository, 
 knowing at the time that the drawer of such check had not sufficient funds 
 for the payment thereof, apply to national banks? 
 
 The section was intended to apply to all banks, and the use of 
 the words "or other depository" would clearly cover national 
 banks even if the words "any bank" should be construed as ap- 
 plying only to banks organized and operating under the act. The 
 section supersedes the Act of 1914 (Park's Penal Code, 718-d) 
 on the same subject. 
 
 Bank Cannot Pay or Certify a Post-dated Check in Advance 
 of the Date it Bears. 
 
 Can a demand for payment be made on a post-dated certified check 
 before the date which the check bears? 
 
 Payment on such a check cannot be demanded prior to the date 
 on the face of the check. A bank cannot even certify a post-
 
 OPINIONS OF THE GENERAL COUNSEL. 279 
 
 dated check, and a post-dated certified check stands on exactly the 
 same footing as any other post-dated check. I quote from the 
 decision of the Court of Appeals in Smith v. Maddox-Rucker 
 Banking Company, 8 Ga. App. 289: 
 
 "A post-dated check (i. e., a check dated at a time in future) 
 is not subject to payment or acceptance until the time of its date 
 arrives. If it be presented at a time in advance of its date, 
 the drawee, even if he has funds on hand suffcient to pay it, can- 
 not pay it, or retain the funds to pay, as against other checks or 
 drafts presented and payable prior to its date. The drawer of a 
 post-dated check does not undertake to have the funds in the 
 drawee's hands to meet it before the time it bears date arrives." 
 
 Right of Bank to Recover Money Paid on Post-dated Check. 
 
 If a bank should pay a post-dated check by inadvertence, could it recover 
 the amount paid from the party for whom it was cashed? 
 
 I have been unable to find any decision on the question. The 
 rule as stated by the text writers is that the payment of a post- 
 dated check before the date which it bears is entirely at the risk 
 of the bank. It is, of course, well settled that the check cannot be 
 charged to the account of the drawer, and that no recourse can 
 be had on him for the amount. 
 
 Morse says that the bank's "only source of restitution is from 
 the depositor." Morse on Banks and Banking, 5th Ed., Vol. I, 
 p. 699. 
 
 "If a bank pays a post-dated check before the day of its ma- 
 turity, it does so entirely at its own risk." Magee on Banks and 
 Banking, 2d Ed., p. 328. 
 
 It is true that money paid by mistake may ordinarily be re- 
 covered from the payee. Quoting again from Morse: 
 
 "When a bank honors a draft by mistake of fact, the money 
 may be recovered.' Morse on Banks and Banking, Vol. 2, p. 55. 
 
 But while this is true, where the bank is negligent in making 
 the payment, it can not ordinarily claim that the payment was by 
 mistake. Quoting from Michie on Banks and Banking, p. 1145, 
 in regard to a mistake as to the amount of customer's deposit : 
 
 "A mistake in regard to the amount of a customer's deposit is 
 not such a mistake of fact as entitles a bank paying a check to 
 recover back the amount from the payee. Such transaction is not 
 a mistake of fact in a legal sense, only laches. Banks are sup- 
 posed to be informed of a depositor's financial standing, and to 
 know the condition of his account with them at the time of 
 presentation of checks for payment. They are required, and for 
 their own safety are compelled, to know at all times the balance
 
 280 PARK'S BANKING LAW OF GEORGIA. 
 
 to the credit of each individual customer, and they accept and 
 pay checks at their own risk and peril. If from negligence or 
 inattention to" their own affairs banks improvidently pay when the 
 account of a customer is not in a condition to warrant it, and if 
 by mistake a check is paid when the drawer has no funds, the 
 bank must look to the customer for rectification, not to the party 
 to whom the check was paid." 
 
 The cashing of a post-dated check is so clearly negligent on the 
 part of the bank that it would seem that the bank could hardly 
 claim that the payment was made under a mistake of fact or 
 through any misapprehension. The only theory upon which the 
 bank would be allowed to recover from the person to whom the 
 money was paid is that the payee fraudulently induced the bank 
 to pay, the rule being well established that where the payee is 
 a party to the fraud by which money is obtained improperly on a 
 check the amount can be recovered from him. If not actually 
 guilty of fraud when by presenting a check which he knows is 
 not due he induced the bank to cash it, he should not be per- 
 mitted to take advantage of his own wrong and say that the bank 
 was negligent and should not have cashed the check. Even if he 
 was entirely innocent in presenting the check, he is in as good 
 if not better position than the bank to know that the check is not 
 collectible at the time presented, and where by his conduct he in- 
 duces the bank to pay there would seem to be good reason for 
 holding that he should reimburse the bank for the amount so paid. 
 
 This view is supported by Morse in his discussion of payment 
 by mistake. He says : 
 
 "Money paid with full information as to the facts, but in mis- 
 take of law, cannot be recovered. But money paid under mis- 
 take of fact, the error not being negligent, or if negligent not 
 causing loss to the payee, or if both negligent and causing loss, 
 yet the payee was negligent equally with or to a greater degree 
 than the payer, can be recovered." Morse on Banks and Banking, 
 5th Ed., Vol. I, p. 56. 
 
 There is no way to tell, of course, what view the courts might 
 take of the question. It might be held, and with considerable 
 reason, that the payment having been made carelessly and negli- 
 gently by the bank, when the check itself showed on its face that 
 it was not entitled to payment, could not be recovered. On the 
 otherhand, it might be held that the payee having induced the 
 bank to pay could not take advantage of such payment and hold 
 the money at the expense of the bank. There would seem to be 
 very good reason for holding that the bank should have the right 
 to recover the money.
 
 OPINIONS OF THE GENERAL COUNSEL. 281 
 
 Over Payment by Drawee Bank Through Mistake of Fact 
 Can Be Recovered. 
 
 Where a check drawn for $125.00 in the body, but with marginal figures 
 $175.00, is cashed at the latter figure, and after passing through two or 
 three other banks is finally paid by the bank on which it is drawn at 
 $175.00, which bank is compelled to make good to its customer the amount 
 paid in excess of the face of the check, what recourse, if any, has the 
 bank? 
 
 First. There is no doubt that the written amount in the face 
 of the check controls over the figures. 
 
 Second. Money paid by mistake of fact can generally be re- 
 covered from the payee. A bank paying a check by mistake can 
 ordinarily recover, its right to recover being entirely independent 
 of the liability of an indorser, and being based on the principle 
 that where one pays money by mistake for the benefit of another, 
 it may be recovered unless the payment is so negligently made as 
 to be the fault of the payer, or unless the person to whom pay- 
 ment is made is an innocent holder for value. Under such cir- 
 cumstances the equity of the holder would be superior to that 
 of the bank. 
 
 Applying this principle to the case stated, I should say that 
 probably the bank on which the check was drawn could recover 
 the excess payment from the bank to which it was paid. This 
 bank could in turn recover the amount from the bank to which it 
 paid the excess amount and this bank could recover from the 
 original payee. 
 
 NOTE. As to payment by mistake, see preceding opinion. 
 
 Undated Checks Are Valid and Bank May Pay on 
 Presentation. 
 
 Should a bank cash a check which is not dated ? 
 
 I do not think the question has been passed on by the Supreme 
 Court or the Court of Appeals of Georgia, and I have only been 
 able to find two or three decided cases from other States. The 
 text writers seem to disagree on the subject. Morse on Bank's and 
 Banking, says : 
 
 "A check must be dated. It may' be dated either on, before, 
 or after the day it is issued. But it would seem that if a check is 
 not dated at all, and contains no statement of a date when it is to 
 be paid, it is never payable. For a check is payable either on the 
 day of its date, or else on some other day specifically designated in
 
 282 PARK'S BANKING LAW OF GEORGIA. 
 
 it. So, if it is not dated at all, and if no designation occurs, 
 expressed in the body, which might perhaps operate to supply the 
 deficiency of a formal dating it is reasonable to say that it can 
 never become due, and payment can never be demanded. If this 
 rule, which is not directly asserted in any adjudication, goes at all 
 too far, it is nevertheless utterly impossible to doubt that a bank 
 would be fully justified in refusing to pay a check showing an 
 unexplained deficiency of so important a character. It has been 
 said that a check may be dated on Sunday, though it cannot be 
 payable on that day." Morse on Banks and Banking, 368. 
 
 This view is concurred in by Magee on Banks and Banking, 
 from which I also quote: 
 
 "If a check has no date, it has no definite time for payment. A 
 check is only payable on the day of its date or on a day a future 
 date, or at the time of presentmentsubsequent to its date. The bank, 
 therefore, if a check is not dated has no direction when to pay or 
 charge the drawer's account ; but a bank may pay a check with- 
 out risk and without a date when presented by and payable to the 
 drawer himself. * * * But the bank cannot charge the de- 
 positor's account with a sum of money, which sum is to be paid 
 to or transferred to the account of another, without direction 
 or authority in writing; and this authority must be dated and 
 signed by the party to be charged. 
 
 "The date is important, as stated, because it fixes accurately the 
 time in which payment may be demanded. It is not due until a 
 date is fixed. If it fails to bear a date, the bank is at once put 
 upon inquiry and may refuse payment upon the special ground 
 that the check not being dated, no time of payment is fixed. 
 The fact that a check is not dated or that the date is 
 changed as stated, would put the bank on inquiry, and it has been 
 held that an undated check is never payable." Magee on Banks 
 and Banking, 182. 
 
 Neither of these authors cite any authority for their statements. 
 
 The recent work of Michie on Banks and Banking, which is 
 by far the most exhaustive treatment of the subject, does not 
 discuss the question at all. 
 
 Bolles, in his Modern Law of Banking, says : 
 
 "A check should be dated. If it is not and contains a blank to 
 be thus filled, the holder may insert the date of its delivery." 
 Bolles, Modern Law of Banking, p. 589. 
 
 Th"is would seem to imply that the date is not essential. Weitzel 
 on the Law of Deposits, 67, uses almost the same language 
 as that quoted from Bolles. 
 
 On the other hand, Tiedeman on Commercial Paper, says : 
 
 "The form and formalities of the check differ but little from 
 that of the ordinary bill of exchange. Like all other kinds of
 
 OPINIONS OF THE GENERAL COUNSEL. 283 
 
 commercial paper, the check usually contains a date, although 
 this is not necessary to the validity of the instrument. It may 
 contain the true date; or the check may be ante-dated or post- 
 dated." Tiedeman on Commercial Paper, 435. 
 
 This is in line with the rule so far as other commercial paper is 
 concerned, it being almost universally held that the date is not 
 essential to the validity or negotiability of commercial paper, 
 and I am inclined to think that this is the better doctrine. A 
 check is generally regarded as an inland bill of exchange drawn 
 on a bank or banker, payable on demand, the time of presentment 
 fixing ' its maturity. The date seems entirely immaterial, for 
 checks are paid, not according to date, but according to the time 
 of presentment for payment. Of course, no one could say in 
 light of the authorities what a court might hold. In my opinion, 
 however, if the question were raised in Georgia, the court would 
 hold that the date is immaterial, and that the bank is authorized 
 to pay an undated check. 
 
 The only decided cases which I have been able to find are: 
 Gordon v. Lansing State Savings Bank, 133 Mich. 143, 94 N. W. 
 741, in which it was held that a date is not essential to the validity 
 of a check ; and Weld v. Eliot Five Cent Savings Bank, 158 Mass. 
 339, 33 N. E. 519, holding that an undated order on a savings 
 bank for the payment of a deposit is valid. There have been 
 a number of cases in which it has been held that the date of a bill 
 of exchange is not essential. 
 
 Drawer of Check Has the Right to Stop Payment. 
 
 Where a depositor gives notice to a bank to stop payment of a check, 
 is the bank authorized to decline to pay the check? 
 
 I quote from two of the leading authorities on banks and bank- 
 ing: 
 
 "A check is simply a written order of a depositor to his bank 
 to make a certain payment. It is executory, and as such it is of 
 course revocable at any time before the bank has paid or com- 
 mitted itself to pay it. But after the bank has paid, or has placed 
 itself under an obligation, or has incurred a liability to comply 
 with the order, the drawer's power to revoke is at an end. 
 * * The bank is the drawer's agent. Its primary duty is 
 to hold or to pay his money as he directs. Primarily it owes no 
 duty to the holder, except under and by virtue of directions from 
 the drawer." Morse on Banks and Banking, 5th Ed., 398.
 
 284 PARK'S BANKING LAW of GEORGIA. 
 
 "An ordinary, uncertified check on a general account is simply 
 an order which may be countermanded and payment forbidden 
 by the drawer at any time before it is actually paid, or accepted 
 by the bank on which it is drawn. After acceptance or payment, 
 however, by the bank, the drawer's right of revocation is lost." 
 Michie on Banks and Banking, p. 1101. 
 
 The text is supported by any number of decisions from the 
 courts throughout the country. 
 
 Of course, "the drawer exercises his right to countermand 
 payment of a check at his own risk. By this exercise he cannot 
 affect the validity of a check, unless procured from him by 
 fraud or mistake, and he cannot affect it at all in the hands of an 
 innocent holder for value." Parker-Fain Grocery Company v. 
 Orr, 1 Ga. App. 628-631. 
 
 Bank Paying Check After Payment Stopped Does So at Its 
 
 Own Risk. 
 
 A customer draws a check on a bank. He later stops payment on the 
 check. After some years the check is presented and is paid, the bank over- 
 looking the order stopping payment. What are the bank's rights in the 
 premises? 
 
 A check is the order of the depositor to pay out of the amount 
 due him by the bank a given sum to the payee. This order he has 
 the right to countermand at any time before the actual payment of 
 the check, or before the bank becomes liable by certification to pay 
 it. If the bank pays after the order is countermanded, that is, 
 after payment of the check is stopped, it does so at its peril, and 
 the drawer of the check can recover the amount from the bank. 
 
 So far as the person to whom the check is paid is concerned, 
 payment to him is a purely voluntary payment on the part of the 
 bank. The bank is in the same position as where it pays a forged 
 check; it cannot in either case recover the amount from the 
 person to whom it paid it, unless that person was guilty of some 
 fraud. 
 
 The only theory upon which the bank could recover would be 
 that the payment was by mistake. The courts generally hold that 
 this is not such a mistake as would authorize the recovery of the 
 amount. The precise question has been decided by the Supreme 
 Court of New Jersey in the case of The National Bank of N. J. 
 v. Berrall, 66 L. R. A. 599, from which I quote : 

 
 OPINIONS OF THE GENERAL COUNSEL. 285 
 
 "Where a bank receives in the ordinary course of business a 
 check drawn upon it, presented by a bona fide holder, who is with- 
 out notice of the fact that payment thereof has been stopped, and 
 the bank pays the amount of the check to such holder, it cannot 
 afterwards recover back the money as paid by mistake on the 
 ground that payment of the check had been countermanded by the 
 drawer." 
 
 Unless the party presenting the check knew that it had been 
 countermanded, or in some way misled the bank in regard to it, 
 it would not be entitled to recover the amount paid from him, 
 and, as already stated, it is, of course, liable to make good the 
 amount to the customer to whose account it charged the check. 
 
 Payee of Check Has No Right to Stop Payment of a Check. 
 
 If A draws a check in favor of B, and B endorses it payable "to the 
 order C, can B then stop payment of the check to C? 
 
 The payee of a check has no contractual relation with the 
 bank, and, therefore, has no right to direct the bank either to pay 
 or not to pay. The bank is not paying his order or out of his 
 funds, but is paying out of the funds of the drawer and upon his 
 order. Therefore, the payee of the check, particularly after he 
 has indorsed it and, therefore, put it beyond his own control, 
 has no right to give the bank any direction with regard to it, 
 and the bank is not authorized to obey his order to stop payment 
 on the check. Of course, where a check has been stolen or 
 fraudulently obtained from the payee, the payee may notify the 
 bank that the holder is not entitled to payment, and the bank, if 
 this information is correct, would be justified in refusing payment 
 to the holder. But this is not upon the theory of stopping pay- 
 ment, but is simply notice that the holder of the check has no 
 title to it, and, therefore, is not entitled to collect it. 
 
 Holder Has Right of Action Against Both Drawer and 
 Indorser When Payment Is Stopped. 
 
 A draws a check in favor of B on an out-of-town bank, which B in- 
 dorses and cashes at the local bank with which he does business. A stops 
 payment on the check. Has the paying bank any recourse on the maker 
 and indorser 6f the check? 
 
 The drawer of a check has the right to stop payment on it 
 either with or without reason for so doing, and the bank on which
 
 286 PARK'S BANKING LAW OF GEORGIA. 
 
 the check is drawn must respect the request of the drawer to stop 
 payment. But a check is a negotiable instrument, and a bona fide 
 holder for value, where payment has been stopped, may have re- 
 course on both the drawer and indorsers of the check. 
 
 In the case stated it is assumed that the bank cashed the check, 
 without any notice that payment had been stopped or that there 
 was any other defect connected with it. If this is the case, that 
 bank has the right to bring suit against the drawer and indorser of 
 the check to collect the amount paid out on it. 
 
 When Check Is Accepted for Deposit After Banking Hours 
 on Condition That Payment Is Not Stopped Before the 
 Following Day, Bank May Charge Check to Depositor if 
 Payment Is Stopped. 
 
 After business hours on Saturday a check was deposited, the teller ad- 
 vising the depositor that the drawer of the check would have until the 
 opening of the bank for business on Monday within which to stop payment. 
 Before the bank opened on Monday the drawer of the check notified the 
 bank to stop payment. Is the bank liable to the depositor for the amount 
 of the check? 
 
 The check having been offered to the bank for deposit after 
 business hours, the bank was under no obligation to accept the 
 deposit. It did not accept it unconditionally, but advised the 
 depositor that it would accept the deposit subject to the right of 
 the drawer to stop payment on the check. The bank could have 
 refused to accept the deposit altogether. If it accepted it on 
 condition, the depositor has no right to insist that it was an un- 
 conditional acceptance. It was practically agreed that the de- 
 posit would be taken, but entered during business hours on the 
 next regular business day. In the meantime the deposit was held 
 subject to the right of the drawer of the check to stop payment, 
 and the depositor took this risk. I do not think the depositor has 
 any right to complain that payment was stopped on the check, and, 
 therefore, the amount charged back to his account. 
 
 Bank Has No Right to Stop Payment of Its Cashier's Check. 
 
 Can a bank refuse payment of its cashier's check which was indorsed 
 drawee and cashed by another bank in good faith, the payee claim- 
 ing that the check was taken from him by force after it was indorsed and 
 requesting the drawee bank to stop payment on the check?
 
 OPINIONS OF THE; GENERAL COUNSEL. 287 
 
 The rule applicable to cashiers' checks is stated in Michie on 
 Banks and Banking, p. 1105, as follows: 
 
 "A cashier's check, being merely a bill of exchange drawn by a 
 bank on itself, and accepted in advance by the act of its issuance, 
 is not subject to countermand by the payee after indorsement, 
 as is an ordinary check by the drawer, and the relations of the 
 parties to such an instrument are analogous to those of the par- 
 ties to a negotiable note payable on demand." 
 
 This states the law on the subject. The drawee bank would not 
 be authorized to refuse payment of the check if the bank which 
 cashed it and is presenting it for payment is the bona fide holder 
 of it. That bank has all the rights of a bona fide holder if 
 it took the check without notice that it was taken by force 
 from the payee after it was indorsed, and the fact that it was so 
 taken would not affect its right to have the check paid upon 
 presentation. 
 
 Indorser on Whose Credit Money Is Loaned Which Is De- 
 posited to Credit of the Maker, Has No Right to Stop 
 Payment of Checks Against the Deposit. 
 
 A borrows money from a bank on B's indorsement, which is required 
 by the bank. The money is deposited in the bank to A's credit, in a gen- 
 eral deposit. B subsequently notifies the bank not to honor A's checks on 
 this fund. If the bank follows B's instructions and refuses to pay a check 
 drawn by A, is it liable to A? 
 
 The bank would not be justified in refusing payment of the 
 check under the circumstances stated. The deposit apparently 
 was made to the individual credit of A without any conditions or 
 restrictions whatsoever. While it is true that he borrowed money 
 on the strength of the indorsement of another person, yet with 
 the consent of that person the money was deposited to his own 
 credit, and he was entitled to control it. The fact that the money 
 was obtained on another's indorsement would not give that other 
 the right to control the deposit. 
 
 The bank would be liable in damages for dishonoring the 
 check. If it had refused to comply with the request of the in- 
 dorser, this would not have increased his liability in any way or 
 released him as indorser. He had no control over the money 
 whatever, and, therefore, had no right to stop payment of the 
 check.
 
 288 PARK'S BANKING LAW OF GEORGIA. 
 
 Bank Is Liable to Make Good a Check Which It Pays Upon 
 a Forged Indorsement. 
 
 Where a bank pays a check upon a forged indorsement of the payee's 
 signature and charges the check to the depositor's account, is it liable to 
 the depositor to make good the amount upon the discovery of the forgery? 
 
 The case of the Atlanta National Bank v. Burke, 81 Ga. 597, 
 seems to be one of the leading cases upon the subject and is very 
 frequently cited by the courts and text writers. 
 
 "That Burke was himself imposed upon by the forgery by 
 Knapp of the name of Knapp's wife as maker and grantor of a 
 note and deed, would not preclude Burke from complaining of the 
 payment by a bank of a check drawn upon it by Burke in favor 
 of Mrs. Knapp to Knapp, upon the forged indorsement by Knapp 
 of her name upon said check. Nor is it true that, because Knapp's 
 own indorsement was genuine and followed the forged indorse- 
 ment of his wife's name and he was the last indorser, the bank 
 was not bound to look to the genuineness of her indorsement. 
 
 "When the bank reported to Burke, in a statement of its ac- 
 count with him and return of his bank book with the check in 
 question, that it had paid the money on the check, it appearing 
 therefrom that the money was so paid on the indorsement of 
 Mrs. Knapp though actually paid to Knapp, he being the last in- 
 dorser, Burke had a right to rely upon the supposition that Mrs. 
 Knapp's indorsement was genuine, there being nothing to put him 
 upon notice that it was forged." 
 
 The doctrine of the case appears to be well established. Under 
 this case, I hardly see how the -bank can escape liability. The 
 drawer of the check directed the bank to pay to a named person 
 or to that person's order. It did not comply with this direction 
 when it paid to anyone else. 
 
 The rule that a bank is liable to the drawer of a check, where 
 it pays upon a forged indorsement, is thoroughly established. It 
 is very clearly stated in Morse on Banks and Banking, 474, 
 where a number of cases are quoted and others cited : 
 
 "Where a check is drawn payable to the order of any actually 
 existing person or corporation, if the order or indorsement of 
 such payee is forged, payment by the bank is no acquittance. 
 
 "The depositor has directed payment to be made in a certain 
 manner ; a payment made otherwise than according to his direc- 
 tions is no discharge of the bank's obligations towards him. 
 Neither has the holder, under a forged indorsement, any title to 
 the paper, or any right to receive payment upon it." 
 
 There is also an elaborate discussion of the question in the 
 work of Michie on Banks and Banking on pages 1093, 1097, 1203, 
 1209-13, apparently citing all of the decided cases.
 
 OPINIONS OF THE GENERAL, COUNSEL. 289 
 
 The Supreme Court of the United States in Leather Manufac- 
 turers National Bank v. Merchants National Bank, 128 U. S. 26, 
 32 L. Ed. 342, states the rule thus : 
 
 "A bank cannot discharge its liability to account with the de- 
 positor to the extent of the deposit except by payment to him or 
 to the holder of a written order from him, usually in the' form 
 of a check. If the bank pays out money to the holder of a check 
 upon which the name of a depositor or of a payee or indorsee is 
 forged, it is simply no payment as between the bank and the de- 
 positor, and the legal state of the account between them and the 
 legal liability of the bank to him remain just as if the pre- 
 tended payment had not been made." 
 
 There are a great many other authorities to the same effect 
 which are cited in Michie. 
 
 Bank Generally Held to Be Liable for Paying Check to Person 
 of Same Name as the Payee. 
 
 Is a bank liable for paying a check to a person of the same name as the 
 payee where it has no means of knowing that payment is being made to 
 the wrong person? 
 
 It has been held, generally, that the bank making the payment is 
 liable. See note to Weisberger Co. v. Barberton Sav. Bank 
 (Ohio), 34 L. R. A. (N. S.) 1100. 
 
 This seems to be the weight of authority, but it is too harsh a 
 rule. It is not supported by reason, and the cases so holding 
 have been severely criticized. The drawer of the check directs 
 payment to a named individual. The check gives no other de- 
 scription than the name. The bank making the payment ordi- 
 narily must satisfy itself that the person demanding payment is the 
 person named in the check as payee, but it can not do more than 
 ascertain that the person presenting the check is the person whom 
 he purports to be, and when it has done this it has fully met all 
 the requirements. It is utterly impossible for the bank to know 
 which of two John Smiths is intended, when there is no other 
 description than the name given in the check. Under these cir- 
 cumstances, I think the bank should be protected in paying the 
 check, and the drawer should lose the amount of it. Of course, 
 if there is anything to put the bank on notice that the wrong 
 person presented the check, it should not be protected in such pay- 
 ment.
 
 290 PARK'S BANKING LAW OF GEORGIA. 
 
 Nondrawee Bank Liable Where It Cashes Check on Indorse- 
 ment of Person of Same Name as Payee. 
 
 Where a person having the same name as the payee of a check indorses 
 the check and it is cashed by a non-drawee bank, which has no reason to 
 suspect that such person is not the payee, is the bank liable for the amount 
 paid on the check? 
 
 It is well settled, where a person having the same name as the 
 intended payee of a check, but who is not the same person, in- 
 dorses the check, that such indorsement is a forgery, although the 
 person signing signs his own name and makes no attempt to copy 
 the signature of the real payee. No title passes on a forged 
 indorsement, and where a bank pays a check upon a forged in- 
 strument, it cannot charge its depositor with the amount so paid, 
 although it may have acted in perfect good faith. 
 
 The rule is also well settled that where a nondrawee bank pays 
 a check upon a forged indorsement the bank on which the check 
 is drawn, having paid the check on the strength of the prior in- 
 dorsement of the first bank, can recover the amount so paid, the 
 reason being that a bank is under no obligation to pay a check 
 drawn on another bank, and when it does so it pays at its peril. 
 Before paying a check on request to a stranger, a bank is supposed 
 to require identification and proof sufficient to enable it to know 
 that it is paying to the right party, and the bank on which the 
 check is drawn may assume that the paying bank has made such 
 an investigation before the check was actually paid. 
 
 If in the case stated, the bank on which the check is drawn 
 can show that the check has been paid to the wrong person, al- 
 though paid to a person of the same name, it could be compelled 
 to reimburse the amount paid. The bank could recover of the 
 person for whom it cashed the check the amount which was paid 
 to him, and this seems to be the only way in which the bank could 
 reimburse itself. If the nondrawee bank indorsed the check, it 
 would be liable as indorser, for an indorser .guarantees the genu- 
 ineness of all previous signatures. 
 
 Nondrawee Bank Not Liable for Cashing Check Presented 
 by Named Payee When Drawer Intended a Different 
 Payee. 
 
 A bank issues a cashier's check, making it payable to a named person, 
 
 h intending to make it payable to another. The check is forwarded 
 
 by mail and is received by a person bearing the name which is written in
 
 OPINIONS OE THE GENERAL COUNSEL. 291 
 
 the check as the name of the payee. This person indorses the check and 
 has it cashed by another bank. Can the first bank hold the paying bank 
 liable? 
 
 Where the bank issuing the cashier's check makes it payable 
 to a named person, intending to make it payable to another, the 
 paying bank could not by any kind of inquiry ascertain what was 
 in the mind of the cashier when he drew the check. How it would 
 be possible to make the paying bank responsible for the mistake 
 of the cashier drawing the check is more than I can understand. 
 Of course, if there was .anything suspicious about the circum- 
 stances surrounding the cashing of the check, the paying bank 
 might be justified in refusing to cash it, but I do not under- 
 stand that there was anything of that nature in this transac- 
 tion. It appears that the check was drawn payable to a named 
 party, that a party by that name and known to the paying bank to 
 be a person of that name presented the check for payment, and 
 that it was cashed by this bank. 
 
 It seems to me that the only recourse of the bank that issued 
 the check is on the party who got the check, and who, knowing 
 that it must have been intended for another, cashed it himself. 
 Clearly the bank paying the check is not responsible, unless it 
 could be shown that it in some way participated in the fraud of 
 the party cashing the check. 
 
 Drawer Not Liable on Check Bearing His Signature Only, 
 Which Is Stolen and Blanks Filled in. 
 
 A check bearing only the name of the drawer is stolen from the drawer's 
 check book. If the check is filled out and negotiated, is the drawer liable 
 to an innocent holder?' Would not the principle that one is liable where 
 he puts it in the power of another to do harm, make the drawer liable? 
 
 This question has been variously decided by different courts. 
 The weight of authority seems to be that a negotiable paper, note, 
 bill of exchange, or check, which is stolen before delivery has no 
 validity and is void even in the hands of a bona fide holder. The 
 Supreme Court of Georgia in the case of Reese v. Fidelity Assur- 
 ance Society, 111 Ga. 482, held that "delivery is essential to the 
 validity of a promissory note." In support of this decision, the 
 court cites Tiedeman on Commercial Paper, 34, from which is 
 taken the following quotation : 
 
 "Until the bill or note has been delivered to the payee, it can 
 have no validity. Intentional delivery is also essential. For,
 
 292 PARK'S BANKING LAW OF GEORGIA. 
 
 while the possession of a commercial paper by the payee or 
 some one else, other than the maker or acceptor, to whom on its 
 face it appears to be payable, is prima facie evidence of a good 
 title, yet it is not conclusive; and if it be shown that there has 
 beeri no delivery to the payee, it is valueless even in the hands of 
 an innocent purchaser. As long as a bill or note has not been 
 delivered, it is a nullity." 
 
 The Supreme Court also cites 1 Daniel on Negotiable Instru- 
 ments, 63, which is to the same effect. This writer says also, 
 on page 1016, that where an incomplete instrument has been 
 signed and stolen without any delivery, and the blank has been 
 filled, it is sheer forgery, in which the maker is not involved, 
 and on which paper he is not bound. 
 
 Nor would the well-known principle that a person is liable 
 where he puts it into the power of another to do harm, render 
 the drawer liable. It is on this principle that, where a person 
 delivers a note or check signed in blank to an agent or other 
 person to fill in the blank, he is bound for the amount of the 
 note or check as filled in, although it may be for a much larger 
 amount than was authorized. As was stated by the Supreme 
 Court of the United States in Bank of Pittsburgh v. Neal, 22 
 How. 107, 16 L. Ed. 328. 
 
 "Where a party to a negotiable instrument intrusts it to the 
 custody of another, with blanks not filled up, whether it be for 
 the purpose to accommodate the person to whom it was intrusted, 
 or to be used for his own benefit, such negotiable instrument car- 
 ries on its face an implied authority to fill up the blanks and 
 perfect the instrument; and as between such party and innocent 
 third parties, the person to whom it was so intrusted must be 
 deemed the agent of the party who committed such instrument to 
 his custody or, in other words, it is the act of the principal, and 
 he is bound by it." 
 
 But where the instrument is not delivered at all, but is stolen 
 from the maker in an incomplete state, there is no authority to the 
 thief to fill in the blanks, and it can hardly be said that the negli- 
 gence of the maker in leaving the paper where the thief could get 
 hold of it was the proximate cause of the injury to the innocent 
 holder. The leading case on the subject is Baxendale v. Bennett, 
 L. R. 3 Q. B. D. 525, decided by the English Court of Appeals, 
 where an acceptance on an unsigned draft was stolen from the 
 drawer of the acceptor. In this case it was held that the negli- 
 gence of the defendant in accepting the draft and leaving it in his 
 desk would not justify a recovery. I quote from the opinion:
 
 OPINIONS OF THE GENERAL COUNSEL. 293 
 
 "Suppose he had signed a blank check with no payee or date 
 or amount, and it was stolen, would he be liable or accountable, 
 not merely to his banker, the drawee, but to a holder? * * * 
 I can not think so. * * * The defendant has not voluntarily 
 put into anyone's hands the means, or part of the means, for com- 
 mitting the crime. But it is said that he has done so through neg- 
 ligence * * * But then this negligence is not the proximate 
 or effective cause of the fraud. A crime was necessary for its 
 completion." 
 
 This case is cited by all of the textbooks on negotiable instru- 
 ments, and most of the decided cases. The Supreme Court of the 
 United States in the case of District of Columbia v. Cornell, 130 
 U. S. 655, 32 L. Ed. 1041, cites it with approval, the court holding 
 that "when the maker of a negotiable instrument lawfully cancels 
 it before maturity, his liability upon it is extinguished, and can- 
 not be revived without his consent." In that case the cancelled 
 instrument had been stolen and the cancellation erased, and the 
 paper sold to a bona fide holder. 
 
 The case of Knoxville National Bank v. Clark, 51 la. 264, 33 
 Am. Rep. 129, states the reasons usually given for holding the 
 drawer of a check or maker of a note liable under such circum- 
 stances, and answers them as follows : 
 
 1. That the drawer is estopped from showing the truth. This 
 has been exploded in both England and in this country. The 
 drawer has not done or omitted to do anything upon which an 
 estoppel can be based. 
 
 2. That the drawer of the check was negligent in leaving it in 
 an incomplete condition. But it could not be anticipated that such 
 negligence would cause another to commit a crime. And can it 
 be said that a person is negligent who does not anticipate and pro- 
 vide against the thousand ways through or by which crime is 
 committed? Is it not requiring of the ordinary business man 
 more diligence than can be maintained on principle, or is practi- 
 cable, if he is required so to protect and guard his business trans- 
 actions that he can not be held liable for the criminal acts of an- 
 other? If the drawer is liable on the theory of negligence, wh> 
 should not the negligence of the owner of goods which are stolen 
 excuse the bona fide purchaser? 
 
 3. That when one of two innocent persons must suffer by the 
 wrongful act of another, he must suffer who placed it in the 
 power of such third person to do the wrong. It seems that such 
 rule can have no application to this class of cases. It has never
 
 294 PARK'S BANKING LAW OF GEORGIA. 
 
 been carried to the extent of making one person civilly liable for 
 the crime of another, and, on principle, we think it can not be. 
 
 4. That the free interchange of negotiable paper requires the 
 establishment of this rule. But at the present day negotiable 
 paper is not ordinarily freely received from unknown persons. 
 The necessities of trade and commerce do not require the law to 
 be so construed as to compel a person to perform a contract 
 he never made, and which it is proposed to fasten on him because 
 some one has committed a forgery or other crime. 
 
 It is probable, as was stated in the case of Salley v. Terrill, 
 95 Me. 553, 55 L. R. A. 730, "that there may be such gross care- 
 lessness or recklessness of the maker in allowing an undelivered 
 note to get into circulation as will justly estop him from setting 
 up nondelivery, as if he were knowingly to throw it into the street, 
 or otherwise leave it accessible to the public, with no person pres- 
 ent to guard against its abstraction under circumstances where he 
 might reasonably apprehend that it would be taken." But I do 
 not think the signing of a check and leaving it in the drawer's 
 check book in his desk or at his place of business would be con- 
 sidered such gross carelessness or recklessness as to make him 
 liable where it was stolen, the blanks filled in and the check nego- 
 tiated. 
 
 As stated in the beginning, some of the courts hold the maker 
 liable under these circumstances, but the weight of authority 
 seems to be against this view. And I think that in Georgia, where 
 our Supreme Court holds delivery essential to the validity of a 
 commercial instrument, it would take a very unusual case of neg- 
 ligent conduct of the part of the drawer of an incomplete check 
 to make him liable where it was stolen and negotiated without his 
 authority. 
 
 Check Payable to "Cash or Order" Is Payable to Bearer and 
 
 Is Valid. 
 
 Is a check payable to "cash or order" payable to bearer ? 
 
 To be valid a check must have a payee, "but a check made pay- 
 able to an indefinite or obscure thing, for example, 'to the order of 
 1658' or 'bills payable/ is held to be payable to bearer. The same 
 rule applies to a check payable to a fictitious payee." Belles' 
 Modern Law of Banking, p. 595. I quote also from Magee on 
 Banks and Banking, p. 310: "It is held that where a check is
 
 OPINIONS of THE GENERAL COUNSEL. 295 
 
 drawn payable to a fictitious person or to a name or figure, as for 
 example '1913' or a w<5rd 'rent,' it is in law regarded as payable to 
 bearer and is transferrable on delivery." Of course, a check pay- 
 able to "cash" is as definite as one payable to "bills payable" or 
 to "rent," and would be regarded as payable to bearer. 
 
 COLLATERAL. 
 
 Holder of Collateral Is a Purchaser for Value. 
 
 Does the holder of a promissory note as collateral for a debt stand in 
 the same position as a purchaser? 
 
 It is expressly provided by the Code that : 
 
 "The holder of a note as collateral security for a debt stands 
 upon the same footing as the purchaser." Park's Ann. Code, 
 S 4289. 
 
 When Husband Pledges Wife's Bonds, the Pledgee Without 
 Notice Is Protected. 
 
 A gentleman borrows money from the bank on city bonds which he 
 brings in and delivers. Years afterwards his wife claims the bonds as being 
 her personal property. Where does the bank stand? 
 
 I quote from an excellent opinion by the Court of Appeals the 
 rule which governs in such cases : 
 
 "The purchaser for value of a commercial paper who takes it 
 from the apparent owner acquires a good title as against an un- 
 disclosed true owner, in the absence of mala fides. Mere want of 
 such caution in the purchaser as ordinarily prudent men usually 
 exercise in other transactions is not suffcient to defeat his title. 
 
 "Ordinarily, where commercial paper is offered in the usual 
 course of business, the purchaser need not make inquiry as to the 
 ownership, when the transaction appears regular on its face. 
 
 "If the purchaser knows or has reasonable cause to believe 
 that the apparent owner is not the true owner, and enters into 
 privity or participation in the fraud upon the true title, his title 
 is defeasible." Third National Bank v. Poe, 5 Ga. App., pp. 113. 
 114. 
 
 In the case cited a husband, who was indebted to a bank, 
 brought to the bank a cashier's check of another bank pay- 
 able to his order, indorsed it, deposited it to his credit and gave 
 his personal check in settlement of his note due the bank. It 
 was held that the bank in the absence of bad faith on its part was
 
 296 PARK'S BANKING LAW OF GEORGIA. 
 
 not liable in an action brought by the wife to recover the value of 
 the cashier's check, although it was obtained with her money and 
 although the bank which accepted it had cause to suspect that the 
 wife was in some way instrumental in procuring it for the hus- 
 band. 
 
 Judge Bleckley once said, in a case in which a wife brought 
 suit to recover money which had been paid by her husband to his 
 creditors, that 
 
 "It is only where notice is brought home that a wife's rights 
 will be saved. The burden of proof is upon her, for in every 
 case where money is received and value given, there is a presump- 
 tion that title passes, which stands until it is rebutted by evi- 
 dence. And the measure of evidence should not be too scant in 
 mere deference to sex. When man and wife cooperate for good 
 they can do much good ; and so, when they combine against third 
 persons and cooperate for evil, they can do much harm. In 
 protecting women, courts and juries should be careful to protect 
 men, too, for men are not only useful in general society, but to 
 women especially."- Humphrey v. Copeland, 54 Ga. 543. 
 
 Pledgee Liable for Value of Collateral Lost Through His 
 Negligence. 
 
 A customer borrows money from a bank, pledging as collateral a note 
 retaining title to a mule. This collateral note is lost by the bank. Is the 
 bank liable to its customer for the amount of this note? 
 
 Under our Code, 3535, the pledgee of promissory notes or 
 other evidences of debt must exercise ordinary care in collecting 
 and securing the same. Where loss results to the pledger on ac- 
 count of the failure of the pledgee to exercise such ordinary care 
 and diligence, the pledgee is liable for such loss. So if the note 
 was lost through the careless handling or negligence of the bank, 
 the bank would be liable to its customer for whatever loss he might 
 sustain by reason of its negligence. The mere loss of a paper, how- 
 ever, does not necessarily result in any damage. Suit may still 
 be entered on the paper in spite of its loss, and it may be collected 
 just as though the original paper could be produced. If it became 
 necessary, the lost paper could be established through appropriate 
 proceedings, and the established copy would take the place in all 
 respects of the lost original. 
 
 If a note should be payable to bearer or indorsed in blank, and 
 should get into the hands of a bona fide holder, so that neither 
 the bank nor the original pledger could collect it, the bank, of
 
 OPINIONS OF THE; GENERAL COUNSEL. 297 
 
 course, would be liable but ordinarily there is little danger of 
 such a contingency, and the mere loss of the paper would not 
 deprive the pledger of any substantial right, though it might 
 put him to some little inconvenience. Any inconvenience or ex- 
 pense resulting from the loss should, of course, be compensated 
 for by the bank. The bank would be liable only for the value 
 of the paper, not necessarily for the amount named in the face 
 of the paper. In the case mentioned, if the maker of the paper 
 was insolvent and the mule was dead, no loss would result to 
 the pledger, although the paper itself could not be found. The 
 burden would be upon the customer to show the value of the lost 
 collateral, and the bank would not be liable for more than the 
 amount of this loss. 
 
 t 
 The Renewal of a Note to Secure Which Another Note Is 
 
 Pledged Will Not Affect 'the Liability of the Maker of 
 the Collateral Note. 
 
 Does the renewal of a note secured by collateral affect a bank's right as 
 the holder of the note pledged as collateral, the principal note being re- 
 newed from time to time after the note pledged becomes due? 
 
 I do not see how the renewal of a note could make any differ- 
 ence to the maker of the note which is held as collateral. The 
 rule is that the holder of collateral must exercise ordinary dili- 
 gence in collecting collaterals pledged, and the failure to exercise 
 such diligence discharges the pledger ; but the failure to collect 
 promptly would not affect the liability of the maker of the note 
 which has been pledged as collateral, and the renewal of the prin- 
 cipal note would have no effect on the liability of the maker of 
 the collateral note. Usually, it would not seem to be good policy 
 to continue to renew a note after collateral has become due, and 
 remains unpaid, as the 'failure to pay the collateral note would 
 seem to indicate that it is of doubtful value ; but I do not think 
 the renewal could in any way affect the liability of the maker of 
 the note pledged as collateral, the question as to whether renewal 
 should be made being merely a business question, the legal status 
 not being affected in any way by the renewal.
 
 298 PARK'S BANKING LAW OF GEORGIA. 
 
 Where Proceeds of Sale of Collateral Are Sufficient to Cover 
 Principal and Interest on Original Note, Adjudication in 
 Bankruptcy Does Not Stop Running of Interest. 
 
 Does the rule that bankruptcy stops interest on claims against the bank- 
 rupt from the date of adjudication apply to secured claims, where the 
 amount of the collateral held as security is more than sufficient to pay both 
 principal and interest on the claim? ' 
 
 The Supreme Court of the United States in the case of Coder, 
 Trustee, v. Arts, 213 U. S. 223, 53 L. Ed. 772, held that a mort- 
 gage creditor, where the property covered by the mortgage sold 
 for a sum sufficient to pay both principal and interest of the mort- 
 gage debt, was entitled to collect interest up to the date of the sale 
 of the mortgaged property. The same rule would apply to a claim 
 secured by collateral. Where, however, the collaterals or other 
 securities bring less than the amount of the debt, the creditor is 
 not authorized to apply the proceeds first to the payment of in- 
 terest, and then as a credit upon the principal, and -prove his claim 
 in bankruptcy for the difference. In such cases the running of 
 interest stops with the adjudication of bankruptcy, with this pro- 
 viso, however, that interest and dividends upon securities held by 
 creditors accruing after the date of the petition in bankruptcy 
 may be applied to the future accruing interest upon the debt. 
 This was held by -the Supreme Court of the United States in 
 Sexton v. Dreyfus, 219 U. S. 339, 55 L. Ed. 244. 
 
 Rights of Holder of Collateral on Bankruptcy of the Pledger. 
 
 Can a creditor holding a note secured by collateral prove his debt for the 
 full amount in a bankruptcy proceeding against his debtor, proceed to 
 realize on his collateral, and collect dividends on the full amount of his 
 claim? Or is it necessary for him to account for his collateral and collect 
 dividends on the balance? 
 
 A creditor holding a secured debt may (a) realize on the se- 
 curity according to the terms of the contract, credit the same on 
 the debt and prove his claim for the balance; or (b) prove his 
 claim for the full amount as an unsecured debt, surrendering the 
 collateral to the trustee for the benefit of the estate ; or (c) he 
 may prove his debt as a secured debt, have his collateral valued 
 and credited upon the claim, and collect dividends on the excess. 
 He can not prove the claim as an unsecured debt, collect dividends 
 on the full amount, and yet hold on to his collateral. This seems 
 to be very clearly provided by 57 of the Bankruptcy Act. See 
 Collier on Bankruptcy, pp. 721 et seq.
 
 OPINIONS OF THE; GENERAL COUNSEL. 299 
 
 Holder of Collateral Pledged by Bank May Collect Collateral 
 Upon Insolvency of Bank. 
 
 A bank borrows from its correspondent, pledging certain of its custom- 
 ers' notes as collateral. Before it liquidates its indebtedness a receiver is 
 appointed for it. Has the correspondent bank the right to collect the col- 
 lateral notes which it holds, or is it compelled to turn over the collateral 
 to the receiver of the insolvent bank? 
 
 There can be no doubt as to the right of the bank to hold this 
 collateral and itself undertake the collection of it; and, generally 
 speaking, this would be much better than undertaking to collect 
 through the receiver. It is a general custom for correspondent 
 banks to undertake to make their own collections. Sometimes a 
 receiver agrees to assist in making the collection, but where he 
 does so he accounts to the correspondent bank. His collections 
 are entirely outside of his trust as receiver. 
 
 Collateral Pledged to Secure Specified Note and "All Other 
 Indebtedness" May Be Held Until All Debts Satisfied. 
 
 Where a collateral note recites that certain described papers are de- 
 posited as general collateral for the payment of such note and of any 
 other existing or future liability of the maker to the payee or holder, does 
 the collateral cover any other indebtedness than that represented by the 
 note itself? 
 
 Some such clause is usually adopted by banks in their col- 
 lateral notes, and such a clause is valid. Under it a bank would 
 be authorized to hold the collateral to cover any indebtedness of 
 the maker of the note, althought the indebtedness represented by 
 the note itself might have been paid. I quote from a decision of 
 the Supreme Court, which seems to settle the question : 
 
 "Where one borrows money from a bank, and in the note given 
 therefor pledges certain collaterals for the payment of that note 
 and for 'any general balance due or to become due' the bank, the 
 borrower has no right to withdraw the collaterals without the 
 consent of the bank, on payment or tendering payment of the 
 note only, if the bank is the holder of other just demands against 
 him not then fully secured otherwise, according to sound business 
 principles and the rules of practical banking." Merchants Na- 
 tional Bank of Savannah v. Demere, 92 Ga. 735 (3).
 
 300 PARK'S BANKING LAW OF GEORGIA. 
 
 Collateral Pledged to Secure All Indebtedness Would Secure 
 
 Indorsements. 
 
 Would the clause in a note, "We have deposited with said payee, as col- 
 lateral security for this note, and any other present or future indebtedness 
 of ours of any character to said payee or holder, the following collateral," 
 be sufficient to cover the maker's indorsement, either on papers discounted 
 by him or accommodation indorsement on notes of others? 
 
 The language is quite broad, and would seem to be intended to 
 cover just what it says, "any other present or future indebtedness 
 of any character." As an indorsement is an indebtedness, I think 
 the form would be sufficient to cover liability as indorser on 
 papers discounted or held by the bank. 
 
 Sale of Collateral Under Power Contained in Note Valid if 
 Terms of Power Strictly Followed. 
 
 Where cotton is pledged to secure a note, warehouse receipts being 
 turned over to the bank, and where the note provides for a sale of the col- 
 lateral, can the cotton be sold under the power in the note ? 
 
 Under the usual form of collateral note, the bank would have 
 authority to exercise the power and to sell the cotton, where the 
 maker of the note was in default, as provided by the note. Care 
 should be taken to follow strictly the terms of the power; but 
 where this is done and a fair and regular sale is made, the bank 
 would be protected in making the sale and applying the proceeds 
 to the satisfaction of the note. 
 
 Sale Under Power in Note May Be Public or Private and 
 Without Notice When so Agreed. 
 
 Is there any decision by our courts in regard to selling collateral at 
 public or private sale without notice to the maker, security or indorser, 
 such sale being authorized by the pledge agreement contained in the note 
 to secure which the collaterals are pledged? 
 
 The Supreme Court has upheld such a sale in the case of 
 Thornton v. Martin, 116 Ga. 115 (3), from which I quote: 
 
 "Where the pledgee is authorized, on or after the nonpayment 
 of the note at maturity, to sell the stock at public or private sale, 
 without advertisement or 'giving any notice' to the maker and 
 pledger, the sale is not invalid when made without demand and 
 without notice of the time or place of sale, although not made 
 until long after the maturity of the note. Where there is no 
 valid extension of the note, the waiver of notice is not af- 
 fected by mere delay in exercising the power of sale."
 
 OPINIONS OF THE; GENERAL COUNSEL. 301 
 
 Advertisement of Sale in Sunday Newspaper Invalid. 
 
 Would advertisement in a Sunday paper be legal under a provision in 
 a collateral note providing for certain advertisement in order to sell? 
 
 This question seems to have been expressly ruled in the case of 
 Sawyer v. Cargile, 72 Ga. 290, from which I quote: 
 
 "Sunday is dies non juridicus, and service cannot be made, or 
 legal notice given on that day, or the business or work of ordinary 
 callings done. Therefore, the publication of the advertisement of 
 a marshal's sale for taxes in a newspaper appearing on Sunday 
 was not legal, and the sale thereunder passed no title." 
 
 COLLECTIONS. 
 
 General Rules Governing Liability. 
 
 D. & Co. deposited with the G. Bank their draft on the A. Bank. 
 The bank forwarded the item for credit to the F. Bank in another city, 
 which bank turned the draft over to the clearing house in that city for col- 
 lection. The clearing house forwarded the draft direct to the A. Bank. 
 This bank made settlement with the clearing house in New York Ex- 
 change. Before this could be collected in due course the A. Bank was 
 closed and the exchange dishonored. What are the rights of the several 
 parties under the facts stated? 
 
 (1) D. & Co. are fully relieved from liability. I quote from a 
 decision of the Supreme Court : 
 
 "Where one gave to another, in payment of a debt, a check 
 upon a bank at which he had on deposit sufficient money to meet 
 the payment of the check, and the payee deposited the check for 
 collection in another bank, which immediately forwarded it to 
 the drawee bank for payment, an entry on its books by the drawee 
 bank charging the account of its depositor with the amount of the 
 check was equivalent to the payment thereof. The drawee 
 bank then held the amount of the check as the agent of the payee, 
 and the drawer was discharged from liability on the debt for 
 which the check was given." Smith Roofing & Contracting Co. ?/. 
 Mitchell, 117 Ga. 772 
 
 D. & Co. having deposited the check as cash, and it having been 
 presented to the bank on which it was drawn, and charged to their 
 account, the check was paid and D. & Co. relieved of further 
 liability. 
 
 Of course, if the G. Bank had a contract with D. & Co. that 
 items taken for credit were at their, risk, and that if returns for 
 such items should be dishonored, the amounts could be charged 
 back to their account, they would not be relieved. In the 'ab-
 
 302 PARK'S BANKING LAW of GEORGIA. 
 
 sence of such contract D. & Co. seem clearly to be relieved of lia- 
 bility. 
 
 (2) The respective rights and liabilities of the G. Bank and the 
 F. Bank depend upon the terms on which the draft was for- 
 warded and acknowledged by the F. Bank; that is to say, upon 
 the terms of the contract between the two banks. 
 
 "In the absence of a contract, express or implied, to the con- 
 trary, a bank taking paper for collection is liable for the defaults 
 of its agents and correspondents to whom the paper has been en- 
 trusted for collection." Park's Ann. Code, 2362. 
 
 "Where * * *. a bank received for collection from a cus- 
 tomer a check which by the exercise of proper diligence might 
 have been collected, it became, in the absence of any express or 
 implied contract to the contrary, liable for any neglect of duty 
 whereby the collection of the check was defeated, whether such 
 negligence arose through the default of its own officers, or from 
 that of its correspondent or agent to whom it may have sent the 
 check for collection, and in such case, it would be immaterial 
 whether such correspondent or agent was the bank upon which 
 the check was drawn or another." Bailie v. Augusta Savings 
 Bank, 95 Ga. 277. 
 
 In the absence of a contract limiting its liability, the F. Bank 
 is liable to the G. Bank for any neglect of duty in the collection 
 of the check by itself or the clearing house, which was its agent, 
 or the A. Bank. 
 
 It is almost universally held that it is negligence in a collecting 
 bank to send a check for collection directly to the bank upon 
 which it is drawn. 
 
 "If a bank receiving paper for collection, payable at a distant 
 place, sends it by mail to the payer for collection, it is guilty of 
 negligence, and this, too, though the payer is the only bank in 
 the place, and though it is customary thus to send paper for col- 
 lection, since the custom is unreasonable." Michie on Banks and 
 Banking, Vol. II, p. 1405. 
 
 The question has never been decided in Georgia, though it 
 was raised in the Bailie case above referred to, the court there 
 expressly declining to decide it ; but there appears to be little con- 
 flict on the proposition in other jurisdictions. 
 
 The general rule also seems to be that a collecting bank is not 
 authorized to receive anything except money in payment, and if 
 it takes a check which is dishonored, it is liable for so doing. The 
 only exceptions are where the bank has special authority to re- 
 ceive something other than money, or where there is a general 
 custom to receive something else, which custom is known to the
 
 OPINIONS OF THE GENERAL COUNSEL. 303 
 
 depositor, or is so universal as to authorize the assumption that 
 he knew of it. 
 
 "In the absence of special authority or well-established custom 
 to the contrary, a bank with which paper is deposited for collec- 
 tion has no authority to accept anything but money as payment. 
 It can only receive payment of the debt due the principal in the 
 legal currency of the country, or in bills which pass as money at 
 their par value by the common consent of the community. Thus, 
 for instance, a bank receiving paper for collection has no author- 
 ity to accept a check in payment thereof, even though such 
 check be certified. 
 
 "It has been held, however, in a number of jurisdictions that 
 a collecting bank may properly accept payment other than money 
 by virtue of special authority from its principal or custom known 
 to such principal or obtaining so universally that the holder of the 
 paper will not be allowed to plead ignorance of it." 2 M'ichie on 
 Banks and Banking, pp. 1395-1398. 
 
 "Where a bank accepts a check on another bank in payment of 
 a draft in its hands for collection and surrenders the draft, it 
 makes the check its own, and its libility is the same as if cash 
 had been received." National Bank v. American Exchange Bank 
 (Mo.), 52 S. W. 265; Fifth National Bank v. Ashworth (Pa.), 
 2 L. R. A. 491. 
 
 There is no Georgia case on this precise point, but it has been 
 held that 
 
 "Where a bank sends an accepted draft to a correspondent 
 for collection, who receives in payment the check of the acceptor 
 on itself in the regular course of business, the acceptor being 
 a depositor with the collecting bank and having on deposit a sum 
 in excess of the check, and the collecting bank surrenders the 
 draft to the acceptor, and remits its own check to the initial bank, 
 which check is not paid because of the failure of the remitting 
 bank, such transaction constitutes a payment of the draft as be- 
 tween the drawer and the acceptor, although the collecting bank 
 may have been insolvent at the time, its insolvency not being 
 known to its officials or the depositor." Pollak Brothers v. 
 Niall-Herin Co., 137 Ga. 23. 
 
 Under these authorities, when the F. Bank accepted New York 
 Exchange and surrendered the draft, it took the risk of the 
 New York check being paid. The draft was absolutely satisfied, 
 and if the New York check was dishonored for any reason, the 
 risk was that of the F. Bank as between it and the G. Bank. 
 
 Another element possibly is the delay in presenting or report- 
 ing on the draft. The rule is that a check must be presented for 
 payment within a reasonable time, and if the bank fails be- 
 tween the time of drawing and the presentation of the check,
 
 304 PARK'S BANKING LAW OF GEORGIA. 
 
 the drawer is discharged from liability to the extent of the in- 
 jury he has sustained by such failure. 
 
 "What is a reasonable time will depend upon circumstances, 
 and the relation of the parties between whom the question arises." 
 Comer v. Dufour, 95 Ga. 376, 378. 
 
 If the delay in presenting the check was occasioned by its being 
 routed via F. Bank instead of being sent directly for collection 
 to the town in which A. Bank was located, then in order to escape 
 liability to its depositor for failing to present the check at the 
 bank on which it was drawn within a reasonable time, G. Bank 
 would have to show that it was usual and customary to so collect 
 checks deposited for collection. Each case must depend upon its 
 own facts both as to whether or not there was delay and whether 
 or not the route selected was so unreasonable as to amount to 
 negligence on the part of the bank or its correspondents. 
 
 "Checks on out-of-town banks, which are deposited with a 
 bank for collection, must of necessity be collected through the 
 agency of intermediary or correspondent banks. * * * It 
 should follow that a collecting bank is not guilty of negligence and 
 does not render itself liable to its depositor where it forwards his 
 check through one or more correspondent banks for collection, 
 provided the check is sent in a reasonably direct manner and ar- 
 rives at its destination for presentment within a reasonable time." 
 Brady on Law of Bank Checks, 200. 
 
 (3) On account of our statute above quoted, making a collect- 
 ing bank liable for the negligence of its agents or correspondents, 
 it is customary with most of the banks to have printed on their 
 deposit tickets, and frequently in their pass books, a notice that 
 items payable outside of the city in which the bank is located, are 
 taken at the depositors' risk, and that the bank assumes no re- 
 sponsibility for neglect or default of collecting agents. 
 
 It is also customary for banks doing any considerable amount 
 of collecting to have printed on their acknowledgments some simi- 
 lar expressions, frequently adding that items may be sent to 
 banks on which they are drawn, and that if returns sent by the 
 collecting agents are dishonored, the amount may be charged 
 back. It is generally held that such notices amount to a contract 
 and relieve the bank from liability for neglect or default of their 
 correspondents, and authorize the charging back of items. 
 
 "In a State wherein a bank is responsible for the conduct of a 
 subagent, it may by notice in a pass book absolve itself from the 
 negligence of the subagent." Bolles on Modern Law of Bank- 
 ing, p. 576.
 
 OPINIONS OF THE GENERAL COUNSEL. 305 
 
 "Where defendant bank had been acting as plaintiff's collection 
 agent for some time, with the understanding that it should not be 
 liable for the misconduct of its subagents, and on receipt of the 
 item in question for collection in accordance with its uniform 
 prior practice acknowledged receiving the check and incorporated 
 in the body of the receipt a statement that in receiving the same 
 it acted only as agent, and assumed no responsibility for the acts, 
 omissions, neglect, or default of agents or subagents at other 
 points, or for items lost in transit, it was not liable for the failure 
 to collect the check, due to the negligence of a subagent." Cali- 
 fornia National Bank v. Utah National Bank, 190 Fed. 318 (8 
 C. C. A.). 
 
 The Supreme Court of Georgia holds, however, that it is a 
 question for the jury in each case from the course of dealing be- 
 tween the parties as to whether there was an implied contract 
 exempting the bank from responsibility for neglect upon the part 
 of its agents or correspondents through whom it endeavors to 
 collect a check which has been deposited with it for collection. 
 Youmans Jewelry Co. v. Blackshear Bank, 141 Ga. 357. 
 
 In the case of a savings bank, the court held 
 
 "A depositor in a saving bank is bound by the reasonable rules 
 of the bank to which he assents by an agreement in writing." 
 Langdale v. Citizens Bank of Savannah, 121 Ga. 105. 
 
 If the F. Bank in its letter acknowledging receipt of the draft 
 protected itself by a notice similar to that above referred to, and 
 the notice authorized it to forward the check to the bank on which 
 it was drawn, and provided for the charging back of such items 
 as might be dishonored, it would be relieved of liability and au- 
 thorized to charge the item to the G. Bank. If it did not pro- 
 tect itself by such a contract or notice, it would be liable, and 
 would not have the right to charge the item back. 
 
 If the F. Bank is authorized to charge the item back to the G. 
 Bank, whether it could in turn charge it to D. & Co. would depend 
 on whether or not it had a contract with D. & Co. which would 
 authorize it to do so. For, as above stated when D. & Co.'s draft 
 was presented to the A. Bank and charged to its account, it was 
 paid, and they were relieved of further liability, unless there 
 was a contract which authorized charging back the item in the 
 event checks taken in payment should be dishonored. 
 
 NOTE. The foregoing opinion correctly states the law governing the col- 
 lection of checks prior to the passage of the Banking Act of 1919, effective 
 January i, 1920. This act, however, has materially modified the banks' 
 liability. 
 
 179. "When a check, draft, note, or other negotiable instrument is 
 deposited in a bank for credit, or for collection, it shall be considered due 
 20
 
 306 PARK'S BANKING LAW OF GEORGIA. 
 
 diligence on the part of the bank in the collection of such check, draft, 
 note or other negotiable instrument so deposited, to forward and route the 
 same without delay in the usual commercial way, according to the regular 
 course of business of banks, and the maker, indorser, guarantor, or surety 
 of any check, draft, note, or other negotiable instrument so deposited shall 
 be liable to the bank until actual final payment is received ; and when a 
 bank receives for collection any check, draft, note, or other negotiable in- 
 strument and forwards the same for collection as herein provided, it shall 
 be liable only after actual final payment is received by it, except in case of 
 want of due diligence on its part as aforesaid." 
 
 180. "Any bank, or banker, doing business in this State, receiving for 
 collection or deposit, any check, note or other negotiable instrument drawn 
 upon or payable at any other bank, located in another city or town, whether 
 within or without this State, may forward such instrument for collection 
 directly to the bank on which it is drawn or at which it is made payable, 
 and such method of forwarding direct to the payor shall be deemed due 
 diligence, and the failure of any such payor bank, because of its insolvency 
 or other default, to account for the proceeds thereof, shall not render the 
 forwarding bank liable therefor ; provided, however, such forwarding 
 bank shall have used due diligence in other respects in connection with the 
 collection of such instrument." 
 
 Correspondent Bank Liable to Forwarding Bank for Delay in 
 Tracing and Reporting on Items Sent It for Collection. 
 
 A bank sends to its correspondent for collection and credit a number of 
 checks drawn on different localities. These items are properly credited, 
 and the forwarding bank so notified. After a year elapses the correspond- 
 ent bank advises the forwarding bank of the loss of one of the checks, and 
 requests duplicate. Duplicate can not be secured, and the correspondent 
 bank then notifies the forwarding bank that it will charge the amount of 
 the check to its account. Has it the right to make such a charge ? 
 
 A bank which acts as collecting agent for another bank must 
 use reasonable diligence and care, and if in consequence of a fail- 
 ure to do so a loss occurs, it is liable. This is the well-recognized 
 and established rule. Quoting from Morse on Banks and Bank- 
 ing, 252 : 
 
 "If a bank fails to do its duty in the matter of collection with 
 reasonable skill and care, it is liable for the damage resulting to 
 any party interested in the paper, whether his name appears on 
 the paper or not." 
 
 Reasonable diligence requires that a bank undertaking collec- 
 tion of checks must ascertain within a reasonable time 
 whether checks are paid, and, if not, advise the customer 
 from whom the check was received to that effect, and a delay in 
 making such inquiry and failure to notify the party interested 
 imposes a liability if loss is thereby occasioned. In one case it 
 was held that a delay of fifteen or sixteen days in making inquiry 
 and giving notice was inexcusable, and that the bank was liable. 
 First National Bank of Trinidad v. First National Bank of
 
 OPINIONS OF THE; GENERAL COUNSEL. 307 
 
 Denver, Fed. Cases, No. 4810. In another case a delay of twelve 
 days in discovering the loss and of fourteen days in notifying the 
 forwarding bank was held sufficient to charge the collecting bank 
 with negligence and to render it liable, a loss having resulted. 
 Shipsey v. Bowery National Bank, 59 N. Y. 485. Both of these 
 cases are cited with approval by Mr. Morse in the section referred 
 to above. 
 
 Of course, if the loss of the check resulted from the negligence 
 of the correspondent bank itself, it would undoubtedly be liable 
 for any damage which might be occasioned thereby, and under the 
 authorities above cited, if the loss occurred in the mails or entirely 
 without the fault of the correspondent bank or its agents, it would 
 still be liable for its failure to follow up the check, ascertain the 
 loss, and report to the forwarding bank. The correspondent bank, 
 therefore, would not be authorized to charge to the account of the 
 forwarding bank the amount of the check, for the loss of which it 
 was responsible. 
 
 Bank May Require Identification of Party Indorsing Name 
 of Payee, Although One of Its Regular Customers, Upon 
 Check Forwarded Through Another Bank, and Is Not 
 Liable for Loss Resulting from Delay Caused Thereby. 
 
 A bank issued a cashier's check to a regular customer, which was sub- 
 sequently forwarded to it by another bank with this indorsement : "For 
 collection. Pay on signature only. Party is stranger to. us." The bank 
 issuing this check had the customer's signature on file, but was not en- 
 tirely sure the indorsement was genuine. If such bank paid the check, 
 could it hold the forwarding bank liable in the event the indorsement 
 proved to be a forgery? Could the bank issuing the check decline payment 
 until the customer was properly identified and be relieved of liability to 
 him for any loss resulting from the delay caused thereby? 
 
 I do not think the bank forwarding the check could be held 
 liable. It did not cash the check, but simply sent it to the bank 
 issuing it for collection, putting such bank on notice, by its in- 
 dorsement on the check that it did not cash it and did not under- 
 take to guarantee the genuineness of the signature. Where a 
 bank cashes a check drawn on another bank, it is supposed to have 
 the party to whom it pays the money properly identified before 
 making payment, and when it indorses the check it guarantees all 
 prior indorsements. But in this case the check does not seem 
 to have been cashed, but simply accepted for collection and for- 
 warded with the information that it had not been cashed and that 
 the forwarding bank was undertaking simply to collect for a party
 
 308 PARK'S BANKING LAW OF GEORGIA. 
 
 whose signature it could not vouch for and for the genuineness of 
 which it assumed no responsibility. 
 
 A bank is expected to know its depositors' signatures and to take 
 the risk of paying on forged signatures. This applies, however, 
 to signatures on the customers' checks rather than to their signa- 
 tures on other papers. I do not think there would be any burden 
 on a bank to know the indorsement of a party, although he might 
 happen to have a deposit account with it and his genuine signa- 
 ture might be on file. This signature would. generally afford the 
 means of determining whether or not an indorsement was genu- 
 ine, but if the bank were doubtful about the signature I think it 
 would be justified in holding the check until the genuineness of 
 the indorsement could be established. And if there was any 
 reason to doubt the genuineness of the signature, and the bank 
 held the check in order that the signature might be properly 
 identified or its genuineness established, I do not think it would 
 be liable for damages occasioned by this delay, assuming, of 
 course, that it exercised reasonable diligence to secure the identi- 
 fication promptly. 
 
 CONDITIONAL BILL OF SALE. 
 
 Conditional Bill of Sale Retaining Title to Personalty Cannot 
 Be Treated as a Mortgage or Foreclosed as Such. 
 
 A conditional bill of sale retaining title to personal property sold, also 
 contains a provision authorizing the vendor to treat the instrument as a 
 mortgage and to foreclose the same in the way that chattel mortgages are 
 foreclosed. Is this option in the instrument valid and enforceable? 
 
 It is not, the Supreme Court of Georgia has decided : 
 
 "Where sellers of personal property took from the buyer a written 
 instrument'promising to pay the unpaid purchase money and agreeing 
 that the title to the property should remain in the sellers until pay- 
 ment in full, and in the instrument was inserted an agreement by 
 the buyer, that upon default in payment the sellers might, 'in ad- 
 dition to any other remedies provided by law for the enforcement 
 of the collection hereof, at their option elect to treat this instru- 
 ment as a mortgage upon the property title to which is retained 
 by the said (sellers) by the terms hereof, and upon the execution 
 of a bill of sale to the maker or makers hereof to such property, 
 and the filing and recording of such bill of sale in the office of the 
 clerk of the Superior Court * * * shall give the right to 
 the said (sellers) to proceed to foreclose this instrument as a 
 mortgage upon said property, together with the other property
 
 OPINIONS OF THE GENERAL COUNSEL. 309 
 
 herein mortgaged, in the same manner as mortgages upon per- 
 sonal property are foreclosed under the laws of this State/ the 
 parties could not by such an agreement make the instrument one 
 both retaining title and not retaining title; nor could they by 
 such agreement make a summary statutory proceeding applicable 
 by law to one character of instruments applicable by agreement to 
 another." Wynn & Robinson v. Tyner, 139 Ga. 765 (2). 
 
 It should be remembered that bills of sale to secure debt, where 
 the amount secured is less than $100, can be foreclosed as chattel 
 mortgages under the statute. Park's Ann. Code, 3298. 
 
 CONFEDERATE MONEY. 
 
 Passing Not in Violation of United States 'Statutes. 
 
 What is the penalty for passing or attempting to pass Confederate 
 money ? 
 
 In answer to this question I quote first from a case decided 
 some little time ago by a Federal court sitting in North Dakota: 
 
 "The passage of a Confederate! bill as money is not a violation 
 of the fourth clause of Rev. St. 5430, which makes it an offense 
 for any person, except under authority of a proper officer, to have 
 in his possession 'any obligation or other security engraved and 
 printed after the similitude of any obligation or other security 
 issued under the authority of the United States, with intent to 
 sell or otherwise use the same;' but, to constitute a violation of 
 such provision, the instrument used must in its inception have 
 been intended to simulate some obligation or security of the 
 United States. The general likeness which one form of paper 
 money bears to another is not sufficient." United States v. Bar- 
 rett, 111 Fed. 369 (1). 
 
 In another case it was held : 
 
 "An ordinary Confederate States five dollar note does not bear 
 to the national currency the 'similitude' contemplated in Rev. 
 St., 5430, notwithstanding such notes are frequently ac- 
 cepted by mistake as money." United States v. Kuhl, 85 Fed. 
 624 (D. C. Iowa). 
 
 In the case last cited it was held also that a Confederate bill 
 might, if it bore a marked similarity to national currency, violate 
 the statute of the United States, but that the ordinary Confed- 
 erate note did not bear such similarity. 
 
 While it would not be a violation of the statute of the United 
 State ordinarily to pass a Confederate bill, such money might be
 
 310 PARK'S BANKING LAW OF GEORGIA. 
 
 used to perpetrate a fraud, and might be punished under our 
 statute against cheating and swindling, the statute being broad 
 enough in its terms to cover any means or device by which one 
 person defrauds, cheats, or swindles another. Passing such 
 money on a very ignorant person who could not read and who, 
 therefore, would not be able to tell that the bill offered was a 
 Confederate bill, or on a blind person, would be such a fraud. 
 The fact that the bill was a Confederate bill would make no 
 difference. Passing any kind of paper on another person as 
 money would be the same thing. 
 
 CORPORATE STOCK. 
 
 Transfer of Not Affected by Judgments Against Vendor. 
 
 Was not a law recently passed making corporate stock negotiable? Is 
 it necessary in lending upon stock to examine the records to see whether 
 there are judgments against the parties owning the stock? 
 
 I know of no recent act on the subject. The last statute was 
 passed in 1894 and is found in 6036, Park's Ann. Code. Under 
 this statute corporate stock is of a quasi negotiable character. After 
 being indorsed in blank it may be transferred freely from hand 
 to hand practically as a negotiable instrument, and the purchaser 
 or pledgee can hold regardless of a judgment against the original 
 owner, although that judgment may have been entered prior to 
 the transfer. 
 
 The following quotation is from the case of Owens v. Atlanta 
 Trust and Banking Company, 122 Ga. 521, 523 : 
 
 "Stock in a corporation is a chose in action. In the absence of 
 a statute it would not be subject to levy or sale. By the Act of 
 1822, the lien of a judgment against the shareholder attached 
 from the date of its rendition, but had to be kept alive by giving 
 notice within twenty days to the corporation. This policy is re- 
 versed by the Civil Code, 6035. The lien now does not attach 
 to the stock upon the rendition of the judgment, but only after 
 notice acting as a sort of garnishment on the corporation, or 
 withholding the lien until levy as under the Civil Code, 3701. 
 Until this notice is received the statute recognizes that the com- 
 pany may make transfers notwithstanding the existence of a 
 judgment against the shareholder. The quasi negotiable char- 
 acter of stock, the fact that certificates indorsed in blank may and 
 dp pass from hand to hand, and the necessity of preserving the 
 rights of that large body of the public who buy and lend on
 
 OPINIONS OF THE GENERAL COUNSEL. 311 
 
 the faith of shares, was no doubt the reason for the change made 
 by the Code in the Act of 1822." 
 
 Under this decision, it would not be necessary for a bank to 
 examine the execution dockets to determine whether judgments 
 had been rendered against the pledger of stock. 
 
 Corporate Stock When Transferred as- Collateral Should Be 
 Accompanied by Power of Attorney. 
 
 Where corporate stock is transferred as collateral is a simple indorse- 
 ment of the stock sufficient, or is it necessary that a power of attorney, 
 such as is usually printed on the back of a stock certificate, should be 
 signed? 
 
 A power of attorney should be given. This power can be left 
 in blank, however, having only the signature of the stockholder, 
 which should be witnessed. It is not necessary that the power 
 of attorney on the back of the certificate should be signed. A 
 separate power of attorney can be given and attached or filed 
 away with the certificate. There is usually, however, no reason 
 why the regular form of power of attorney on the back of the 
 certificate should not be used. 
 
 COUNTY LOANS. 
 
 County Authorities Have No Power to Borrow Money for 
 Current Expenses. 
 
 Can county commissioners lawfully borrow a sum of money on their 
 note payable December 31 of the current year, the transaction being for 
 the purpose of raising money to cover running expenses of the county for 
 the year and also old debts ? 
 
 The precise question has been decided by the Supreme Court, 
 the Court having held distinctly that the county commissioners 
 have no such authority. I quote from the case of Butts County v. 
 Jackson Banking Company, 129 Ga. 801 : 
 
 "County commissioners have no authority to contract in behalf 
 of a county for a loan of money (not to supply a casual deficiency 
 of revenue) to be used in defraying current expenses, although 
 the notes which evidence the loan be payable within the current 
 year, and the general design be to discharge them from the antici- 
 pated revenue of that year."
 
 312 PARK'S BANKING LA"W OF GEORGIA. 
 
 In discussing what are "casual deficiencies of revenue" for 
 which a county may borrow money without the approval of the 
 qualified voters at an election regularly held for the purpose, the 
 court in Lewis v. Lofley, 92 Ga. 804, says : 
 
 "The word 'casual' means that which happens by accident or is 
 brought about by an unknown cause ; and we think the f ramers 
 of the Constitution, in using this language, meant some unfore- 
 seen or unexpected deficiency, or an insufficiency of funds to meet 
 some unforeseen and necessary expense." 
 
 In the case of Hall v. Greene County, 119 Ga. 253, the court 
 held that loans made to pay court and jail expenses, expenses 
 of working a chain-gang on public roads, and other current ex- 
 penses, the money having been borrowed to be repaid within the 
 year from the taxes of that year, were unauthorized. Quoting 
 from the opinion : 
 
 "There is no authority whatever in our law authorizing county 
 authorities to make any such loans as the one disclosed by this 
 record." 
 
 The paragraph of the Constitution covering the subject was di- 
 rectly under consideration by the court in the cases above cited. 
 The paragraph provides in terms that no new debt shall be in- 
 curred, except for temporary loans to supply casual deficiencies of 
 revenue, without the assent of two-thirds of the qualified voters 
 at an election held for the purpose. The same paragraph ap- 
 plies to municipal corporations. In construing this section, in a 
 case brought against a municipal corporation, the court in Tate v. 
 Elberton, 136 Ga. 302 (3), says: 
 
 "This does not authorize municipal authorities to borrow money 
 (not to supply casual deficiencies of revenue) for the purpose of 
 using it during the year in defraying current expenses as occasion 
 may arise, and to give notes therefor." 
 
 COUNTY WARRANTS. 
 
 Order of Payment. 
 
 In what order must a county treasurer pay warrants issued by the county 
 commissioners? 
 
 The method of handling county warrants is prescribed by 
 579 Park's Ann. Code, which I quote : 
 
 "When there are funds enough to pay all outstanding orders 
 and other forms of indebtedness due, which the treasurer may be
 
 OPINIONS of THE GENERAL COUNSEL. 313 
 
 authorized to pay, they may be paid indiscriminately without re- 
 gard to their dates; when there is enough to pay all dated an- 
 terior to some particular dates, all such may be likewise paid in- 
 discriminately ; when there is not enough to pay all of equal 
 degree, they shall be paid ratably ; under all other circumstances, 
 they shall be paid in the order of their dates." 
 
 I quote also 581 and 582 in reference to orders carried over 
 from one year to the next : 
 
 "If any person holding county orders shall fail to present them 
 by the first day of December of each year to the county treasurer 
 for payment, they shall be postponed to all orders which were so 
 presented and not paid for want of funds." 
 
 "On the first day of December of each year such treasurer 
 shall make an entry of all orders entitled to payment which were 
 not so presented for payment, and what orders not of equal dig- 
 nity have been paid instead, in whole or in part, and what others 
 are entitled to payment before such nonpresented orders. Persons 
 holding such orders, who present them without receiving their pay 
 before said day, may have the treasurer annually to mark thereon 
 'presented/ the day of presentation, and 'not paid for want of 
 funds.' " 
 
 These three sections of the Code fully answer the question. 
 
 Warrants Do Not Bear Interest? 
 
 Do county warrants bear interest? 
 
 No. The question has been expressly decided in the case of 
 the First National Bank v. Owens. 147 Ga. 599 
 
 Rule changed, 7 per cent inter- 
 est provided. Act 1 920, page 65 
 
 School Warrants to Pay Teachers' Salaries Are Valid. 
 
 Are school warrants issued by county boards of education valid? 
 
 These warrants are issued under authority of an act of the 
 legislature passed in 1910, Park's Ann. Code, 1548 (a), which 
 gives to the county boards of education of the several counties the 
 authority to borrow a sufficient amount of money to pay the sal- 
 aries of teachers in the public schools of their counties for the 
 current school year, the authority being limited to the amount 
 to which the county may be entitled from the public school fund. 
 In order to be valid, these warrants must be authorized by a reso- 
 lution of the board of education entered upon its minutes, the 
 resolution stating the amount of money to be borrowed, the length
 
 314 PARK'S BANKING LAW OF GEORGIA. 
 
 of time, the rate of interest, the purpose of the loan and the name 
 of the lender. The notes must be signed by the president of 
 the board of education and the county school commissioner. If 
 the warrants are drawn in accordance with the statute, the loans 
 are valid and collectible. 
 
 Whether Warrants May Be Applied to Payment of Taxes Not 
 
 Decided. 
 
 Would county authorities be obliged to receive in payment of taxes 
 county warrants given for labor and merchandise? 
 
 Apparently the question has not been decided by the courts in 
 Georgia. The Cyclopedia of Law and Procedure, Volume XI, 
 p. 542, says : 
 
 "County warrants have been held to be receivable in discharge 
 of county or city revenue, license, tax, assessment, fine, penalty, 
 or forfeiture, etc." 
 
 The cases cited in support of the text, however, seem all to 
 depend on the statutes of the particular States. In a number of 
 States it is expressly provided that county warrants shall be re- 
 ceivable for taxes and other governmental charges. I believe 
 that every case cited in support of the text depends on one of 
 these special statutes. Therefore, they are without any real 
 bearing on the question. 
 
 I doubt very much whether, except where provided by statute, 
 a county warrant may be offset against a claim for taxes. These 
 warrants are not notes or obligations of the county, but are simply 
 orders of the ordinary or commissioners of the county on the 
 treasurer, and are given primarily to advise the treasurer that the 
 account of the holder of the order has been properly authorized, 
 audited and allowed, and, therefore, that the treasurer is au- 
 thorized to pay it. The orders are not payable at any fixed time, 
 it being contemplated that they shall be paid on presentation, 
 provided the treasurer has funds, and if not he is to note the fact 
 on the warrant; and such warrants as are not presented by the 
 first of December are postponed to those which are so presented. 
 
 There is nothing in the statute authorizing these warrants or 
 orders to be given to indicate that it was contemplated that they 
 should be used in the payment of claims again,st the county or 
 were themselves to be regarded as the obligations of the county. 
 As stated, they seem to be mere evidence for the benefit of the
 
 OPINIONS OF THE GENERAL COUNSEL. 315 
 
 treasurer that the accounts which they represent are proper 
 claims against the county, and they are his authority for making 
 payment thereof. 
 
 It should be remembered, too, that the tax collector collects not 
 only the county tax, but also the State tax. It would hardly do to 
 say that a county warrant could be used to pay the State tax, and 
 I fear if they were used to pay the county tax, separate and 
 apart from the State tax, considerable confusion might arise in 
 the handling of the county affairs. Such use of them would 
 probably permit one debtor of the county to receive payment 
 of his claim in preference and priority to other creditors holding 
 claims of equal dignity. 
 
 But as above stated, the question does not seem to have been de- 
 cided in Georgia, and there is no way to tell just what the courts 
 would hold in the event the question were raised. There would 
 be very good argument for the position that the taxpayer to whom 
 the county was indebted should not be required to pay his tax and 
 wait on the county to meet its obligation to him, but that the one 
 claim should be offset against the other. 
 
 CREDIT STATEMENTS. 
 
 Advantages of. 
 
 What is the advantage to a bank in securing credit statements from its 
 customers? 
 
 I am a great believer in a bank securing statements to be used 
 as a basis for fixing lines of credit. Such statements give in- 
 formation in a permanent form, which could hardly be obtained 
 by conversation with the customer. And even if the customer in 
 conversation gave the bank essentially the same facts as he put 
 in the statement, he would perhaps not be so accurate in these 
 verbal statements as he would be if required to reduce the state- 
 ments to writing. Then, too, in the absence of a written state- 
 ment, it would be simply a question of recollection between the 
 bank and the customer as to what the customer actually said; 
 whereas, if the bank has it in writing over the customer's own 
 signature, there can be no doubt as to what his statement was. 
 
 Another advantage in securing credit statements is the fact that 
 obtaining credit on the strength of a written statement, which is
 
 316 PARK'S BANKING LAW OF GEORGIA. 
 
 materially false, could be made the basis of a criminal prosecution, 
 or to defeat a discharge in bankruptcy. 
 
 Such a statement should show not only the customer's assets 
 and liabilities in detail, but all other facts in connection with his 
 business, as, for instance, the volume of business done, the amount 
 of cash and credit sales, the expenses, margin of profit, and any 
 and all other matters which would enable the banker to determine 
 whether or not the business being conducted is a profitable one 
 or one likely to succeed. Where the business is that of a partner- 
 ship or a small private corporation, statements as to the indi- 
 vidual assets and liabilities of the partners or officers of the cor- 
 poration should also be required. In giving the liabilities the 
 customer should be required to show what these Habilites repre- 
 sent, whether for the purchase of merchandise, borrowed money, 
 or outside indebtedness of any sort, how much of this indebted- 
 ness is due, whether any of it is secured, and how. Similar de- 
 tail information as to assets should be required. With such a 
 statement as this, the banker may intelligently fix a line of credit. 
 He may also in many cases be of material benefit to the customer, 
 pointing out to him wherein his business is not being properly con- 
 ducted or wherein its weakness lies, getting him to cut off this or 
 that expense, to get this indebtedness shaped up and carried in 
 better form. 
 
 Where such statements are kept from year to year, a com- 
 parison of the statements will enable the banker to determine 
 whether the business is making any headway, and whether or 
 not the demands and requirements of the customer are proper or 
 necessary for the conduct of the business. A bank frequently 
 does a customer injustice by giving him a too liberal line of 
 credit, and many a failure, resulting not only in disaster to the 
 customer but loss to the bank, would be avoided by keeping the 
 customer within proper limits. This can best be done by a careful 
 study of his business needs and requirements, which can only be 
 made from carefully compiled information in regard to the finan- 
 cial condition of the business. One of the great troubles with 
 many business houses is that they do not know their own con- 
 dition, and so long as they can get credit from the bank they 
 continue to do business, frequently getting deeper and deeper in 
 debt, and finally fail, generally subjecting the bank to considerable 
 loss, when, if they had known what the true condition was and 
 had their line of credit limited to real requirements, they would 
 probably have been successful.
 
 OPINIONS OE THE; GENERAL COUNSEL. 317 
 
 CROP MORTGAGES. 
 
 Mortgage on Crop for Supplies Superior to Older Judgment. 
 How Crop Subject to Both Should Be Handled. 
 
 It being provided in 3349 of the Code that mortgages given to secure 
 advances for supplies in making a crop are superior to judgments, although 
 of older date, how can a crop, which is subject to such mortgage and also 
 to judgments, be safely marketed? 
 
 The effect of this section is simply to postpone judgment liens 
 to the liens of mortgages for supplies. The section does not di- 
 vest the judgment liens, but leaves the crop subject to them in 
 the same way and to the same extent as it was before, merely 
 postponing the judgment to the mortgage. The situation is pre- 
 cisely the same as though after the mortgage was given a judg- 
 ment should be obtained against the mortgagor and properly re- 
 corded. 
 
 A mortgage is only a lien upon the property covered thereby, 
 and does not convey title. A judgment is also a lien. The Su- 
 preme Court has held that a judgment lien can not be divested 
 by a subsequent conveyance of property, although such convey- 
 ance is made in satisfaction of a prior mortgage lien. I quote 
 from the case of Maclntyre v, Ferst's Sons & Company, 101 Ga. 
 682: 
 
 "Where a creditor whose debt is secured by mortgage, in satis- 
 faction of such debt, takes a conveyance of the property mort- 
 gaged, such conveyance is not effectual to vest in him a title which 
 would prevail upon the trial of a claim afterwards filed by such 
 creditor to prevent the sale of such property under an execution 
 issued upon a judgment junior to the mortgage but older than the 
 deed." 
 
 It will be seen from this decision, therefore, that where there 
 are judgments against the mortgagor of a crop, the holder of the 
 mortgage can not take the crop and apply it in satisfaction of his 
 debt, so as to defeat the judgment, although his lien may be su- 
 perior to the lien of the judgment. The only way that a judgment 
 lien can be divested would be by a foreclosure of the mortgage 
 and a sale of the property. As the cotton would be subject, both 
 to the lien of the mortgage for supplies and also to a duly re- 
 corded judgment, it could not be pledged either directly or by the 
 hypothecation of a warehouse receipt, so as to defeat the lien 
 either of the mortgage or the judgment, and, of course, it could 
 not be sold so as to defeat either lien.
 
 318 PARK'S BANKING LAW OF GEORGIA. 
 
 It is probably well to remember that 3349 only makes superior 
 to older judgments a technical mortgage, and it has been held that 
 a bill of sale given to secure a debt, although the debt is for sup- 
 plies furnished to make a crop, is not superior to older judgments. 
 I quote from a decision by the Court of Appeals : 
 
 "The lien of a judgment duly recorded on the general execu- 
 tion docket is, after the maturity of a growing crop of the de- 
 fendant in fi. fa., superior to the title thereto obtained through 
 a bill of sale to secure a debt, executed by the defendant in fi. fa. 
 to a third person after the judgment is recorded, but before the 
 crop is mature. 
 
 The Act of December 21, 1899 (Park's Ann. Code, 3349) pro- 
 viding that mortgages given to secure supplies necessary to make 
 a crop shall be superior to older judgments, does not include 
 within its purview bills of sale given to secure such supplies." 
 Hixon v. Callaway, 2 App. 678. 
 
 Crop Mortgages Must Be Attested as Mortgages on Real 
 
 Estate. 
 
 Does a crop mortgage in Georgia require two witnesses, one of whom 
 must be a duly authorized officer? 
 
 My information is that crop mortgages in Georgia are ordina- 
 rily attested as are chattel mortgages, crops being popularly con- 
 sidered as personal rather than as real property. The legal status 
 of a growing crop has given rise to much uncertainty and con- 
 tradiction in the law. The decisions are spoken of by Chief Jus- 
 tice Simmons as constituting a "mystic maze." The Chief Jus- 
 tice says : 
 
 "We are free to confess, about the only deduction we have been 
 able to draw therefrom is that a growing crop is a sort of legal 
 species of chameleon, constantly changing color to meet the 
 emergency of each particular class of cases in which the question 
 arises whether it is to be considered as personalty or as realty." 
 Bagley v. Columbus Southern Railway Company, 98 Ga. 626. 
 
 In this case, which involved the sum of $6.00, it required an 
 opinion of twenty printed pages for the Supreme Court to reach 
 the conclusion which it finally did, that a crop in Georgia is a part 
 of the land upon which it is growing, and is not personal property. 
 This decision has been several times followed by the Supreme 
 Court and the Court of Appeals. 
 
 The last reported case, decided February 13, 1919, is that of 
 Newton County v. Boyd, 98 S. E. 347, in which it is said :
 
 OPINIONS OF THE GENERAL COUNSEL. 319 
 
 "A crop of corn not detached from the soil, whether mature 
 or immature, is a part of the realty and passes, by sale of the land, 
 without contractual reservation of the crop." 
 
 A corp under these decisions being a part of the land is re- 
 garded as real property and not as personal property. Under the 
 Code, a mortgage of land, or any interest therein, must be at- 
 tested by two witnesses, one of them being an officer. Crop mort- 
 gages must, therefore, be attested like any other mortgages of 
 real estate, though, as above stated, it has not been customary in 
 Georgia to so attest them. 
 
 Crop must Be Up and Growing Before It Can Be Mortgaged. 
 
 What is the advantage of waiting until May ist to take a crop mortgage? 
 Should such a mortgage be recorded? 
 
 A crop cannot be mortgaged until it is up and growing. It is 
 not considered a crop until that time, and, therefore, is not the 
 subject of mortgage, the law requiring that the property mort- 
 gaged shall be specifically described in the mortgage itself. Redd 
 v. Burrus, 58 Ga. 574. 
 
 The reason for recording such a mortgage is to preserve its 
 priority over other mortgages and liens. It is true that under 
 3349, Park's Ann. Code, "The liens of mortgages on crops 
 which mortgages are given to secure the payment of debts for 
 money, supplies and other articles of necessity, including live 
 stock, to aid in making and gathering such crops, shall be superior 
 to judgments of older date than such mortgages." But these 
 mortgages would rank as between themselves according to the 
 record, unless the junior mortgagee had notice of the existence 
 of the prior mortgage. 
 
 Mortgage of Peach Crop. 
 
 Can a valid lien be created in the latter part of January upon the year's 
 peach crop? If so, what description should the mortgage contain? 
 
 While the courts of Georgia seem never to have passed upon 
 the question as to whether a peach crop could be mortgaged as 
 early as the time indicated, I think a valid mortgage on such a 
 crop could be created. Park's Ann. Code, 3256, says that 
 a mortgage "may embrace all property in possession or to which
 
 320 PARK'S BANKING LAW OF GEORGIA. 
 
 the mortgagor has the right of possession at the time," and under 
 this section the Supreme Court has held that a crop planted and 
 up and growing may be mortgaged. I quote from the decision in 
 Stephens v. Tucker, 55 Ga. 543 : 
 
 "A mortgage executed in May, 1873, of six bales of cotton, 
 growing and being grown and produced on a plantation in Lee 
 County, known as the Jesse Tucker plantation, and cultivated 
 by the mortgagor, said bales to average five hundred pounds 
 each, to be covered with bagging and bound with iron ties, and 
 'to be delivered in good order and condition at the warehouse 
 of Welch, Bacon & Cook, in Albany, Georgia, on or before the 
 15th of October next,' is sufficiently specific in the description 
 of the particular bales mortgaged. 
 
 "If it be proved to the satisfaction of the jury, that six bales 
 of the crop of cotton so grown, ginned and packed, were delivered 
 at said warehouse, the cotton will be sufficiently identified as that 
 described in the mortgage, and will be subject to execution issued 
 thereon." 
 
 Other decisions in which this has been held to be the law are : 
 Redd v. Burrus, 58 Ga. 574; Crine v. Tifts, 65 Ga. 644; Kor- 
 syth Manufacturing Co. v. Castlen, 112 Ga. 199; Hall v. State, 
 2 Ga. App. 739. It appears from these decisions that a crop hav- 
 ing any actual or potential existence can be mortgaged. 
 
 Applying these decisions to the case of a peach crop, I think the 
 peaches could be mortgaged the latter part of January. I am 
 informed by peach growers that at that time buds can be seen 
 on the trees, and that they can tell with a reasonable degree of 
 certainty what sort of crop they will have, provided the cold 
 weather does not kill it. In view of this information, I should say 
 that a peach crop at the time indicated certainly has a potential 
 existence and that, therefore, a valid mortgage upon it can be cre- 
 ated. 
 
 It is usual in mortgaging a crop to describe it as "So many 
 acres of cotton or so many acres of corn," but I think under the 
 decision in Stephens v. Tucker, above quoted, a mortgage could be 
 taken on five hundred crates of peaches, the land on which the 
 peaches are raised being fully described so it could be identified.
 
 OPINIONS OF THE GENERAL COUNSEL. 321 
 
 Advantages of Reciting Purpose for Which Crop Mortgage 
 
 Is Given. 
 
 Where money is advanced on a crop mortgage, is it of advantage to 
 state in the mortgage that advance is for purpose of raising the crop, and 
 if so drawn, will mortgage be of equal dignity with landlord's lien for sup- 
 plies advanced to make the crop? 
 
 It is best that a crop mortgage taken to secure advances of 
 money or other things needed to make a crop should so state in 
 the mortgage itself. This is not necessary, for if the money 
 was in fact advanced for the purpose, it could be shown, but this 
 requires proof. Such a recital in the mortgage would estop the 
 mortgagor, or any one claiming through him, from questioning 
 the fact that the amount was advanced for the purpose of making 
 the crop. 
 
 The lien of a landlord for supplies furnished is superior to 
 such crop mortgage. See Park's Ann. Code, 3351. 
 
 CURRENCY. 
 
 Stamping Advertisement on, Criminal. 
 
 Is it contrary to law to use rubber stamp on currency imprinting on it 
 in ink such notations as "This bank insures your deposits. Bank of 
 A"? 
 
 Yes; the U. S. Criminal Code, 177, Rev. St., 5188, pro- 
 vides : 
 
 "It shall not be lawful * * * to design * * * any 
 business or professional card * * * in the likeness or simili- 
 tude of any bond, certificate of indebtedness, certificate of 
 deposit, coupon, United States note, treasury note, gold cer- 
 tificate, silver certificate, fractional note or other obligation or 
 security of the United States which has been or may be issued 
 under or authorized by any Act of Congress heretofore passed, 
 or which may hereafter be passed, or to write, print or otherwise 
 impress upon any such instrument, obligation or security, any 
 business or professional card, notice or advertisement, or any no- 
 tice or advertisement of any matter or thing whatever." 
 
 The penalty for violating the section is a fine of not more than 
 $500.00. 
 
 21
 
 322 PARK'S BANKING LAW OF GEORGIA. 
 
 DEPOSITS. 
 
 Payment of Deceased Depositor's Balance to His Heirs. 
 
 Can a bank safely pay over to the heirs at law of a deceased depositor 
 the amount of his balance, as well as the amount due on time certificates, 
 the heirs being all of age and the customer having left no debts? 
 
 Where the heirs are all of age and are laboring under no dis- 
 abilities, they can divide among themselves an 'estate, provided 
 there are no debts. The trouble about cashing the time certifi- 
 cates and paying out the deposits under such an arrangement as 
 this is, that it throws upon the bank the necessity of determining 
 whether there are any debts and whether the persons who make 
 the division are all of the heirs at law, and whether they are all 
 legally qualified to act. Where the parties are known and where 
 the heirs are themselves responsible, there is very little risk. If 
 the matter is to be handled in this way, each one of the heirs 
 should be required to indorse the certificate of deposit as heirs 
 at law of the decedent, and also to sign the check for the amount 
 of the deposit. If they hold a savings bank pass book, this should 
 be surrendered. They should also be required to sign a written 
 obligation, reciting that they are all of the heirs at law of the 
 deceased ; that they are all of age and otherwise sui juris; that the 
 deceased left no will, and there has been no administration on 
 his estate ; that he left no debts or that all of his debts have been 
 satisfied in full; and that the heirs are dividing among them- 
 selves his estate; and obligating themselves to protect and save 
 the bank harmless on account of the paying over to them of the 
 deposit and the cashing of the certificate. 
 
 This method is frequently adopted where the amount on deposit 
 is small, but it should be an invariable practice where the amount 
 is considerable to require the taking out of letters of administra- 
 tion and the filing with the bank of a certified copy ; then have 
 the money paid over to the administrator. Payment to an ad- 
 ministrator is a perfect protection to a bank, and it is the only 
 really safe way in which the account of a deceased person can be 
 closed. Temporary letters can be had on application and without 
 any delay, and the cost is inconsiderable. Usually bond can be 
 arranged among the heirs themselves. I think it always much 
 better to require the qualification of a temporary administrator, 
 at least, rather than to undertake to pay out any considerable sum 
 of money on the voluntary agreement of the heirs.
 
 OPINIONS OF THE GENERAL COUNSEL. 323 
 
 NOTE. The Banking Act of 1919, 192, makes special provision for the 
 payment of deposits of less than $100.00 when the entire estate does not 
 exceed $500.00 and no administration is had upon the estate. 
 
 Gift of Deposit to Take Effect at Death of Donor Can Only 
 Be Made by Will. 
 
 Can one, without making a will, have the title to money deposited by 
 him pass to another at his death? 
 
 A testamentary gift to take effect upon the death of the giver 
 can only be accomplished by will. A deposit, the depositor re- 
 taining control during his life, could not pass at his death to any 
 particular designated person unless provided for by will. 
 
 NOTE. The Banking Act of 1919, 183, provides that deposits made in 
 the name of two persons, payable to either, may be paid to the survivor in 
 case of death of the other. 
 
 On Insolvency of Bank Depositors Share Equally with Other 
 Creditors in Distribution of Its Assets. 
 
 Do all creditors of a bank share equally in its assets, or do the depositors 
 have a preferred claim on the general assets, or does the preference given 
 to depositors apply only to the double liability of the stockholders? 
 
 Depositors rank equally with other creditors so far as the 
 capital, property and assets of a bank are concerned. They have 
 no superior right to other creditors save as to the stockholders' 
 liability. The individual liability of the stockholders under our 
 statute is to depositors only. This was true under the old law, 
 and is also true under the Banking Act of 1919, 137. 
 
 Status of Depositor Not Changed by Payment of Interest on 
 
 Deposit. 
 
 Does a depositor who is paid interest on daily balances rank the same 
 as a depositor not drawing interest? 
 
 Payment of interest does not change the character of a deposit. 
 Interest-bearing deposits and those that do not bear interest are 
 on the same footing. 
 
 The Banking Act of 1919, 2, provides that the term "de- 
 positor" includes "any person who shall deposit money * * * 
 whether interest is allowed thereon or not."
 
 324 PARK'S BANKING LAW OF GEORGIA. 
 
 Deposit for Special Purpose May Be Checked Out by De- 
 positor for Other Purposes. 
 
 A depositor writes on one of his deposit slips "to cover draft of John 
 Doe also." The deposit is larger than the amount of the draft. This de- 
 posit is entered on the customer's regular account. The bank knows of 
 this particular draft. Would the bank be justified in declining to pay 
 checks presented in the regular course of business which would reduce the 
 depositor's balance to an amount less than the face of the draft? If the 
 bank should allow the balance checked out, would it be liable to the drawer 
 of the draft for not having reserved a sufficient fund to cover the draft? 
 
 A deposit may be made for a special purpose, and the bank 
 would be expected under these circumstances to hold the deposit 
 for that particular purpose. In the case mentioned, so much of 
 the deposit as was necessary to pay the particular draft specified 
 could properly be held by the bank to cover the draft ; but while 
 this is true, the bank would be under no contractural relation 
 with the drawer of the draft, and he would have no right to com- 
 plain if the amount was checked out. Of course, the bank might 
 make itself liable to pay the draft by accepting it or by being a 
 party to the contract by which the deposit was made for the pur- 
 pose of covering the draft, but where the bank had assumed no 
 direct obligation to the drawer of the draft, he would have no 
 right of action because the bank had allowed the deposit checked 
 out by the depositor. To illustrate, suppose a deposit is made for 
 a particular purpose, and thereafter the depositor changes his 
 mind about it, and comes to the bank and draws out the deposit. 
 There would seem to be no reason why he could not do this, the 
 bank having assumed no obligation to any one except the de- 
 positor himself. The bank would be justified in declining to pay 
 checks of the customer unless these checks clearly indicated the 
 purpose on the part of the customer to withdraw the special 
 deposit, but the payment of such checks would not make the bank 
 liable to any one except the depositor, and, of course, he could not 
 complain of the payment of his own checks. 
 
 Father Has No Right to Check Out Money Deposited in 
 Name of Minor Son. 
 
 Where a father deposits money in a bank to the credit of his minor son, 
 can the bank pay out the money on the father's check? 
 
 It has been held that a bank cannot pay out such deposit on the 
 father's check. In the case of Dickinson v. Leominster Savings 
 Bank, decided by the Supreme Judicial Court of Massachu-
 
 OPINIONS of THE GENERAL COUNSEL. 325 
 
 setts, 152 Mass. 51, 25 N. E. 12, which was a suit by a minor 
 against a bank for money deposited in her name and paid out 
 to her father, the court said: "The bank had no right to make 
 the payments to the father, if the deposits were absolutely the 
 property of the plaintiff, even if the father had made the de- 
 posits." 
 
 It is true, however, that a deposit of money in the name of a 
 person. does not conclusively show title in the person in whose 
 name the deposit is made. If the bank should pay out this money 
 on the father's checks, it might be permitted to show that the 
 money was deposited by the father in the name of the son merely 
 for convenience, and was not intended as a gift to the son, and 
 that nothing had in fact been done by the son or on his behalf in 
 the way of accepting the gift. If these things could be proved, 
 the bank might be protected in a suit brought by the son or on 
 his behalf. 
 
 In my opinion, however, the bank would take a very grave risk, 
 for it would certainly carry the burden of overcoming the prima 
 facie case made for the minor by the fact that the deposit stands 
 in his name. 
 
 The bank might pay out the money on the father's check upon 
 his giving a bond with good security conditioned to hold the bank 
 harmless against any claim which might thereafter be made by 
 the son or on his behalf. And of course the bank could pay out 
 the money on the check of a lawfully appointed guardian for the 
 son. 
 
 NOTE. The Banking Act of 1919, 185, provides : "A minor shall be 
 allowed to deposit money in bank in his own name, and the money so de- 
 posited shall not be subject to the control of his parent, guardian or trus- 
 tees, but may be drawn or checked out by the minor depositing the same 
 as though he were of full age." 
 
 Deposit in Two Names Presumed to Belong Equally to the 
 Two, but Since Banking Act of 1919 May Be Paid to the 
 Survivor. 
 
 What is the status of deposits made in the name of two persons, where 
 one of them dies and the bank was not advised as to the ownership of the 
 fund? 
 
 Where a deposit is made in the name of two persons, in the 
 absence of some information as to the real ownership, the law 
 would presume that the fund was owned in equal parts by the
 
 326 PARK'S BANKING LAW o$ GEORGIA. 
 
 depositors ; and on the death of one, his administrator would be 
 entitled to his share in the fund, and the other would have no 
 right to check out the balance. This would be true whether the 
 deposit was subject to the joint check of the parties or to the 
 check of either of them. 
 
 It has been held, however, that it is competent for parties 
 making a deposit to agree with each other and with the bank that 
 the fund deposited shall be subject to the check of either of the 
 depositors and to the check of the survivor on the death of 
 either of them, the contract being construed as amounting to a 
 gift inter v'vuos. In the absence of a distinct agreement, however, 
 upon the death of one of the joint depositors his interest in the 
 fund would go, not to the survivor, but to his administrator. 
 
 Since this was written the Banking Act of 1919 has been 
 adopted. Section 183 of this act provides that deposits made in 
 the name of two persons, payable to either, may be paid to either 
 whether the other be living or not. This is now the law in most 
 of the States. 
 
 DIRECTORS. 
 
 To Qualify as Such, Director Must Hold Stock in His 
 Own Right. 
 
 Can one holding stock in a bank as executor or administrator be elected 
 a director of the bank? 
 
 Directors of a bank, under the laws of Georgia, must be owners 
 in their own right of the requisite amount of qualifying stock. 
 The holding of stock as executor or in any other representa- 
 tive capacity would not constitute one a stockholder within the 
 meaning of the statute, and, therefore, one so holding stock could 
 not be made a director. See 146, Banking Act of 1919. 
 
 Amount of Stock Necessary to Qualify as Director in 
 National Bank. 
 
 A director in a national bank sells his stock to a corporation in which he 
 owns half the stock, under an agreement between himself and the cor- 
 poration, that eight shares of the bank stock are to remain in his name in 
 order that he may continue to act as a director of the bank. Can he 
 legally act as a director of the bank after such sale? 
 
 ' Under the circumstances stated, the director is not qualified 
 since the sale of his stock to act as a director. The provision
 
 OPINIONS of THE GENERAI, COUNSKL. 327 
 
 of the National Bank Act, 5146 of the Revised Statutes, is that: 
 
 "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 disqualified, shall 
 thereby vacate his place." 
 
 The next section of the Revised Statutes, which prescribes the 
 oath to be taken by directors, requires that a director must swear 
 "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." 
 
 It appears that the director in this case does not hold the re- 
 quired number of shares of stock, even if the arrangement were 
 otherwise legal. I do not think, however, that he would be quali- 
 fied to act as a director under the circumstances stated even if 
 there were ten shares of stock standing in his name in order to 
 qualify him as such director. He has in reality under that ar- 
 rangement ceased to be the owner of ten shares of stock, and is 
 not the owner in good faith and in his own right of the required 
 number of shares. He is therefore required, under the provisions 
 of the National Bank Act referred to, to vacate his place as di- 
 rector. 
 
 Approval of Loans by Directors. 
 
 At a directors' meeting loans made since the last meeting are reported, 
 the notes examined, and the loans approved and ordered to be entered on 
 the minutes as approved. Is such a form of approval or acceptance bind- 
 ing on the directors, and would the cashier be relieved of responsibility 
 for having made these loans? 
 
 I do not see how there could be any question about the matter. 
 The directors can confer upon the cashier the power to make 
 loans, and loans so made in good faith would not require any 
 further approval in order to bind the directors and relieve the 
 cashier of liability. Where the directors adopt the policy, either 
 under a by-law or by custom, of actually, at each meeting, going 
 over the loans and formally by resolution approving them, this 
 approval would certainly be binding, and would relieve the cashier 
 of any further liability for having taken these particular notes, 
 assuming always that the cashier acted in good faith. It should 
 be remembered that loans to officers, directors and employees 
 must be authorized in advance by the board of directors or by 
 a committee of the board authorized to act. Banking Act of 1919, 
 155, 156.
 
 328 PARK'S BANKING LAW OF GEORGIA. 
 
 Directors May Delegate to Committee Authority to Make 
 Loans and Transact Ordinary Business of the Bank. 
 
 How far can the board of directors of a national bank empower the 
 executive committee to act? If the board has no right to delegate au- 
 thority, can authority be delegated to a committee by an amendment to the 
 by-laws ? 
 
 The board of directors are the chosen representatives of a 
 bank. As such, they constitute the corporation to all intents and 
 purposes. What they do within the scope and object of the 
 corporation is the act of the corporation itself. They can not 
 abrogate their authority nor delegate the authority which has 
 been delegated to themselves by the charter and by-laws. They 
 have the right to appoint committees, agents and offcers, and 
 confer upon them executive authority, so long as they do not ab- 
 rogate their own power or relieve themselves of responsibility. 
 If it is intended that authority should be permanently exercised, 
 either by a committee or by the officers of a bank, the by-laws 
 should so provide. It is not unusual. In fact, in many institu- 
 tions executive or finance committees are provided for by the by- 
 laws, which committees exercise in large measure the powers of 
 the bank, making loans, discounting paper, borrowing money, and 
 generally transacting almost all of the business of the bank. Such 
 committees report their action to the board, and the board by 
 adopting the report of the committee adopts its acts, and makes 
 them the acts of the board itself. When done in this way, there 
 can be no objection to the appointment of an executive or finance 
 committee, and as a small committee can much more readily be 
 gotten together, and can act much more quickly, and frequently 
 more intelligently than a large board, the desirability of appoint- 
 ing such a committee is manifest. 
 
 A Director Who Is an Indorser of the Bank's Paper Is Not 
 Relieved of His Liability upon His Resignation and the 
 Sale of His Stock. 
 
 Is a director of a bank who has indorsed the bank's paper released from 
 his indorsement when he sells his stock and thereby ceases to be a di- 
 rector? 
 
 The sale of the stock would in no way affect the liability al- 
 ready assumed. It can readily be seen that if it were otherwise 
 all the directors could resign and the bank lending the money 
 would in that event have no security whatever for its advances
 
 OPINIONS OF THE GENERAL* COUNSEL. 329 
 
 other than the liability of the bank itself. Unless the holder of 
 the paper consented, the director would remain liable regardless 
 of the sale of the stock. 
 
 DISCOUNTS. 
 
 At Seven Per Cent, or More, the Amount Reserved Not Ex- 
 ceeding Eight Per cent., Not Usurious Though Not in 
 Writing. 
 
 Is discount by a bank at seven per cent, illegal unless a higher rate is 
 agreed on in writing? 
 
 Park's Ann. Code, 3426, provides that : "The legal rate of in- 
 terest shall be seven per cent, where the rate per cent, is not named 
 in the contract, and that any higher rate must be specified in writ- 
 ing, but in no event to exceed eight per cent, per annum." 
 
 Under the decisions of the Supreme Court, however, where a 
 bank discounts paper at seven per cent., this section of the Code is 
 not violated, provided the discount charged does not exceed eight 
 per cent. I quote from two decisions on the question. 
 
 In Tribble v. Anderson, 63 Ga. 56, it was said : 
 
 "It was, however, insisted, as matter of law, that when the 
 statute allowed a conventional rate of interest higher than the 
 general rate, on condition that the contract therefor was in writ- 
 ing, the rate stipulated for or agreed on had to be expressed in 
 the writing, and that to add the principal and interest together, 
 giving a note for the aggregate, would not be a compliance with 
 the statute. We think otherwise. The statute merely intended to 
 distinguish between written and parol contracts, declaring the 
 former effectual and the latter not. The promise to pay might 
 be so much in a round sum, provided the statutory limit as to 
 rate was not exceeded, and if the promise and the sum were evi- 
 denced by writing the contract would be in writing." 
 
 Following this in the case of Green v. Equitable Mortgage 
 Company, 107 Ga. 536, the Supreme Court, construing the Code 
 provision on this subject, said: 
 
 "The statutory provision, that 'Any higher rate [than seven 
 per cent.] must be specified in writing, but in no event to exceed 
 eight per cent, per annum,' is, in a given instance, substantially 
 complied with, if in fact the lender does not contract to receive 
 more than eight per cent, per annum for the use of the principal 
 advanced. The contract in this case was not usurious."
 
 330 PARK'S BANKING LAW OF GEORGIA. 
 
 Officer or Director Cannot Discount Paper Payable to 
 
 Himself. 
 
 What is the law with reference to an officer and director of a bank 
 discounting with the bank notes payable to himself, where the amount of 
 such discount does not exceed ten per cent, of the capital and surplus, the 
 officer and director being a member of the finance committee, which passes 
 on the paper? 
 
 An officer of a bank has no right to lend to himself, although 
 he may have the general authority to make loans. He cannot 
 represent the bank and deal with himself. The same rule would 
 apply to the discount of paper as to making direct loans. A bank 
 can discount papers payable to an officer or director, provided 
 it is not by so doing violating the section of the Code prohibiting 
 the lending to an officer without good collateral or other ample 
 security. In other words, if the paper itself is good, there would 
 be no reason why the bank could not buy it, but it should not buy 
 it on the strength of the officer's name alone. Where a loan is 
 being made to a member of the finance committee, such member 
 must not act in passing on the loan, and the loan must be ap- 
 proved by the written signature of the majority of the directors 
 or of the committee authorized to act. Sections 155 and 156 of 
 the Banking Act of 1919 fully cover the question. 
 
 DIVIDENDS. 
 
 Directors, Not Stockholders, Declare Dividends. 
 
 Who has the authority to declare dividends from the profits of a bank, 
 the directors or the stockholders? 
 
 I quote from Cook on Corporations, p. 1471 : 
 
 "The board of directors declare the dividends, and it is for the 
 directors, and not the stockholders, to determine whether or not 
 a dividend shall be declared." 
 
 The authority is expressly conferred on the directors by 173 
 of the Banking Act of 1919.
 
 OPINIONS OF THE GENERAL COUNSEL. 331 
 
 To Whom Payable Upon Transfer of Stock Between Date of 
 Declaration and Date of Payment. 
 
 Who is entitled to dividends on stock transferred after the dividends 
 are declared but before they are payable? 
 
 I quote from Machen on the Modern Law of Corporations, 
 1370 and 1375 : 
 
 "The person who is the registered holder at the time the divi- 
 dend is declared is the person in whom, so far as the company is 
 concerned, the right to the dividend vests. This is true even 
 where the dividend is made payable at some later date. ' * * * 
 As between transferor and transferee of shares, the right to 
 dividends is of course a mere matter of mutual agreement. The 
 legal presumption is that the parties to a contract of sale of shares 
 intend that all dividends and bonuses declared after the making 
 of the contract, whenever the profits out of which they are de- 
 clared may have been earned, shall belong to the transferee and 
 that all dividends and bonuses declared prior to that time, even 
 though not payable until afterwards, shall go to the transferor." 
 
 I think this completely answers the question. 
 
 Pledgee Entitled to Dividends on Stock Held as Collateral. 
 
 Where stock is pledged as collateral, is the holder entitled to collect 
 the dividends ? If the corporation is in liquidation is the pledgee entitled 
 to the liquidation dividends? 
 
 This question is answered in the case of Guarantee Company of 
 North America v. East Rome Town Company, 96 Ga. 511, as 
 follows : 
 
 "Where stock of an incorporated company is pledged by the 
 owner as collateral security for the payment of a debt, the pledgee 
 is, as a general rule, entitled to collect and receive the dividends 
 thereon, unless this right is reserved by the pledger at the time 
 the pledge is made." 
 
 The pledgee or collateral holder should give notice to the cor- 
 poration, and is thereafter entitled to demand and receive the 
 dividends declared on the stock. 
 
 It is equally true that where a corporation is in liquidation, the 
 liquidation dividends should be paid to the person holding stock 
 in the corporation as collateral security, and not to the pledger.
 
 332 PARK'S BANKING LAW OF GEORGIA. 
 
 Dividends Can Only Be Paid to Stockholder or His Legal 
 Representative, Although He May Have Disappeared and 
 His Whereabouts Been Unknown for Long Period. 
 
 Where a stockholder of a bank has disappeared, and his family know 
 nothing of his whereabouts, and nobody knows where his stock certificate 
 is, can the bank turn over to his father dividend checks which have ac- 
 cumulated during the stockholder's absence? 
 
 The bank can not pay over dividends to the father of the 
 stockholder except at its own risk. If the stockholder has been 
 absent and unheard of for more than seven years, the law would 
 presume that he is dead, and his estate could be administered 
 and the stock sold as a part thereof. But if he has not been ab- 
 sent for that long a period, the presumption is that he is still in 
 life and will sooner or later claim his stock and -the dividends 
 thereon. In the event he should do so, the payment to the father 
 would not be any protection. It is possible, also, that he may have 
 transferred his stock to some one else, in which event, while pay- 
 ment to the stockholder of record would be a protection, payment 
 to the father, who is not a stockholder, would not be. 
 
 If the stockholder has been absent for a long period and there 
 is not, as a matter of fact, much probability of his ever returning, 
 the bank might take the risk of paying the dividends to the father, 
 taking from him a bond, or, if his solvency is sufficient to justify 
 it, his personal obligation, to reimburse the amount paid, with 
 interest and any expenses or costs which might accrue on account 
 of the payment. Whether this would be wise would depend en- 
 tirely on the circumstances of the case. 
 
 DRAFTS. 
 
 Liability of Drawer After Acceptance Is Secondary, Acceptor 
 Being Primarily Liable. 
 
 What is the liability of the drawer of a draft after acceptance? 
 
 I quote in substance from Parmelee v. Williams, 72 Ga. 42 : 
 
 "Where a negotiable draft was drawn and accepted by the 
 drawees, after negotiation the acceptors were primarily and abso- 
 lutely bound therefor to the holder. The drawer was bound to 
 pay if the acceptors did not. As to the holder, the acceptors may 
 be regarded as makers and the drawer as first indorser." 
 
 This is the well recognized rule.
 
 OPINIONS OF THE GENERAL COUNSEL. 333 
 
 After Collecting Draft and Delivering Order Notify Bill of 
 Lading, Bank Cannot Hold Amount Paid by Request of 
 Drawee as Money Belongs to Owner of Draft. 
 
 Drawee of draft with bill of lading order notify a third party attached 
 pays draft to bank holding it for collection and bill of lading is delivered 
 to him. Subsequently the third party refuses shipment on ground goods 
 are not as ordered. Drawee notifies collecting bank not to remit for draft, 
 but refuses to return bill of lading unless reimbursed for his loss in the 
 transaction. Forwarding bank demands remittance or return of bill of 
 lading. What course shall collecting bank pursue ? 
 
 The purpose of shipping goods to the order of the shipper and 
 attaching bill of lading to the draft on the purchaser is to retain 
 title in the shipper until the goods are paid for. In the case stated, 
 as soon as the drawee paid the draft and took up the bill of lading, 
 title to the property passed from the shipper to him, and, of 
 course, the shipper was entitled to the proceeds of the draft, that 
 is, the purchase price of the property covered by the draft. The 
 collecting bank would have had no authority to deliver the bill 
 of lading except upon the payment of the draft. Having re- 
 ceived payment it holds the amount for the shipper or the bank 
 from which it received the draft, and would not be authorized 
 to hold the amount or return it to the drawee unless it could 
 return the bill of lading, placing the shipper in the same position 
 that he would have occupied had delivery not been made. The 
 drawee cannot retain the bill of lading which gives him title to the 
 goods and refuse to pay for them, or, what is equivalent to the 
 same thing, insist on the bank holding the money. 
 
 Of course, in the case stated, the situation is somewhat com- 
 plicated, by reason of the fact that the goods were rejected, not 
 by the original purchaser who paid the draft, but by his cus- 
 tomer ; at the same time as between him and the shipper the situ- 
 ation is the same as though he had rejected the goods. Having 
 accepted them by the payment of the draft, the collecting bank- 
 will have to remit to the correspondent from whom the draft was 
 received, unless prevented from doing so by garnishment or some 
 other appropriate legal proceeding.
 
 334 PARK'S BANKING LAW OF GEORGIA. 
 
 Bank Which on Authority of Forged Telegram Wires An- 
 other Bank to Honor Draft Must Protect the Second Bank 
 in So Doing. 
 
 If A signs B's name to a telegram which instructs a bank to wire an- 
 other bank to pay a certain sum to A and the former bank wires the 
 latter to honor A's draft on B and it does so, can the latter bank recover 
 the amount from the former when the fraud develops ? 
 
 The first bank would be liable for the amount paid in pursuance 
 of its telegram. The second bank received a genuine telegram 
 from the first bank directing the payment to a named party, upon 
 his draft on another party named. After getting this telegram, 
 and without any reason to suspect that a fraud was being perpe- 
 trated on either bank, or on the drawee of the draft, the second 
 bank honored the same. The second bank was innocent in act- 
 ing on the telegram, and the other bank, as between the two, 
 ought clearly to be the loser. 
 
 EXCHANGE. 
 
 Rate Not Fixed in Georgia. 
 
 What is the legal limit, if any, to the amount of exchange to be charged 
 by one bank in remitting to another bank for checks drawn on the bank 
 remitting? 
 
 The rate of exchange is not fixed in Georgia. -Not only is there 
 no fixed legal rate, but I do not think there is any such customary 
 rate as would be enforceable as a matter of custom. Of course, 
 as between particular banks, where a rate has for a considerable 
 time been in force, whether by agreement or by custom, no change 
 in this rate should be made without due notice; and where the 
 banks in a particular locality have for a considerable period main- 
 tained a regular fixed rate and other banks generally had become 
 accustomed to such rate, in the absence of notice that a change 
 will be made, the forwarding banks would have a right to assume 
 that the old rate would remain in force. But there is no reason 
 why a bank can not change the rate at any time it sees fit. All 
 that would be necessary would be to notify the banks with which 
 it does business that a new rate would be enforced from that time 
 forward. [But see 171 as amended by Act of 1920.]
 
 OPINIONS of THE GENERAL COUNSEL. 335 
 
 Checks in Payment of Taxes Due the United States Must Be 
 Remitted at Par. 
 
 Are checks in payment of Government obligations required to be re- 
 mitted at par? 
 
 The Revenue Act of October, 1917, provides that under Rules 
 and Regulations prescribed by the Secretary of the Treasury, 
 collectors of internal revenue may receive, at par and accrued in- 
 terest, checks in payment of income and excess profits taxes, 
 during such time and under such regulations as the Commis- 
 sioner of Internal Revenue, with the approval of the Secretary 
 of the Treasury, shall prescribe. 
 
 In Treasury Decision 666, issued to collectors of internal 
 revenue by the Commissioner and approved by the Secretary 
 of the Treasury on March 8, 1918, the following ruling is made : 
 
 "Collectors should give the widest possible publicity, through 
 newspapers and all other available means, to the fact that all 
 checks in payment of income and excess profits taxes must be 
 collectible at par (without any deduction). Taxpayers who are 
 not sure that their checks will be paid at par should be advised 
 to write beneath the amount 'without deduction for exchange,' or 
 'with exchange.' 
 
 "The collector need not, however, examine all checks to see 
 whether or not they are collectible at par, but should stamp on 
 the face of each the words 'This check is in payment of an obli- 
 gation to the United States and must be paid at par. No pro- 
 test,' with his name and title. If the bank on which a check is 
 drawn should refuse to pay it at par, it will be returnable through 
 the depositary bank and should be treated in the same manner as 
 a bad check." 
 
 Under the law, therefore, as construed by the Treasury De- 
 partment, it would seem that a bank is required to remit at par 
 for such items, if it handles them at all. I do not think the law 
 requires a bank to handle such checks if it does not wish to do so. 
 But if it does handle them, it must remit at par. 
 
 Checks May Be Made Payable in Exchange Only. 
 
 Is it legal to stamp on checks the phrase, "payable in New York or 
 Savannah Exchange," the purpose of making such an entry being to pre- 
 vent demanding payment of the check in cash through the post office or 
 through an express company? 
 
 A check is an order given by the depositor to the bank direct- 
 ing payment of a portion or all of his deposit to a particular
 
 336 PARK'S BANKING LAW OF GEORGIA. 
 
 person or to bearer. The bank is compelled to carry out the di- 
 rection of the depositor and pay in whatever manner the de- 
 positor directs. To illustrate : The depositor may direct payment 
 to the order of a named person or simply to the bearer of the 
 check ; and it has been held in Georgia that a depositor may- di- 
 rect payment through a particular bank, and that this direction 
 must be complied with. Farmers Bank v. Johnson, King & Co., 
 134 Ga. 486. 
 
 In discussing this case, the Supreme Court says that the drawer 
 of a check has a right to direct the channel through which it shall 
 be presented for payment, and the payee of the check is bound to 
 respect this direction. He can refuse to take the check on ac- 
 count of such direction, but if he takes it he must present it 
 through the channels directed. During the panic of 1907, it was 
 quite frequent for checks to be stamped payable only through a 
 particular clearing house, and such directions were uniformly 
 respected. Morse, one of the leading writers on the law of banks 
 and banking, says : 
 
 "Valid agreements may at any time be entered into between 
 the bank and the customer concerning the species of money or 
 currency in which his checks may or shall be honored. The hold- 
 ers of the checks need be no parties to this agreement. They have 
 accepted from their debtor his check as a means of procuring 
 money, but the bank is not therefore liable to pay them money. The 
 nature of the duty of the bank to them is determined by the nature 
 of its duty to the depositor. It is bound to offer to them whatever 
 it has undertaken with him that it will offer to holders of his 
 checks. If this be unsatisfactory to the holders, their sole recourse 
 and remedy is against him." Morse on Banks and Banking, 
 447. 
 
 It seems, therefore, that it is quite competent for a bank to 
 agree with its customer that his checks will be honored in ex- 
 change, or to make any other reasonable agreement as to the han- 
 dling of his account ; and where such agreement is made, anyone 
 accepting a check upon which such an agreement or provision is 
 entered takes it subject to this agreement, and cannot compel 
 payment in any other manner than that specified.
 
 OPINIONS o$ THE GENERAL COUNSEL. 337 
 
 FIXTURES. 
 
 Sold Under Retention Title Contract, How Far Rights of 
 Vendor Protected. 
 
 Lighting plants are sold and erected in farm houses, a gasoline engine 
 being placed on a foundation to which it is securely attached, and the 
 houses being wired for electric lights. The seller retains title to the 
 plant. Does the plant become such a fixture by reason of its being at- 
 tached to the ground and the house that the seller loses his right to re- 
 capture his property in the event his debt is not paid? 
 
 Under the Code : 
 
 "Anything intended to remain permanently in its place, al- 
 though not actually attached to the land, such as a rail fence, is 
 a part of the realty, and passes with it. Machinery, not actually 
 attached, but movable at pleasure, is not a part of the realty." 
 Park's Ann. Code, 3621. 
 
 This provision, however, does not always provide a certain and 
 easy test by which to determine, in a given case, whether or not 
 the article in question remains personalty, or is attached to the 
 realty and a part thereof. The intention of the parties frequently 
 determines. An article, which would ordinarily be regarded as 
 personalty, may be held to be a fixture; and, conversely, a fix- 
 ture may, where the parties so intend, remain personalty. The 
 circumstances under which the article is attached, and the use to 
 which the property is put frequently determines its character. 
 A lighting system attached to the building would ordinarily be 
 classified as a fixture and would pass with the property on a sale 
 thereof ; but where it is sold under a contract retaining title, the 
 intention of the parties that the property should retain its char- 
 acter as personalty although attached to the realty would govern, 
 and the seller of the lighting system would not lose his title al- 
 though the property should be attached to the building. This ap- 
 plies, however, only as between the original parties to the con- 
 tract. A subsequent purchaser of the land, or a subsequent mort- 
 gagee thereof, without notice of the retention title contract, would 
 acquire rights superior to the contract. This has been distinctly 
 held by the Supreme Court : 
 
 "When land is conveyed, whatever fixtures are annexed to the 
 realty at the time of the conveyance pass with the estate to the 
 vendee unless there be some express provision to the contrary ; 
 and fixtures pass to a bona fide purchaser of the real estate, not- 
 withstanding an agreement between the owner of the land and 
 the vendor of the fixtures that they should remain personal prop- 
 
 22
 
 338 PARK'S BANKING LAW OF GEORGIA. 
 
 erty. The same rules as to fixtures which apply as between 
 vendor and vendee apply also as between mortgagor and mort- 
 gagee. And a mortgage on the land in the absence of any agree- 
 ment to the contrary includes not only such fixtures as are at- 
 tached to the realty at the time of its execution, but such as 
 may be annexed subsequently." Cunningham v. Cureton, 96 
 Ga. 489. 
 
 Whether or not the record of the conditional sale contract, or 
 the note retaining title, would be such notice as to prevent a subse- 
 quent purchaser, or mortgagee, of the land from being a bona fide 
 holder, has not been decided in Georgia. The weight of authority 
 outside the State seems to be that record would be notice, but 
 there is very respectable authority to the contrary. In a recent 
 case the Georgia Court of Appeals said that it is inclined to be- 
 lieve that notice by the record of a conditional sale contract would 
 be sufficient to prevent the purchaser of the land from acquiring 
 the title to the fixtures, but as it was not necessary to decide the 
 question in order to dispose of the case, the court expressly de- 
 clined to pass on it. Empire Cotton Oil Co. v. Continental Gin 
 Co., 21 Ga. App. 16. The question is, therefore, an open one in 
 Georgia. 
 
 It will be seen that neither the seller of the lighting plants, nor 
 the holder of retention title contracts, are protected under all cir- 
 cumstances. While the retention title contract is good as between 
 the seller of the plant and the purchaser, and is probably good as 
 against a subsequent vendee, or mortgagee, of the land, it is not 
 good as against such vendee, or mortgagee, unless he has notice 
 of the outstanding contract; and, whether the record of the 
 contract constitutes such notice has not been decided in this State. 
 
 GARNISHMENTS. 
 
 In Superior Courts Answer May Be Filed at Second Term, 
 but in Justice Courts Must Be Filed at First Term. 
 
 Does answer have to be filed to a summons of garnishment on the date 
 mentioned in the summons, that is, on the first day of the first term, or 
 does the garnishee have until the second term in which to make answer, 
 and can judgment be taken at the first term in the event answer is not 
 made at that term? 
 
 In the Superior Courts the rule is as follows : 
 
 "When any person summoned as garnishee fails to appear in 
 obedience to the summons, and answer at the first term of the
 
 OPINIONS of THE GENERAL COUNSEL. 339 
 
 court at which he is required to appear, the case shall stand con- 
 tinued until the next term of the court ; and if he should fail to 
 appear and answer by said next term, the plaintiff may, on mo- 
 tion, have judgment against him for the amount of the judgment 
 he may have obtained against the defendant in attachment, or 
 so much thereof as shall remain unpaid at the time the judgment 
 is rendered against the garnishee ; and the court may continue 
 the case until final judgment is rendered against the defendant in 
 attachment." Park's Ann. Code, 5097. 
 
 While this section applies primarily to cases in attachment, the 
 same rule applies to garnishments in common law cases, that is, 
 on pending suits or judgments. As said by the Supreme Court: 
 
 "In the Superior Court the garnishee in all cases has until the 
 first day of the second term after the service of the summons of 
 garnishment in which to answer." Averback v. Spivey, 122 Ga. 
 18. 
 
 No judgment by default can be entered against the garnishee 
 until the second term, and no judgment can be rendered against 
 the garnishee until after judgment is obtained against the defend- 
 ant 
 
 In justice courts, however, answer must be filed at the first 
 term. I quote the section of the Code applicable : 
 
 "When a process of garnishment is issued out, returnable to 
 any justice's court and served upon the garnishee, it shall be the 
 duty of the garnishee to answer at the term to which the garnish- 
 ment is made returnable. And in case of failure so to answer, the 
 justice of the peace shall enter a default against the garnishee, 
 and shall enter up judgment in favor of the plaintiff against the 
 garnishee, for such an amount as may have been obtained by 
 judgment against the defendant, or for such amount as may 
 thereafter be recovered in the pending suit." Park's Ann. Code, 
 4753. 
 
 The practice in the city courts generally conforms to that in 
 the superior courts, but as these courts are created by special act, 
 the act must in all cases be looked to to determine what the prac- 
 tice in the particular court may be. This is also true with 
 reference to the municipal courts recently created in some of the 
 larger cities.
 
 340 PARK'S BANKING LAW of GEORGIA. 
 
 Answer Must Include All Property Coming Into Hands of 
 . and all Debts Due by Garnishee Up to Date of Answer. 
 
 When a garnishee files answer to summons of garnishment at the second 
 term, should the answer include the amount due the debtor at the time 
 of the answer or the amount due at the date the garnishment is return- 
 able? 
 
 The garnishee is required to answer what property, money or 
 effects of the defendant he had in his hands at the date of the 
 service of the summons, and also what property, money or ef- 
 fects have come into his hands at any time from the date of the 
 service to the date of the answer, and what amount he is in- 
 debted to the defendant at the date of the service, and what addi- 
 tional amount he may have become indebted between the date of 
 the service and the answer thereto. Park's Ann. Code, 5271. 
 
 Under this section the answer should include all funds or prop- 
 erty coming into the hands of the garnishee and all indebtedness 
 up to the date of the answer. 
 
 National Banks Are Subject to Garnishment. 
 
 Is a depositor's account with a national bank subject to garnishment? 
 
 It is. The Judicial Code of the United States, 24 ( 16) pro- 
 vides that except in suits commenced by the United States or its 
 officers and cases for winding up their affairs, "national banking 
 associations shall, for the purposes of all other actions by or 
 against them, real, personal or mixed, and all suits in equity, be 
 deemed citizens of the States in which they are respectively lo- 
 cated." 
 
 While 5244 of the U. S. Rev. Stat. provides that "no attach- 
 ment, injunction or execution shall be issued against such [na- 
 tional banking] association or its property before final judgment 
 in any suit, action or proceeding in any state, county or municipal 
 court"; the Supreme Court of the United States holds that it 
 does not prohibit the suing out of a garnishment against the 
 bank as garnishee, as this is not an attachment against the bank 
 or its property nor a suit against it within the meaning of this 
 section. Earle v. Pennsylvania, 178 U. S. 449, 44 L. Ed. 1146.
 
 OPINIONS of THE GENERAL COUNSEL. 341 
 
 Deposit to Credit of "A, Agent," May Be Subjected on 
 Garnishment Against A. 
 
 A deposit is made by A, Agent." The bank is served with garnishment 
 against "A" individually, but is notified at the time that it is contended the 
 deposit is really the money of "A" and not of his wife for whom he claims 
 to be acting as agent. Must the bank hold the deposit subject to the gar- 
 nishment or can it pay the money over on check signed by "A, Agent"? 
 
 In the case of Pettey v. Dunlap Hardware Company, 99 Ga. 
 300, the Supreme Court held that where money was deposited 
 to the credit of a named person, as agent, it could be reached by 
 garnishment served upon the bank at the instance of the creditor 
 of the depositor, and if the bank knew the creditor's contention 
 was that this money in fact belonged to the depositor, individually, 
 and not to another for whom he claimed to act as agent in making 
 the deposit, it could not, except at its peril, pay over the money 
 to the alleged principal. 
 
 Under this ruling it would be the duty of the bank to hold the 
 deposit subject to the garnishment. If the money in fact belonged 
 to another person for whom the depositor was acting as agent, 
 that person could claim the fund in the garnishment proceeding, 
 and by giving a bond dissolve the garnishment and check out 
 the deposit. The bank should require this before paying over the 
 money to the alleged principal. 
 
 Negotiable Instruments Are Subject to Garnishment. 
 
 Where a bank has issued a cashier's check or certificate of deposit and 
 afterward is served with a summons of garnishment at the instance of a 
 creditor of the customer, can it safely pay over the money to a third person 
 to whom the check or certificate has been indorsed? 
 
 Negotiable instruments are subject to garnishment and where 
 the maker of such an instrument is served with garnishment based 
 on a suit against the payee, he pays the instrument at his peril. 
 
 Therefore, a bank would not be safe in paying such a certificate 
 of deposit or cashier's check, although it had been indorsed to a 
 third person. The proper course for the bank would be to answer 
 the garnishment, setting up the fact that the certificate or check 
 had been given and that the amount was due but that the 
 bank could not say whether it was due to the original payee 
 or to some other person. Unless this was done the burden would 
 be upon the bank to show that the check or certificate had been 
 transferred before the garnishment was issued, and that the party 
 presenting the same was a bona fide holder.
 
 342 PARK'S BANKING LAW OF GEORGIA. 
 
 Deposit Is Subject to Garnishment Even After Check Drawn 
 Against Same Is Held by the Bank, but Not Charged to 
 Depositor's Account. 
 
 Is a savings bank account subject to garnishment, where check on this 
 account has been turned over to a bank as security for a loan? 
 
 The giving of a check would not prevent the account from 
 being subjected under process of garnishment. A check is not an 
 assignment of the fund, and is revocable until actually paid. 
 Quoting from the Supreme Court : 
 
 "An unaccepted check, drawn in the ordinary form, not de- 
 scribing any particular fund or using words of transfer of the 
 whole or any part of any amount standing to the credit of the 
 drawer, does not amount to an assignment at law or in equity of 
 the money to the credit of the drawer." Reviere v. Chambliss, 
 120 Ga. 714. 
 
 The fact that the bank holds the check would not prevent the 
 drawer of the check from giving another check, which if pre- 
 sented for payment before the one held by the bank would be 
 entitled to be cashed in preference to it. As the title to the fund 
 does not pass by the giving of a check, it would still be subject to 
 garnishment. 
 
 Cashier's Check Issued to Depositor in Exchange for Check 
 of Another Subsequent to Service of Garnishment Is Sub- 
 ject. 
 
 A garnishment is served on a bank in a suit against a depositor. The 
 depositor presents a check payable to his order drawn by a third person 
 and asks the bank to exchange the check for a cashier's check. If the 
 cashier's check is issued, does the amount which it represents become sub- 
 ject to garnishment? 
 
 In my opinion the amount of the cashier's check is subject. 
 A garnishment calls on the garnishee to answer what property, 
 money, or effects of the defendant he has in his hands at the time 
 the garnishment is served, what property, money, or effects have 
 come into his hands at any time between the date of the service 
 and the date of filing his answer, what amoun;. he owes the de- 
 fendant at the date of the service, and what amount he has be- 
 come indebted to the defendant at any time between the date 
 of the service and the date of the answer. When a bank issues 
 a cashier's check in lieu of another check, it becomes indebted 
 to the holder of the check for the amount thereof, and, therefore, 
 would have to answer that it owed the defendant this amount.
 
 OPINIONS OF THE GENERAL COUNSEL. 343 
 
 Indeed, it is by no means certain that a bank can safely pay a 
 check to a person where garnishment has been served on the 
 bank calling on it to answer what amount it owes the payee. 
 It has been held by the Court of Appeals (Watt-Harley-Holmes 
 Hdw. Co. v. Day, 1 App. 646) that after the delivery of a check 
 the drawer of the check can not be garnished as debtor of the 
 payee in respect to the debt for which the check is given. This 
 would seem to imply that the bank, so far as the garnishment is 
 concerned, would be treated as the debtor of the payee and as 
 having funds in its possession belonging to the payee. If this is 
 true, it could not pay the amount to the payee after being served 
 with garnishment. In the absence of a ruling from one of our 
 appellate courts, the only safe thing for a bank to do where gar- 
 nishment has been served on it against a particular party is to 
 decline to pay that party anything either on his own check or on 
 the check of another, and certainly it could not make itself the 
 primary obligor, as by issuing a cashier's check or by certifying 
 a check in his favor, without rendering itself liable under the 
 garnishment. 
 
 Contents of Safety Deposit Box May Be Reached by Gar- 
 nishment. 
 
 Where a garnishment is served upon a bank, can it safely allow a cus- 
 tomer, defendant in the garnishment proceeding, access to a safety deposit 
 box, which the bank has rented to such customer, the contents of the box 
 being unknown to the bank, and is the bank required in response to the 
 garnishment to answer that it has property, money or effects of the de- 
 fendant in its custody or control? 
 
 The precise question does not seem to have been decided in 
 Georgia. It has been held, however, that where a defendant left 
 with a garnishee a large box, securely nailed, for safe keeping, 
 the garnishee declining to be responsible for it and not knowing 
 its contents, the garnishee was liable where he permitted the de- 
 fendant to go into the box and remove its contents. Loyless z/. 
 Hodges, 44 Ga. 647. 
 
 There appear to be only a few reported cases in which the 
 precise question as to whether the contents of a safety deposit 
 box may be reached by garnishment has been decided. Probably 
 the leading case is Tillinghast v. Johnson, 82 Atl. 788, 41 L. R. A. 
 (N. S.) 764, decided by the Supreme Court of Rhode Island. I 
 quote the headnote :
 
 344 PARK'S BANKING LAW OF GEORGIA. 
 
 "A safe deposit box, kept in the vault of a safe deposit company 
 subject to its general control, access to which can be obtained only 
 under restrictions imposed by it, is in its possession, although the 
 box has been rented to a customer, and can be opened only by 
 the joint use of a master key in the possession of the company and 
 a key in the possession of the customer, and hence is subject to at- 
 tachment by garnishee process against the company in an action 
 against the customer." 
 
 To the same effect is Trowbridge v. Spinning, 23 Wash. 48, 62 
 Pac. 125, 54 L. R. A. 204; Washington, etc., Co. v. Susquehanna 
 Coal Co., 26 App. D. C. 149, and National Safe Deposit Co. v. 
 Stead, 250 111. 584, 95 N. E. 973. 
 
 The editor of the Lawyers' Reports Annotated, New Series, in 
 a note to the Tillinghast case above cited, says : 
 
 "As to the garnishment of the contents of securely closed re- 
 ceptacles, while there are cases to the contrary under some stat- 
 utes, the weight of authority is in accord with Tillinghast v. 
 Johnson, to the effect that such property is subject to garnish- 
 ment." 
 
 It has been generally held that a sealed package or a locked 
 trunk in the possession of a bailee, although the bailee may not 
 know its contents and may have no access to it, is subject to gar- 
 nishment. I am, therefore, of the opinion that a bank renting a 
 safety deposit box would be required in obedience to a summons 
 of garnishment, calling on it to answer what property, money or 
 effects of a customer renting a box it had in its possession, would 
 be required to answer the fact that it had rented the box to the 
 customer, but did not know the contents thereof ; and that it 
 could not safely permit the customer to withdraw any of the 
 articles deposited so long as the garnishment is pending. 
 
 How Garnishment Should Be Answered Where Bank Has 
 More Than One Account in Same or Similar Names as 
 That of Defendant in Garnishment. 
 
 A bank is served with a summons of garnishment against Earl S. The 
 bank has accounts with E. D. S., E. M. S., and E. R. S., one of whom is 
 supposed to be Earl S., the party named in the garnishment. How should 
 the garnishment be answered? 
 
 If the bank actually knows that one of these parties is named 
 Earl S., it should answer indebted. If it does not, it should an- 
 swer not indebted, and set up the fact that it has these three ac- 
 counts.
 
 OPINIONS OF THE; GENERAL COUNSEL. 345 
 
 As a matter of expediency, it would be wise to ascertain, if 
 possible, from the three depositors which one is Earl S., or from 
 the garnishing creditor which one of the accounts he is attempt- 
 ing to reach, and hold up that account only. 
 
 HOLIDAYS. 
 
 Banks Are Not Prohibited from Carrying on Ordinary 
 Business on Legal Holidays. 
 
 Can a bank safely carry on its general business on a legal holiday? 
 
 There is nothing in the law which prohibits a bank from carry- 
 ing on its business on a legal holiday if it desires to do so. There 
 are certain things which the law forbids to be done on a legal 
 holiday, but the prohibition extends only to the things named in 
 the statute. The statute enumerates the public holidays recog- 
 nized in this State, -and declares that these days "shall for all 
 purposes whatsoever as regards the presenting for payment or 
 acceptance and the protesting and giving notice of the dishonor 
 of bills of exchange, bank checks and promissory notes be treated 
 and considered as the first day of the week, commonly called 
 Sunday, and as public holidays; and all such bills, checks and 
 notes otherwise presentable for acceptance or payment on said 
 days shall be deemed to be presentable for acceptance or payment 
 on the next business day thereafter." Park's Ann. Code, 4284. 
 
 This is the only restriction upon carrying on business on a 
 public holiday. 
 
 The Supreme Court and the Court of Appeals have both held 
 that the courts may sit and judicial business may be transacted on 
 a public holiday. Hamer v. Sears, 81 Ga. 288; Wood v. The 
 State, 12 App. 651. 
 
 And the Supreme Court has said that 
 
 "The General Assembly has not, however, seen proper to pro- 
 vide for an entire cessation of business on public holidays. On 
 such days it is not lawful to note and protest bills and notes, but 
 further than this the law does not prohibit the carrying on of 
 business vocations." Watson v. Mayor and Council of Thomson, 
 116 Ga. 546, 547.
 
 346 PARK'S BANKING LAW OF GEORGIA. 
 
 Stockholders' Meeting May Be Held on Holiday. 
 
 Can a stockholders' meeting be held legally on the first day of January? 
 
 The fact that New Year's Day is a public holiday does not 
 render illegal business transactions on that day. In the absence 
 of a by-law prohibiting it a corporate meeting may be held 
 legally on a holiday. 
 
 Note Falling Due on Holiday, When Payable. 
 
 When should a note which falls due on Sunday be presented for pay- 
 ment when the Monday following is a holiday? 
 
 Such a note should be presented on the Tuesday following. 
 The question is settled by 4285 of the Code, which is as follows : 
 
 "All bills, checks, notes, and other evidences of debt maturing 
 on Sunday or a public holiday shall be payable on the next busi- 
 ness day thereafter; and all bills, checks, notes, and other evi- 
 dences of debt presentable, by their terms, for acceptance or pay- 
 ment on Sundays or on a public holiday shall be presentable for 
 acceptance or payment on the next business day thereafter. By 
 business day is meant a day other than Sunday or a public holi- 
 day." 
 
 Legal Holiday Falling on Sunday. 
 
 Does the Georgia law provide for the contingency of a legal holiday 
 falling on Sunday? 
 
 Our Code is entirely silent on the subject, and while it has 
 been customary for the banks to observe the next day, or Monday, 
 as a holiday in place of one falling on Sunday, it is very doubtful 
 whether a day so observed is legally a holiday. It has been ex- 
 pressly held in other States that "where a holiday designated by 
 a statute falls on Sunday, the following Monday is not a holiday, 
 in the absence of express statutory provision to that effect." 
 
 Under the Code of 1895, 3693, it was provided : 
 
 "Whenever any such holiday [referring to the usual holidays 
 like the first of January, the nineteenth of January and twenty- 
 second of February, etc.] shall fall upon Sunday, the Monday 
 next following shall be deemed a public holiday, and papers due 
 on such Sunday shall be payable on the Saturday next preceding, 
 and papers which would otherwise be payable on such Monday 
 shall be payable on the Tuesday next thereafter," etc.
 
 OPINIONS OF THE GENERAL COUNSEL. 347 
 
 In 1906 (Acts of 1906, p. 43) the Legislature amended this sec- 
 tion as follows : 
 
 "Whenever any such holiday shall fall upon Sunday, the Mon- 
 day next following shall be deemed a public holiday, and papers 
 due on such Sunday shall be payable on the secular or business 
 day next succeeding. Whenever either of the days shall fall on 
 Saturday, the papers due on that day or on the Sunday following 
 shall be payable on the business day next succeeding." 
 
 In 1907 (Acts of 1907, p. 97) a new law was passed reading 
 as follows : 
 
 "That hereafter all bills, checks, notes and other evidences of 
 debt maturing on Sunday or a public holiday shall be payable on 
 the next business day thereafter, and all bills, checks, notes and 
 other evidences of debt presentable by their terms for acceptance, 
 or payment on Sundays or on a public holiday shall be presentable 
 for acceptance or payment on the next business day thereafter. 
 By business day is meant a day other than Sunday or a public 
 holiday." 
 
 This act is codified in 4285 of the Code of 1910, and also in 
 Park's Ann. Code. 
 
 The question, therefore, is whether the Act of 1907 repealed 
 3693 of the Code of 1895 as amended by the Act of 1906, and, 
 if not, whether the codification of the law in 1910 had that effect. 
 
 "Where the later of two acts covers the whole subject matter 
 of the earlier one, not purporting to amend it, and plainly shows 
 that it was intended to be a substitute for the earlier act, such 
 later act will operate as a- repeal of the earlier one, though the 
 two are not repugnant." 26 A. & E. Enc. of Law, 2d Ed. 731 (c) . 
 
 This is quoted as the law of this State in Thornton v. The State, 
 5 Ga. App. 397, and is abundantly supported by decisions of the 
 Supreme Court. 
 
 The cases which hold that repeals by implication are not fa- 
 vored and will not result unless the later statute is clearly repug- 
 nant to a former one, recognize this as the rule : 
 
 "Or it must be clear from the terms of the later statute that 
 there was a legislative intent to cover the subject matter of the 
 former statute and have the later statute operate as a substitute 
 therefore." Edalgo v. Southern Ry. Co., 129 Ga. 258, 264. 
 
 Again : 
 
 "An implied repeal results, from some enactment, the terms and 
 necessary operation of which can not be harmonious with the 
 terms and necessary effect of the earlier act." 
 
 This is quoted from Southerland on Statutory Construction in 
 Western & Atlantic R. R. v. Atlanta, 113 Ga. 536, 556.
 
 348 PARK'S BANKING LAW OF GEORGIA. 
 
 It may well be argued that the Act of 1907 was intended as a 
 substitute for 3693 of the Code of 1895, as amended by the Act 
 of 1906, p. 43. It will be recalled that great confusion resulted 
 after the passage of the Act of 1906 as to when papers ma- 
 turing on holidays were due, and it was to clear up this doubt and 
 provide a simple uniform rule, easy of application, that the Act 
 of 1907 was adopted. 
 
 The caption of the Act of 1907 is as follows : 
 
 "An act to provide for "the payment and presentation for accept- 
 ance or payment of bills, checks, notes and other evidences of 
 debt, maturing on Sunday or a public holiday, or presentable for 
 acceptance or payment on Sundays or public holidays." 
 
 The caption, therefore, as well as the body of the act, pur- 
 ports, I think, to cover the entire subject. It is very similar to 
 the caption of the Act of 1906 : 
 
 "An act to amend 3693, Volume 2, of the Code of 1895 
 * * * which section relates to the time when promissory 
 notes, etc., shall be paid in connection with a public holiday, by 
 striking from said section, etc." 
 
 It is true that the language of the Act of 1907 is not necessarily 
 repugnant to that part of the previous law which provided that 
 the Monday following should be regarded as a legal holiday, but 
 the purpose of the Act of 1907 seems to have been to supersede 
 the legislation on the subject. 
 
 When the history of this act is taken into consideration it 
 seems clear that the legislature had this in mind. It appears that 
 the last act was a substitute, and though not repugnant in all re- 
 spects, was intended to supersede the prior law. Judge Hopkins 
 evidently took this view of it, as he omitted entirely in the Code 
 of 1910 the original section of the Code of 1895, as well as the 
 amendment of 1906 ; and as he cites both the original Act of 1894 
 and the Act of 1906, it seems that he considered the three acts 
 together and came to the conclusion that the Act of 1907 was in- 
 tended to express the legislative intent on the whole subject. 
 
 But whether the legislature intended that the Act of 1907 
 should supersede all of the previous acts on the subject, I am in- 
 clined to the opinion that since the adoption of the Code of 1910. 
 3693 of the Code of 1895 and the Act of 1906, except as codified 
 in 4285 of the Code of 1910, are repealed. It is, of course, true 
 that the mere omission of a law from the Code does not have 
 the effect of a repeal, but while this is true, it is also true that 
 whatever is contained in the Code has the force and
 
 OPINIONS OF THE GENERAL COUNSEL. 349 
 
 effect of a. statute, and where it appears that the codifiers with 
 knowledge of an act omitted it and undertook to give their con- 
 struction of the law or to revise it, this construction or revision 
 becomes the law regardless of the omission. The fact that this 
 act is cited in the margin of the section shows that the codifier 
 knew of its existence, and the section as we have it gives his con- 
 struction of the law. See as to the effect of marginal references 
 Barnes v. Carter, 114 Ga. 886, 889; s. c., 120 Ga. 895, 897. 
 
 Where the Code section undertakes to deal with the subject, 
 and the section differs from the act which is being codified, as 
 for instance where words or clauses are omitted, the rule, as I 
 understand it, is that the court is bound to presume that the 
 change was made or the clause omitted intentionally. Miller v. 
 Southwestern R. R. Co., 55 Ga. 143. See also Kennedy v. Mc- 
 Cardle, 88 Ga. 454. Quoting from Verdery v. Dotterer, 69 Ga. 
 194, 197: 
 
 "This provision of the law, however, is no longer of force, for 
 in the revision of this section of this act the codifiers have con- 
 fined the liability alone to mortgagees, etc. Had it simply been 
 omitted from the Code, it might have been held still to be of force, 
 but having revised and changed it, it is the law as it now stands 
 in the Code." 
 
 From the marginal references, as well as from the insertion of 
 the 1905 Code section number, it appears that Judge Hopkins 
 undertook to put in this section the law as he understood it from 
 the Acts of 1894, 1906.and 1907. The conclusion may be reached, 
 therefore, that the omitted parts of those acts were intentionally 
 omitted, and that the adoption of the Code made this section the 
 law, regardless of what it had been before, and the omitted 
 clauses and portions of the acts were repealed. 
 
 The question is one of much importance and of far-reaching 
 effect. It is very doubtful, and there is no way to determine what 
 view the Supreme Court might take of it.
 
 350 PARK'S BANKING LAW OF GEORGIA. 
 
 HOMESTEAD. 
 
 Waiver of Existing Homestead Invalid. Proceeds of Home- 
 stead Property Also Exempt. Homestead for Wife and 
 Minor Children Continues Until Death of Wife and Ma- 
 jority or Marriage of Children. 
 
 The head of a family to whom a homestead was set apart some years 
 ago, signs a note which contains a waiver of homestead and also a state- 
 ment that there are no homesteads, mortgages or liens upon the property. 
 He subsequently claims that certain property represents the proceeeds of 
 the original homestead estate. The wife, who was the beneficiary of the 
 homestead, has died, and the children are able to support themselves, 
 though they are still minors. First : Would the waiver or the statement 
 that there is no homestead defeat the homestead? Second: Would the 
 homestead attach to the proceeds of the original property? Third: Would 
 the homestead still subsist, notwithstanding the death of the wife? 
 
 1. While a debtor may waive or renounce his right to the 
 benefit of a homestead, a prior homestead, that is to say, one that 
 has already been set apart, is not affected by such waiver, but 
 remains in full force. This has been decided by the Supreme 
 Court in several cases. Sigman v. Austin, 112 Ga. 570. Nor 
 would the statement in the note that the property is unincum- 
 bered, or that there is no homestead, lien or incumbrance thereon, 
 defeat a homestead already set apart. This might amount under 
 some circumstances to cheating and swindling, but it would not 
 affect the homestead. A homestead is set apart for the benefit of 
 the wife and minor children, and no act of the head of the family 
 can deprive them of their interest therein. 
 
 2. The Code provides that "All produce, rents or profits arising 
 from homesteads shall be for the support and education of the 
 families claiming said homesteads, and shall be exempt from 
 levy and sale except as provided in the Constitution." Park's 
 Ann. Code, 3398. Under this section the courts have held that 
 the proceeds of homestead property, no matter how invested, are 
 exempt from levy and sale to the same extent that the original 
 homestead property is exempt. 
 
 3. The property set apart for a wife and minor children, upon 
 the death of the wife and the majority of the children, or their 
 marriage during minority, reverts to the estate from which it was 
 set apart. Park's Ann. Code, 3396. So long as the children 
 remain minors and unmarried, the homestead would continue for 
 their benefit, notwithstanding the fact that they might be able to 
 support themselves.
 
 OPINIONS of THE GENERAL COUNSEL. 351 
 
 HUSBAND AND WIFE. 
 
 Husband and Wife May Be Partners in Business. 
 
 Is an open partnership between husband and wife legal in Georgia? 
 
 While there are certain restrictions upon the right of a married 
 woman to contract under the law of Georgia, she can neverthe- 
 less be a bona fide member of a partnership with her husband. 
 
 Under the law of Georgia, a married woman cannot enter into 
 a contract of suretyship or become responsible for the debts of 
 her husband. If the partnership with her husband is not a mere 
 scheme to evade the law which forbids her to enter into contract 
 of suretyship, then undoubtedly such a partnership is legal. 
 
 The precise question has been decided by the Court of Appeals 
 in the case of Butler v. Frank, 7 Ga. App. 655, wherein the court 
 said: 
 
 "A married woman may contract to become and actually be- 
 come a member of a partnership with her husband or other per- 
 sons ; and if she does enter into such a partnership arrangement 
 (unless it is merely colorable and devised for the purpose of evad- 
 ing the law), she is bound for the partnership debts." 
 
 INDORSEMENT. 
 
 Liability of Indorser. 
 
 Is an indorser liable to the same extent as the maker of a note? 
 
 Section 4279 of the Code, governing the liability of an indorser, 
 is as follows : 
 
 "In ordinary indorsements the contract of the indorser is to pay 
 the money if the parties to the instrument primarily liable thereon 
 fail to pay according to the terms thereof ; hence, if there are 
 several indorsers, each is liable to subsequent ones in the order of 
 their indorsements." 
 
 It will be noted that the indorser's contract is to pay, provided 
 the other parties primarily liable on the paper do not. But. it 
 will be seen by reference to 4283 that an indorser may be sued 
 in the same action with the maker. Of course, where suit is 
 entered against maker and indorser, and judgment is obtained, 
 the execution can be levied on the property of either maker or
 
 352 PARK'S BANKING LAW OF GEORGIA. 
 
 indorser as may be most convenient to the plaintiff and the levy- 
 ing officer. In other words, it is not necessary to exhaust the 
 property of the maker before levying on that of the indorser. 
 
 Indorser May Be Sued Without Joining Maker. 
 
 . Can a suit be maintained against the indorser of a note without suing 
 the maker? 
 
 I quote from Daniel on Negotiable Instruments : 
 
 "As a general rule, the holder may sue all the prior parties on 
 the bill or note, but not any subsequent party. Thus a payee 
 may sue the acceptor or maker. An indorsee may sue the ac- 
 ceptor or maker, and all prior indorsers. By the general law 
 merchant the indorser of a negotiable instrument is bound in- 
 stantly, and may be sued after maturity, upon demand and notice. 
 But by the statutes of some of the States the maker must be first 
 sued, and his property first subjected." Daniel on Negotiable 
 Instruments (6th Ed.), 1202. 
 
 Quoting again from the same author, 1203 : 
 
 "At common law, the holder of a bill or note might commence 
 and prosecute several actions against each of the prior parties at 
 the same time; and an action instituted against one would not 
 preclude any other remedy against the others. But satisfaction 
 by any one would discharge all from liability to the plaintiff as to 
 the principal sum. But by statute in many of the States an action 
 may be maintained and judgment given jointly against all the 
 parties to a negotiable instrument, whether makers, drawers, in- 
 dorsers, or acceptors, or against any one, or any intermediate 
 number of them." 
 
 Quoting from the Cyclopedia of Law and Procedure : 
 
 "At common law the holder of a bill might bring several simul- 
 taneous actions against all or any of the prior parties liable to 
 him. He could not, however, maintain a joint action against par- 
 ties severally liable. By statute in many of the United States, 
 in England, and in Canada the holder of a bill of exchange or 
 promissory note may bring suit against the drawer or maker, ac- 
 ceptor or indorser, any or all, in the same action." 8 Cyc., p. 92. 
 
 The rule laid down by these authorities seems to be the rule in 
 Georgia. I quote from a decision of the Supreme Court : 
 
 "Upon the acceptance of a bill of exchange, the acceptors be- 
 come primarily liable to the payee as makers and the drawers sec- 
 ondarily liable as indorsers. On nonpayment he may sue either or 
 both." Davis v. Baker, 71 Ga. 33.
 
 OPINIONS OF THE: GENERAL COUNSEL. 353 
 
 Our statute authorizes the bringing of suit against the maker 
 and indorser in one action in the county in which the maker re- 
 sides, but it does not require that suit should first be entered 
 against the maker or that the maker and indorsers must be sued 
 jointly. I am of opinion, therefore, that suit can be maintained 
 against the indorser without joining the maker. 
 
 Bank Has No Power to Indorse for Accommodation. 
 
 Can a bank indorse for an individual? If so, can it be done without 
 the written authority from the directors? 
 
 A bank has no right to indorse for accommodation either with 
 or without the authority of the directors. 
 
 Indorsement by Bank (to Transfer Title) Warrants All Prior 
 
 Indorsements. 
 
 Where a bank places its indorsement on the back of a check which it has 
 cashed, does it guarantee all previous indorsements, or only the signature 
 of its immediate indorser? 
 
 I quote from Tiedeman on Commercial Paper, 259 : 
 "The indorser also warrants the genuineness of all the signa- 
 tures to the paper. It has also been doubted whether the in- 
 dorser warrants the genuineness of the prior indorsements. But 
 this is not the conclusion of the authorities. Inasmuch as the in- 
 dorser also warrants that he has a perfect title to the paper by 
 indorsement, and is liable if his title proves defective ; and since 
 no title passes on a forged indorsement, it follows as a necessary 
 consequence that the indorser must warrant the genuineness of 
 the prior indorsements." 
 
 Indorsement "Pay to Any Bank or Banker or Order" Is In- 
 dorsement for Collection. 
 
 A check drawn on a bank of another city is left with a bank for collec- 
 tion. It is stamped by the bank with which it is left, "pay to any bank 
 or banker or order, previous indorsements guaranteed." Before being 
 mailed, however, the person leaving it for collection calls for it, and it is 
 delivered to him without the stamped indorsement being erased. He takes 
 the check to a neighboring town, and it is cashed by a merchant. This 
 merchant deposits the check with his bank for collection, and it is re- 
 turned, marked "no account with us" by the bank on which it is drawn. 
 The check is not protested. It is afterwards returned to the drawee bank 
 and protested. Is the bank liable on this indorsement to the merchant who 
 cashed the check? 
 
 The only theory upon which the bank could be held liable is 
 that the merchant cashed the check on the faith of its indorsement, 
 23
 
 354 PARK'S BANKING LAW o$ GEORGIA. 
 
 and is a bona fide holder without notice. I do not think he can 
 claim to be such holder under the circumstances detailed in the 
 question. The fact that the check remains in the hands of the 
 original payee would seem to be suffcient to suggest that the in- 
 dorsement of the bank could not have been intended as a guar- 
 antee of the payment of the check. The circumstances are suf- 
 ficient to put any prudent man on inquiry as to why the bank 
 indorsed the check, it not being drawn on such bank and its 
 indorsement not being necessary for the negotiation of the check. 
 Besides, the form of the indorsement suggests that it was in- 
 tended as an indorsement for collection, and, therefore, limited 
 to that purpose, and was not intended as a full indorsement, mak- 
 ing the bank liable on the paper. Similar indorsements have been 
 held sufficient to carry on their face notice that the indorsement 
 is intended for collection only. The Supreme Court of Arkansas 
 in the case of Johnston <u. Schnabaum, 109 S. W. 1163, held 
 that "an indorsement by a bank on a note to pay to the 
 order of any bank or banker shows on its face that it passes 
 title for collection only" ; and the Court of Civil Appeals of 
 Texas, in the case of Gregory v. Sturgis National Bank, 71 S. W. 
 66, held that an indorsement, "pay any bank or banker or order" 
 shows that the bank, the holder of the draft, held the draft merely 
 for collection, or at least was sufficient to put the drawee on 
 inquiry as to the bank's ownership of the same. 
 
 Certainly, where the check was cashed by a merchant under the 
 circumstances stated in the question, it would seem that the form 
 of the indorsement would put the merchant on inquiry, and that 
 he could not be held to be a bona fide holder without notice. 
 
 A check, payment of which is refused by the bank on which 
 it is drawn, must be protested at once in order to bind indorsers. 
 There is no authority for presenting a check the second time in 
 order that protest may be made. Therefore, the protest made on 
 the second presentation is entirely without effect. However, 
 unless the paper was made payable to the bank and its indorse- 
 ment was necessary in order to transfer title, protest of the paper 
 would not be required in order to bind it as an indorser, protest 
 being required only for the purpose of binding parties whose 
 signatures are necessary in negotiation of the paper. 
 
 Regardless of the question of whether or not the bank would be 
 released by the failure to protest, which as indicated would de- 
 pend on whether its indorsement was necessary to transfer title
 
 OPINIONS OE THE GENERAL COUNSEL. 355 
 
 to the paper, I do not think it would be liable to the merchant, 
 because the form of the indorsement clearly indicated that it was 
 not intended as an unrestricted indorsement. 
 
 Note Indorsed in Blank Is Payable to Bearer, and Holder 
 May Sue in His Own Name. 
 
 Where a note is payable to the order of a named person and is indorsed 
 by him in blank, can a subsequent holder sue on the note in his own 
 name? 
 
 Where a paper is payable to the order of a named person, and 
 is indorsed by him in blank, it is payable to bearer and passes 
 freely from hand to hand, and the holder of such an instrument 
 can bring suit on the same in his own name. This has been de- 
 cided by our Supreme Court in more than one case. I quote from 
 Habersham v. Lehman, 63 Ga. 383 : 
 
 "Where a promissory note is payable to a named person or 
 order, or to the order of a named person, and is indorsed in 
 blank, it is then, until the blank is filled, payable to the holder, 
 and any holder may receive payment or sue and collect." 
 
 The case of Heard v. DeLoach, 105 Ga. 500, is to the same 
 effect. 
 
 Check Indorsed in Blank Is Payable to Bearer Notwithstand- 
 ing Subsequent Limited Indorsement. 
 
 A check drawn by P in favor of L is indorsed in blank by the payee. 
 It also contains an indorsement by X as follows : "Pay F, bank or order." 
 Was the bank on which the check was drawn authorized to pay the check 
 upon the blank indorsement of the payee or was its right to do so re- 
 stricted by reason of the subsequent indorsement stamped thereon? 
 
 The precise question seems to have been decided by the Su- 
 preme Court. I quote from the case: 
 
 "A negotiable note being indorsed in blank (the blank still un- 
 filled), any holder may sue the maker. A full indorsement by 
 a person other than the payee, will not hinder the blank indorse- 
 ment by the payee from operating as evidence of title in the pres- 
 ent holder." Habersham v. Lehman, 63 Ga. 380 ( 1 ) . 
 
 The court also says in discussing the question : 
 
 "Where a promissory note is payable to a named person or" 
 order, or to the order of a named person, and is indorsed in blank, 
 it is then, until the blank is filled, payable to the holder, and any 
 holder may receive payment, or sue and collect. The payee's
 
 356 PARK'S BANKING LAWS OF GEORGIA. 
 
 order to pay to any holder is not revoked or canceled by the 
 order of some other person to pay to a particular individual." 
 
 Checks are negotiable instruments and are affected by all the 
 rules governing commercial paper. The effect of a blank en- 
 dorsement of a check is the same as the blank endorsement of a 
 note. The rule laid down by the Supreme Court of Georgia and 
 above quoted seems to be universally recognized. I quote again 
 from Brady on the Law of Bank Checks, p. 56: 
 
 "A blank indorsement makes the instrument so indorsed trans- 
 ferable by delivery, without the holder's indorsement, in the 
 same manner as an instrument payable to bearer. When an in- 
 strument is payable to bearer or after it is once indorsed in blank, 
 a subsequent indorsement to a particular person, or order, does 
 not limit its tranferability. An instrument, being once made 
 payable to bearer may, notwithstanding a subsequent special in- 
 dorsement, still be transferred by delivery without the indorse- 
 ment of the holder." 
 
 Under these authorities, I do not think there can be any doubt 
 but that the bank was authorized to pay the check to the holder. 
 
 INSTALLMENT LOANS. 
 
 Not Usurious When Made by Savings Bank Which Pays In- 
 terest to Depositors, and Whose Deposits Are Not Subject 
 to Check. 
 
 Where a savings bank, which pays interest to depositors and whose 
 deposits are not subject to check, makes a loan on real estate, calculates 
 interest at eight per cent, for the whole period, and divides the payments 
 of both principal and interest thus aggregated for the entire term into 
 monthly, quarterly, or annual installments, is the transaction usurious? 
 
 Section 2878 Park's Ann. Code provides that building and loan 
 associations and other like associations may lend money accord- 
 ing to the plan outlined in the question. Section 2881 of the 
 Code, which is in the same article as 2878, provides that, 
 
 "All the provisions of this article are to apply to all savings 
 institutions which pay interest to depositors, and whose deposits 
 are not subject to check." 
 
 This section was construed in the case of Union Savings Bank 
 & Trust Company v. Dottenheim, 107 Ga. 606^ where it was held 
 by the Supreme Court that the Union Savings Bank, being a sav- 
 ings institution which paid interest to depositors and whose de-
 
 OPINIONS otf THE GENERAL COUNSEL. 357 
 
 posits were not subject to check, could charge and collect interest 
 in the manner described. 
 
 I am, therefore, of the opinion that such a bank can make loans 
 as outlined under the provisions of 2881, and that loans so made 
 are not usurious or in any sense invalid. 
 
 INSURANCE. 
 
 Any Change in Title of Property Insured Without Notice to 
 Insurance Company Voids the Policy. 
 
 A merchant borrows from the bank and as security gives a receipt for 
 merchandise. He delivers to the bank an insurance policy made out in 
 his favor with a written order to the insurance company to pay over the 
 amount to the bank in case of fire. No "loss clause" is attached to the 
 policy. Would this transaction affect the insurance? 
 
 I think it would unquestionably void the policy. As I under- 
 stand the transaction, the title to the merchandise is transferred 
 to the bank as security for the loan. Whether this be regarded as 
 an absolute transfer or as creating a lien on the merchandise 
 simply, the effect, so far as the insurance is concerned, would be 
 the same. The policy would be rendered void. The rule is that 
 any change in the title to the property insured voids the policy. 
 This applies not only to an absolute sale, but to a sale to secure 
 a debt, or to the creation of a simple lien on the insured property. 
 
 Wife Witnessing Transfer of Policy Previously Transferred 
 to Her Is Estopped to Claim Proceeds as Against Trans- 
 feree. 
 
 A man transferred a life insurance policy to a bank as security for a 
 loan. His wife, who was his business partner, attested the transfer as a 
 witness, and benefitted by the loan. She now claims the policy had been 
 transferred to her before the loan was made. Will she be allowed to set 
 up this old transfer or is she estopped by having witnessed the transfer 
 to the bank? 
 
 The wife, having witnessed the transfer of the insurance 
 policy by her husband to the bank and having received the benefit 
 of" that transfer in the further extension of credit to the firm 
 of which she was a member, is estopped now to assert a previous 
 transfer of the policy to herself or to claim any benefit thereunder 
 superior or antagonistic to the transfer to the bank. I quote :
 
 358 PARK'S BANKING LAW OF GEORGIA. 
 
 "If the owner or a person having an interest in property repre- 
 sents another as the owner, or permits him to appear as such, 
 or as having complete authority over it, he will be estopped to 
 deny such ownership or authority, against persons who, relying 
 on his representations or silence, have purchased or acquired an 
 interest in the property ; and generally where a person by word or 
 conduct voluntarily induces another to act on a belief in the ex- 
 istence of a certain state of facts, he will be estopped, as against 
 him, to allege a different state of facts." Equitable Mortgage Co. 
 v. Butler, 105 Ga. 555. 
 
 "One who attests a deed knowing its contents, cannot after- 
 wards stand by and see expensive work done under it on the 
 premises, making no objection, and then assert an older adverse 
 title in himself, and recover the premises in opposition to the 
 deed to which his attestation gave authenticity and credit. He is 
 estopped." Ga. Pacific Ry. Co. v. Strickland, 80 Ga. 776 (2). 
 
 "The true owner of property may estop himself by his conduct 
 from asserting title to his own property, as when he stands by and 
 allows property belonging to him to be sold to an innocent pur- 
 chaser for value as the property of another. American Mort- 
 gage Co. v. Walker, 119 Ga. 341, and cit. Or, he may so estop 
 himself by attesting a deed, of the contents of which he knows, 
 made by a person who has no title. Ga. Pac. Ry. Co. v. Strick- 
 land, 80 Ga. 776. The negotiation of the loan from Lewman by 
 Farrar in behalf of his wife and his attestation of her deed given 
 to secure the loan would estop Farrar from asserting title in his 
 own favor as against Lewman, assuming, of course, Lewman's 
 ignorance of the true title." Equitable Loan & Security Co. v. 
 Lewman, 124 Ga. 190. 
 
 "If one who held the legal title to land, though unrecorded, 
 represented that the title was in another person who appeared 
 from the record to be the owner, and that such other person had 
 the right to sell and make a bond for title to the land, and thus 
 induced an innocent purchaser for value, in reliance on such rep- 
 resentation, to accept a bond for title from the other person, to 
 give notes for the purchase money, and to pay some or all of 
 them, the person so. acting would be estopped from denying the 
 title of such third person." Sewell v. Norris, 128 Ga. 824. 
 
 The principle is well stated in 4419 of Park's Ann. Code : 
 
 "A fraud may be committed by acts as well as words ; and one 
 who silently stands by and permits another to purchase his prop- 
 erty without disclosing his title is guilty of such a fraud as estops 
 him from subsequently setting up such title against the pur- 
 chaser." 
 
 The fact that the claimant is a married woman and that the 
 policy was transferred to secure the debt of her husband makes 
 no difference. While there are certain restrictions on the right 
 of a married woman to contract, and while her property may not
 
 OPINIONS of THE GENERAL COUNSEL. 359 
 
 be taken to satisfy her husband's debts, she may nevertheless be 
 estopped by her conduct. I quote again from the Supreme Court : 
 
 "This is not a case in which can be applied the rule that any 
 assumption by the wife of'the husband's debts is void. While her 
 power of contracting is restricted by law, yet there is no prin- 
 ciple of law or justice that will tolerate in her, any more than in 
 a man, the perpetration of a fraud. Even minors may be estopped 
 by their admissions from denying the truth of them, or by their 
 silence when the circumstances call for a disclosure of their claims 
 or their rights, provided the minor has arrived at those years of 
 discretion when a fraudulent intent could be reasonably imputed 
 to him. Whittington v. Wright, 9 Ga. 23. A married woman 
 has no legal rights that can exempt her from this rule of law and 
 justice. Dunbar v. Mize, 53 Ga. 439 (2) ; Dotterer v. Pike, 60 
 Ga. 42; Archer v. Guill, 67 Ga. 195, 200; Ruffin v. Paris, 75 Ga. 
 654; Henry v. McAllister, 99 Ga. 557." Wolff & Happ v. 
 Hawes, 105 Ga. 153. 
 
 "One plea of the defendant averred, that she employed an 
 attorney to examine the title, and that the wife represented to him 
 that the deed made by her to her husband was a deed of gift and 
 not one of sale, and that he was induced thereby to recommend 
 to the defendant that the husband had a good title to the property, 
 and that the defendant was induced by such recommendation to 
 make the purchase from the husband, and that the plaintiffs, who 
 claimed the land as heirs at law of the wife, were estopped from 
 setting up title thereto on the ground that the deed to the hus- 
 band was void because it was one of bargain and sale, and had not 
 been allowed by the Superior Court of the wife's domicile. Held, 
 that the court committed no error in refusing to strike this plea 
 and in admitting testimony in support thereof." Shackelford v. 
 Orris, 135 Ga. 29 (6). 
 
 These cases appear to be closely in point. It is true none of the 
 cases in which estoppels were invoked related to policies of insur- 
 ance, but there is nothing sacred or peculiar about an insurance 
 policy which would differentiate it from other transactions. In 
 fact, there would seem to be less reason for invoking the doctrine 
 of estoppel where real estate is concerned than where the subject 
 matter of the contract is an insurance policy, for the law pro- 
 vides for the recording of deeds and makes such record notice 
 to all the world . As I understand the question, there was noth- 
 ing in the policy which was transferred to the bank to indicate 
 that there had been a previous assignment or that the transferrer 
 did not have full and complete control over the same.
 
 360 PARK'S BANKING LAW OF GEORGIA. 
 
 INTEREST. 
 
 Method of Calculating When Partial Payments Are Made. 
 
 What is the proper method for calculating interest where partial pay- 
 ments are made? 
 
 Section 3433 of Park's Ann. Code, which covers the subject, is 
 as follows: 
 
 "When a payment is made upon any debt, it shall be applied 
 first to the discharge of any interest due at the time, and the bal- 
 ance, if any, to the reduction of the principal. If the payment 
 does not extinguish the interest then due no interest shall be 
 calculated on such balance of interest, but only on the principal 
 amount up to the time of the next payment." 
 
 It is suggested that this method of calculating interest is some- 
 times called compounding interest and is objected to for that 
 reason. I quote from the case of Wade v. Powell, 31 Ga. 3 : 
 
 "It is not compound interest to add interest on the balance up 
 to the credit, and deduct credit from the sum of principal and in- 
 terest, and then to add interest on balance, etc., when the credit 
 exceeds the interest, etc. ; but such rule is the one prescribed by 
 the statute." 
 
 This case fully settles the legality of this method and decides 
 the precise point raised. 
 
 Computing on Basis of Thirty Days to Month and Twelve 
 Months of Thirty Days Each to Year Is Allowable. 
 
 Are banks authorized to calculate interest on the basis of thirty days to 
 the month and three hundred and sixty days to the year? 
 
 It is the custom among bankers, for the sake of convenience, to 
 compute interest at thirty days to the month and twelve months 
 to the year, and this custom is recognized in Georgia. I quote 
 from a decision by the Supreme Court : 
 
 "The taking of interest for a portion of a year, computed on 
 the principle that a year consists of 360 days, or twelve months 
 of thirty days each, is not usurious, provided this principle is 
 resorted to in good faith as furnishing an easy and practical mode 
 of computation and not as a cover for usury." Patton v. Bank of 
 Lafayette, 124 Ga. 965.
 
 OPINIONS of THE GENERAL COUNSEL. 361 
 
 Estate of Decedent Not Exempt from Interest. 
 
 The maker of a note bearing interest from maturity dies shortly after 
 its maturity. Is the administrator of the maker relieved from paying in- 
 terest on the note for twelve months ? 
 
 I know of no provision of law which would authorize the ad- 
 ministrator to deduct twelve months' interest. The only provision 
 relieving an administrator from the payment of interest is that 
 found in 4077 of Park's Ann. Code. This section lays down 
 the rules to be used as the basis of settlement between dis- 
 tributees and administrators. It is provided in this section that in 
 the settlement of estates "no interest shall be charged either way 
 for the first year, as one year is now allowed by law for the col- 
 lection of assets and to ascertain the indebtedness of an estate." 
 But this provision is not applicable to the case stated. If the note 
 bears interest from maturity, the holder is entitled to collect in- 
 terest from maturity. 
 
 KITING. 
 
 Definition of 
 
 What is "kiting"? 
 
 The word seems to be used in several different senses. It is 
 sometimes understood to mean the lending of its credit by one 
 commercial firm to another. Thus one friendly firm may borrow 
 from another its check, draft, note, or indorsement to tide over 
 an immediate necessity for money, the other firm, when occasion 
 arises, returning the favor. 
 
 In Georgia, we generally use the term as meaning the mailing 
 out of checks by a person who has no account with the bank on 
 which the checks are drawn, or checks for an amount in excess 
 of his balance, with a view to making up the amount by the 
 time the checks are presented. Sometimes it goes even further 
 than this, as for example, where a man deposits in a bank a check 
 on another bank in which he has no funds, intending to make 
 up the amount with the drawee bank before the check can be 
 presented. In short, the term seems to cover almost every variety 
 of fictitious credit built up by means of checks, drafts, notes, etc., 
 drawn against deposits which do not exist or which do not repre- 
 sent bona fide obligations.
 
 362 PARK'S BANKING LAW OF GEORGIA. 
 
 LANDLORD'S LIEN. 
 
 Indorsement of Rent Note Transfers the Landlord's Lien. 
 
 Does the indorsement of a rent note transfer the landlord's lien? 
 
 It was provided by the Act of 1882, codified as 3343 Park's 
 Ann. Code, as follows : 
 
 "Whenever any contract for rent is evidenced by writing and 
 is transferred by written assignment before the maturity of the 
 crops on the lands rented, the special lien in favor of landlords 
 shall, on the maturity of the crops, arise in favor of the transferee 
 of such rent contract in the same manner as it would have done 
 in favor of the landlord had no transfer been made." 
 
 And by the Act of 1899, codified as 3345 and 3346 of that 
 Code, it is provided : 
 
 "All transfers and assignments of rent notes, mortgage notes, 
 and other such evidences of indebtedness, secured either by con- 
 tract lien or out of which a lien springs by operation of law, shall 
 be sufficiently technical and valid where such transfer or assign- 
 ment plainly seeks to pass the title to any of such papers in writ- 
 ing from one person to another." 
 
 "Upon all such transfers or assignments of any such rent note, 
 mortgage note, or other such evidence of indebtedness as men- 
 tioned in the preceding section, such transfer or assignment shall 
 carry together with the title thereof to such transferee or assignee 
 also the lien connected with the same without naming or spe- 
 cifically transferring the lien, so that the effect of such transfer 
 or assignment will be to completely and fully carry the lien as a 
 necessary incident thereof." 
 
 There can be no doubt under these sections of the Code that an 
 indorsement of a rent note transfers the landlord's lien. 
 
 LANDLORD'S LIEN FOR SUPPLIES 
 FURNISHED. 
 
 Whether Such Lien Exists Where Supplies Furnished by 
 Another on Order of Landlord Depends on the Circum- 
 stances. 
 
 A landlord gives the manager of a fertilizer company, in which he 
 himself is a stockholder, a verbal order to supply his tenant with fer- 
 tilizers necessary to make the crop. The company takes a note signed 
 by the tenant but not by the landlord. The landlord, however, considers
 
 OPINIONS OF THE; GENERAL COUNSEL. 363 
 
 himself liable and will pay the note at maturity if the tenant does not. 
 Before the fertilizer note becomes due, it develops that a supply merchant 
 has a duly executed and recorded crop mortgage on the tenant's crop. 
 Can the landlord pay the fertilizer note, have it assigned to himself, and 
 collect it out of the crop as against the mortgage of the supply merchant? 
 
 The only question involved on the state of facts detailed is 
 whether, under those facts, the landlord had a lien on the crop 
 for supplies furnished. Of course fertilizers come within the 
 designation of supplies for the furnishing of which the landlord 
 has a lien. And if the landlord has such a lien, it is of course su- 
 perior to a mortgage on the crop held by a third person. The 
 question, therefore, is : Has the landlord a lien under the facts 
 set out? It is well settled by the courts of this State that a land- 
 lord has a lien on the tenant's crop only for supplies which he 
 has furnished as landlord. 
 
 If, therefore, the landlord in this case had the fertilizer fur- 
 nished the tenant merely as agent of the fertilizer company, in 
 which he was a stockholder, he would have no lien therefor on 
 the crop, even if he should pay the note and have the same as- 
 signed to him. This has been held by the Supreme Court in the 
 case of Swann v. Morris, 83 Ga. 143, the headnote of which is 
 as follows : 
 
 "Where a landlord, as agent, sold to his tenant guano and took 
 a note therefor payable to his principal, and at maturity paid the 
 note because the tenant did not do so (this being required by his 
 contract with his principal), he was not entitled to foreclose a lien 
 for the guano as landlord." 
 
 I understand from the question, however, that the landlord 
 did not, as agent for the fertilizer company, sell the fertilizer to 
 his tenant, but rather that he made arrangements with "the tenant 
 to furnish the fertilizer to him and that the landlord originally 
 intended to be responsible to the fertilizer company for the pur- 
 chase. If this is true, I think the landlord has a lien which is 
 superior to the merchant's crop mortgage. If the landlord was a 
 mere surety for the tenant, he would not have a lien ; but if the 
 landlord, and not the tenant, was the real purchaser of the fer- 
 tilizer, the landlord undoubtedly has a lien on the crop for the 
 amount. I quote from the case of Scott v. Pound, 61 Ga. 579, 
 which supports this view: 
 
 "In order for a landlord to have a lien upon his tenant's crop 
 for supplies, etc., the landlord must furnish the articles, and not 
 merely become the tenant's surety for the price to some other 
 person by whom they are sold to the tenant. The landlord may 
 furnish them directly from his own stores, or may order them
 
 364 PARK'S BANKING LAW OF GEORGIA. 
 
 from others on his credit, and have them delivered with or 
 without passing through his hands. .If he is the real purchaser 
 for the tenant, the case is one for a lien, even though the joint 
 and several note of landlord and tenant be given for the price. 
 But if the tenant is the real purchaser in the first instance, not 
 deriving title through the landlord, there is no lien. What the 
 truth of the matter is, in its substance and reality, is a question 
 for the jury." 
 
 This case was followed in the case of Brimberry v. Mansfield, 
 86 Ga. 792; Rodgers v. Black, 99 Ga. 139, and Henderson v. 
 Hughes, 4 Ga. App. 52. I quote the first headnote in the last case 
 cited as being an exceptionally clear statement of the law : 
 
 "While a landlord has no lien for supplies furnished by another 
 to his tenant, and cannot acquire a lien by voluntarily assuming, 
 without the consent of the tenant, liability for supplies to be fur- 
 nished, nor obtain a lien for any preexisting debt for supplies, nor 
 as surety for payment of his tenant's debt for supplies, still he 
 is entitled to his lien for supplies where, at the request or with 
 the consent of the tenant, he directs the furnishing of supplies 
 to the tenant by an agent, and assumes sole liability for the debt 
 thus created. In such case the authority to sell to the tenant, 
 given by the landlord to the merchant, is an original undertaking, 
 and not an agreement to pay the debt of another, and the sup- 
 plies are indirectly furnished by the landlord, through the mer- 
 chant as his agent, instead of being directly delivered by his 
 hands." 
 
 In view of these authorities, I think that if the landlord had the 
 fertilizer furnished at the request or with the consent of the 
 tenant and that if he intended from the first to be liable to the 
 company, he would have a lien, and upon paying the note could 
 foreclose such lien as against the crop mortgage ; but if the land- 
 lord acted merely as the agent of the company in selling the fer- 
 tilizer or if he simply agreed, after the tenant made the note, to 
 pay it, in case the tenant did not, he did not have a lien upon the 
 tenants' crop, and the merchant could enforce his mortgage. 
 
 LEGAL TENDER. 
 
 Fractional Currency as. 
 
 To what extent is fractional currency legal tender? 
 I quote from the statutes of the United States: 
 
 "The present silver coins of the United States of smaller de- 
 nominations than one dollar shall hereafter be a legal tender in all
 
 OPINIONS OF THE; GENERAL, COUNSEL. 365 
 
 sums not exceeding ten dollars in full payment of all dues public 
 and private." Act of Congress, June 9, 1879, 21 Stat. L. 8, 
 amending Rev. St. 3586, U. S. Comp. Stat. 6573. 
 
 "The minor coins of the United States shall be a legal tender, 
 at their nominal value for any amount not exceeding twenty-five 
 cents in any one payment." U. S. Rev. St. 3587, U. S. Comp. 
 Stat. 6574. 
 
 By minor coins is meant, as I understand it, nickels and pennies. 
 
 LICENSE TAX. 
 
 State Bank Subject to and Must Register with the Ordinary. 
 
 Is a bank required to register with the ordinary of the county and to 
 pay the ordinary a fee of $1.00 for such registration? 
 
 State banks are required to register with the ordinary. Section 
 950 of Park's Ann. Code provides for a license tax on all busi- 
 ness corporations. This section applies to banks. Section 978 
 of the Code provides that before persons upon whom an occupa- 
 tion tax is levied shall be authorized to carry on business they 
 shall go before the ordinary of the county and register their 
 names, the business they propose to engage in and the place where 
 it is to be conducted, and that the tax levied shall then be paid 
 to the tax collector. There seems to be no doubt that this law 
 applies to banks, and that, therefore, they are required to register. 
 
 So far as I am able to ascertain, there is no express provision 
 of law authorizing the ordinaries to charge a fee of $1.00 for this 
 registration. I understand, however, that the ordinaries generally 
 over the State are charging this fee, and that the banks are pay- 
 ing it. The ordinaries claim that they get their authority to 
 charge this registration fee by analogy to the Corporation Com- 
 missioner Act, which provides a like fee to be paid to the Sec- 
 retary of State for recording the return made under that act. 
 I do not think that this law would give the ordinaries the right 
 to charge the fee, but they are undoubtedly entitled to some com- 
 pensation for the service. The law fixing the fees of ordinaries 
 provides that for every service required of them for which no 
 fees are specified, the same fees shall be allowed them as are al- 
 lowed clerks of the superior courts for similar services, or for a 
 like amount of labor. Under this provision, the ordinaries could 
 doubtless collect a reasonable fee for this service, and the amount 
 they are charging is probably a reasonable fee.
 
 366 PARK'S BANKING LAW of GEORGIA. 
 
 LIENS. 
 
 Senior Contract Liens on Personal Property Not Divested 
 by Judicial Sale. 
 
 Does a sale of personal property under execution, properly levied and 
 advertised, divest senior liens? 
 
 Such a sale does not divest senior contract liens. I quote 
 3274 of Park's Ann. Code : 
 
 "Property mortgaged may be sold under other process, subject 
 to the lien of the mortgage. If the mortgage is foreclosed, the 
 mortgagee may place his execution in the hands of the officer 
 of the law making the sale, and cause the title unincumbered to be 
 sold, and claim the proceeds according to the date of his lien." 
 
 I quote also 3292 : 
 
 "If a mortgage on realty or personalty is not foreclosed, and 
 the equity of redemption is levied on by other fi. fas. by consent 
 of the mortgagor and mortgagee and the plaintiff in the fi. fa. 
 levied, the entire estate may be sold, and the mortgagee claim 
 under his lien in the same manner as if his mortgage were fore- 
 closed." 
 
 From these sections it will be seen that the property may be 
 levied on and sold subject to the mortgage. And it is provided 
 by 3 2 75 that in such event the mortgagee, by filing with the 
 levying officer, prior to the sale, an affidavit, giving the amount 
 due on the mortgage and stating that he apprehends the loss of 
 the property unless a bond is taken, may require a bond to be 
 given in double the value of the property, conditioned not to re- 
 move the property out of the State, and for its forthcoming to 
 answer the lien of the mortgage. 
 
 If the mortgage creditor knows of the levy and sale, he may 
 foreclose his mortgage and claim the proceeds of the sale, or by 
 consent between the mortgagor and the mortgagee and the plain- 
 tiff the unincumbered title may be sold and the mortgage paid 
 without foreclosure. If no arrangement is made, and the mort- 
 gage is not foreclosed, the purchaser would buy the property 
 subject to the lien of the older mortgage.
 
 OPINIONS OF THE GENERAL COUNSEL. 367 
 
 Holder of Junior Lien May Take Up Prior Debt in Order to 
 Levy on and Sell Property. 
 
 How can the holder of a second deed to secure debt realize on his se- 
 curity? 
 
 The Code provides : That where any person other than the 
 holder or assignee of a secured debt has judgment against a de- 
 fendant who has an interest or equity in the property, the plaintiff 
 may take up the debt necessary to be paid by the defendant in 
 order to give such defendant legal title to the property, by paying 
 the debt with interest to date if due, and interest to maturity if 
 not due. When this is done, a conveyance must be made by the 
 holder of the security deed to the defendant, and when this con- 
 veyance is recorded the property may be levied on and sold as 
 the property of defendant, the proceeds of the sale being applied, 
 first, to the payment of the amount advanced by the plaintiff in 
 order to put the title in the defendant, and the balance to the pay- 
 ment of the execution under which the property is sold. Park's 
 Ann. Code, 6038. 
 
 The equity of a person who has given a deed to secure debt is 
 not subject to levy and sale. Where a loan is made and a deed 
 to secure debt taken and the party has already given a prior 
 security deed, the lender would have to proceed in accordance 
 with the section above mentioned. That is to say, he would first 
 have to reduce his claim to judgment and then pay off the debt 
 to the holder of the first deed, and when title was in this way 
 put in the debtor, he could levy on and sell the property. It can 
 readily be seen that this makes a second security deed very poor 
 security where the amount secured by the first deed is consider- 
 able. 
 
 LOANS. 
 
 Power Conferred on Officer to Borrow Money for Corporation 
 Does Not Generally Extend Beyond the Year. 
 
 Is a resolution passed by the directors of a corporation in 1919, author- 
 izing the president and manager to negotiate loans from time to time, as 
 in his judgment may be necessary, sufficient authority to such officer to 
 secure loans on behalf of the corporation in a subsequent year? 
 
 The by-laws of most corporations provide that directors and 
 officers shall be elected at each annual meeting, and this is cus- 
 tomary even with those small business corporations which have no
 
 368 PARK'S BANKING LAW OF GEORGIA. 
 
 regular by-laws. Officers are usually, elected to hold office until 
 the next annual meeting. A specific authority conferred by reso- 
 lution of the board of directors would generally not be presumed 
 to continue longer than the term for which the officer was elected, 
 and one board of directors would not generally be presumed to 
 have intended to provide for the carrying on of the business of 
 the corporation beyond the next annual meeting nor to confer au- 
 thority on an officer to be elected by their successors. I think, 
 therefore, that a bank should require a resolution by the board 
 for the current year conferring authority on the officer. This 
 would certainly be safer. 
 
 A resolution passed by a board in 1919 would not be pre- 
 sumed to have been intended to bind the board elected in 1920, 
 and in order to confer authority upon the officer a new resolution 
 should be passed by the new board of directors. For instance, 
 where a bank borrows money from its correspondents, a 'specific 
 authority is ordinarily required for each transaction, or at least 
 a general resolution passed at the beginning of each new year. 
 
 While this is true, it is also true that "where all of the share- 
 holders of the corporation by their direct act or acquiescence invest 
 the executive officer of the company with the powers and functions 
 of the board of directors, as a continuous and permanent arrange- 
 ment, there being no board of directors, or, if directors, they 
 being entirely inactive, and the officer discharging all its duties, 
 a mortgage on the personal property of the corporation, made 
 and executed in its behalf by such officer to secure one who in- 
 dorsed a note in order to secure a loan for it and who had to pay 
 such loan, is valid as against the corporation." Garmany v. 
 Lawton, 124 Ga. 876. If the circumstances are such as those de- 
 tailed in the above quotation, a loan made by the officer would be 
 binding on the corporation, but it would be far better to have a 
 regular resolution by the board of directors authorizing the 
 officer to make loans on behalf of the company. 
 
 Authority of Officer to Borrow Money Should Be Shown by 
 Copy of Resolution of Directors Properly Certified. 
 
 How should the authority of an officer of a corporation to borrow 
 money be shown? 
 
 Corporations can only act through their officers or agents. 
 These derive their authority either from the by-laws or through
 
 OPINIONS OF THE GENERAL COUNSEL. 369 
 
 resolutions of the stockholders or board of directors. The board 
 of directors in most corporations manages and controls all the 
 ordinary affairs and business of the corporation. Stockholders 
 and directors can only act when duly assembled in meeting held 
 in accordance with the charter and by-laws. Minutes of these 
 meetings should be kept and all resolutions adopted entered 
 thereon. Of course, a corporation may be bound by acts of its 
 officers which have not been formally authorized, by acquiescence 
 or ratification. " But authority to bind the corporation should be 
 shown by the by-laws or by resolution duly passed by the di- 
 rectors or stockholders and entered on the minutes. 
 
 The regular way in which such corporate action is shown is 
 by a certified copy of the resolution as it appears on the minutes, 
 under the seal of the corporation, attested by the secretary. The 
 secretary's certificate should show that the resolution authorizing 
 the action, the loan in this case, was duly passed at a meeting of 
 the directors or stockholders, as the case may be, regularly called 
 in accordance with the by-laws of the corporation, and that a 
 quorum was present. It should also recite that the resolution 
 has been duly entered on the minutes of the company. 
 
 It is very important in dealing with an officer of a corporation 
 that there should be no doubt as to his authority, especially when 
 he undertakes to execute papers which are out of the usual, such, 
 for instance, as a mortgage on the corporation's property. Bank 
 officers cannot be too careful in requiring that an officer purport- 
 ing to act for a corporation shall furnish proof of his authority 
 in the form of a properly certified resolution of the board of di- 
 rectors, or stockholders, or of a by-law. 
 
 Loans to Live-Stock Dealers with Which to Buy Stock, 
 Difficulty in Properly Securing Shown. 
 
 Can a bank safely lend money to a customer engaged in the live stock 
 business, that is, buying and selling stock; and what kind of paper should 
 be taken to secure advances for use in such a business? 
 
 The question does not disclose definitely the method which the 
 customer pursues in the handling of his business. Presumably, 
 he is buying up cattle and other stock and selling them to packing 
 houses or other dealers, not keeping any^ regular stock or supply 
 on hand, at times having none, or practically none, and at other 
 times a large supply. What is desired is an opinion as to how a 
 24
 
 370 PARK'S BANKING LAW OF GEORGIA. 
 
 bank can advance such a customer money to be used in purchas- 
 ing live stock, the advances to be repaid when the stock is sold. 
 
 The question is by no means an easy one. Apparently there 
 is no satisfactory method by which these advances can be made 
 and properly secured. The bank, of course, could take a mort- 
 gage on, or a bill of sale to, the stock as it is purchased, and have 
 these papers recorded; but when the stock was sold and the 
 money paid over in satisfaction of the mortgage or bill of sale, 
 additional mortgages or bills of sale would have to be taken cov- 
 ering each new lot purchased. This, of course, is not satisfac- 
 tory. 
 
 The Code provides that a mortgage may be given covering a 
 stock of merchandise or other articles changing in specific. But 
 on account of the way business of this character is usually carried 
 on, the dealer would not have on hand any regular stock which 
 could be covered by such a mortgage, though there would be 
 changes in its composition. Consequently, if the bank took a stock 
 mortgage without attempting actually to describe the live stock 
 covered, as is usually necessary, when the stock on hand at the 
 time the mortgage was given was all sold there would be nothing 
 on which the mortgage could operate. 
 
 It is thus almost impossible to taRe a mortgage or other lien on 
 property which is constantly shifting and changing as this is, 
 which has no fixed locality, and which cannot be described with 
 anything like sufficient accuracy to identify it. For example, 
 there may be ten head of cattle to-day, fifty to-morrow, and none 
 the next day ; and there may be cattle located in one place to-day, 
 at an entirely different place to-morrow, and some at one place 
 and some at another on the same day. 
 
 In some cases, where business of somewhat similar character 
 was carried on, banks have entered into contracts with customers, 
 under which they agreed to hold in trust for the bank the money 
 advanced and all of the articles purchased therewith, and to ac- 
 count to the bank for the proceeds of all articles sold and to 
 deliver at any time upon demand either the money advanced, the 
 articles purchased, or the proceeds of any which might have 
 been sold. In such cases the customer is constituted a special 
 agent of the bank to use and expend the money advanced. Under 
 a carefully drawn contract of this character, the customer would 
 be bound to account to the bank, and if he failed to do so would be 
 liable criminally for larceny after trust. This, however, is very 
 poor security. The agent of the bank created in this way would
 
 OPINIONS of THE GENERAL COUNSEL. 371 
 
 have the right to sell and the bank would have no lien on the 
 property. If such an agent should fail to account for the pro- 
 ceeds of the sales, or should run off, or should dispose of the 
 property, the bank would be practically without protection other 
 than criminal prosecution. 
 
 If such customer owns any property, he should be given a line 
 of credit sufficient for his requirements and secured by a mort- 
 gage on such property. A mortgage of this kind could be pre- 
 pared so as to secure the amount advanced at the time the mort- 
 gage was executed and additional amounts that might be ad- 
 vanced from time to time, not exceeding a given sum. This 
 would leave the customer entirely free to carry on his business 
 in his own way, without any liens on the stock purchased and 
 without any liability to account for the proceeds of sale. And at 
 the same time the bank would be secured by stable property and 
 would be protected in handling the account. 
 
 LOANS TO PUBLIC CORPORATIONS. 
 
 County Boards of Education May Borrow Money to Pay 
 Teachers' Salaries. 
 
 Can a bank safely lend to county boards of education under the Act 
 of 1910 (Park's Ann. Code, 1548 a-g), authorizing them to borrow 
 money to pay the salaries of teachers? Explain the operation of this law. 
 
 Where the terms of the act are complied with, the loans made 
 under it are valid and binding, and I see no reason why a bank 
 cannot safely make such loans. The act, however, should be care- 
 fully looked to, and it should be seen that all of its provisions and 
 requirements are literally followed ; otherwise, in case of contest, 
 there might be considerable difficulty in enforcing the debt. 
 
 By the terms of the act, the county boards of education of 
 the several counties are authorized to borrow a sufficient amount, 
 and no more, to pay the salaries of the teachers in the public 
 schools, the salaries to be paid being restricted to those of the cur- 
 rent school year in which the money is borrowed, and the board 
 being limited in the amount to be borrowed to the sum to which 
 the county may be entitled from the public school fund. The act 
 provides that the board of education shall pass a resolution, in 
 which shall be stated the amount of money to be borrowed, the 
 length of time same is to be used, the rate of interest, the pur-
 
 372 PARK'S BANKING LAW OF GEORGIA. 
 
 pose for which the money is borrowed, and from whom, and that 
 this resolution shall be entered on the minutes of the board. The 
 bank should require a certified copy of this resolution, the cer- 
 tificate showing that it was adopted at a regular meeting of the 
 board at which a quorum was present, and that the resolution 
 had been entered upon the minutes of the board by the county 
 school superintendent. This resolution should also show that the 
 amount to be borrowed is not in excess of the amount which the 
 county will receive from the public school fund. In other words, 
 the resolution should be full and complete, and should follow the 
 terms of the act in every respect. 
 
 The act further provides that the note shall be signed in the 
 name of the board of education of the county by the president 
 of the board of education and the county school superintendent. 
 It would perhaps be well to add to the note a statement that it is 
 given pursuant to a resolution passed by the board of education, 
 giving the date upon which the resolution was adopted. The 
 money advanced upon such loan should be paid over to the county 
 school superintendent, and disbursed by him, and the superin- 
 tendent is authorized to repay the loan out of any funds coming 
 into his hands which are legally applicable to the payment. 
 
 It would be well to have the note mature at the time when the 
 superintendent will be in funds, as the act expressly provides that 
 no money shall be borrowed for any longer time than is necessary, 
 and shall be paid back out of the funds coming into the hands of 
 the superintendent. 
 
 What has been said is little more than a summary of the pro- 
 visions of the act. It would be well for the officials of the bank 
 to get the act itself, study it carefully, and see that the resolution 
 and note itself are in accordance with the act, and that the money 
 is borrowed, and will be used, solely for the purpose of paying the 
 salaries of the teachers for the current school year. 
 
 NOTE. The sections of Park's Ann. Code above referred to have been 
 reenacted in what is known as the Georgia School Code, 102-108, in 
 exactly the same language, with the exception that instead of being limited 
 to a sufficient amount of money to pay the salaries of teachers, the au- 
 thority of the county boards of education is extended to borrowing a suf- 
 ficient amount of money to pay for the operation of the public schools of 
 their counties, and the proviso limiting this authority to salaries for the 
 current school year is stricken. Acts 1919, pp. 328-330.
 
 OPINIONS OF THE GENERAL COUNSEL. 373 
 
 Trustees of Local School Districts Have No Authority to 
 Borrow Money. 
 
 Can the trustees of a local school district, which is merely a subdivision 
 of the county created under what is known as the "McMichael Act" bor- 
 row money and give notes or other obligations therefor? 
 
 I do not know of any authority for the trustees of such a dis- 
 trict to borrow money and make a note or other obligation there- 
 for. Any loans made to the trustees of the district would have to 
 be made simply as a good faith proposition, the trustees having 
 no legal right to borrow the money or execute a binding obliga- 
 tion therefor. Provision is made for the county board of educa- 
 tion to borrow money in order to pay teachers' salaries, but there 
 seems to be no provision for the trustees of the separate districts 
 to make such loans. 
 
 Municipal Corporations Have No Right to Borrow Money 
 Except for Casual Deficiencies in Revenue. 
 
 Is a note given by the mayor and aldermen of a municipality under au- 
 thority of a resolution regularly passed at a meeting of the board legal? 
 
 The Constitution of Georgia, Article 7, Section 7, Paragraph 1, 
 provides that: 
 
 "The debt hereafter incurred by any county, municipal corpora- 
 tion or political division of this State shall not exceed seven per 
 centum of the assessed value of all the taxable property therein, 
 and no such county, municipality, or division shall incur any new 
 debt, except for a temporary loan or loans to supply casual de- 
 ficiencies of revenue, not to exceed one-fifth of one per centum 
 of the assessed value of taxable property therein, without the 
 assent of two-thirds of the qualified voters thereof at an election 
 for that purpose to be held as may be prescribed by law." Park's 
 Ann. Code, 6563. 
 
 In discussing this section, Mr. Justice Cobb in the Dawson 
 Water Works case, 106 Ga. 696, 713, says : 
 
 "It was the purpose of the constitutional provision to provide a 
 system of finance for subordinate public corporations under 
 which there should be each year contracts made for the expenses 
 of the year, and these were to be paid out of moneys arising from 
 taxes levied during the year, that is, each year's expense should be 
 paid by taxes levied during the year, and no item of expense was 
 to be paid except out of the taxes levied during the year in which 
 the contract for the expense was made." 
 
 In the case of the Town of Wadley v. Lancaster, 124 Ga. 354, 
 the Supreme Court held that a municipal corporation could not
 
 374 PARK'S BANKING LAW OF GEORGIA. 
 
 lawfully purchase a fire engine and give negotiable promissory 
 notes therefore, payable annually through a series of years, and 
 that a promissory note given under such contract is invalid even 
 in the hands of a bona fide purchaser for value before maturity. 
 In the case of Tate v. City of Elberton, 136 Ga. 301, the Su- 
 preme Court says: 
 
 "A liability for a legitimate current expense may be incurred, 
 provided there is at the time of incurring the liability a sufficient 
 sum in the treasury of the municipality which may be lawfully 
 used to pay the liability incurred, or if a sufficient sum to dis- 
 charge the liability can be raised by taxation during the current 
 year. This does not authorize municipal authorities to borrow 
 money (not to supply casual deficiencies of revenue) for the 
 purpose of using it during the year in defraying current expenses 
 as occasion may arise, and to give notes therefor." 
 
 The giving of promissory notes by a municipal corporation is 
 entirely without the scheme of municipal finance provided by the 
 Constitution. Where an unexpected deficiency in revenue arises, 
 money may be borrowed to meet such deficiency within the con- 
 stitutional limit, and a note given under these circumstances 
 would be valid. 
 
 Loans to Public Service Corporations Where for More Than 
 Twelve Months Must Be Approved by Railroad Commis- 
 sion. 
 
 Has a local telephone company, incorporated, the right to borrow 
 money without getting permission from the Railroad Commission? 
 
 Under the amendment of the Railroad Commission law in- 
 creasing the powers of the Commission, jurisdiction over tele- 
 phone and telegraph companies within this State is conferred 
 upon the Commission. This seems to be true whether the com- 
 pany is strictly a local company or also controls long distance 
 lines, the language of the law being, "over all common carriers 
 * * * telephone and telegraph corporations or companies 
 within this State." It is further provided by the Railroad Com- 
 mission Act that all companies or corporations over which the 
 authority of the Railroad Commission is extended shall be re- 
 quired to furnish a list of any stocks or bonds the issuance of 
 which is contemplated, and that it shall be unlawful for any of 
 such corporations or companies to issue stocks, bonds, notes, or 
 other evidences of debt payable more than twelve months after 
 date thereof, except upon the approval of the Railroad Commis-
 
 OPINIONS OF THE; GENERAL COUNSEL. 375 
 
 sion, and then only when necessary and for such amount as may 
 be required for the proper purposes of the corporation. Under 
 this section it would be necessary before a telephone company 
 undertook to give its notes payable more than twelve months 
 from the date thereof for the purpose of borrowing money that 
 the approval of the Railroad Commission be obtained. This 
 would not apply, of course, to temporary loans to be repaid within 
 the year. 
 
 LOSS IN MAILS. 
 
 Loss of Package in Mails Falls on Addressee. 
 
 A bank orders stamps from collector of internal revenue, and remits 
 therefor. The shipment is never received, but is supposed to have been 
 lost in the mails. Does loss fall on the government or on the bank? 
 
 As soon as the stamps are mailed, the responsibility of the col- 
 lector ceases. The rule is that the delivery of a shipment to a 
 carrier is delivery to the consignee. The same rule holds with 
 regard to delivery to the mails. When a letter is posted the for- 
 warder has no further control over it, and whether the addressee 
 receives the letter or not, the transaction is completed. Assuming, 
 of course, that the collector mailed the stamps, the loss in the 
 mails would be the bank's loss and not the Government's loss. 
 
 LOST INSTRUMENTS. 
 
 How Bank May Be Protected in Paying or Issuing Duplicates. 
 
 What steps can be taken to protect a bank in issuing a duplicate cashier's 
 check, where the purchaser of the original claims to have lost the check, 
 and his financial responsibility is not sufficient to warrant issuing a dupli- 
 cate on his obligation to protect the bank against the lost original? 
 
 Two courses are open. One is to require the purchaser to es- 
 tablish the paper as a lost instrument under the provisions of the 
 Code. Where this is done, he would have to show to the satis- 
 faction of the court that the paper was, in fact, lost, and that it 
 had not been transferred, and was not in the hands of an inno- 
 cent holder. The court would require a bond to protect the bank 
 from loss, in the event the original should be found. 
 
 The other course would be to require the holder of the original
 
 376 PARK'S BANKING LAW of GEORGIA. 
 
 check to furnish an indemnity bond, with satisfactory surety, to 
 protect the bank against loss in the event the original should be 
 found. In addition to the bond, an affidavit should also be re- 
 quired from the purchaser of the check, to the effect that the 
 original has been lost ; that it had not been indorsed, that he has 
 made diligent search for it and is unable to locate it. This affi- 
 davit would be a protection against fraud on his part, and a bond 
 would protect the bank against a holder who might have pur- 
 chased the check from the finder thereof. 
 
 It is best to proceed according to the first method, which is the 
 regular course provided by law, and affords generally better 
 protection than any other. 
 
 Where the check is not very large, I think the bank would be 
 very well protected by adopting the latter course, there being 
 some expense attached to the first method. 
 
 Method of Establishing Lost Stock Certificate. 
 
 What is necessary for the protection of a bank in issuing a duplicate 
 stock certificate? 
 
 The legislature in 1910 (Park's Ann. Code, 5321 a-d) made 
 full provision for the establishment of lost stock certificates and 
 for the protection of the bank where a certificate is so estab- 
 lished. The act provides that a petition shall be filed in the Su- 
 perior Court of the county in which the bank is located, which 
 petition shall contain a description of the lost certificate, state 
 how its loss occurred, and pray for the establishment of a copy. 
 The judge issues a citation, which is published once a week for 
 four weeks and served upon the bank, calling on all persons who 
 may be interested to show cause why the lost certificate should 
 not be established. If no defense is made at the time fixed for 
 the hearing, or if the defense is not sustained, a copy is estab- 
 lished in lieu of the lost original. The act provides that when 
 such copy is established all liability of the bank to any holder of 
 the original certificate shall cease, and that the established copy 
 shall take the place in all respects of the lost original. 
 
 I do not think it would be safe for a bank to proceed in any 
 other manner than in strict compliance with the terms of this 
 statute.
 
 OPINIONS OF THE GENERAL COUNSEL. 377 
 
 MARRIED WOMAN. 
 
 Cannot Be Surety or Pledge Her Property for Debt of 
 Another. 
 
 Do the restrictions on the right of a married woman to become surety 
 for another apply to personal property as well as to real estate? Can a 
 married woman ever be held liable upon a contract of suretyship? 
 
 The restrictions on the right of a married woman to contract 
 applies to personal property as well as to real property. Where 
 she lends her credit to her husband or to anyone else, or pledges 
 her property as security for the debt of another, she is not liable 
 on the contract and may recover her property. 
 
 A married woman may, however, borrow money on her own 
 credit and pledge her property to secure the debt, and give the 
 proceeds to her husband or pay her husband's debt with the 
 money, provided the loan is not made from the creditor of the 
 husband. She can also give her husband her property, either 
 real or personal, though she can not sell it to him without the 
 approval of the judge of the superior court. Park's Ann. Code, 
 3009. 
 
 While a married woman has the right to recover her property 
 which has been pledged as security for the debt of another or to 
 repudiate her contract of suretyship, she may under some cir- 
 cumstances be estopped to do so just as anyone else may be. In 
 what is possibly the leading case in Georgia, a married woman 
 stated to a creditor who had sold goods to a business with which 
 she was connected that the business belonged to her and not to 
 her husband. On the faith of this statement, the creditor made 
 no effort to collect his debt, knowing that she was good. When 
 sued on the account she pleaded that it was the debt of her hus- 
 band. The Supreme Court held, however, that, the wife having 
 led the creditor to believe that the business was hers, and the 
 creditor having taken no steps to collect the account of her 
 husband, she could not plead that it was her husband's debt. 
 Wolff v. Hawes, 105 Ga. 153. 
 
 There may be other cases where a married woman would be 
 estopped to reclaim her property which she had loaned to her 
 husband or another person and upon the security of which a loan 
 had been made, as where she had stated to the creditor that the 
 property belonged to her husband and she had no interest in it; 
 but where the lender knows that the property pledged by the hus-
 
 378 PARK'S BANKING LAW OF GEORGIA. 
 
 band is the property of the wife, the wife would not be estopped 
 from recovering the property. Nor would the act of the husband 
 in pledging her property, although with her knowledge and con- 
 sent, estop her, unless she by her own affirmative act misled the 
 creditor. 
 
 Loan to Married Woman, Secured by Her Individual Prop- 
 erty, Valid Though Lender May Know Money Is to Be 
 Used in Paying Husband's Debt to Another. 
 
 Can a bank safely lend to a married woman, secured by a mortgage or 
 security deed on her individual property, where the bank knows that her 
 purpose in making the loan is to obtain money with which to pay her hus- 
 band's debts? 
 
 It is well settled under the decisions of the Supreme Court that 
 such a loan is valid and is binding upon a married woman. I 
 quote from the case of Chastain v. Peak, 111 Ga. 889 : 
 
 "If a married woman voluntarily and upon her own responsi- 
 bility borrowed money and gave therefor a note and mortgage, 
 she was bound by her contract, although her object in obtaining 
 the loan was to raise money for the purpose of paying a debt 
 due by her husband, and although this fact was known to the 
 lender, if the latter was not the creditor to be thus paid, and had 
 nothing to do with any arrangement or scheme between the hus- 
 band and wife, looking to the accomplishment of the results in- 
 tended." 
 
 To the same effect are Nelms v. Keller, 103 Ga. 745 ; Johnson 
 v. Leffler Company, 122 Ga. 670, and Maynard & Company v. 
 Maynard, 12 Ga. App. 279. Possibly the strongest case is that of 
 Longley v. Bank, 19 Ga. App. 701, from which I also quote: 
 
 "Where a note is signed by a wife as principal and by the hus- 
 band as surety, the presumption of law is that she gives it on her 
 own contract and for value, to charge her separate property. 
 Perkins v. Rowland, 69 Ga. 661 ; Love v. Lamar, 78 Ga. 323 (3 
 S. E. 90) ; Temples v. Equitable Mortgage Co., 100 Ga. 503 (28 
 S. E. 232, 62 Am. St. R. 326) ; Jones v. Weichselbaum, 115 Ga. 
 369 (41 S. E. 615). 
 
 "Where the creditor, at the time a debt is created, really intends 
 in good faith to extend the credit to the wife, and not to the hus- 
 band, and the consideration of the loan passes legally and morally 
 from the creditor to the wife, and where the writings then exe- 
 cuted are such as purport to bind her for the debt as her own, 
 then, whatever may be the private understanding between the 
 wife and the husband, in which the creditor is not concerned and 
 in which he has no interest, as to the disposition by the wife of 
 the proceeds of the loan so received by her, the writings are to be
 
 OPINIONS OF THE GENERAL COUNSEL. 379 
 
 treated as embracing the true substance of the contract. Nor does 
 it matter in such case that the negotiations relating to the loan 
 are in fact all had through the husband, where the transaction 
 otherwise appears to be the bona fide and voluntary contract of 
 the wife. Schofield v. Jones, 85 Ga. 816, 819 (11 S. E. 1032) ; 
 Nelms v. Keller, 103 Ga. 745 (30 S. E. 572) ; Johnson v. Leffler 
 Co., 112 Ga. 670 (50 S. E. 488) ; Gross v. Whitely, 128 Ga. 79, 
 82 (57 S. E. 94) ; Third National Bank of Columbus v. Poe, 5 
 Ga. App. 113 (62 S. E. 826) ." 
 
 It is held, however, in Gross v. Whitely, 128 Ga. 79 : 
 
 "Tho'ugh a wife may contract as a feme sole, she can not bind 
 her separate estate by any contract of suretyship, nor by any 
 assumption of the debts of her husband, nor sell her property in 
 extinguishment of his indebtedness. Her inability to bind her 
 separate estate by a contract of suretyship precludes her from de- 
 livering her property in pledge for her husband's debt. A deed 
 executed by a married woman to a third person to secure a loan 
 contemporaneously made to the husband is void, although the 
 wife did not bind herself as surety to pay the husband's debt 
 which the deed was given to secure." 
 
 In Nelms v. Keller, 103 Ga. 746, the court say : 
 
 "The whole law of this question is comprised in the following 
 language used by the present Chief Justice in McCrary v. Grandy, 
 92 Ga. 327: 'Under our code ( 2488) there are three things 
 which a married woman having a separate estate can not lawfully 
 do. She can not bind her separate estate by any contract of 
 suretyship, nor can she assume the debts of her husband, nor sell 
 her separate estate to a creditor to extinguish his debts. If she 
 should do any of these things, the transaction would be absolutely 
 void. These are the only restrictions put upon her in dealing with 
 her separate estate, and outside of them, she stands upon the 
 same footing as a man or a feme sole.' " 
 
 Joint Mortgage of Husband and Wife Valid Though Money 
 Borrowed to Pay Husband's Debts. 
 
 What would be the status of the bank in the event property offered as 
 security for a loan is owned in part by a husband and in part by his wife, 
 who both sign the note and loan deed, it appearing that the larger part of 
 the money is to be used in paying off an incumbrance on the part of the 
 land belonging to the husband, or otherwise used for the payment of the 
 husband's debts? 
 
 It will be seen from the preceding opinion that 
 
 "A married woman may voluntarily and upon her own respon- 
 sibility borrow money and secure the same by mortgage, although 
 her object in obtaining the loan is to raise money to pay a debt
 
 380 PARK'S BANKING LAW OF GEORGIA. 
 
 of her husband, and although this fact is known to the lender, if 
 the latter is not the creditor to be thus paid, and the contract is 
 valid and binding upon her." 
 
 If the wife may borrow for the sole purpose of paying her 
 husband's debt, I do not think the fact that her husband signs 
 the note and mortgage and that the mortgage includes also prop- 
 erty belonging to the husband, would affect the question. The 
 situation would be altogether different, of course, if the mort- 
 gage was made to an existing creditor of the husband. 
 
 It is true that it has been held that where a mortgage is given 
 for future advances to be made to husband and wife jointly, the 
 wife is bound only to the extent of the consideration afterwards 
 received by her. Dobbins v. Blanchard, 94 Ga. 500. And it has 
 been held also that a sale of the wife's property in part for a con- 
 sideration paid to her and in part in payment of the husband's 
 debt, can not be upheld. Campbell v. Trunnell, 67 Ga. 518. 
 
 So, where a married woman signs a note, the consideration of 
 which is partly her debt and partly the debt of her husband, the 
 payee can only recover that part which is based on her own debt. 
 Jones v. Harrold, 110 Ga. 373. 
 
 But these and similar cases are based upon the fact that the 
 lender is the creditor of the husband. Where the bank lends upon 
 the credit of the wife, having no claims against the husband at 
 the time, it is no concern of the bank whether the wife gives the 
 money to her husband or uses it to pay the husband's debt. I 
 do not think the rule would be changed because the husband also 
 signed the note and included his property with hers in the security 
 deed, though there is some room for the argument that the hus- 
 band and the wife are each principals to the extent of the loan 
 to each, respectively, and sureties for each other to the extent of 
 the loan to the other, respectively. 
 
 Bona Fide Holder of Note Given by Married Woman as 
 Collateral Is Protected. 
 
 A married woman lends to her brother a note to be used as collateral to 
 a loan to the brother. The lender, who knows the woman is married, 
 deposits the note with a bank as collateral. Is the bank an innocent holder, 
 so that it can sell the collateral? 
 
 The bank is an innocent holder, and can sell the collateral. 
 While a married woman can not bind her separate estate by any
 
 OPINIONS OF THE GENERAL COUNSEL. 381 
 
 contract of suretyship, it is yet true that a bona fide purchaser 
 of a note given by a married woman will be protected. 
 
 The question does not disclose whether the note was that of a 
 third person held by the woman or whether it was a note which 
 she, herself, executed. If it is meant that she merely loaned to 
 her brother a note of a third person which she held, to be used by 
 the brother as collateral security, I do not think there could be 
 any question that the right of the bank is superior to her right to 
 the note. 
 
 But even if it is meant that she executed a note to her brother 
 which she knew he was going to use as collateral security for 
 money which he intended to borrow, the holder of the note under 
 the circumstances detailed in the question would be protected. 
 
 The Court of Appeals has said : 
 
 "While a wife cannot legally make a contract of suretyship or 
 assume the debt of her husband, yet where she has given a ne- 
 gotiable note payable to her husband's order and intended to be 
 used as security for or in payment of his debt, and it has been 
 transferred to a bona fide purchaser for value before maturity 
 and without notice, it is valid and binds her." Farmers & Traders 
 Bank v. Eubanks, 2 Ga. App. 839. 
 
 The court also says in this case : 
 
 "Where a married woman gives her individual negotiable note, 
 the presumption of law is that she gave it on her own contract and 
 for value, and when sued thereon the burden is on her to show 
 that the note falls within some of the restrictions on her right 
 to contract and that the holder of the note had notice of its in- 
 validity when he took it." 
 
 So that in either event, that is, whether the married woman 
 simply transferred a note which she owned to her brother, or 
 whether she executed a note to him to be used as collateral for 
 his debt, the bank would be an innocent holder. 
 
 MINORS. 
 
 Father Is Liable for Assessment on Stock Bought by Him in 
 Name of His Minor Child. 
 
 Is a father liable for assessments on stock in a bank which he has 
 bought in the name of his minor child? 
 
 The rule is thus stated in Michie on Banks and Banking, p. 
 1833:
 
 382 PARK'S BANKING LAW OF GEORGIA. 
 
 "One buying stock in a national bank in the names of his minor 
 children himself becomes liable to assessment as a shareholder, 
 for minors are incapable of assenting to become stockholders, so 
 as to bind themselves to the liabilities thereof." 
 
 The case of Foster v. Chase, decided by the United States Cir- 
 cuit Court of Vermont, and reported in 75 Fed. 797, is cited by 
 Michie in support of this statement, and this appears to be the only 
 case upon the subject. This would seem to be the correct rule in 
 view of the principle of law that minors are incapable of con- 
 tracting. 
 
 The same court holds, as is stated in Michie in a footnote on 
 page 1833, that "the father's liability on stock bought in the name 
 of his minor child is not affected by the fact that after the assess- 
 ment, but before the suit was brought to recover it, the son be- 
 came of age, and assented to holding the stock." 
 
 MORTGAGES. 
 
 Not Affected by Renewal of Original Note. 
 
 Where a mortgage or security deed specifies a certain note due at a cer- 
 tain time for a certain amount, but makes no provision for a renewal, can 
 a new note be taken in renewal of the debt without affecting the security, 
 the new note showing on its face that it is given as a renewal? 
 
 One of the requisites of a mortgage is that it must specify the 
 debt to secure which it is given. While this is true, parol evi- 
 dence may be admitted to identify a particular debt as being the 
 same debt as that described in the mortgage. It is identity of 
 the debt rather than identity of the note evidencing the debt which 
 is material. So long as the debt is the same, it can always be 
 shown to be the debt which is secured by the mortgage. Of 
 course, there is some advantage in having the note specified defi- 
 nitely in the mortgage, as this relieves all question as to the in- 
 debtedness intended to be secured; but the mortgage is valid, 
 although the paper evidencing the debt may be changed.
 
 OPINIONS of THE GENERAL COUNSEL. 383 
 
 A Mortgage Can Not Cover Subsequently Created Debt. 
 
 A mortgage is given to secure two described notes with no provision 
 for future advances or other indebtedness. Subsequently another note is 
 given by the mortgagor to the mortgagee for a new and separate indebt- 
 edness, with a recital therein that it is secured by the mortgage. Does the 
 mortgage cover this note as against third parties? 
 
 In Georgia a mortgage does not pass the title to the mortgaged 
 property, but only creates a lien thereon. No particular form is 
 necessary to constitute a mortgage. "It shall clearly indicate the 
 creation of a lien, specify the debt to secure which it is given and 
 property upon which it is to take effect." Park's Ann. Code, 
 3257. 
 
 Our Supreme Court has been quite liberal in allowing parol 
 evidence to explain or identify the debt intended to be secured, 
 as, for instance, where a note has been renewed, it can be shown 
 by parol testimony that the renewal note represents the same in- 
 debtedness as that described in the mortgage. So, where a note 
 has not been accurately decsribed or there has been some mistake 
 in the description, parol evidence is admissible to show that it 
 represents the same debt that was intended to be secured by the 
 mortgage. 
 
 It has also been held that mortgages may secure not only an 
 indebtedness described therein, but future advances to be made 
 by the mortgagee to the mortgagor, and our statute authorizes the 
 giving of a mortgage to indemnify a surety or guarantor, and 
 parol evidence may be admitted to show the extent of the liability. 
 But in all of these cases the debt secured is the original debt in 
 contemplation of the parties at the time the mortgage was given, 
 and not a new, separate and independent indebtedness. 
 
 The precise question as to whether parties may by agreement 
 extend a mortgage, which by its terms is intended to secure a par- 
 ticular indebtedness, so as to make it cover another and different 
 indebtedness, has not been squarely passed upon by our Supreme 
 Court. The court, however, has in several cases intimated that 
 parol evidence could not be admitted to show that another and 
 different debt from that described in the mortgage was secured 
 by the mortgage. The Georgia Court of Appeals has held : 
 
 "Parol evidence is inadmissible to extend or increase the 
 amount of indebtedness specifically secured by a mortgage, where 
 the mortgage does not show that it was given to secure future 
 advances. Evidence that a mortgage was intended to secure a 
 note not specified in it is properly repelled, in the absence of an 
 averment that, by reason of fraud, accident, or mistake, the cor-
 
 384 PARK'S BANKING LAW OF GEORGIA. 
 
 rect amount was not stated." Kight v. Robinson, 10 Ga. App. 
 548 (1). 
 
 The only difference between the case just quoted and the facts 
 stated is that in the note given by the mortgagor there is a re- 
 cital that it is intended to be secured by the mortgage, but ia my 
 opinion this is not sufficient to change the rule as stated by the 
 court. I am of the opinion that the mortgage having been given 
 to secure a specified indebtedness, and containing no language 
 showing that it was the intention of the parties that any other 
 debt might or could be covered by it, the mortgage was limited to 
 the specified indebtedness, and could not be made to include an- 
 other debt not in contemplation of the parties at the time it was 
 given by a simple entry on the note to that effect. 
 
 Mortgage by Agreement May Cover Additional Indebtedness. 
 
 Where a mortgage recites that it is given to secure the described notes 
 and that it will be satisfied only on payment of these notes and others to 
 be made later during the year, is it good security for another note made 
 after the execution of the mortgage but during the year specified in the 
 instrument ? 
 
 One of the requisites of a mortgage is that it shall describe the 
 debt it is intended to secure, but it is not essential that there 
 should be an accurate and specific description of the debt. A 
 mortgage, for instance, may be given to indemnify a surety 
 against any loss growing out of a particular transaction, and from 
 the nature of the case it would be impossible accurately to de- 
 scribe the indebtedness intended to be secured. So it has been 
 held that a mortgage may be given to secure advances to be made 
 by the mortgagee to the mortgagor for the purpose of carrying on 
 the farm of the mortgagor during a particular year. Allen v. 
 Lathrop, 46 Ga. 133. I think, therefore, that in the particular 
 case mentioned the mortgage would secure not only the two notes 
 specifically described in it, but other notes given during the year. 
 This might depend somewhat on the language of the mortgage, 
 but if it showed on its face that it was intended to secure not only 
 the notes specifically described but any other notes which might 
 be given by the mortgagor to the mortgagee during a particular 
 year, there can be but little doubt that it would be valid as security 
 for the entire indebtedness.
 
 OPINIONS OF THE GENERAL COUNSEL. 385 
 
 Holder of Bond for Title May Mortgage His Interest. 
 
 Can the holder of a bond for title mortgage his interest in the property? 
 
 The holder of a bond for title can give a mortgage which would 
 attach to his equity in the property covered by the bond. In order 
 for the mortgagee to realize on the debt, it would usually be 
 necessary that he should pay off the balance of the purchase 
 money; but on doing this, he could collect not only the purchase 
 money paid, but the amount of his mortgage, supposing of course 
 the property was of sufficient value. The mortgage creditor of 
 the holder of the bond could, by proper proceedings, subject to 
 the payment of his debt, whatever equity the holder of the bond 
 might have in the property. 
 
 The Holder of a Purchase-Money Mortgage on Personal 
 Property Can Subject the Property in the Hands of a 
 Second Purchaser from the Original Vendor Where Mort- 
 gage Is Duly Recorded. 
 
 A live stock dealer sells two horses, taking a mortgage for the purchase 
 money, and deposits the mortgage note as collateral with a bank. The 
 bank notifies the maker of the note that it holds the paper. Before the 
 note becomes due, the maker returns the horses to the dealer, taking a 
 receipt against the note. The dealer then sells the horses to another party. 
 The mortgage is recorded soon after it is given. The original purchaser 
 is insolvent, and the live stock dealer is likewise in bad financial condi- 
 tion. Can the bank follow the horses in the hands of the second purchaser 
 and make the money on the mortgage note? 
 
 The question presents a good many difficulties. It is my 
 opinion that the bank can subject the horses to the pay- 
 ment of the mortgage. The original purchaser could not re- 
 lieve himself from liability by the return of the horses, 
 unless he took up the note. The bank holding the note as col- 
 lateral is in the same position as though it had purchased the 
 paper outright. The live-stock dealer had no right to settle the 
 note with the original purchaser without accounting to the bank. 
 Whatever lien he had had been transferred to the bank, and he had 
 no more right to take the horses and cancel the debt than any 
 other person would have had, unless, of course, the bank author- 
 ized him to collect papers for it. In the absence of authority 
 from the bank to collect, I do not think he could change the status 
 of affairs. The mortgage covered the stock, and would follow 
 it in the hands of any purchaser. If the original purchaser 
 25
 
 386 PARK'S BANKING LAW OF GEORGIA. 
 
 sold to a third party, the bank could still follow the stock. The 
 fact that he in effect sold or turned the stock back to the seller 
 would not cancel the mortgage or affect the lien in any way. It 
 is, of course, a hardship on the second purchaser to allow the 
 bank to follow the stock in his hands. He might very well urge 
 that he did not know of the mortgage, and had no way of find- 
 ing it out, because he might search the records critically, and 
 would hardly find the mortgage. Still, the bank could do nothing 
 more to protect itself than to see that the mortgage was recorded ; 
 and to allow the mortgagor to sell the mortgaged property to an 
 innocent purchaser, and thereby defeat the lien of the mort- 
 gage,, would destroy the effectiveness of our recording statutes 
 and greatly lessen the value of chattel mortgages. 
 
 The bank can perhaps do nothing to strengthen its position 
 until the paper becomes due. When it is due, the bank would be 
 justified in foreclosing the mortgage and levying on the .stock, 
 though as stated in the beginning this seems a hardship on the 
 purchaser, and the bank will probably find its claim vigorously 
 contested. The question seems to be a new one so far as the 
 reported cases in this State are concerned. 
 
 Mortgage on Personalty Properly Recorded Does Not Have to 
 Be Re-recorded Where Mortgagor Changes Residence to 
 Another County. 
 
 If a dealer sells mules to a party living in one county, taking a mort- 
 gage which is duly recorded, but before the maturity the purchaser moves 
 to another county, and there gives another mortgage on the mules which is 
 recorded in that county, is the first mortgage superior to the second? 
 
 The Code provides that "mortgages on personalty must be re- 
 corded in the county where the mortgagor resided at the time of 
 the execution if a resident of this State," also that "all chattel 
 mortgages of stocks of goods, wares and merchandise, or other 
 personal property shall be recorded in case the same is upon 
 property or goods located in some other county than that of the 
 mortgagor's residence, in the county where the goods or personal 
 property is located at the time of the execution of the mortgage, 
 in addition to the record of the mortgage in the county of the 
 mortgagor's residence." Park's Ann. Code, 3259. 
 
 It will be seen from this section that the mortgage does not 
 have to be re-recorded on the change of the domicile of the mort-
 
 OPINIONS OF THE GENERAL COUNSEL. 387 
 
 gagor. Where the mortgage is properly recorded at the time of 
 its execution it will not lose its lien by the removal of the mort- 
 gagor to another county. 
 
 Rank of Mortgages with Other Liens. 
 
 What liens or claims take precedence over mortgages? 
 Mortgages are inferior to the following liens: 
 
 (a) Taxes. 
 
 (b) The general and special liens of laborers. 
 
 (c) The landlord's special lien on crops for rent and for sup- 
 plies furnished. 
 
 (d) Mechanics' liens for work done and material furnished 
 when no notice has been communicated before the work was done 
 or materials furnished. 
 
 (e) Of course, mortgages are inferior to judgments, other 
 mortgages arid liens of various kinds which are of older date and 
 recorded as required by statute, or in the case of contract liens 
 of which the mortgagee has actual notice, except mortgages on 
 crops for money, supplies or other articles of necessity including 
 live stock, to aid in making and gathering such crops which are 
 superior to judgments of older date than such mortgages on the 
 crop for the year in which the advances were made. 
 
 Mortgages are also inferior to the year's support allowed by 
 statute to the widow and minor children of a deceased person ; 
 and, unless it is waived, to a homestead, except in cases where 
 the mortgage is given for the purchase money thereof, or for the 
 removal of incumbrances thereon. 
 
 Corporate Stock Is Not the Subject of Mortgage in the 
 Ordinary Sense. 
 
 Can a mortgage be given on shares of corporate stock? 
 
 I am unable to find any case decided by the Georgia courts on 
 this subject. The following quotations, however, from two of the 
 leading authorities on corporations are illuminating: 
 
 "The use of the terms 'mortgage,' 'pledge,' etc., as applied 
 to shares is more likely to mislead than instruct. From the fact 
 that shares held as collateral security are said by one court to 
 be 'pledged,' and by another to be 'mortgaged,' no inference can
 
 388 PARK'S BANKING LAW OF GEORGIA. 
 
 safely be drawn that the rights of the parties would be held to 
 be different by the two tribunals. Terms which are useful as 
 applied to charges upon land or personal chattels are worse than 
 useless as applied to shares. Hence, to discuss which charges 
 or liens upon shares in a corporation are properly denominated 
 'mortgages' and which 'pledges' would be largely a waste of time 
 and battle about words. The term 'pledge' is frequently used in 
 this work, for want of a better word, to designate a charge or 
 lien upon shares ; but the word is used as a generic term and not 
 in any technical sense, as distinguished from a mortgage, equita- 
 ble charge, or security of a different nature. All such classifica- 
 tions will be disregarded as unfortunate and misleading; and 
 in lieu thereof a classification suited to the peculiarities of shares 
 in incorporated companies will be adopted. 
 
 "Charges or liens upon shares may, then, be divided into five 
 classes: (1) where there is an agreement, oral or written, that 
 the shares shall be held as security for a debt, no formal transfer 
 being executed and the indicia of ownership, notably the share- 
 certificate, being retained in the possession of the debtor; (2) 
 where the share-certificate is delivered to the creditor but without 
 any transfer or endorsement sufficient to enable the creditor to 
 have himself registered as the owner or to sell the shares in the 
 market, without some further act on the part of the debtor; (3) 
 where the certificate is delivered to the debtor coupled with a 
 transfer or blank endorsement; (4) where the shares are trans- 
 ferred to the creditor on the books of the company but coupled 
 with an entry indicating that they are held as collateral security 
 merely, and (5) where the shares are transferred to the creditor 
 on the company's books, no entry being made to indicate that they 
 are held as collateral security and no communication of the fact 
 being made to the company." 1 Machen on Corp., pp. 803, 804. 
 
 "Shares of stock may be the subject of a mortgage or pledge. 
 A collateral trust indenture is often made to cover stock as se- 
 curity for a debt, but such an instrument would hardly be called 
 a mortgage. In fact a mortgage of stock is not often made, and, 
 unless there is a clear intent to the contrary, the courts will treat 
 the transaction as a pledge rather than a mortgage. In fact it is 
 difficult to ascertain from the cases how shares of stock may be 
 mortgaged ; and transactions which, in a few early decisions, 
 were held to be mortgages, would to-day be held to be pledges. 
 There are but few clear cases of a mortgage of stock to be found. 
 It seems that a formal instrument of chattel mortgage of stock, 
 duly executed and registered at the municipal clerk's office, as 
 required by law in case of chattel mortgages, would not consti- 
 tute an effectual mortgage of stock, and the mortgagee would not 
 be protected where he does not receive the certificate of stock 
 from the mortgagor, or does not obtain a registry of transfer on 
 the corporate books." 2 Cook on Corp., pp. 1181-1183.
 
 OPINIONS OF THE GENERAL COUNSEL. 389 
 
 The Code of Georgia provides that a mortgage may embrace 
 all property in possession or to which the mortgagor has the 
 right of possession. Shares of stock are personal property, at 
 least in a qualified sense. I think, therefore, that a lien in the 
 form of a mortgage might, perhaps, be created upon shares of 
 stock in Georgia. 
 
 I do not think, however, that the record of such a mortgage 
 would constitute notice. Corporate stock is quasi negotiable in 
 character. After being endorsed in blank it may be transferred 
 freely from hand to hand practically as a negotiable instrument, 
 and the purchaser or pledgee thereof can hold regardless of a 
 judgment against the original owner, although that judgment may 
 have been entered prior to the transfer. If a judgment is no lien 
 on the stock it would certainly seem that a mortgage, even duly 
 recorded, would not create a lien on the stock as against one sub- 
 sequently taking it, with no actual notice of such mortgage. 
 
 The Supreme Court of Kentucky has held in the case of 
 Spalding v. Paine, 81 Ky. 416, that a mortgage of stock duly re- 
 corded was not effective as against a subsequent bona fide pur- 
 chaser of the stock. The reason for this rule is clearly stated by 
 the court in the following language : 
 
 "Much of the business of the country is conducted on the faith 
 of the pledge of such stock as collateral ; and to adjudge that the 
 holder of the stock by transfer on the books of the corporation, 
 or by indorsement and delivery by the owner, is subordinate in 
 his claim to the mortgagee, upon the doctrine of constructive 
 notice, would paralyze trade and open a wide field for the fraudu- 
 lent disposition of such valuable interests at the expense of 
 honest and confiding purchasers." 
 
 Where a mortgage is given on stock before it had been pledged 
 as collateral security I do not think the mortgage would hold as 
 against the claim of the pledgee, unless the pledgee had actual 
 notice of the mortgage when he received the stock as collateral 
 security. 
 
 Mortgage on Property of Corporation Is Superior to Claim 
 of Pledgee of Its Stock. 
 
 Is a mortgage given by a corporation on its physical property and tangi- 
 ble assets superior to the claim of holder of stock in the corporation 
 pledged as collateral? 
 
 The mortgage is superior. All creditors of the corporation 
 must be paid before the stockholders have any interest in its prop-
 
 390 PARK'S BANKING LAW OF GEORGIA. 
 
 efty, and the pledge of the stock can, of course, carry no greater 
 right to the pledgee than the stockholder himself has in the cor- 
 poration or its assets. 
 
 Principal Debtor Cannot Enforce a Mortgage Given to 
 Secure an Indorse r. 
 
 A bank makes a loan, taking therefore a note indorsed by the president 
 of the bank in whose favor a mortgage is executed by the debtor for the 
 purpose of securing the indorsement. The bank subsequently renews the 
 note without the indorsement. The president of the bank transfers and 
 assigns the mortgage to the bank with the right to control and foreclose 
 it. Can the bank legally foreclose the mortgage? 
 
 There are two separate and distinct debts. The first is the 
 debt owed by the debtor to the bank. This is not secured by the 
 mortgage. The second is the debt which would be owed by the 
 debtor to the president of the bank who indorsed his note, if 
 and when the president should be called on to pay the note which 
 he indorsed. This is the debt which the mortgage was given to 
 secure. The mortgage was given to secure a future contingent 
 liability and could not be inforced against the debtor until the 
 liability became fixed. 
 
 I quote from 27 Cyclopedia of Law and Procedure, p. 1411 : 
 
 "A mortgage given to secure or indemnify an indorser or surety 
 for a note covers any renewal of the note if the indemnitee's lia- 
 bility on it continues." 
 
 Again : 
 
 "A mortgage given to indemnify the mortgagee against loss or 
 damage by reason of a liability which he has assumed for the 
 benefit of the mortgagor as guarantor, surety, indorser, or other- 
 wise, can not be enforced by foreclosure or sale of the property 
 pledged until the mortgagee has been actually damnified by pay- 
 ing the debt or obligation assumed, or at least until he has become 
 immediately and absolutely liable for its payment to a fixed 
 amount, so that the fact and the extent of the injury sustained 
 by him are definitely fixed. * * * Where a surety holds a 
 note and mortgage for purposes of indemnity, and assigns the 
 same, his assignee cannot enforce the mortgage until the 'mort- 
 gagee has paid the debt for which he was surety or has in some 
 way been damnified." 27 Cyc. 1067. 
 
 Under this authority, the bank is not entitled to foreclose the 
 mortgage.
 
 OPINIONS OF THE; GENERAL COUNSEL. 391 
 
 NATIONAL BANKS. 
 
 Officers of National Bank Not Punishable Under State 
 Banking Statutes. 
 
 When a state law provides for punishment of directors and bankers, 
 does it apply to the directors and officers of national banks? 
 
 The question seems to have been answered by the Supreme 
 Court of the United States in the case of Easton v. State of Ohio, 
 188 U. S. 220, 47 L. Ed. 452, from which I quote: 
 
 "Congress, having the power to create a system of national 
 banks, is the judge as to the extent of the powers which should 
 be conferred upon such banks, and has the sole power to regulate 
 and control the exercise of their operations. * * * 
 
 "Undoubtedly a State has the legitimate power to define and 
 punish crimes by general laws applicable to all persons within its 
 jurisdiction. So likewise it may declare, by special laws, certain 
 acts [such as the receipt of deposits when bank is insolvent] to be 
 criminal offenses when committed by officers or agents of its own 
 banks and institutions. But it is without lawful power to make 
 such special laws applicable to banks organized and operating 
 under the laws of the United States." 
 
 State laws making penal certain offenses committed by bank 
 officers or bank employes are, therefore, not applicable to national 
 banks. For instance, it has been held that an officer of a national 
 bank can not be punished under State laws for embezzling the 
 funds of the bank. Commonwealth v. Felton, 101 Mass. 204; 
 Commonwealth v. Ketner, 92 Pa. St. 372; People v. Fonda, 62 
 Mich. 401. 
 
 National Banks Prohibited from Holding Stock in State 
 
 Banks. 
 
 May a national bank own and hold stock in a state bank? 
 
 A national bank has no authority to become a stockholder in a 
 State bank or other corporation. This has been distinctly held 
 by the Supreme Court of the United States in several cases. I 
 quote from one of them: 
 
 "Stock of a savings bank, not taken as security or acquired in 
 the course of the business of banking, cannot be purchased or 
 dealt in by a national bank." California National Bank v. Ken- 
 nedy, 167 U. S. 362, 42 L. Ed. 198.
 
 392 PARK'S BANKING LAW OF GEORGIA. 
 
 In discussing the case, the court said : 
 
 "It is settled that the United States statutes relative to national 
 banks constitute the measure of the authority of such corpora- 
 tions, and that they can not rightfully exercise any powers except 
 those expressly granted or which are incidental to carrying on 
 the business for which they are established. Logan County Nat. 
 Bank v. Townsend, 139 U. S. 67, 73. No express power to ac- 
 quire the stock of another corporation is conferred upon a na- 
 tional 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 inforcement of its rights as pledgee it 
 may become the owner of the collateral and be subject to liability 
 as other stockholders. * * * 
 
 "The power to purchase or deal in stock of another corpora- 
 tion, as we have said, is not expressly conferred upon national 
 banks, nor is it an act which may be exercised as incidental to 
 the powers expressly conferred." 
 
 Borrowing Power of National Banks. 
 
 Can a national bank borrow a sum greater than the capital stock of the 
 bank, and are rediscounts counted as liabilities? 
 
 Section 5202 of the U. S. Revised Statutes with amendments 
 is as follows: 
 
 "No national banking association shall at any time be indebted 
 or in any way liable to an amount exceeding the amount of its 
 capital stock at such time, actually paid in, and remaining undi- 
 minished by losses or otherwise, except on account of demands of 
 the nature following: 
 
 "1st. Notes of circulation. 
 
 "2d. Moneys deposited with or collected by the association. 
 
 "3d. Bills of exchange or drafts drawn against money actually 
 on deposit to the credit of the association or due thereto. 
 
 "4th. Liabilities to the stockholders of the association for divi- 
 dends and reserve profits. 
 
 "5th. Liabilities incurred under the provisions of the Federal 
 Reserve Act. 
 
 "6th. Liabilities incurred under the provisions of the War Fi- 
 nance Corporation Act. 
 
 "7th. Liabilities created by the endorsement of accepted bills of 
 exchange payable abroad actually owned by the indorsing bank 
 and discounted at home or abroad." U. S. Comp. Stat. 9764, as 
 amended by Act of October 22, 1919. 
 
 The reading of this section will show that the intent of the law 
 is to limit liability of every kind and character to an amount not
 
 OPINIONS OF THE GENERAL COUNSEL. 393 
 
 exceeding the capital of the bank, except for the seven specified 
 demands. Rediscounts are treated by the comptroller, as within 
 this rule, as are also certificates of deposit given for borrowed 
 money. 
 
 National Banks May Discount Paper at the Highest Rate of 
 Interest Permitted by State Law Reserved in Advance. 
 
 Can a national bank in Georgia deduct interest in advance from a loan 
 made at the rate of eight per cent, per annum? 
 
 The question has been decided by the Georgia Court of Ap- 
 peals. I quote from the decision: 
 
 "The provisions of the acts of Congress constitute the ultimate 
 authority relative to the operation of national banks, and the de- 
 cisions of the Supreme Court of the United States will be fol- 
 lowed by the State courts in the construction of those statutes. 
 
 "The national bank laws of Congress adopted as the author- 
 ized rate of interest that permitted by the laws of the several 
 States where such banks might be located ; but Congress did 
 not adopt the prohibition imposed by the Georgia statute upon 
 the taking of interest at the highest authorized rate in advance 
 by way of discount, but on the contrary, by 5197 of the Revised 
 Statutes, specifically authorizes national banks to reserve, on any 
 discount made, interest at the rate allowed by the laws of the 
 several States." Cooper et al., Receivers, v. National Bank of 
 Savannah, 21 Ga. App. 356 (1 and 2). 
 
 The Supreme Court of Georgia denied a petition for certiorari 
 to review this case, indicating that it believed the case correctly 
 decided. 
 
 The case was then carried to the Supreme Court of the United 
 States and the decision of the Court of Appeals of Georgia af- 
 firmed. Evans, Receiver, v. National Bank of Savannah, 
 U. S. , 34 Sup. Ct. 58, 64 L. ed. 69. 
 
 Mr. Justice McReynolds, speaking for that court, said that the 
 court thought "Congress intended to endow national banks with 
 the power which banks generally exercise of discounting notes, 
 reserving charges, at the highest rate permitted for interest." He 
 added "to carry out this purpose, the National Bank Act provides 
 that associations organized under it may reserve on any discount 
 interest at the rate allowed by the State." 
 
 In Georgia the legal rate of interest is seven per cent, where 
 the rate is not named in the contract, and any higher rate must
 
 394 PARK'S BANKING LAW OF GEORGIA. 
 
 be specified in writing, but in no event shall the rate exceed eight 
 per cent, per annum. Park's Ann. Code, 3426. 
 
 The taking or reserving, directly or indirectly, any greater sum 
 for the use of money is denominated usury. Park's Ann. Code, 
 3427. 
 
 It is also provided : 
 
 "It shall not be lawful for any person, company, or corporation 
 to reserve, charge, or take for any loan or advance of money, 
 or forbearance to enforce the collection of any sum of money, 
 any rate of interest greater than eight per centum per annum, 
 either directly or indirectly by way of commission for advances, 
 discount, exchange, or by any contract or contrivance or device 
 whatever." Park's Ann. Code, 3436. 
 
 Under this last section, the Supreme Court of Georgia in the 
 case of Logansville Banking Company v. Forrester, 143 Ga. 302, 
 held that "the reserving of interest in advance by a bank at the 
 highest legal rate of interest on a loan, whether it be a short or a 
 long term loan, is usurious." Under this decision, banks organ- 
 ized under the laws of Georgia can not deduct interest at eight 
 per cent, in advance even on short time paper. But under the 
 United States Revised Statutes, which authorize national banks to 
 take, receive, reserve and charge on any loan or discount interest 
 at the highest rate allowed by the laws of the State in which the 
 bank is located, and which further provide that "such interest 
 may be taken in advance", the Court of Appeals held that a na- 
 tional bank was authorized to discount paper at eight per cent. 
 All doubt upon the question has now been set at rest by the de- 
 cision of the United States Supreme Court. 
 
 It will readily be seen, therefore, that the national banks enjoy 
 an advantage over the State banks in the matter of interest. It 
 was to meet this situation and to place the State banks on a parity 
 with the national banks that Section 17 of Article 19 was in- 
 serted in the Banking Act of 1919. This section as originally 
 framed provided: 
 
 "Any bank may take, receive, reserve and charge on any loan 
 or advance of money or forbearance to enforce the collection of 
 money, interest at the legal rate, and such interest may be taken in 
 advance, reckoning the days from which the note, bill, or other 
 evidence of debt has to run ; provided that such interest deducted 
 in advance shall not be for a longer period than one year; and 
 the purchase, discount or sale of a bona fide bill of exchange, 
 payable at another place than the place of said purchase, discount 
 or sale, at not more than the current rate of exchange for sight
 
 OPINIONS OF THE GENERAL COUNSEL. 395 
 
 drafts in addition to the interest, shall not be considered as taking 
 or receiving a greater rate of interest." 
 
 Had it been adopted in this form, State banks as well as na- 
 tional banks would have had the privilege of discounting paper 
 at eight per cent. The legislature, however, amended the section 
 so as to read as follows : 
 
 Sec. 19. "Any bank may take, receive, reserve and charge on 
 any loan or advance of money or forbearance to enforce the 
 collection of money, interest at not exceeding eight per cent. 
 (8%) per annum." 
 
 In this form, as it was finally adopted, the section made no 
 change in the law. State banks may charge interest at eight 
 per cent., but can not deduct such interest in advance by 
 way of discount. Fortunately, the legislature by the Act of 1916 
 substituted for the penalties imposed for the exaction of usury 
 the forfeiture of the entire interest charged or taken, and pro- 
 vided that no further penalty or forfeiture should be occasioned 
 thereby. Before the passage of this act titles tainted with usury 
 were void. Since the act went into effect, the penalty is simply 
 the forfeiture of the entire interest, and titles, though infected 
 with usury, are no longer void. Park's Ann. Code, Sup. 1917, 
 3438, 3438(a). 
 
 It is unfortunate, however, that national banks in Georgia 
 should be accorded greater privileges than the State allows to her 
 own banks. 
 
 NOTES. 
 
 All Persons Jointly Liable Must Be Sued Together. 
 
 Can one maker of a joint note be sued alone, without joining the others? 
 I quote from the decision of the Supreme Court of Georgia in 
 Lippincott v. Behre, 122 Ga. 546: 
 
 "If the liability is joint, then all those jointly liable must be 
 sued. Plaintiff has no right to impose upon one the burden of a 
 single obligation which was assumed not severally, but jointly. 
 He cannot sue some of the contracting parties, where all are liable 
 as a unit, except in those cases where the statute itself has made 
 the exception." 
 
 The statute referred to provides that where some of the joint 
 obligors are nonresidents or cannot be found, or plead infancy 
 and the plea is sustained, judgment may be taken against the 
 other parties.
 
 396 PARK'S BANKING LAW OF GEORGIA. 
 
 Most promissory notes, however, are joint and several. A note 
 reading, "I, we, or either of us" is a joint and several note. So 
 notes reciting the words "jointly and severally," or some similar 
 expression, are joint and several notes. Where notes are joint 
 and several, all the obligors may be sued or any one of them. 
 Reference to Park's Ann. Code, 4270, will explain somewhat 
 the difference between joint, and joint and several notes. 
 
 A Nonresident Indorser Cannot Be Sued in Same Action with 
 Resident Maker. 
 
 Is it necessary to sue in one action the maker of a simple promissory 
 note, who resides in Georgia, and an indorser on the note, who resides in 
 another State? 
 
 While under our statute the maker and indorser of a note, who 
 reside in different counties, may be sued in the same action in 
 the county of the residence of the maker, the courts of Georgia 
 have no jurisdiction in an ordinary suit to give judgment against 
 a nonresident. Of course, if the nonresident happened to be 
 caught in the State of Georgia, he could be sued in any county in 
 which he could be served ; but, residing out of the State, he could 
 only be sued by attachment levied on any property which he might 
 own within the State, or by service of garnishment on some 
 resident debtor of his or person holding property for him. Suit 
 would have to be brought against the maker in Georgia, and in 
 the other State against the indorser, unless the indorser could be 
 caught in Georgia and served while within the State. 
 
 Maker and Indorser of Promissory Note Cannot Be Sued 
 Jointly in County of Indorser's Residence. 
 
 Can both the indorser and the maker of a note who reside in different 
 counties be sued in the county of the indorser's residence? 
 
 Suit against the maker and the indorser cannot be brought in 
 the county where the indorser resides. Both can be sued in the 
 county of the maker's residence. The constitutional provision 
 embodied in 6542 of Park's Ann. Code is as follows : 
 
 "Suits against the maker and indorser of promissory notes, or 
 drawer, acceptor and indorser of foreign or inland bills of ex- 
 change, or like instruments, residing in different counties, shall 
 be brought in the county where the maker or acceptor resides."
 
 OPINIONS OF THE GENERAL COUNSEL. 397 
 
 Where the indorser is not a technical indorser, that is, one 
 whose indorsement is necessary to pass title to the instrument, but 
 is merely a surety, the rule is different. In such case the maker 
 and indorser can both be sued in the county of the indorser's or 
 surety's residence. 
 
 Reference in Face of Note to Contract Under Which It Is 
 Issued Does Not Affect Its Negotiability. 
 
 An entry upon the face of a promissory note recites that the note is 
 one of a series subject to a contract of given date, to which reference is 
 made. Does this render the note nonnegotiable? 
 
 An entry of this character upon the face of the note makes 
 the paper referred to a part of the contract. It does not affect 
 the negotiability of the note, but the purchaser is put on notice 
 of any fact contained in the paper referred to which might be a 
 defense to the note. References of this character are very fre- 
 quently found in purchase-money notes, rent notes, note retain- 
 ing title to property sold, and notes secured by mortgage or deed 
 to secure debt. The fact that a note shows upon its face, or by 
 reference to another paper, what its consideration is, does not pre- 
 vent it from being negotiable, nor is the purchaser charged with 
 notice of failure of consideration or put on any inquiry with 
 regard to the consideration by reason of such a statement in the 
 body of the note. This has been frequently decided by the Su- 
 preme Court. Bank of Commerce v. Barrett, 38 Ga. 126. 
 
 The effect of the reference is, therefore, to embody in the note 
 the terms of the contract referred to ; and unless there is some- 
 thing in the contract which shows that the note is conditional, or 
 that the consideration upon which it was given has failed, or that 
 the consideration is illegal, immoral, or against public policy, or 
 some other defense of this character, the fact that the note re- 
 fers to the contract and that by this reference the consideration is 
 shown, would not affect its negotiability, nor charge the purchaser 
 with any secret defense which the maker might have which could 
 not be ascertained from a reading of the contract. Simmons v. 
 Council, 5 Ga. App. 386.
 
 398 PARK'S BANKING LAW OF GEORGIA. 
 
 Provision for Indefinite Renewal or Extension Renders 
 Note Nonnegotiable. 
 
 Does the statement in a note that the indorser consents to a renewal or 
 extension affect the negotiability of the paper? 
 
 I am inclined to think, under the authorities, that the state- 
 ment that the indorser consents to a renewal or extension ren- 
 ders the note nonnegotiable. 
 
 In the case of Woodbury v. Roberts, 59 Iowa 348, 13 N. W. 312, 
 the note under consideration contained the following clause : "The 
 makers and indorsers of this obligation further expressly agree 
 that the payee or his assigns may extend the time of payment 
 thereof from time to time indefinitely as he or they may see fit." 
 The court held that the note was not negotiable, because the time 
 of payment was not certain, and not capable of being made cer- 
 tain. 
 
 In the case of City National Bank v. Gunter, 67 Kan. 227, 72 
 Pac. 842, a note provided that the makers and indorsers "agree to 
 all extensions and partial payments before or after maturity with- 
 out prejudice to holder," and it was held that the note was not ne- 
 gotiable, the holding being based on the same ground as that set 
 out by the Iowa court in the case referred to above. 
 
 The Supreme Court of Iowa, however, in a later case, lays 
 down the rule a little less broadly. The notes involved in that 
 case contained the following provision : "Sureties hereby consent 
 that the time of payment may be extended from time to time 
 without notice thereof," and the court said : "We may concede 
 that in the case of an instrument providing in terms for extension 
 of time of payment indefinitely, there is such uncertainty as to 
 make the same nonnegotiable. But in the notes before us, we have 
 a distinct and unqualified agreement on the part of the makers 
 to pay on a certain date. And we perceive no good reason for 
 holding that the negotiable character thereof is destroyed, because 
 of a clause embodied therein providing that a surety, if such there 
 shall be, will not claim a release from his collateral liability on the 
 instrument, if forsooth an extension of time shall be granted the 
 makers without notice to him." Farmer v. Bank, 107 N. W. 170. 
 
 I think that the clause stated in the question would probably 
 be held to make the time of payment of the note uncertain, and, 
 for that reason would, perhaps, render it nonnegotiable. Such a 
 clause would not, it seems to me, come within the ruling of the 
 last case cited for it is not a clause in its terms waiving notice of 
 an extension simply, but affirmatively agreeing to such extension.
 
 OPINIONS OF THE GENERAL COUNSEL. 399 
 
 The question is a close one. No one can say with certainty just 
 how the courts would decide it. 
 
 Note Is Negotiable Though Appearing on Its Face to Be a 
 
 Renewal. 
 
 A note which a bank took in the regular course of business before ma- 
 turity, discounting the same for value, matures, and the bank is offered a 
 new note with the word "renewal" written on it. Would the bank be 
 considered a bona fide holder of this new note, or would the fact that the 
 word "renewal" is written in it charge the bank with notice of any de- 
 fenses ? 
 
 It is well settled that "where a negotiable instrument is trans- 
 ferred before its maturity in payment of a preexisting debt, the 
 transferee is a holder for value and takes the paper free from 
 the equities existing between the original parties." Harrell v. 
 National Bank of Commerce, 128 Ga. 504. 
 
 This being true, the bank would occupy the position of a bona 
 fide holder in taking the renewal note under the circumstances 
 mentioned. The fact that the note shows on its face that it was 
 a renewal would not prevent it from being a negotiable paper or 
 charge the holder with notice of any defenses. It has been fre- 
 quently held in cases where a note showed on its face what the 
 consideration was, that this did not prevent it from being a ne- 
 'gotiable instrument or render it subject to equities. So words on 
 a note indicating that it is a mortgage note or a purchase-money 
 note, or other words of like character, have been frequently held 
 not to affect the negotiability of the paper or to put the holder 
 on notice of equities existing between the original parties. 
 
 Bill of Exchange or Draft Payable "With Exchange" Is 
 Negotiable. 
 
 Is a bill of exchange or a promissory note payable in exchange or with 
 exchange negotiable under the law of Georgia, or is it nonnegotiable be- 
 cause the amount is not definitely fixed? 
 
 I do not think the question has ever been decided by the Su- 
 preme Court or Court of Appeals of Georgia. The courts in 
 other States are in hopeless conflict, though I am inclined to think 
 that the majority of them, and most of the leading text writers 
 on the subject of commercial paper, hold such a bill of exchange
 
 400 PARK'S BANKING LAW OF GEORGIA. 
 
 to be negotiable. The Uniform Negotiable Instruments Act, 
 which has been adopted in most of the States, provides : 
 
 "The sum payable is a sum certain within the meaning of this 
 act, although it is to be paid * * * (4) with exchange, 
 whether at a fixed rate or at the current rate." (Section 21.) 
 
 While the question seems not to have been decided in Georgia, 
 I think such bills are regarded in this State as negotiable, and I 
 believe our courts would so hold. 
 
 It is very unusual to make a promissory note payable with ex- 
 change. In fact, I do not think I ever heard of one so payable. 
 Notes are usually made payable at a particular place, and there 
 is no occasion for the collection of exchange on them, as there 
 is in the case of bills of exchange or drafts. The question 
 whether a note made payable with exchange is negotiable has not 
 been decided in Georgia. I do not think this would affect its ne- 
 gotiability. The fact that a note bears collection charges, includ- 
 ing ten per cent, attorney's fees, has been held by the Supreme 
 Court not to prevent it from being negotiable. 
 
 Demand Note Being Due Immediately There Can Be No 
 Bona Fide Holder Thereof. 
 
 Is the holder of a note, payable on demand, a bona fide holder where 
 he has received the note by indorsement six months after it was exe- 
 cuted ? 
 
 Section 4292 of Park's Ann. Code provides that notes payable 
 on demand are due immediately. Section 4286 of the Code pro- 
 vides that a bona fide holder for value of a note, who receives it 
 before it is due and without notice of any defect or defense, shall 
 be protected from defenses set up by the maker. Section 4287 
 of the Code says that if the holder receives the note after it is 
 due, -its nonpayment at maturity is notice to him of dishonor. As 
 a note, payable on demand, is due immediately, one who receives 
 such note after its date can not be a bona fide holder, because he 
 takes it after it is due.
 
 OPINIONS of THE GENERAL COUNSEL. 401 
 
 Purchase-Money Notes of Land Are Good Collateral, 
 Especially Where Indorsee Also Holds Title to the Land. 
 
 1. Are purchase-money notes for land where bond for title is given, 
 good collateral? 
 
 2. Where such notes are discounted at a bank and are paid, to whom 
 does the maker look for a deed? 
 
 1. Purchase-money notes for land are usually considered good 
 collateral, and are frequently discounted. It should be borne in 
 mind, however, that if such notes are transferred without re- 
 course and there is no deed from the seller to the bank, or where 
 the notes are payable to bearer, and they are transferred without 
 indorsement and no deed made, the transfer of the notes of itself 
 conveys the title from the seller to the purchaser, and the bank 
 could only look to the responsibility of the purchaser on the note, 
 and would have no claim on the land. Where the notes are 
 regularly indorsed to the bank, especially where a deed is made 
 from the seller to the bank, subject to the bond for title, or a con- 
 tract to convey is made, the bank would hold as security for the 
 notes the reserved title of the seller, and could subject the land to 
 the payment of the notes. The proper way to handle these notes 
 is to have them indorsed to the bank, and have the seller make a 
 deed to the bank subject to the outstanding bond for title. Where 
 this is done the purchase-money note is first-class security, sup- 
 posing, of course, that the land is worth more than the amount of 
 the note. 
 
 2. When purchase-money notes, which have been discounted, 
 are paid, the purchaser would look to the bank for a deed, pro- 
 vided the seller had deeded the property to the bank, subject to 
 the bond. Where the notes were transferred and no deed made 
 to the bank, he would have to look to the seller. The payment of 
 the notes would give him a perfect equity in the land, and he 
 could compel the holder of the legal title to convey, whether this 
 happened to be the bank or the original seller, and as stated above, 
 if the note is tranferred without recourse, or is payable to bearer 
 and is transferred by delivery, the transfer itself would operate 
 to vest the title in the purchaser. 
 
 Maker of Note Payable at Named Bank Liable Thereon 
 Though Not Presented at That Bank. 
 
 A bank discounts for a customer a note payable at a named bank in 
 
 another city. The note is sent to the first bank's correspondent in thai 
 
 city, the correspondent not being the bank at which the note is payable. 
 
 The maker goes to the bank at which the note is payable on the day it 
 
 26
 
 402 PARK'S BANKING LAW of GEORGIA. 
 
 matures and asks for it but is told it is not there. The note is subse- 
 quently presented at the maker's office by the correspondent of the first 
 bank and he refuses payment on the ground that the note is payable at 
 the other bank. Can the bank presenting the note protest it? Can the 
 maker compel the holder of the note to send it for collection to the bank 
 at which it is payable? 
 
 In so far as the maker of the note is concerned, the question 
 is answered in an early decision of the Supreme Court, where it 
 was held that a demand is not necessary to charge the maker of a 
 note payable on demand at a particular place. The court further 
 held, however, that the defendant could plead readiness to pay 
 at the place stipulated, or damages sustained by himself in conse- 
 quence of the neglect or omission to make the demand, and that 
 upon proof of his plea the plaintiff 'could not recover costs and 
 damages, and that the defendant would be exonerated to the ex- 
 tent of the damages which he had sustained. Dougherty v. The 
 Western Bank of Ga., 13 Ga. 288. 
 
 The maker of the note in question would be liable and could be 
 forced to pay by suit without any presentation of the note or de- 
 mand for payment, either at the bank where it was payable or 
 elsewhere. 
 
 As to indorsers, however, the rule is different. Where the 
 place of payment designated in a note is a particular bank, pre- 
 sentment and demand at the bank are necessary in order to charge 
 an indorser. The correspondent bank, therefore, could not pro- 
 test the note without presenting it at the place designated therein. 
 
 Where Check Given in Payment of Note Is Not Paid, Surety 
 Is Not Released Though Note Marked Paid and Delivered 
 to Maker. 
 
 Are sureties or indorsers relieved when the note upon which they are 
 secondarily liable is paid by check of the maker, the note being marked 
 paid and delivered to the maker? 
 
 It is well settled that a check or draft is not payment until it 
 is itself paid, unless it can be shown that it was the intention of 
 the parties that it should be so treated. The marking of the note 
 paid and delivering it to the maker would not alone be sufficient 
 to take the transaction out of the general rule. This has been 
 expressly held by the Supreme Court in the case of Kinard v. 
 First National Bank of Sylvester, 125 Ga. 228. In this case a 
 note was marked paid and the mortgage securing it cancelled, 
 and the note and mortgage were delivered to the maker. But in
 
 OPINIONS OF THE GENERAL COUNSEL. 403 
 
 spite of this the bank was allowed to foreclose its mortgage. The 
 fact that other parties are also liable on the note would not change 
 the rule. Of course, the bank would be under obligation to these 
 parties to use reasonable diligence in the collection of the check, 
 but only the same diligence would be required in this case as 
 would be required in the ordinary case of collection of a check. 
 
 Bank Can Collect Note Given in Payment of Its Stock. 
 
 A subscriber for stock in a bank borrows money from another bank 
 with which to pay for his stock, giving his note therefor. The bank issu- 
 ing the stock subsequently bought the note and renewed it. Can that bank 
 enforce payment of the note? 
 
 The bank can enforce payment of the note, regardless of the 
 fact that the original indebtedness was created for the purchase 
 of its stock. The note was not given to the bank which issued 
 the stock, and there was no agreement or understanding that that 
 bank should take it over. But even if there had been, this would 
 not be a defense so far as the debtor is concerned. He owes the 
 debt, and the bank ought to be able to enforce payment. The 
 fact that the note was originally given for money used to pur- 
 chase stock in the bank would not be a defense to the note. 
 
 Judgment Notes Are Unknown in Georgia. 
 
 Can the maker of a note in Georgia in the body of the note authorize 
 an attorney in fact to confess judgment for him on the note if not paid 
 at maturity? 
 
 Judgment notes, as they are usually called, that is, notes "em- 
 bodying an authorization to any attorney or to a designated at- 
 torney, or to the holder, or the clerk of the court, to enter an ap- 
 pearance for the maker and confess a judgment against him for 
 the sum named therein, upon default of payment of the note," 
 are not known in Georgia. Whether such a warrant or power 
 of attorney would be valid in this State seems not to have been 
 decided . The text writers agree that in the absence of a statutory 
 prohibition such notes are valid. As we have no statute pro- 
 hibiting such notes, it is probable that they would be upheld in 
 this State. The reason doubtless that such notes have not been 
 used is that in Georgia judgments must be rendered at regular 
 terms of the court and suits must be filed a specified number of
 
 404 PARK'S BANKING LAW OF GEORGIA. 
 
 days before the convening of the term. Park's Ann. Code, 
 5954. Our statutes provide that in the event of the failure of a 
 defendant to file his answer, judgment by default may be entered 
 against him. While confessions of judgment are not unknown in 
 Georgia, there is very little reason for such confessions, as the 
 same result is accomplished by taking judgment by default. In 
 the event a note should contain a power of attorney authorizing 
 the confession of judgment thereon, suit would have to be filed 
 on the note in precisely the same way as though it contained no 
 such power and the same length of time would have to elapse be- 
 tween the filing of the suit and the entry of judgment, otherwise 
 the judgment would be void as to third persons. Ainsworth v. 
 Mobile, Etc., Co., 102 Ga. 123. There is, therefore, little or 
 no advantage in having such a power of attorney to confess 
 judgment embraced in the note. In the States where judgment 
 notes are common, the statutes usually provide for a quick method 
 of obtaining judgment. In many of them the clerk is authorized 
 to enter up judgment and issue execution immediately. Of 
 course, where this practice prevails, a judgment note is quite an 
 advantage over an ordinary promissory note. 
 
 Debtor Is Not Entitled to Interest on Partial Payments Made 
 Before Maturity, Where Note Payable at Fixed Date. 
 
 A note is payable at a fixed date, and draws interest from date. Cer- 
 tain payments are made on the note which are properly credited on the 
 back. At the time the payments are made there is no agreement, express 
 or implied, with regard to interest. Does interest stop on the amounts 
 credited from the dates of payment? 
 
 The precise question has been decided. In the case of Black- 
 shear Manufacturing Company v. Stone, 8 Ga. App. 661, it is 
 said : 
 
 "Where a promissory note is payable on a fixed day, and not 
 'on or about' a fixed date, and the debtor makes payments before 
 the maturity of the note, he is not entitled, in the absence of an 
 agreement to the contrary, to interest on the payments from the 
 time they are made up to the date the note is due." 
 
 Place of Signature of Surety on Note Immaterial. 
 
 Is a person who signs a note as security outside the border of the note, 
 but on the face of it. liable on the note? 
 
 There is no doubt that a party so signing a note can be held 
 liable. The question is settled by the decision of the Supreme
 
 OPINIONS OF THE; GENERAL COUNSEL. 405 
 
 Court in the case of Quin v. Sterne, 26 Ga. 223, from which I 
 quote : 
 
 "Where the signature of a party is put, at the time it was made, 
 upon a promissory note, payable to another or bearer, and held by 
 the payee continuously from the execution and delivery of the 
 note, the location alone of the signature is not to control in settling 
 the liability of the parties. 
 
 "The signature of the maker of a note is usually below, at the 
 right hand ; it is not essential, however, that it should be there ; 
 and it matters not in what part of the note it is placed, provided 
 it can be ascertained who the maker is. And the same doctrine 
 applies to indorsers." 
 
 OFFICERS. 
 
 Notice of Resignation of Not Required. 
 
 Does the law make it obligatory upon an officer of a bank, in the event 
 of a desire to resign, to give a certain number of days' notice to the 
 bank, and if so how many days? 
 
 An officer of any corporation may resign at any time without 
 previous notice to the corporation, unless his contract of em- 
 ployment or the by-laws of the corporation restrict him in doing 
 so. Of course, by contract the right of an officer to resign or the 
 time when the resignation shall take effect may be limited, and the 
 same effect may be accomplished by a by-law provision. In the 
 absence of any provision in the contract of employment or in the 
 by-laws, an officer may resign when he sees fit and without any 
 previous notice of his intention to do so. 
 
 Guaranty of Note by Officer for Compensation Valid, but 
 Practice Disapproved. 
 
 Can the president of a national bank guarantee the payment of a debt 
 due the bank by one of its customers, accepting from the customer com- 
 pensation for his guarantee? 
 
 An officer of a national bank is not forbidden to borrow from 
 the bank, either directly or indirectly. Of course, the president 
 would not be authorized to make loans to himself or to another 
 person on the strength of his guarantee, but the board of directors 
 or the committee of the board having authority to make loans 
 could lend either to the president or to some one else on the
 
 406 PARK'S BANKING LAW OF GEORGIA. 
 
 strength of the president's indorsement or guarantee. I do not 
 think there would be any legal reason why the president should 
 not be compensated for the risk which he would assume in guar- 
 anteeing a paper of a customer. 
 
 Of course, the president could not make a profit at the expense 
 of the bank or be personally compensated for lending the funds 
 of the bank, but if the payment is made not for securing the loan, 
 but as compensation for the risk assumed, and if the loan is made 
 by the board of directors or a duly authorized committee, and not 
 by the president, I think the transaction would be legal in spite 
 of the fact that the president received compensation for his guar- 
 antee. Such a transaction, while legal, is of very doubtful pro- 
 priety, however. It is very easy to see how it might be abused 
 by the president's refusing to approve loans to a customer unless 
 he was, paid something for guaranteeing it. There is also danger, 
 where the president is himself liable, of the bank's interest suffer- 
 ing because the paper is not pushed sufficiently. 
 
 I thoroughly disapprove of any transaction where an officer of 
 the bank assumes a position which may be antagonistic to the 
 bank or out of which he gets, even legitimately, any personal 
 benefit. Where the transaction is explained to, and approved 
 by, the directors, the president, of course, would be bound on his 
 guarantee, and the original debtor would also be bound, and the 
 bank would seem to have no concern as to what was paid to the 
 president personally for assuming the obligation ; but I think it 
 would be very much better to handle the transaction in some 
 other way and to avoid the appearance of evil and the temptation 
 which such irregular transactions almost inevitably produce. 
 
 NOTE. Section 209 of the Banking Act of 1919 makes it a misdemeanor 
 for an officer, to accept compensation for making a loan. 
 
 Officers Are Liable for Allowing Overdrafts Unless 
 Authorized by Board of Directors. 
 
 What is the liability of officers of banks who allow overdrafts? 
 
 One of the earliest cases on the subject is Minor v. Bank, re- 
 ported in 1 Peters (U. S.) 46. That was a suit on a cashier's 
 bond, in which it was claimed that he was liable for having al- 
 lowed ovedrafts. He sought to justify on the ground that the 
 usage and practice of the bank excused him. Said Mr. Justice 
 Story:
 
 OPINIONS of THE GENERAL COUNSEL. 407 
 
 "What is that usage and practice, as put in the case? It is a 
 usage to allow customers to overdraw, and to have their checks 
 and notes charged up without present funds in the bank; stripped 
 of all technical disguise, the usage and practice thus attempted 
 to be sanctioned, is a usage and practice to misapply the funds of 
 the bank, and to connive at the withdrawal of the same, without 
 any security, in favor of certain privileged persons. Such a usage 
 and practice is surely a manifest departure from the duty, both 
 of the directors and the cashier, as cannot receive any counte- 
 nance in a court of justice. It could not be supported by any vote 
 of the directors, however formal ; and, therefore, whenever done 
 by the cashier, is at his own peril, and upon the responsibility 
 of himself and his sureties. It is anything but 'well and truly exe- 
 cuting his duties, as cashier.' " 
 
 This is, however perhaps an overstatement under present con- 
 ditions, even if the Supreme Court of the United States is the 
 authority quoted. 
 
 The commonly accepted rule is somewhat fully stated in the 
 1917 Edition of Morse on Banks and Banking, 357, 358. In 
 discussing the nature of overdrafts, the author says : 
 
 "In fact, it is nothing else but a loan and a loan of a very dan- 
 gerous and irregular description, wherein the bank has no se- 
 curity whatsoever beyond the right of action against the drawer. 
 If a cashier, not authorized, as cashiers seldom are, to loan the 
 funds of the bank, or if the paying teller, who probably never has 
 such authority, pay the overdraft of a customer without specific 
 power from the government of the bank, but simply of his own 
 individual motion, his act is, in the eye of the law, a breach of his 
 trust. They have used the funds and property of the bank in a 
 manner which the law does not authorize, and in which they have 
 not even a color of right to use them. They have imperilled the 
 safety of corporate money by loaning it, and the fact that it is to 
 a customer whom they believe to be rich and honest, and a man 
 whom it is desirable to favor, does not prevent the transaction 
 from being a transgression beyond the limits of their power and 
 duties. * * * The fact that in banking business such things 
 are often done, and that their true character is hardly recognized 
 or appreciated by the actors in them, is perhaps a moral extenua- 
 tion, but it is certainly no legal excuse. The. language of the 
 adjudicated cases is not capable of being explained away. Such 
 a course of dealing, long carried on by a cashier or teller with 
 the knowledge and express or tacit approval of the bank directors, 
 may possibly relieve him from liability to them. * * * Of 
 course, however, there is a power in the bank to allow overdrafts. 
 By negotiating with the authorized and proper officials a customer 
 may make a legal and binding arrangement by which his over- 
 drafts to a certain amount named and under the circumstances 
 agreed upon shall be honored." 1 Morse on Banks and Banking, 
 357, 358.
 
 408 PARK'S BANKING LAW OF GEORGIA. 
 
 NoTE. Section 160 of the Banking Act of 1919, enacted since this 
 opinion was written, provides : "Any officer, or employee, of any bank 
 who shall permit any customer of the bank to overdraw his account or 
 who shall pay any check or draft, the paying of which shall overdraw 
 any account, unless the same shall be authorized by the board of directors 
 or by a committee of such board authorized to act, shall be personally and 
 individually liable to such bank for the amount of such overdraft? 
 
 PARTNERSHIP. 
 
 Notice of Dissolution Necessary to Relieve Partner from Sub- 
 sequent Acts in Partnership Name. 
 
 After the dissolution of a partnership, the partner who managed the 
 business gives a note in the firm name for money borrowed, representing 
 that the firm is still in business. Is the other partner bound? 
 
 Upon the dissolution of a partnership, notice of the dissolu- 
 tion should be given to the public by published advertisement ; in 
 addition to this, all persons with whom the firm does business 
 should be notified personally of the dissolution. If no such 
 notice is given, a person who has previously dealt with the firm 
 and who has no knowledge of the dissolution or notice of suf- 
 ficient facts to put him upon inquiry, can hold all members of the 
 firm for an indebtedness incurred after dissolution, in the firm 
 name, and in the regular way in which the firm has been accus- 
 tomed to do business. Park's Ann. Code, 3163. 
 
 PASS BOOK. 
 
 Entries in Pass Book Not Conclusive Against the Bank. 
 
 Does an entry erroneously made in a depositor's pass book prove con- 
 clusively a liability against the bank? 
 
 A credit entry in a pass book is the bank's receipt for money 
 deposited. No receipt is conclusive, but can always be shown to 
 be erroneous, if, in fact, it is erroneous. 
 
 The Supreme Court of Georgia has answered the question in 
 the case of Bank of Lawrenceville v. Rockmore, 129 Ga. 582, in 
 which the court says : 
 
 "A bank pass book is evidence, but not conclusive evidence, of 
 the amount due to a depositor."
 
 OPINIONS OF THE GENERAL COUNSEL. 409 
 
 Money Erroneously Credited to a Depositor and Checked Out 
 May Be Recovered Although Pass Book and Checks 
 Destroyed. 
 
 A depositor checks out his entire balance. He then destroys all 
 his old checks, pass books, deposit tickets, etc. Some two months 
 after the account is closed the bank discovers that through an error he 
 has been credited with $200.00 that should have gone to another account. 
 Can the bank recover the amount? 
 
 The entry of this deposit was a mistake. The depositor was 
 given credit for an amount to which he was not entitled. When 
 he checked out his balance, including this sum, he received $200 
 of the bank's money. I know of no reason why he should not be 
 required to account to the bank for this money erroneously paid 
 to him. The fact that it was entered presumably in his pass book 
 does not, it would seem, change the rule. Some of the earlier 
 cases held that the entry in a pass book was conclusive against 
 the bank, but this rule has been changed by the later decisions. 
 I quote from Bolles on the Modern Law of Banking : 
 
 "Formerly entries in a pass book were regarded in a more 
 technical manner than they are to-day. Once, an entry made by 
 a bank officer at the time of receiving a deposit was deemed 
 original and binding on the bank, but not on the depositor; and 
 on neither when the entry was made afterward by copying from 
 the ledger. The modern law has swept away all this refining. 
 The rights of neither party are absolutely fixed by the entries, and 
 they are always 'open to examination and correction.' Prima 
 facie they are correct, but not conclusive." Bolles on The Mod- 
 ern Law of Banking, p. 467. 
 
 This is the rule in Georgia. See Bank v. Rockmore, 129 Ga. 
 582, quoted in the preceding opinion. 
 
 In a somewhat similar case in which the error had been in the 
 bank's favor instead of against it, the Supreme Court of the 
 United States used this language : 
 
 "It comes to this, then, that upon a settlement of accounts be- 
 tween them, a credit was by mistake allowed to the bank to which, 
 it was not entitled. The law is, that neither party is to be bene- 
 fited or to be injured by the mistake. The bank must refund the 
 amount by handing over the sum, or by crediting the same to Mr. 
 Spinner in his next account. Mistakes in bank accounts are not 
 uncommon. They occur both by unauthorized or pretended pay- 
 ments, as well as by the omission to give credit for sums de- 
 posited. When discovered, the mistake must be rectified, and an 
 ordinary writing up of a bank book, with a return of vouchers 
 or a statement of accounts, precludes no one from ascertaining 
 the truth and claiming its benefit." First National Bank v. Whit- 
 man, 94 U. S. 343, 24 L. Ed. 229.
 
 410 PARK'S BANKING LAW OF GEORGIA. 
 
 The destruction of the pass book, cancelled checks, etc., does 
 not affect the question at all. It may make it much more difficult 
 for the mistake to be established, but if it is clearly shown the 
 destruction of the evidence could not affect the question of lia- 
 bility. 
 
 Furnishing Statement of Account Is Equivalent to Balancing 
 
 Pass Book. 
 
 Has a monthly statement of a depositor's account returned with his 
 cancelled checks the same effect as entering the checks and striking the 
 balance in the pass book as is usually done? 
 
 The effect of balancing a customer's pass book and returning 
 his checks is simply stating the account between the bank and the 
 customer. Furnishing a statement of the account, with accom- 
 panying vouchers, has precisely the same effect as balancing the 
 pass book. It is more convenient, as it can be regularly done 
 without waiting for the pass book to be presented. It is usually 
 adopted as between banks, and many banks are now using it with 
 their customers. 
 
 Printed Rules in Savings Bank Pass Book Binding on 
 Depositor. 
 
 Is a printed rule in a savings pass book that payments made to a person 
 presenting pass book shall be good and valid on account of the owner, 
 legal and could it be enforced in a case covered by it? 
 
 There is no doubt under a decision of the Supreme Court that 
 such a rule is reasonable and binding upon depositors. The Su- 
 preme Court said in the case of Langdale v. Citizens Bank of 
 Savannah, 121 Ga. 105 : 
 
 "A rule providing that 'Every effort will be made to protect 
 depositors against fraud, but payment made to a person present- 
 ing pass book shall be good and valid on account of the owner, 
 unless the pass book has been lost and notice in writing given to 
 (the) bank before such payment is made,' is reasonable and 
 binding upon depositors." 
 
 As to whether or not the rule can be enforced in a case to 
 which it is applicable, seems to depend on whether there are any 
 circumstances to arouse the suspicion of the bank when the book 
 is presented by a person other than the owner. If there are no 
 such circumstances and no negligence can be imputed to the bank 
 in the payment, then the bank is not liable if the pass book is pre-
 
 OPINIONS OF THE; GENERAL COUNSEL. 411 
 
 sented. The Supreme Court in the case above cited states the law 
 as follows : 
 
 "Under the terms of such a rule, where a pass-book is pre- 
 sented by a person other than the depositor to whom it belongs, 
 together with a forged check bearing a signature similar to that 
 of the depositor, and there is nothing to arouse the suspicion of 
 the teller or put him upon inquiry, as a reasonably prudent man, 
 as to the genuineness of the check, and the bank in good faith 
 pays the check, believing the person presenting it to be the de- 
 positor, it is not liable in a suit by the depositor to recover the 
 money so paid." 
 
 The principle of this case has been recently reaffirmed by the 
 Court of Appeals of Georgia in the case of Wilson v. The Citizens 
 & Southern Bank, 23 Ga. App. 654, 99 S. E. 239. 
 
 POST-CARD NOTICES. 
 
 A Notice of Maturity on a Post-Card Is Not Nonmailable. 
 
 Is a postal card notice that a bank holds a note or draft on the party 
 addressed, giving the date when the paper is due and stating that it will 
 be held until a certain date, in violation of the Act of Congress making 
 certain matter nonmailable? 
 
 The Act of Congress declares nonmailable any postal card 
 upon which are 
 
 "Any delineations, epithets, terms, or language of an indecent, 
 lewd, lascivious, obscene, libelous, scurrilous, defamatory, or 
 threatening character, or calculated by the terms, or manner, or 
 style of display, and obviously intended, to reflect injuriously 
 upon the character or conduct of another." (Italics mine.) U. 
 S. Penal Code, 212. 
 
 A mere notice that a bank holds for collection a paper, unac- 
 companied by any threat and with no language of any sort which 
 could possibly reflect on the person addressed is not nonmailable. 
 
 POWER OF SALE. 
 
 In Collateral Note Not Revoked by Death of Maker. 
 
 Does the death of the maker of a note secured by collateral revoke a 
 power of sale contained in the note? 
 
 In 1894 the legislature passed an act providing that where a 
 creditor advances money upon the pledge of a certificate of stock
 
 412 PARK'S BANKING LAW OF GEORGIA. 
 
 or other script representing an ownership or interest in a corpora- 
 tion in Georgia, he shall have an irrevocable interest in such 
 certificate, which is not affected by the death or disability of the 
 person in whose name the stock stands on the books of the com- 
 pany, and the same rights after the death of the pledger as before. 
 Park's Ann. Code, 3575. 
 
 The same section provides that, while an agency is generally 
 revocable at the will of the principal and that death revokes a 
 power, if the power is coupled with an interest in the agent him- 
 self, it is not revocable. 
 
 A bank holding collateral with a power of sale, in the event 
 the debt is not paid, would have such an interest as would make 
 the power irrevocable. This is true in the case of a power of 
 sale in a security deed. See Roland v. Coleman, 76 Ga. 652; 
 Baggett v. Edwards, 126 Ga. 463. 
 
 The situations of the grantee in a deed to secure debt and the 
 holder of a note secured by collateral are very similar. Section 
 3532 of Park's Ann. Code provides that the general property of 
 goods pawned remains in the pawner, but the pawnee has a spe- 
 cial property therein, and that the death of neither party inter- 
 feres with their respective interests. As the pawnee has an in- 
 terest which is not affected by the death of the pawner, and has 
 by the terms of the instrument creating the pledge a power, he 
 would have a power coupled with an interest, which under 
 3575 would not be revoked by the death of the pledger. 
 
 PROTEST. 
 
 County Warrants Not Protestable. General Discussion of 
 Protest and What Papers Are Protestable. 
 
 Is a county warrant, that is, a warrant drawn by the chairman of the 
 county commissioners on the county treasurer, subject to protest ? 
 
 I do not think so. A county warrant is a voucher for the 
 treasurer rather than a negotiable instrument. Quoting from 
 Daniel on Negotiable Instruments, 427 : 
 
 "Frequently a draft, order, or warrant is drawn by one officer 
 of a municipal corporation upon another; or by the selectmen 
 of a town, or supervisors of a county, upon an officer, for the 
 payment of corporate indebtedness to the payee. The intention 
 in such case is, as a general rule, to furnish vouchers to the proper
 
 OPINIONS of THE GENERAL COUNSEL. 413 
 
 disbursing officer, and not to put negotiable instruments in cir- 
 culation. And it has been generally, and as we think justly, 
 considered that such drafts, orders, or warrants are not negotia- 
 ble instruments, and cannot be regarded either as bills of ex- 
 change or promissory notes, cutting out equities as against the 
 corporation on the ground that there is no implied authority in 
 such officers to execute negotiable instruments." 
 
 The author cites a large number of cases in support of the text, 
 among them a case from the Supreme Court of the United States, 
 where it was said with reference to county warrants : 
 
 "The warrants being in form negotiable are transferable by 
 delivery, so far as to authorize the holder to demand payment of 
 them, and to maintain, in his own name, an action upon them. 
 But they are not negotiable instruments in the sense of the law 
 merchant, so that when held by bona fide purchasers, evidence 
 of their invalidity or defenses available against the original payee 
 would be excluded. The transferee takes them subject to all 
 legal and equitable defenses which existed to them in the hands 
 of such payee." Wall v. County of Monroe, 103 U. S. 77, 26 L. 
 Ed. 430. 
 
 A good deal of confusion seems to exist in the minds of bankers 
 as to what papers are protestable under our Georgia statute. 
 Under the law merchant, drawers and indorsers of both inland 
 and foreign bills of exchange were entitled to notice of dishonor. 
 Protest was permissible on inland bills and required on foreign 
 bills. Afterwards it became customary to give notice of dishonor 
 and to protest promissory notes. In 1826 the practices originat- 
 ing under the law merchant were abolished by statute in this 
 State as to all instruments except promissory notes given for the 
 purpose of negotiation or intended to be negotiated or left for 
 collection at a chartered bank. Act of 1826, Cobb's Digest 594. 
 
 The Code of 1863 modified the statute to some extent, the rule 
 there established being: 
 
 "When bifls of exchange and promissory notes are made for 
 the purpose of negotiation, or intended to be negotiated at any 
 chartered bank, and the same are not paid at maturity, notice of 
 the nonpayment thereof, and of the protest of the same for non- 
 payment, or nonacceptance, must be given to the indorsers 
 thereon within a reasonable time, either personally or by post, 
 (if the residence of the indorser be known,) or the indorser will 
 not be held liable thereon ; but in no other case, and upon no 
 other bills or notes, shall notice or protest be held necessary to 
 charge the indorser." Code of 1863, 2731. 
 
 The law stood thus until 1876, when the section was amended 
 by adding the following :
 
 414 PARK'S BANKING LAW OF GEORGIA. 
 
 "That it shall not be necessary to protest as now required by 
 law in order to bind indorsers except in the following cases, to 
 wit, 1st, when a paper is made payable on its face at a bank or 
 banker's office; 2d, when it is discounted at a bank or banker's 
 office; 3d, when it is left at a bank or banker's office for collec- 
 tion and in all such cases days of grace shall be allowed." Ga. 
 Laws 1876, p. 18, 4. 
 
 This is the law as now contained in the Code (Park's Ann. 
 Code, 4280), except that "days of grace" have been abolished. 
 
 It will readily be seen, therefore, that the law only provides for 
 protest in case of bills of exchange and promissory notes which 
 are made "for the purpose of negotiation or intended to be ne- 
 gotiated at any chartered bank," and that even in the case of these 
 instruments protest is not required unless the paper is payable on 
 its face at a bank or banker's office or when it is discounted at a 
 bank or banker's office or when it is left at a bank or banker's 
 office for collection. In other words, the paper must have been 
 made for the purpose of being negotiated at a bank and must have 
 been actually so negotiated or left for collection. Banks generally 
 are under the impression that any paper which is discounted at a 
 bank or left at a bank for collection is protestable, but as will be 
 seen this is not the case unless the paper was intended to be ne- 
 gotiated at a bank. 
 
 The Supreme Court has in a number of cases held that the 
 indorsers and drawers of domestic bills of exchange, as well as 
 the makers and indorsers of notes, are not entitled to protest and 
 notice where the papers were not made payable at a bank or made 
 for the purpose of negotiation or intended to be negotiated at a 
 chartered bank. I quote from one or two of these cases. 
 
 "In a suit against the drawers of a domestic bill of exchange, 
 not made for the purpose of negotiation, nor intended to be ne- 
 gotiated, at any chartered bank, it is unnecessary to show pro- 
 test for nonpayment, and notice thereof." Pannell v. Phillips, 
 55 Ga. 618. 
 
 In discussing this case it was said: 
 
 "These two drafts were domestic inland bills of exchange, 
 drawn in this State upon parties in this State, and payable here, 
 and were not payable at any chartered bank, and were not made 
 for the purpose of negotiation nor intended to be negotiated, as 
 appears on the face thereof, at any chartered bank. Since the 
 passage of the Act of 1826, Code, 2781, notice of the nonaccept- 
 ance or of the nonpayment of this class of paper, has not been 
 required in this State to charge the indorser or drawer." Pannell 
 v. Phillips, 55 Ga. 619.
 
 OPINIONS OF THE GENERAL COUNSEL. 415 
 
 "Notice that the acceptor has failed to pay is not necessary to 
 charge the drawer of a domestic bill of exchange in this State, 
 the draft or bill not being intended to be negotiated at any char- 
 tered bank." High v. Cox, 55 Ga. 662. 
 
 "Where there is nothing upon the face of a bill of exchange to 
 show that it was intended for negotiation at a chartered bank, 
 the defendant the drawer cannot show by parol evidence that 
 such was the intention in a suit against him by the holder." Mc- 
 Laren v. Marine Bank, 52 Ga. 131. 
 
 In this case the paper was actually held by a bank. 
 
 "Where a draft was not negotiable or payable at any char- 
 tered bank, notice of nonpayment was not necessary to charge the 
 drawers' or indorsers thereof." Williams v. Lewis, 69 Ga. 825. 
 
 The whole subject is reviewed by Judge Cobb in Bank of Rich- 
 land v. Nicholson, 120 Ga. 622, in which it is held that since 
 the Act of 1826 notice is only necessary in the case of technical 
 indorsers, and not even the drawer of a domestic bill of exchange, 
 though discounted at a bank, is entitled to notice of dishonor. 
 
 A county warrant not being a negotiable instrument, and cer- 
 tainly not being intended to be negotiated or being made for the 
 purpose of negotiation at a chartered bank, is not such an instru- 
 ment as to require protest. 
 
 Protest Is Required Where Payment of Check Is Stopped. 
 
 Where the drawer of a check stops payment on it should the check be 
 protested ? 
 
 A check is usually regarded as, substantially, a bill of ex- 
 change, and while it has been held in some of the States that 
 protest of a check is not required, most of the courts hold that a 
 check is protestable. Protest is not required to bind the drawer 
 of a check where he has no funds on deposit with the bank on 
 which the check is drawn, nor where he stops payment of a 
 check, but is required to bind the indorsers. An indorser is not 
 supposed to know the state of the drawer's account, and where 
 payment is refused for lack of funds, or w;here the drawer stops 
 payment, the indorser is entitled to formal presentment, protest 
 and notice. I quote from Daniel on Negotiable Instruments, 
 1600: 
 
 "While checks have not all the incidents of bills of exchange, 
 they may be yet included in that term when applied to the steps to 
 be taken in case of dishonor. The same reasons that would au-
 
 416 PARK'S BANKING LAW OF GEORGIA. 
 
 thorize the protest of an inland bill of exchange for nonpayment, 
 would authorize the protest of a check, the payment of which 
 had been refused on presentment. And, therefore, where a stat- 
 ute provides for a protest of inland bills and promissory notes 
 [as it does in Georgia, Code, 4280] , a check would be embraced 
 within the description of paper denominated inland bills of ex- 
 change, and mjight be protested in like manner. And if drawn in 
 one State upon another, a protest would doubtless be neces- 
 sary in order to charge an indorser, the check being in that event 
 a species of foreign bill." 
 
 With regard to the necessity for presenting a check for pay- 
 ment, this author says, 1596: 
 
 "There may, however, exist sufficient excuse, on the part of 
 the holder, for delay or failure in making presentment or giving 
 notice. Thus if the drawer had no funds in the bank at the time 
 of drawing the check, or subsequently withdrew them, he commits 
 a fraud upon the payee, and can suffer no loss or damage from 
 the holder's delay or failure in respect to presentment and notice. 
 He is, therefore, liable without presentment or notice, and may 
 be sued immediately. * * * The indorser of a check stands 
 upon a different footing from that of the drawer. He cannot be 
 presumed to know, as the drawer must know, the state of the 
 latter's account with the bank ; and, although the drawer without 
 funds will be absolutely bound, the indorser of his check will not 
 be so bound, unless it be affirmatively shown that he knew the 
 fact that there were no funds to meet it, and thus participates in 
 the wrong committed upon the holder." 
 
 Certificate of Deposit Not Protestable. 
 
 Is a certificate of deposit payable at a fixed date and indorsed by one 
 or more parties subject to protest? Would failure to protest release an 
 indorser? 
 
 As pointed out in a preceding opinion, protest is required only 
 of bills of exchange and promissory notes made for the purpose 
 of negotiation or intended to be negotiated at a chartered bank. 
 An ordinary certificate of deposit would hardly come under the 
 terms of the statute. It is not a bill of exchange, nor is it a prom- 
 issory note in the ordinary sense of the term, and it is doubtful 
 whether it could be said to be made for the purpose of negotia- 
 tion, or intended to be negotiated, at a chartered bank. I do 
 not think, therefore, that protest is required on such certificates 
 or that an indorser would be relieved by failure to protest.
 
 OPINIONS OE THE GENERAL COUNSEL. 417 
 
 Papers Are Protestable Regardless of Amount. 
 
 Is a draft for less than $10 subject to protest? 
 
 The amount of the paper has nothing to do with its protestable 
 character. A bank would be required to protest a paper, whether 
 it is for $1.00 or for many thousands of dollars, where it is pro- 
 testable and protest is not waived in some way. It is quite usual 
 with some of the banks to instruct their correspondents not to 
 protest items under $10.00; but in absence of instructions, a bank 
 would be liable in the event of failure to protest a small paper 
 just as it would be if the paper were larger. 
 
 Protestable Paper Held as Collateral Security Maturing 
 Before Principal Obligation Should Be Protested. 
 
 Is it the duty of a bank to protest a note left with it as collateral se- 
 curity, the note falling due before the borrower's obligation matures? 
 
 Assuming the paper to be protestable under the rules already 
 discussed, it would be the duty of the bank to protest, if it were 
 necessary to do so in order to bind an indorser. A bank should 
 protest a paper held as collateral just as though it had been left 
 with it for collection, or had been discounted by it. 
 
 Check Not Indorsed by Payee Is Not Protestable. 
 
 Is a check which has not been endorsed by the payee, but has several 
 other indorsements, protestable? 
 
 I have not been able to find the question decided directly, but 
 it seems on principle there can be no doubt that protest is not 
 required. Protest and notice are only required where a paper has 
 been presented for payment or acceptance, as the case may be, 
 and has been dishonored. Its purpose is to furnish a convenient 
 method of proving the fact that such presentment has been 
 made and that the paper has been dishonored. Payment cannot 
 be demanded of a check payable to order except upon the in- 
 dorsement of the payee. The refusal to pay a check without such 
 indorsement is not a dishonor, and as the check has not been dis- 
 honored it cannot properly be protested. 
 
 Protest is made where a paper is dishonored and notice is given 
 of such dishonor in order to bind persons secondarily liable on 
 27
 
 418 PARK'S BANKING LAW of GEORGIA. 
 
 the paper. The contract of these parties, the drawer and in- 
 dorsee, is to pay provided the paper upon presentation thereof 
 to the person primarily liable is dishonored. If called on to 
 respond under this contract, where a paper payable to order is 
 presented without the indorsement of the payee, they could very 
 readily respond that the paper had not been dishonored because 
 its direction was to pay to the order of a named person, and the 
 order of this person (that is, his indorsement) had not been se- 
 cured. 
 
 The Court of Appeals of Alabama, in the case of Harden v. 
 Birmingham Trust & Savings Bank, 55 Sou. 943, said: 
 
 "In order to fix a liability as for breach of duty on a bank for a 
 failure to pay a check of a depositor drawn in favor of another 
 person, it must appear that the check was presented at the proper 
 time and place and properly indorsed by the payee ; and if it has 
 been transferred by the payee to another, then it should be in- 
 dorsed by such other person also." 
 
 As proper presentment of a check cannot be made until it is 
 indorsed, protest, which is simply a memorial of the fact that 
 presentment has been made and payment refused, is not required. 
 
 Where Check Is Indorsed by Agent Whose Authority Is Not 
 Shown, Protest Is Authorized. 
 
 A check payable to W. C. H. is endorsed W. C. H. per I. B. B. It is 
 cashed and sent forward through several correspondent banks, all of 
 which indorse it and guarantee prior indorsements. It is finally presented 
 to the drawee bank, which bank declines payment because the indorsement 
 is unauthorized. The bank presenting it for payment has the check pro- 
 tested. Was the drawee bank justified in declining payment on account 
 of the alleged unauthorized indorsement? Should the check have been 
 protested by direction of the bank presenting it? 
 
 A bank always has right to decline payment until the person 
 presenting the check is properly identified, and in case of in- 
 dorsements to decline payment unless it is satisfied of the genuine- 
 ness of these indorsements. This is true because a bank can only 
 pay the funds of a depositor to the person to whom the depositor 
 directs payment. 
 
 Therefore, the drawee bank in the case stated was within its 
 rights when it declined payment on the indorsement of an agent, 
 the agency not being established. 
 
 Whether or not the drawee bank having declined payment, the 
 checks should have been protested, depends upon the following 
 considerations ;
 
 OPINIONS OF THE; GENERAL COUNSEL. 419 
 
 The indorser of commercial paper guarantees that the paper is 
 a valid obligation in every respect. He warrants the genuineness 
 of all of the signatures to the paper, and in addition to these 
 warranties he also warrants that the paper will be paid, or ac- 
 cepted, as the case may be, when it is properly presented for that 
 purpose. This last warranty, however, the warranty of payment 
 or acceptance, cannot be enforced unless a demand is proved and 
 proper notice given, and the way to establish such demand and 
 notice is by formal protest by a notary public. The indorser is 
 liable on his indorsement, so far as the implied warranty of 
 genuineness is concerned without protest. Where, therefore, the 
 paper is not genuine or where it has been transferred on a forged 
 indorsement, the indorser may be sued immediately on his implied 
 warranty without presenting the paper or protesting it. But if 
 the paper is genuine and the indorsements are all genuine and 
 authorized, in order to hold the indorser on his implied warranty 
 that the paper will be paid on presentation it must be formally 
 presented and protested. 
 
 Applying these rules to the facts of the case stated : If the in- 
 dorsement which has been rejected by the drawee bank is in 
 fact unauthorized, then protest is not necessary in order to bind 
 the several banks which, by their indorsements, have guaranteed 
 the genuineness and authenticity of this indorsement. But if, on 
 the other hand, it should develop that the indorsement was au- 
 thorized, then the banks would not be liable on their warranty 
 of the genuineness of the indorsement, for the reason that the 
 indorsement being genuine there has been no breach of their war- 
 ranty. But, the paper having been presented to the drawee bank 
 and payment having been refused, if it is desired to hold the sev- 
 eral indorsers on their implied warranty that the check would be 
 paid when presented protest would be necessary. As the bank 
 presenting the check for payment would not care to take the risk 
 of determining whether or not the indorsements were authorized, 
 it was entitled to protect itself in any event by protesting the 
 check. 
 
 Protest of a Forged Check Not Required, but Should Be Made 
 as Check May Be Genuine. 
 
 Is it the duty of a bank to protest a forged check? 
 An indorser being liable on his warranty of the genuineness of 
 the paper, whether it is formally presented and protested afid
 
 420 PARK'S BANKING LAW OF GEORGIA. 
 
 notice given or not, protest of a forged check is not necessary. 
 But as the indorser is not liable on a genuine paper unless it is 
 protested and notice is given, the safe rule, even when the bank 
 is satisfied that the paper is a forgery, would be to protest it. 
 In such a case no possible harm could come of the protest, and 
 the bank would be relieved of all responsibility of deciding 
 whether the paper is, in fact, a forgery. A few of the courts 
 have held that notice should be given even in the case of a forged 
 paper, and even if not required, this is certainly safer. 
 
 When Payment Refused Because Signature Does Not Cor- 
 respond with Authorized Signature, Safer to Protest. 
 
 Where a check is returned because the signature does not correspond 
 with the authorized signature given to the bank by the depositor, should 
 the check be protested? 
 
 It is the duty of a bank for the protection of its customers, 
 as well as for its own protection, to decline to pay a check unless 
 the signature corresponds with the one filed with the bank, unless 
 it knows the check is genuine. The bank can not safely determine 
 whether a signature is genuine except by comparison with the 
 authorized signature, and should it pay on an unauthorized signa- 
 ture it would take the risk of doing so. To relieve the bank of the 
 responsibility of 'deciding whether the paper was a forgery, it 
 would be best to protest. The danger of protest is so slight as 
 compared with the risk of not protesting that prudence would 
 seem to require protesting in all cases of doubt. In the case 
 mentioned, I do not see how there could be any possible liability 
 on the bank or the notary for making the protest. The drawer of 
 the check could not complain at its protest, because the failure to 
 pay was directly for his benefit and protection, and no other 
 party to the paper would be injuriously affected by the protest. I 
 think, therefore, that the safe rule would be, in cases of this 
 character, to protest and to notify the indorsers. 
 
 Unsigned Checks Not Protestable. 
 Is a check without signature protestable? 
 
 A check cannot be protested unless payment can properly be 
 (femanded. Manifestly, payment of a check which has not been
 
 421 
 
 signed cannot be demanded, and such a check therefore would not 
 be protestable. 
 
 Voucher Check With Receipt Attached When Receipt Is Not 
 Signed as Required, Not Protestable. 
 
 Is a voucher check, stating on its face that it becomes a check on a 
 named bank when properly receipted, protestable for nonpayment, when it 
 is presented to the bank for payment without being receipted in the place 
 provided for that purpose, though it is indorsed on the back? Is a bank 
 protesting such a check liable in damages for so doing? 
 
 The question does not seem; to have been decided by the courts. 
 I am of the opinion, however, that the paper is not protestable. 
 Until the receipt is signed, the paper is incomplete. It becomes a 
 check only when it is receipted. Until the receipt is signed, it 
 is no more entitled to payment than is any other incomplete check. 
 To illustrate: If a check should be drawn without specifying 
 the amount or the bank on which it was drawn, or if the drawer 
 should fail to sign it, a bank would not be authorized to pay such 
 a check. No presentment for payment could legally be made, and 
 as protest is simply for the purpose of furnishing evidence that 
 the paper has been properly presented for payment and payment 
 has been refused, such a paper could not be protested. So, in the 
 case of the voucher check in question, until it is receipted it is not 
 a check. Therefore, payment can not be legally demanded, and 
 as payment can not be demanded, there is no basis for protest. 
 
 Again, a check is in the nature of an order on a bank to pay a 
 certain sum purporting to be on deposit, and there would seem 
 to be no reason why the drawer could not direct the bank to pay 
 only when a receipt was signed. There seems to be no reason 
 why, in giving direction to the bank, a drawer can not make any 
 reasonable addition to the mere order of payment. If the person 
 to whom the check is delivered is not willing to accept it with 
 such direction, he can reject it ; but if he accepts it, payable only 
 when a receipt is signed, or with any other direction to the bank 
 indorsed thereon, he can not insist that the bank on which it is 
 drawn must disregard this direction given to it by its depositor on 
 the face of the paper. And certainly it would seem that the 
 bank would have no authority to pay except in accordance with 
 the direction of its depositor. Unless the bank is required to pay 
 the check when presented, presentment to be the basis of protest 
 cannot be made, and, therefore, protest would not be authorized. 
 
 To illustrate again : A check payable to the order of a
 
 422 PARK'S BANKING LAW OF GEORGIA. 
 
 named person cannot be legally presented for payment until in- 
 dorsed by the payee, and until so indorsed it is not subject to 
 protest. The drawer directs the bank to pay to the order of the 
 payee. This order is given by indorsement. The bank has no 
 right to pay until the indorsement is made. So, in the present 
 case, the drawer directs the bank to pay upon the receipt of the 
 payee. Until the receipt is signed, the bank would seem to have 
 no right to pay. 
 
 As already stated, unless payment can be legally demanded, 
 a check is not subject to protest, and where the holder of a check 
 unlawfully causes a protest of it to be made and notice to be given 
 to the drawer and indorsers without presentation for payment, 
 according to its terms, a cause of action is furnished to the 
 drawer, who may recover damages against the holder for. such 
 unlawful protest. 
 
 Paper Stamped "No Protest," but Billed as Protestable, Should 
 
 Be Protested. 
 
 Is a draft subject to protest when "no protest" is stamped plainly across 
 the face, but which is billed as protestable? 
 
 The only safe rule in regard to protest is, when in doubt, 
 protest. There is so little risk in protesting as compared with the 
 risk of not protesting that a bank can never afford to take the 
 risk where there is any doubt on the question. 
 
 A bank would be authorized to act on the instructions of its 
 correspondents and protest or not, regardless of whether the 
 paper were otherwise protestable. There are sometimes reasons 
 why a bank wishes a paper protested, although protest may have 
 been waived. Usually an entry on the face of a draft of "No 
 Protest" would be taken as sufficient authority not to protest. If 
 this was on the draft when it was originally given it would be 
 treated as a waiver of protest by the original parties and any 
 subsequent indorser, but even in such case a forwarding bank 
 might wish the paper protested and the collecting bank should act 
 on its instructions. If a draft was stamped "No Protest" after 
 it had been signed and put in circulation, this stamp would 
 not render the paper nonprotestable as against any one who 
 signed it previously to the entry, and if not protested prior in- 
 dorsers would be discharged.
 
 OPINIONS OF THE; GENERAL COUNSEL. 423 
 
 Bank Not Liable for Failure to Protest When "No Protest" 
 Slip Attached, Though Paper Sent Protestable. 
 
 Is a bank liable for not protesting a draft received in a collection letter 
 indicating that it is protestable, but to which is attached a slip marked 
 "no protest, take this off before presenting"? 
 
 The bank would be justified in acting on the slip attached to 
 the draft, and if it failed to protest would not be liable for such 
 failure, although loss may have resulted. But, as stated in the 
 preceding opinion, the draft having been sent protestable, the 
 bank would be authorized to protest in spite of the "No Protest" 
 slip, and it would be safer generally to do so. 
 
 Where "No Protest" Slip Detached, Draft Becomes 
 Protestable. 
 
 A draft has attached to it a perforated slip bearing the words, "no pro- 
 test." Can the draft be made protestable by tearing off this slip? 
 
 Any holder of a draft has the right to insist on protest, even 
 though the draft be drawn on a blank having the words, "no 
 protest," attached by a perforated slip. Any holder can make 
 such a draft protestable by tearing off the slip. Certainly if a 
 bank received the draft without such slip attached and with pro- 
 test not waived in any way, it would be its duty to protest. 
 
 Sureties Not Relieved by Failure to Protest. 
 
 Is it necessary to protest a note in order to bind accommodation in- 
 dorsers or sureties? 
 
 Protest is only necessary to bind technical indorsers. Wher- 
 ever an indorsement is necessary in order to transfer the title, 
 the paper must be protested and the indorser notified. This is 
 true regardless of whether the indorsement is for value or merely 
 for accommodation. Protest is not necessary in order to bind 
 sureties, whether the surety signs on the face of the paper as 
 surety or writes his name upon the back as an accommodation 
 indorser, his indorsement not being necessary to transfer the title 
 to the paper."
 
 424 PARK'S BANKING LAW of GEORGIA. 
 
 Bank Is Liable for Failure to Protest a Protestable Paper as 
 
 Instructed. 
 
 A draft payable to a bank was deposited for collection. The bank sent 
 the draft direct to the bank upon which it was drawn. The draft was sent 
 subject to protest, but was returned unprotested. It was sent back with 
 instructions to protest, and was again returned unprotested. Can the for- 
 warding bank make the bank on which the draft was drawn pay it, be- 
 cause of the failure to protest? 
 
 Where a protestable paper is sent to a bank for collection with 
 instructions to protest, and the bank fails to protest in accord- 
 ance with these instructions, and an indorser is released by such 
 failure, and loss results therefrom, the bank would be liable. 
 
 But from the facts stated, I do not see why it was necessary to 
 protest this draft. Protest is only necessary in order to bind tech- 
 nical indorsers on a paper. There were no indorsers on this 
 paper to be bound, and, therefore, protest was not necessary. If 
 the draft was made payable to the first bank and it forwarded it 
 to the drawee, and the draft did not pass through the hands of 
 anybody else, there necessarily could have been no indorsers on 
 the paper to bind whom protest was necessary. 
 
 The only object of protest and notice is to preserve the liability 
 of indorsers, and, of course, if there are no indorsers it is entirely 
 immaterial whether or not a paper is protested. 
 
 A Paper Presented After Maturity Is Not Protestable. 
 
 A protestable paper is forwarded to a bank for collection after its ma- 
 turity. It is presented to the maker and payment refused. Is it protest- 
 able under these circumstances? 
 
 I do not think so. In order to hold indorsers on a note payable 
 on a fixed day, the note must be presented for payment on the day 
 on which it matures. A presentment before or after this day is 
 not sufficient. 
 
 I quote from two or three recognized authorities : 
 
 "In respect to the drawer of a bill and the indorser of a bill or 
 note, it is essential to the fixing of their liability that the pre- 
 sentment should be made on the day of maturity, provided it is 
 within the power of the holder to make it. If the presentment be 
 made before the bill or note is due, it is entirely premature and 
 nugatory, and, so far as it affects the drawer or indorser, a per- 
 fect nullity. And if it be made after the day of maturity, it can, 
 as matter of course, be of no effect, as the drawer or indorser will 
 already have been discharged, unless there were sufficient legal 
 excuse for the delay." Daniel on Negotiable Instruments, 598.
 
 OPINIONS OF THE GENERAL COUNSEL. 425 
 
 "In order to hold the drawer and indorsers, it is necessary to 
 present the paper for payment on the day of maturity. And pre- 
 sentment before or after the day of maturity will not be sufficient, 
 unless the holder has some valid excuse for not making the pre- 
 sentment on the exact day of maturity." Tiedeman on Commer- 
 cial Paper, 315. 
 
 And, says the author last quoted : 
 
 "If the paper is sent to an agent for collection, or transferred 
 for consideration, so near to the day of maturity, that it is im- 
 possible to present for payment on the day of maturity, the pre- 
 sentment and notice will be excused, at least as to the indorser 
 who had caused the delay. But it will be no excuse as to the prior 
 indorsers, who had not necessitated the delay." 361. 
 
 Protest is intended to furnish to the holder legal evidence of 
 the fact that the required presentment and demand for payment 
 has been made and notice of dishonor given, in order that this 
 evidence may be used in an action brought on the paper against 
 the drawer and indorsers. 
 
 Wherever presentment for any reason cannot be made at the 
 time or place required, protest cannot lawfully be made, for the 
 protest, as above stated, is only for the purpose of furnishing evi- 
 dence of the fact that presentment and demand for payment has 
 been made. 
 
 At the time the paper in question reached the collecting bank 
 it was already past due. Presentment not having been made 
 to the maker on the day of maturity, the indorsers were al- 
 ready discharged. Presentment was not necessary in order to 
 bind the maker of the note, or the indorser whose delay caused 
 the failure to present on the day of maturity. Therefore, pre- 
 sentment after maturity had no effect so far as the liability of any 
 of the persons on the paper was concerned, and protest was for 
 that reason unnecessary. 
 
 A Check May Be Protested Immediately Upon Presentment 
 and Refusal of Payment. 
 
 Where a check is presented to a bank through a clearing house or by 
 another bank at a clearing, is it protestable as soon as payment is refused, 
 even though a deposit sufficient to cover the check be subsequently made 
 on same day before closing hour? 
 
 A check being drawn presumably against funds on deposit is 
 protestable as soon as presented and payment refused. However, 
 before it could be protested, it would have to be presented by a
 
 426 PARK'S BANKING LAW OF GEORGIA. 
 
 notary public and payment demanded by him. Presentation 
 through a clearing house or by another bank at a clearing is not 
 such a presentation and demand for payment as would authorize 
 protest. The rule that the acceptor of a bill of exchange or 
 the maker of a note may make payment at any time during busi- 
 ness hours of the day on which the paper is due does not seem 
 to apply to a check for the reason that a check is drawn against 
 a fund presumably in bank at the time it is given, and' therefore, 
 whenever payment is formally demanded by a notary public the 
 check may be protested. As to the propriety of protesting a 
 check before the bank closes on the day in which it is presented, 
 the bank holding the check would, of course, have to judge. It 
 would seem where a deposit is made on the day that the check is 
 presented, that the check should not be protested. This, however, 
 is a mere matter of policy. 
 
 Date of Original Maturity of Paper Is Proper Time for Pre- 
 sentment and Protest Rather Than Extended Due Date, 
 Unless Agreed to by All Parties. 
 
 Where there is an extension of the time of payment of a note, is the 
 date of the expiration of the extension or the date of the original ma- 
 turity the proper time for protest? The particular case is this: A note is 
 sent for collection, and on the day it falls due the forwarding bank wires 
 the collecting bank to extend payment for a week. This is done. At the 
 expiration of the week's extension, the maker defaults. The question is 
 whether the note should be protested then. 
 
 The rule is that paper must be presented for payment on the 
 date of its maturity. 
 
 Of course, if all the parties liable on a note agree with the 
 holder on an extension for a definite time, this extension would 
 become the day of the maturity, taking the place of the original 
 due day, and in such event the paper should be presented for pay- 
 ment on the new due date rather than on the original date. If not 
 paid then, it could, of course, be protested. But I do not under- 
 stand that any such extension as this had been agreed on in the 
 case mentioned. It appears simply that the forwarding bank 
 wired its correspondent to hold the paper for a week. If this 
 was all, and the indorsers did not agree to such an extension, the 
 paper could not be legally protested at the end of the extension, 
 since then the indorsers would already be discharged.
 
 OPINIONS OF THE GENERAL COUNSEL. 427 
 
 Not Necessary to Protest Draft a Second Time on Second 
 
 Presentation. 
 
 Should a draft be protested a second time upon a second presentation? 
 
 There is no reason for a second protest and no law authorizing 
 it. Protest is for the purpose of furnishing ready proof of the 
 presentation of a negotiable instrument and refusal to accept or 
 to pay, as the case may be. It was formerly confined entirely to 
 foreign bills of exchange, and was allowed because of the exceed- 
 ing difficulty of proving the presentation and refusal to pay in 
 cases of this character. 
 
 Where a paper has once been formally presented by a notary 
 public and protested for nonacceptance or nonpayment, and the 
 indorsers properly notified that acceptance or payment has been 
 refused, they are bound on the paper. They would not be any 
 more bound by any number of subsequent presentations; and 
 as protest is for the purpose of notifying the indorsers and, there- 
 fore, holding them liable, it would seem to be entirely useless 
 to protest and notify more than once. 
 
 Where Place of Payment Not Stated, Note Must Be Presented 
 to Maker in Person or at His Office or Residence. 
 
 If a note is not made payable at any specified place, where must it be 
 presented for payment in order to protest if not paid? 
 
 It would be necessary for the notary to present the note either 
 to the maker in person or at his place of business, if he has any, 
 if not, at his residence. 
 
 Presentment at Office During Business Hours Sufficient, 
 Though Payee Is Out. 
 
 If a draft is presented at the office of the payee and he is out, is this a 
 sufficient presentment to authorize protest? 
 
 A bill of exchange, note or draft, which is not payable on its 
 face at a particular place, should be presented for payment at 
 the office of the payee during business hours, and when so pre- 
 sented by a notary, should be protested regardless of whether the 
 payee happens to be in his office at the time presentment is made.
 
 428 PARK'S BANKING LAW OF GEORGIA. 
 
 Sight Draft Can Be Presented at Place of Payment or at 
 Drawee's Office, Though He Is Out of Town, and Pro- 
 tested. 
 
 Is a sight draft protestable if the person on whom it is drawn is out of 
 town ? 
 
 An ordinary draft is a domestic bill of exchange, and where 
 negotiated through a bank, under the terms of the Code section 
 quoted in a previous opinion, it would be protestable in order to 
 bind the indorsers. The fact that it is payable at sight instead of 
 at a given time does not prevent it from being a protestable paper. 
 If the paper on its face is payable at a particular place, it should 
 be presented at that place. If not, it should be presented at the 
 business office of the drawee if he has a regular business office, 
 and if not, at his residence. It makes no difference whether it 
 is presented to the drawee in person or not, if it is presented at 
 the place of payment named in the bill or at the business office or 
 residence, if no business office is maintained.. The fact that 
 the drawee may be out of town, and, therefore, that it may be im- 
 possible to present to him in person, would not prevent the bill 
 from being protestable or relieve the bank of the duty of making 
 protest when the bilfis properly presented at the place of pay- 
 ment or place of business or residence, as above stated. 
 
 Where Check Drawn on Branch Bank, Presentment at Parent 
 Bank Unauthorized. 
 
 Where a check is drawn on a branch bank and presented for payment 
 to the parent bank, or vice versa, can it be protested without presentation 
 to the one on which it is drawn? 
 
 If the parent bank and the branch are conducted separately, 
 each having its own customers, the accounts of the two being kept 
 entirely separate, and the two banks being located in different 
 buildings, I do not think there would be any obligation on the 
 officers of the bank to present a check drawn on the parent bank 
 to the branch for payment or to present a check drawn on the 
 branch to the parent bank. A check could properly be protested 
 where drawn on either bank and the drawer had no funds in that 
 bank with which to meet it, though he might have funds in the 
 other bank. 
 
 This, however depends somewhat on custom, and the way in 
 which the two institutions are conducted. If it has been custom-
 
 OPINIONS OF THE GENERAL COUNSEL. 429 
 
 ary to present or pay checks at either the parent or branch, re- 
 gardless of whether they were drawn on the parent or branch, or 
 if the branch is a mere agency and not conducted separately and 
 as a distinct institution, I do not think the bank would be author- 
 ized to refuse payment where either the parent bank or branch 
 carried the account of the depositor. 
 
 Notice of Dishonor Must Be Mailed to Indorser on the 
 Next Day. 
 
 Has the notary twenty-four hours in which to mail the notice of pro- 
 test? 
 
 The statute provides that "notice of nonpayment or nonaccept- 
 ance must be given to the indorsers within a reasonable time 
 either personally or by post." 
 
 What is a reasonable time is generally a question of fact 
 depending on the circumstances. The Supreme Court seems 
 never to have directly decided whether a notary has the day 
 succeeding the day of protest in which to mail the notice, but 
 in the case of Apple v. Lesser, 93 Ga. 751, it quotes from Daniel 
 on Negotiable Instruments explaining what is a reasonable time 
 as follows : "The notice should be deposited in the post in 
 time to be sent by the mail of the day after dishonor, provided, 
 such mail is not closed before early and convenient business 
 hours of that day, in which case it must be sent by the next 
 mail thereafter." The rule as laid down here is the one gen- 
 erally adopted. 
 
 Notary Public Who Is a Stockholder in a Bank Is Not Dis- 
 qualified to Protest Papers for the Bank. 
 
 Can the cashier of a bank who is a stockholder thereof and who is a 
 notary public legally protest papers for the bank? 
 
 The Supreme Court has decided the precise question in the 
 case of Patton v. Bank of Lafayette, 124 Ga. 965, 973, from 
 which I quote : 
 
 "The fact that the notary was a stockholder in the bank and 
 had an indirect pecuniary interest in the note, did not render him 
 incompetent to protest it for nonpayment."
 
 430 PARK'S BANKING LAW OF GEORGIA. 
 
 Notary Public Not Entitled to Fee Where Paper Presented 
 
 Before Due. 
 
 Is a notary public entitled to a fee for protesting a draft which is drawn 
 at three days' sight, is presented on the date of its receipt, protested, and 
 returned to the forwarding bank? 
 
 A paper drawn payable at so many days' sight is not due until 
 the required number of days after it is presented. It could, there- 
 fore, not be protested for nonpayment until the number of days 
 required had expired. Any protest before the expiration of the 
 time would be premature, and the notary would not be entitled to 
 his fee. 
 
 I understand from the question that the paper was not pre- 
 sented for acceptance and protested for nonacceptance, but was 
 presented for payment and protested for nonpayment. If the 
 party on whom the paper was drawn refused to accept it, the 
 notary would have been authorized to protest for nonacceptance ; 
 but if the paper was presented for payment before the expiration 
 of the three days after sight, the paper not being payable at that 
 time, protest would be premature, and the notary would not be 
 entitled to his fee. 
 
 Protest Fees on Check May on Payment of Check Be Charged 
 to Drawer's Account. 
 
 When a payee bank protests a check for insufficient funds and later the 
 drawer deposits sufficient funds and the check is returned to the bank 
 with instructions to collect the amount of the check plus the protest fees, 
 is it proper to charge the check with protest fees, to the drawer's account 
 without further instructions from him? 
 
 So far as I know, the question here presented has never been 
 passed upon by our courts. There can be no question of the right 
 of the bank to charge a check which had been turned down for 
 lack of funds, to the account of the depositor, when his deposit 
 is sufficient, without any express authority from the depositor. If 
 the check had been held out for a considerable period, just how 
 long it would be impossible to say, it might be regarded as a stale 
 check, and the bank paying it without authority would take the 
 risk of the drawer having already settled with or paid the payee. 
 The fact that the check had been protested and held for a con- 
 siderable period might strengthen this presumption. But if no 
 considerable time had elapsed between th first presentment of 
 the check and the second, there would be no question of the
 
 OPINIONS OF THS GENERAL COUNSEL. 431 
 
 bank's right to charge the check to the depositor's account without 
 any instructions. 
 
 I am also of the opinion that it would have the right to charge 
 the amount of the protest fees, treating them as a part of the 
 check. The drawer of the check would unquestionably be liable 
 for these fees and I do not think he would be in position to ques- 
 tion the authority of the bank to include them as a part of the 
 check, though I confess there is some doubt on the question. A 
 check is a direct order from the depositor to the bank to pay a 
 definite amount. There is no such order for payment of the 
 protest fees, and it might be that such payment would be treated 
 as unauthorized. 
 
 However, if I were an officer of the bank and such check was 
 presented the second time, I would pay it, charging the check 
 and the protest fees to the depositor unless, as above indicated, 
 the check had been held out for considerable time. 
 
 Bank Having Check Protested When Payment Has Not Been 
 Refused Liable for Protest Fees as Well as for Damages. . 
 
 A check for $26.06 is presented to the drawee bank through another 
 bank, which insists on the payment of $26.09. The check is returned by 
 the drawee with statement indorsed on it that it is only for $26.06. Is the 
 check subject to protest, and if not, who is liable for protest fees? 
 
 There is scarcely any doubt that the check should not have been 
 protested. The drawee bank could only pay the amount of the 
 check and was justified in refusing to pay anything more than 
 that amount. If the bank presenting the check refused to accept 
 the amount called for by the check, insisting on a larger amount, 
 then there was no refusal to pay the amount called for by the 
 check, and until there has been a demand and refusal a check is 
 not protestable. 
 
 As the presenting bank caused the check to be protested with- 
 out authority, it is liable for the protest fees of the notary public, 
 and it may be added that if any damage resulted from the wrong- 
 ful protest of the check, the bank causing the protest would be 
 liable for this damage also.
 
 432 PARK'S BANKING LAW OF GEORGIA. 
 
 Protest May Be Waived in Face of Paper. 
 
 Is a clause in a note waiving protest and notice legal and valid? 
 
 Protest may be waived ; and where a note on its face contains 
 a waiver of protest, protest is not necessary in order to bind in- 
 dorsers. The rule is clearly stated as follows in Tiedeman on 
 Commercial Paper, 363, p. 626: 
 
 "If the waiver is put in the body of the instrument, it enters 
 into and forms a part of the contract of every one who signs his 
 name to the paper, whether as drawer or indorser." 
 
 Maker Can Not Waive Protest After Paper Has Been 
 Negotiated. 
 
 Has the maker of a negotiable instrument at the maturity thereof the 
 right to waive protest? 
 
 Nothing that the maker can do after the paper has been in- 
 dorsed can bind the indorsers. To have the paper protested under 
 the circumstances prescribed by the Code is a right of the in- 
 dorser, which, of course, the maker can not waive. Protest can 
 be waived in the face of a paper, and where a waiver of this 
 kind is included, protest would not be necessary. After the 
 paper is complete and has actually been negotiated, the maker can 
 not waive any right of the indorsers. 
 
 Waiver of Demand Is Equivalent to Waiver of Protest. 
 
 Does a waiver of demand for payment upon a promissory note negoti- 
 ated at a chartered bank constitute a waiver of protest? 
 
 The Supreme Court of Georgia has held that a written waiver 
 of "demand and notice" on the part of an indorser is in effect a 
 waiver of demand and refusal and protest therefor. National 
 Exchange Bank v. Kimball, 66 Ga. 753. 
 
 The court has also held that where a draft waived protest, this 
 included a waiver of notice, Williams v. Lewis, 69 Ga. 825 ; and 
 that the same facts which dispense with notice of dishonor or 
 excuse the holder from giving notice will render protest unnec- 
 essary, Hull v. Myers, 90 Ga. 674. While these cases do not ex- 
 pressly hold that a waiver of demand also waives protest, they 
 practically decide the question.
 
 OPINIONS of THE GENERAL COUNSEL. 433 
 
 On principle, it seems that a waiver of demand is necessarily 
 equivalent to the waiver of protest. The purpose of protest and 
 notice by a notary is to furnish to the holder legal evidence of the 
 fact that presentment and demand for payment has been made. 
 Formerly, protest was not required except in case of foreign bills 
 of exchange, and it was required there as furnishing an easy and 
 cheap method of proving the fact that the bill had been properly 
 presented and that a demand for payment had been made. 
 
 If the demand for payment is waived, there would seem to be 
 no basis for a protest, nor indeed would a notary be authorized 
 to protest except in case of making formal presentment and de- 
 mand for payment. If no protest is made, of course no notice 
 could be given ; hence it seems that a waiver of demand is equiva- 
 lent to waiving protest, which is merely evidence of a demand 
 and that protest for nonpayment has been made, and this would 
 come under the reasoning of the case of Hull v. Myers above 
 referred to, as being a fact which would excuse or dispense with 
 the giving of the notice and therefore render protest unnecessary. 
 
 Where Protest Waived, Bank Not Liable for Not Protesting, 
 Though Paper Sent with Instructions to Protest. 
 
 Where a waiver of protest is contained in a note, but the forwarding 
 bank instructs the collecting bank to protest, does failure to protest re- 
 lieve the indorsers? Is the collecting bank liable for failure to protest? 
 
 Protest may be waived, and where a note on its face contains 
 a waiver of protest, especially where it states that protest is 
 waived not only by the maker, but by indorsers as well, protest 
 is not necessary in order to bind indorsers. Protest not being 
 necessary in order to bind, of course, the indorsers would not be 
 relieved by the failure to protest. 
 
 I do not think a bank could be held liable for failure to protest 
 a note which is not pfotestable or one which it is not necessary 
 to protest in order to bind indorsers. The theory on which a 
 bank would be liable for failure to protest is that it has neglected 
 to do something by reason of which loss has resulted. As no loss 
 could result from the failure to protest a paper where protest 
 has been waived, the bank could not be held liable for failure to 
 carry out instructions. I think, however, that it would be entirely 
 proper for the bank to obey instructions and protest, even though 
 protest was waived. 
 28
 
 434 PARK'S BANKING LAW OF GEORGIA. 
 
 Waiver of Protest Is Not Affected by Bankruptcy of One of 
 
 the Parties. 
 
 When protest is waived, and one of the parties to the note goes into 
 bankruptcy, is it necessary to protest the note? 
 
 It is not necessary to protest a note where the protest is waived. 
 Nor is it generally necessary in such cases to formally present the 
 paper at the place of payment ; that is to say, the indorsers would 
 not be discharged for failure to make such presentment. The 
 bankruptcy of one of the parties does not change the rule. 
 
 REDISCOUNT. 
 
 Bank's Statement Must Show Rediscounts. 
 
 Is there any way in which a small bank can indorse a customer's note 
 and hold the collateral and receive the proceeds from the rediscount for 
 the customer's credit, and not report the same as a rediscount? 
 
 I do not see how this can be done. If the bank rediscounts 
 the paper under its indorsement, this creates a liability against it 
 as indorser, and is a technical rediscount which ought to appear 
 in the bank's statement. 
 
 RENT. 
 
 Landlord's Lien for Rent (Except on Crops) Ranks with 
 Other Liens from the Levy of Distress Warrant. , 
 
 Is a judgment against a tenant superior to the landlord's claim for rent? 
 
 A judgment is superior to a claim for rent (except upon the 
 crop made on the rented lands), unless a distress warrant has 
 been issued and levied. A landlord's general lien for rent ranks 
 with other liens from the levy of a distress warrant. The special 
 lien on crops is superior to judgments and all other liens except 
 taxes. I quote the sections of the Code governing the matter : 
 
 "Landlords shall have a special lien for rent on crops made on 
 land rented from them, superior to all other liens except liens for 
 taxes, to which they shall be inferior, and shall also have a gen- 
 eral hen on the property of the debtor, liable to levy and sale, and 
 such general lien shall date from the time of the levy of a dis- 
 tress warrant to enforce the same.
 
 OPINIONS OF THE; GENERAL COUNSEL. 435 
 
 "Such general lien of landlords shall be inferior to liens for 
 taxes and the general and special lien of laborers, but shall rank 
 with other liens, and with each other according to date, the date 
 being from the time of levying a distress warrant. The special 
 liens of landlords for rent shall date from the maturity of the 
 crops on the lands rented, unless otherwise agreed on, but shall 
 not be enforced by distress warrant until said rent is due, unless 
 the tenant is removing his property, or when other legal process 
 is being enforced against said crops, when the landlord may, as 
 provided elsewhere in this Code, enforce said liens, both general 
 and special." Park's Ann. Code, 3340, 3341. 
 
 Transfer of Landlord's Lien for Rent Does Not Have to 
 Be Recorded. 
 
 Where a landlord's lien is transferred should it be recorded? 
 
 There is no provision in our statute for recording a landlord's 
 lien, whether it is the general lien given the landlord on all the 
 property of his tenant or the special lien on the crops raised on 
 the rented premises ; nor is there any provision requiring the 
 recording of the lien given to the landlord for supplies furnished 
 to tenants to make crops. Of course, a mortgage given on a crop 
 would have to be recorded as any other mortgage. All of these 
 liens are subject to transfer, but there is nothing requiring the 
 transferred lien to be recorded, except in case of a mortgage. 
 
 SAFETY DEPOSIT BOXES. 
 
 Bank Renting Deposit Boxes Liable for Ordinary Care. 
 
 Is a bank renting safety deposit boxes to its customers liable for the 
 theft of money or securities deposited therein? 
 
 While a general deposit creates merely the relation of debtor 
 and creditor, a special deposit renders the bank liable as deposi- 
 tary or bailee, the liability being the same as that of a warehouse- 
 man. If the deposit is gratuitous, the bank is liable only for 
 gross neglect, but where a consideration is paid for the use of the 
 safety deposit box, the bank is bound to exercise ordinary care 
 and diligence in protecting the property deposited therein. 
 Ordinary care and diligence is that care which an ordinarily pru- 
 dent man exercises under the same circumstances in his own in-
 
 436 PARK'S BANKING LAW OF GEORGIA. ; 
 
 terest or for the protection of his own property. What is ordinary 
 care and diligence in any particular instance depends upon the cir- 
 cumstances and conditions under which the deposit is made and 
 the. representation made by the depositary. In case of a loss by 
 theft, the burden is on the bank to show that it exercised ordinary 
 care and diligence ; and if it can show this, it is not liable. 
 
 Ordinarily, a bank would not be liable for a burglary where 
 its safety deposit boxes are of the type in general use, or where 
 the depositor knows the character of the boxes when he makes 
 the deposit and where the boxes are protected in the usual 
 manner. 
 
 SET-OFF. 
 
 Bank May Set Off Deposit Against Matured Note. 
 
 A bank holds a past due note of a customer, who has on deposit an 
 amount more than sufficient to cover the note. Has the bank the right 
 to apply the amount on deposit to the payment of the note? 
 
 The bank has the right to apply enough of the amount on de- 
 posit to the credit of the customer to satisfy its claim against him. 
 The rule is thus stated in Michie on Banks and Banking, Vol. 
 2, pp. 1009, 1011: 
 
 "The rule that a bank has a general lien upon or right of set off 
 against all moneys or funds in its possession belonging to a de- 
 positor to secure the payment of the depositor's indebtedness is a 
 part of the law merchant, and well established in commercial 
 transactions. * * * It rests upon the principle that as the 
 depositor is indebted to the bank upon a demand which is due, 
 the funds in its possession may properly and justly be applied in 
 payment of such debt, and it has, therefore, a right to retain such 
 funds until payment is actually made. * * * A bank to 
 which a depositor owes a matured debt may set off or apply such 
 depositor's general deposit to the discharge of such debt." 
 
 Bank May Set Off Deposit Against Note of Insolvent Debtor 
 Before Maturity. 
 
 Where a depositor owes a bank a note, can the bank upon the insolvency 
 of the depositor, apply his deposit in satisfaction of the note? 
 
 This question has been decided by the Supreme Court of 
 Georgia. I quote from the case of Georgia Seed Co. v. Talmadge, 
 96 Ga. 254:
 
 OPINIONS OF THE GENERAL COUNSEL. 437 
 
 "Where a bank, having money on deposit with another, failed 
 in business and became insolvent, being at the time indebted to 
 the depositary upon promissory notes, the sum total of which 
 exceeded the amount of the deposit, it was the right of the 
 depositary, by way of equitable set off, to appropriate the money 
 on deposit, as far as it would go, to the satisfaction of such notes, 
 although they had not yet become due." 
 
 Bank May Call a Demand Note and Apply to Its Payment 
 Proceeds of Check Presented for Payment by Maker. 
 
 If a bank holds a demand note and the maker presents for payment a 
 check payable to himself, can the bank call the loan and apply the pro- 
 ceeds of the check to its payment? 
 
 I think the bank would have the right to call a demand loan at 
 any time, and if the maker presented a check payable to himself 
 the bank could call the loan and insist on applying the check on 
 the debt. If the bank demanded payment of the note and at the 
 same time held on to the money due on the check and applied it 
 to the payment of the note, the maker would have a very hard 
 time forcing it to pay him the money. Of course this method of 
 collection is a very unusual and harsh one and should not be re- 
 sorted to unless it is absolutely necessary to collect the money. 
 
 Bank May Set Off Deposit Against Series of Notes Purchased 
 as They Mature. 
 
 Has a bank the right to charge to.a depositor's account at the maturity 
 thereof, respectively, a series of notes given by the depositor to a third 
 person and purchased by it from such third person for value and before 
 maturity ? 
 
 A deposit in a bank creates the relation of debtor and creditor. 
 The bank owes the depositor the amount of the deposit, which 
 it agrees to pay to him or his order on demand. The right to 
 offset mutual accounts is universally recognized. So a bank, as 
 has been frequently held, has the right to charge to the account 
 of the depositor at maturity any obligation of his in favor of the 
 bank. The fact that the depositor's notes in the present instance 
 were given to a third party makes no difference. They are still 
 the obligations of the maker of the notes, who is also the de- 
 positor. The situation, therefore, is that the bank owes the de- 
 positor the amount of his deposit. The depositor owes the bank
 
 PARK'S BANKING LAW of GEORGIA., 
 
 the amount of the notes as they respectively mature. The bank 
 has a perfect right to offset the amount due by it against the 
 amount due to it. The depositor's direction not to charge the 
 notes to his account could not affect the right of the bank to do so. 
 
 Bank May Set Off Deposit Against Note of Bankrupt 
 Depositor. 
 
 Has a bank the right to offset a deposit against a past due note of its 
 customer without his consent, where the customer files a voluntary peti- 
 tion in bankruptcy and schedules the deposit as an asset and the note as a 
 liability? 
 
 The Bankruptcy Act expressly authorizes the set off of mutual 
 accounts.. This has been repeatedly held to include deposits in 
 bank as against notes of the depositor. There are numerous 
 decisions to this effect by the bankruptcy courts, including the 
 Supreme Court of the United States, which, of course, is the 
 final authority. Probably the leading case is that of the Conti- 
 nental & Commercial Trust & Savings Bank v. Chicago Title & 
 Trust Company, 229 U. S. 434, 57 L. Ed. 1268, where the ques- 
 tion was expressly ruled. 
 
 Bank May Set Off Deposit Against Matured Note of 
 Deceased Depositor. 
 
 One who has money on deposit executes a note with personal indorse- 
 ment which contains a clause authorizing the bank at maturity of the note 
 to charge off to the satisfaction of the note any funds on deposit to his 
 credit The maker dies before the note matures. Has the bank the right, 
 under the authority contained in the .note, to charge off from the maker's 
 general deposit, a sum sufficient to satisfy the note? 
 
 The power contained in the note is a power coupled with an 
 interest and, under 3575 of Park's Ann. Code, the death of 
 the maker would not revoke the power. But, independently of 
 the question of the power given to the bank to charge the amount 
 to the depositor's account, a bank always has the right to offset 
 the amount due by it to a depositor with any debt due by the 
 depositor to it. The deposit in the bank creates the relation of 
 debtor and creditor between the bank and the depositor, and 
 there can be no question as to the right to set off mutual 
 debts. This is allowed in case of the bankruptcy of a depositor, 
 and the principle would hold good in case of the' death of a de- 
 positor, provided, of course, the note has matured.
 
 OPINIONS OF THE GENERAL COUNSEL. 439 
 
 Bank Cannot Offset Deposit Against Note of Deceased De- 
 positor Before Maturity of Note, Unless Estate Insolvent. 
 
 May a bank set off against a note owed it by a depositor, upon the death 
 of the depositor, the balance to the credit of such depositor in advance of 
 the maturity of the note? 
 
 The right of a bank to set off funds on deposit as against a note 
 due it is thoroughly recognized. It has been so held by more than 
 one decision of our Supreme Court. But while this is true, the 
 right of set-off ordinarily does not exist until the note becomes 
 due. As stated by Michie, "The general rule is, that a bank 
 cannot apply a general deposit to an unmatured indebtedness of 
 the depositor." 2 Michie on Banks and Banking, p. 1028. 
 
 Michie also says : "The death of a depositor does not deprive 
 the bank of its right to apply his deposit to the payment of his in- 
 debtedness." 2 Michie on Banks and Ranking, p. 1017. 
 
 Under our Code, while set-off is not generally allowed until a 
 debt becomes due, it is allowable in case of insolvency or where 
 the debtor is a nonresident, the language of the Code being : "If 
 a plaintiff resides without this State, or is insolvent, the defendant 
 may set off against him a debt not due, under such equitable terms 
 as may be prescribed by the court." Park's Ann. Code, 4349. 
 
 Whether or not in the case of the death of a depositor, his 
 estate being solvent, the bank is allowed to set off a deposit, seems 
 not to have been decided in Georgia. The decisions in other 
 States are not uniform. Even in case of insolvency, a number 
 of the courts hold that the right of set-off does not exist until the 
 maturity of the paper. Other courts hold that where the estate 
 of the depositor is insolvent or there is danger of insolvency, the 
 bank is authorized to apply the deposit in satisfaction of the 
 note. But this seems to be as far as the courts have gone. 
 
 In the absence of insolvency or other special circumstances, I 
 do not think a bank would have the right to offset a deposit 
 against a note which had not matured, or that the death of the 
 depositor without more would give it such right. 
 
 Value of Clause in Note Giving Bank Right to Set Off Deposit 
 Before Maturity. 
 
 What is the value of a clause in a note which authorizes the bank at its 
 option at any time to apply to the payment of the note any money on de- 
 posit, whether the note is due or not? 
 
 I think this is a good provision and is enforceable. It some- 
 times enables a bank to protect itself where it has reason to sus-
 
 440 PARK'S BANKING LAW OF GEORGIA. 
 
 pect that a party whose note it holds is getting in bad circum- 
 stances but who has not gone into "bankruptcy or become in- 
 solvent. Without this provision, in the event of insolvency the 
 bank would have the right, whether the note was due or not, to 
 apply the deposit to the payment of the note, and it would have 
 the right, regardless of insolvency, to apply the deposit when the 
 note became due. There are some cases, however, where a bank 
 would like to make the application, although the note was not due 
 and the party was not then insolvent. In such instances, though, 
 of course, they are rare, the clause would be of considerable 
 value. 
 
 Bank Ordinarily Has No Right to Charge Note to Account 
 of Indorser or Guarantor. 
 
 Has a bank the right to apply to the payment of a note the balance 
 to the credit of a depositor who is an indorser on the note? 
 
 In the absence of a contract authorizing the bank to make such 
 application of the deposit, I do not think under ordinary cir- 
 cumstances it would be allowed to hold the deposit and apply it 
 to the payment of the note. The rule is thus stated in Michie on 
 Banks and Banking, p. 1031 : 
 
 "In absence of a contract a bank has no right, without a de- 
 positor's consent, to apply his deposit to the payment of an obliga- 
 tion for which he is liable as a guarantor, indorser, or surety, as, 
 for instance, a bill of exchange indorsed by such depositor and 
 discounted by the bank ; a check of a third person guaranteed by 
 him ; or a note, payment of which he has guaranteed, or on which 
 he is liable as indorser or surety. The right may exist, under cer- 
 tain circumstances, even where the depositor is not primarily 
 liable on the notes, as where the makers of the notes are insolvent 
 and it appears that it was the intention of the party that their 
 claims should be mutual credits." 
 
 The author's statement is well supported by the decided cases, 
 and is undoubtedly the general rule. 
 
 Failure of Bank to Set Off Deposit Against Note of Maker 
 Does Not Discharge Surety or Indorser. 
 
 Is it the duty of a bank for the protection of a surety or indorser to 
 credit on a note at maturity the amount of the deposit of the principal or 
 maker, such amount being insufficient to pay the note in full? 
 
 In the case of Davenport v. State Banking Co., 126 Ga. 136, the 
 Supreme Court holds that while a bank has a right when it has
 
 OPINIONS OF THE GENERAL COUNSEL. 441 
 
 on deposit funds sufficient to pay a note in full to charge the 
 note to the account of the depositor, it is not obliged to do so for 
 the protection of an indorser, and its failure to charge the note 
 and permitting the deposit to be checked out will not relieve the 
 indorser. 
 
 In discussing the question whether the bank should apply funds 
 as a credit on the note when the deposit is not sufficient to pay it 
 in full, the court says : 
 
 "Jt has been held by almost all the courts where the questions 
 have arisen that if at the maturity of a note held by a bank the 
 principal thereon has not sufficient funds on general deposit with 
 the bank to pay it, the bank is under no duty to a surety upon the 
 note to apply such funds of the principal as may then be on de- 
 posit to the payment of the note pro tanto, nor is it bound to 
 pay the note from subsequent deposits of the principal, although 
 they are sufficient for this purpose." 
 
 The Authorities Are in Conflict as to the Right of a Bank to 
 Charge to Depositor's Account a Note Made Payable at 
 the Bank. 
 
 Can a bank pay a note from the general deposit of the maker without 
 specific direction from the maker to pay it, the note on its face being pay- 
 able at the bank? 
 
 There seems to be a hopeless conflict in- the decisions of the 
 different courts on this question. The courts of Georgia, so far 
 as I have been able to ascertain, have never passed upon it one 
 way or the other. 
 
 I quote from Michie on Banks and Banking: 
 
 "In some jurisdictions it has been held that where one makes 
 a note payable by its terms at a bank at which he is a general 
 depositor, the bank is thereby authorized to pay it, on presenta- 
 tion when due, out of any funds of the maker then on general 
 deposit with it, and is entitled to a proper credit in the account of 
 the depositor, and may hold the note as the equitable owner or 
 purchaser, and set it off in a suit to recover a balance due the 
 depositor on a general account. But in other jurisdictions it has 
 been held that a note executed by a depositor, payable at the 
 bank, is not equivalent to a check, and that the bank has no au- 
 thority to pay such note to a third party in the absence of a usage 
 or of instructions from the maker to that effect; and that a 
 usage to authorize such payment out of deposits of the maker at 
 the bank must be general, uniform and certain, and known to both 
 parties. But a depositor's parol direction to apply his deposit in 
 payment of a note payable at the bank is sufficient to authorize
 
 442 PARK'S BANKING LAW OF GEORGIA. 
 
 such application. In jurisdictions where it is held that a bank is 
 authorized to pay a note payable at the bank out of the funds of 
 the., maker on general deposit with it, the burden of proof is on 
 the bank to show that the note was payable at the bank, in an ac- 
 tion by the maker for the conversion of a portion of his deposit 
 by paying such note without his special authority." 2 Michie on 
 Banks and Banking, 144, p. 1168. 
 
 This quotation embodies a fair statement of the rulings of the 
 different courts. It will be seen that the courts are in direct con- 
 flict. The courts of Indiana, Ohio, New York, and Pennsylvania 
 hold that a bank at which a note is payable can apply the funds 
 of the maker held on deposit to the payment of his note. The 
 contrary is held by the courts of Tennessee, Illinois, Massachu- 
 setts, and Louisiana. 
 
 Perhaps the leading cases upholding the bank's right to pay a 
 note is a decision by the Supreme Court of Indiana. I quote : 
 
 "A bank which in good faith pays a note, made by one of its 
 depositors, payable at its place of business and against which 
 there is no defense, may set off the amount so paid against the 
 balance due on the maker's account, although the payment was 
 made without notice to, or express authority from, him." Bed- 
 ford Bank v. Acoam, 125 Ind. 584, 25 N. E. 713, 9 L. R. A. 
 560, 21 Am. St. Rep. 258. 
 
 The court calls attention in this case to the fact that when 
 money is deposited the relation of debtor and creditor exists be- 
 tween the bank and the depositor, and that the bank has the right 
 to apply a sufficient amount of the deposit to the payment of any 
 debt due by the depositor to the bank. It is said that if the bank 
 had discounted the note or taken an assignment of it there would 
 be no dispute as to its right to retain the amount due out of the 
 depositor's account, and an analogy is drawn between a case of 
 that kind and a case where the bank pays the note, which on its 
 face is payable at the bank. As a further reason, the court says 
 that one who has drawn a note payable at a bank must have done 
 so for some purpose, and that he can not be heard to say after 
 the bank has paid a just debt for which he had given his note, 
 as to which he claims no defense, that the payment was wholly 
 voluntary and unauthorized. 
 
 Perhaps the leading case on the other side of the proposition is 
 from the Supreme Court of Tennessee. In an exceedingly vigor- 
 ous and clear-cut opinion, this court denies that the bank has any 
 right to pay the note of a depositor out of his general deposit. 
 The court says :
 
 OPINIONS of THE GENERAL COUNSEL. 443 
 
 "A bank has no implied authority to pay to a third party a note 
 made by a depositor payable at its place of business simply be- 
 cause he has funds there sufficient for that purpose, in the ab- 
 sence of any course of dealing or previous instructions so to apply 
 the deposits." Grissom v. Com. Nat. Bank, 87 Tenn. 350, 10 S. 
 W. 774, 3 L. R. A. 273, 10 Am. St. Rep. 669. 
 
 The court argues that the relation of debtor and creditor is 
 created by a general deposit, and that the depositor has only a 
 debt against the bank, payable on demand, upon the presentation 
 of an order addressed to the bank in unequivocal terms asking it 
 to pay a certain amount to some person therein named or to 
 bearer. 
 
 It is said also that where an agent receives money for his 
 principal he can not make an application of such money to the 
 payment of his principal's debt without the express or implied 
 assent of the principal. 
 
 The court says that the words "payable at" are not synonymous 
 with the words "by or through," and that the words "payable at 
 the bank" are not a necessary part of the instrument, but that a 
 note is as valid when made payable generally as when made pay- 
 able at any particular place. These words, it is said, simply desig- 
 nate for convenience a place of payment. 
 
 In this case a distinction is drawn between a check and a note. 
 It is pointed out that a check is a written order asking a bank to 
 pay a certain sum of money, while a note is a promise to pay 
 another a certain sum of money at a certain time; that one is 
 payable on presentation, the other on a day certain ; that one is an 
 appropriation of money in a banker's hands, the other is a promise 
 to pay; and that on the check ordinarily no right of action ac- 
 crues until after presentment for payment, while on the note a 
 right of action against the maker exists without such presentment. 
 
 This case, however, holds that a bank might so pay a note if 
 there was a certain and uniform custom among the banks at a 
 certain place so to pay. This is a very strongly reasoned case, 
 and I am inclined to think states the true law on the question. 
 
 The text writers on the subjects of banks and banking and of 
 negotiable instruments note the fact that there is a conflict of au- 
 thority on this subject. Most of them seem to think that the 
 weight of authority is in support of the view that a bank can pay 
 a note out of a general deposit. The Tennessee court, however, 
 in the opinion above referred to, undertakes to prove that the 
 weight of authority is against the bank's right to pay.
 
 444 PARK'S BANKING LAW OF GEORGIA. 
 
 Depositor May Set Off His Deposit with An Insolvent Bank 
 Against His Note Held by That Bank. 
 
 Can a person who owes a note to a bank at the time it becomes insolvent 
 set off, as against such note, money which is on deposit to his credit in 
 the bank? 
 
 There is no doubt that a deposit can be set off against a note 
 owed by the depositor to the bank. The general rule on the sub- 
 ject is thus stated in Michie on Banks and Banking, p. 1059 : 
 
 "Where a depositor is indebted to a bank, he can set off his 
 deposit against a debt due from him to the bank in the same right 
 or capacity, on the principle that mutual claims which are between 
 creditor and debtor may be set off against each other." 
 
 I also quote from the case of Scott v. Armstrong, 146 U. S. 
 499, 36 L. Ed. 1059: 
 
 "Where a national bank becomes insolvent and its assets pass 
 into the hands of a receiver appointed by the Comptroller of the 
 Currency a debtor of the bank can set off against his indebtedness 
 the amount of a claim he holds against the bank, if the debt due 
 from the bank was payable at the time of its suspension, but that 
 due to it was payable at a time subsequent thereto." 
 
 Demand Deposits and Time Deposits Can Be Used Alike in 
 Payment of Notes Due Insolvent Bank. 
 
 Do demand deposits in an insolvent bank have priority of payment over 
 time certificates, and can they be used in payment of notes due the in- 
 solvent bank? 
 
 The Supreme Court in the case of Lamar v. Taylor, 141 Ga. 
 228, held that the holders of time certificates were depositors and 
 entitled to rank as such, there being no difference as to priority 
 between demand and time deposits. 
 
 Demand deposits as well as time certificates can be set off 
 against notes. 
 
 NOTE. The Banking Act, 2, provides that the term "depositor means 
 any person who shall deposit money or commercial paper in any bank, 
 either on open account, subject to check, or to be withdrawn otherwise 
 than by check, whether interest is allowed thereon or not, and shall include 
 holders of demand and time certificates of deposit lawfully issued."
 
 OPINIONS OF THE GENERAL COUNSEL. 445 
 
 Executor or Administrator Cannot Set Off Deposit in His 
 Own Name Against Debt Due by Estate. 
 
 Can an executor or administrator set off a deposit in his own name as 
 an individual against a note which the estate he represents owes the bank? 
 Or can he set off against a debt owed by him individually to the bank a 
 deposit made by him as executor or administrator? 
 
 "Set off must be between the same parties and in their own 
 right." Park's Ann. Code, 4341. Therefore, an executor or ad- 
 ministrator is not entitled to set off against his liability as such 
 executor or administrator a debt from the bank to him as an in- 
 dividual ; nor can he set off against a debt which he owes indi- 
 vidually an indebtedness of the bank to himself in his capacity 
 as representative of the estate. The rule is clearly stated in 
 Morse on Banks and Banking, 334, as follows : "The debts 
 must be between the same parties and in the same right. A de- 
 posit due to A as executor, cannot be offset against A's personal 
 debt, nor vice versa." 
 
 A Member of a Partnership Cannot Set Off Against His Note, 
 a Deposit in Name of the Firm. 
 
 A member of a partnership is indebted to a bank on his individual note. 
 When sued on this note can he set off a deposit in the bank in the name 
 of the firm of which he is a member? 
 
 This question is controlled by the decision of the Supreme 
 Court of Georgia in the case of Bishop v. Mathews, 109 Ga. 790. 
 I quote the headnote : 
 
 "A defendant in an action brought against him individually 
 upon a demand for the payment of which he is individually liable, 
 cannot, without showing some equitable reason for being allowed 
 to do so, set off against the plaintiff's claim a debt due by the 
 latter to a partnership of which the defendant is or had been a 
 member." 
 
 This seems to be the general rule on the subject. It is thus 
 stated in Michie on Banks and Banking, p. 1066: 
 
 "As a general rule a partnership deposit cannot be set off 
 against the debts of individual members of the partnership owed to 
 the bank, unless there be some special equity or equities to justify it. 
 Such special equities may arise under circumstances of fraud ; or 
 where there are a series of transactions in which joint credit is 
 given with reference to the special debt; or where the mode or 
 course of dealing is such as to furnish a presumption that there 
 was an agreement that the mutual dealings on each side, and in-
 
 446 PARK'S BANKING LAW OF GEORGIA. 
 
 dependent debts, were to be set off against each other, and 
 that, without such right of retaining against each other, the 
 parties would not have continued dealing with each other." 
 
 A Deposit in a Bank Can Be Set Off by a Stockholder Against 
 An Unpaid Stock Subscription Unless the Bank Is In- 
 solvent. 
 
 Can a stockholder in a bank use a deposit to his credit in payment of 
 an unpaid balance on a subscription to the stock of the bank? 
 
 Under the Code : 
 
 "Between the parties themselves any mutual demands existing 
 at the time of the commencement of the suit may be set off. 
 Set off must be between, the same parties and in their own right." 
 Park's Ann. Code, 4340, 4341. 
 
 A deposit in a bank creates the relation of debtor and creditor 
 between the bank and the depositor. The bank owes the depositor 
 the amount which it has received from him and which it under- 
 takes to pay on demand. By subscribing to the stock of a bank 
 the subscriber becomes liable to pay to the bank the amount of 
 his subscription. The question presents a case of mutual de- 
 mands existing between the parties in the same right ; and, under 
 the Code, one could be offset against the other. 
 
 But when the bank is insolvent and the unpaid subscriptions 
 are being enforced in equity for the benefit of creditors such an 
 offset is not permitted. In the first, case, the obligations are mu- 
 tual and can, therefore be set off. In the second case, the courts 
 hold that the obligations are not mutual and that set-off is not 
 allowed. I quote from a decision by the Supreme Court : 
 
 "Shareholders of an insolvent corporation who are indebted to 
 it upon unpaid stock subscriptions and who are also its creditors 
 can not, in defense to an equitable proceeding brought by another 
 creditor in behalf of himself and all the creditors of the corpora- 
 tion to wind up its affairs and, as an incident thereto, subject 
 these shareholders to liability upon such stock subscriptions, set 
 off against the amounts due thereon the debts due to them by the 
 corporation. In such a case, 'they must pay up what they owe 
 like other debtors, and then get their dividends like other credit- 
 ors' when the court distributes the assets among those entitled to 
 the same." Wilkinson v. Bertock, 111 Ga. 187.
 
 OPINIONS OF THE GENERAL COUNSEL. 447 
 
 A Deposit Cannot Be Set Off Against an Assessment for the 
 Statutory Liability of a Stockholder. 
 
 Where a bank has failed and it is necessary to collect the full assessment 
 from the stockholders, can a stockholder who was also a depositor set off 
 his deposit against his assessment, the bank not being able to pay its de- 
 positors in full even after collecting the hundred per cent assessment? 
 
 A stockholder, who is also a depositor, cannot set off the 
 amount of his deposit against the assessment levied on him by 
 reason of his individual liability as a stockholder in the bank, 
 where the amount to be realized from the assessment upon the 
 stockholders will not pay in full all the depositors. 
 
 The rule is thus stated in Morse on Banks and Banking, Vol. 
 2, p. 410: 
 
 "Where one is a creditor as well as a stockholder, he cannot 
 avail himself of the debt owing to him by the bank by way of 
 set-off to diminish his contributory share. His liability as a 
 contributor for the benefit of creditors must be distinguished 
 from his character as a simple contract debtor to the bank upon 
 ordinary business transactions." 
 
 STOCK. 
 
 Definition of Prefered, Common, and Watered Stock. 
 
 What is the difference between preferred stock and common stock? 
 What is the meaning of watered stock? 
 
 Without undertaking to give an accurate technical definition, 
 preferred stock differs from common stock in that it is entitled 
 to preference in dividends over common stock, and sometimes 
 also to preference on the final distribution of the corporation's 
 assets. A corporation sometimes issues preferred stock as a 
 means of borrowing money, though holders of preferred stock 
 are stockholders rather than creditors. The holders of this stock 
 are generally entitled to be paid dividends of some fixed amount 
 before any dividends are declared on the common stock, and 
 sometimes it is provided that in the event dividends are not de- 
 clared in any one year they shall be cumulative, and when divi- 
 dends are declared at any later time the holders of the preferred 
 stock are entitled to be paid dividends for the intervening period 
 until they have received the regular stated dividend for each year, 
 before any dividends are declared and paid to common stock- 
 holders.
 
 448 PARK'S BANKING LAW OF GEORGIA. 
 
 By "watered stock" is meant stock issued without correspond- 
 ing value being paid to the corporation. For instance, one com- 
 mon method of financing a railroad company is for a construction 
 company to be organized for the purpose of building the road, 
 the wiork to be paid for by issuing the bonds of the company and 
 so much of the stock of the railroad company. This stock fre- 
 quently represents no value at all, the road being really paid for 
 by the sale of the bonds. Stock issued under such circumstances 
 would usually be regarded as watered stock. So sometimes a 
 corporation in order to secure money will issue so much stock as 
 a bonus to go along with an issue of bonds. Sometimes a stock 
 dividend is declared by a corporation when its surplus and profits 
 are not sufficient to cover the stock issued ; such excess stock 
 would be "watered." The term has no fixed definite meaning, but 
 implies, as will be seen from the illustrations, simply that the 
 stock does not represent actual capital paid into the company. 
 
 Pledgee of Stock Is Entitled to the Dividends Thereon. 
 
 Stock of a corporation is pledged, the corporation being notified of the 
 fact, but the name of the pledgee not being given, is the pledgee entitled 
 to the dividends on the stock or must they be paid to the pledgor? 
 
 I quote from a decision of the Supreme Court of Georgia : 
 "Where stock of an incorporated company is pledged by the 
 owner as collateral security for the payment of a debt, the pledgee 
 is, as a general rule, entitled to collect and receive the dividends 
 thereon, unless this right is reserved by the pledgor at the time 
 the pledge is made. 
 
 "If the company by which the stock was issued, with notice of 
 the fact that the pledge has been made, pays the dividends to the 
 pledgor, it is ordinarily liable to the pledgee for such dividends, 
 although the stock has not been actually transferred on the books 
 of the company." The Guarantee Co. of N. A. v. East Rome 
 Town Co., 96 Ga. 511. 
 
 I do not think it would make any difference that the notice did 
 not specify to whom the stock had been hypothecated. The fact 
 that the notice is given would make the corporation liable to the 
 pledgee for the dividend, and it would pay it to the pledgor of 
 the stock at its own risk.
 
 OPINIONS OF THE; GENERAL COUNSEL. 449 
 
 Administrator or Other Fiduciary May Vote, Either in Person 
 
 or by Proxy. 
 
 Can an executor or administrator vote stock of the estate of which he is 
 the representative at meetings of the stockholders of the corporation? 
 Can a guardian vote his ward's stock? 
 
 The executor or administrator is entitled to vote the stock, 
 whether it has been transferred and stands in his name as exe- 
 cutor or administrator, or still stands in the name of the deceased. 
 I quote from Cook on Corporations, 612, p. 1669: 
 
 "An administrator or executor may vote on the stock of the de- 
 ceased stockholder, even though such stock has not been trans- 
 ferred to the executor or administrator on the books of the com- 
 pany." 
 
 The guardian of a minor can vote the minor's stock, the same 
 rule applying as in the case of the executor. The general rule is 
 that any trustee, or person acting in a fiduciary capacity, has the 
 right to vote the stock whether standing in the name of the trus- 
 tee or of the beneficiary. And as administrators, executors and 
 guardians have the right to appoint agents or attorneys in fact 
 (Park's Ann. Code, 4004), they may be represented and vote by 
 proxy as well as in person. 
 
 Holder of Forged Stock Certificate Acquires No Rights 
 Against Corporation. 
 
 A bank holds as collateral security a certificate of stock of another bank 
 which is believed to be a forgery, but upon which the other bank's seal 
 is affixed. What right has the first bank against the other bank if the 
 certificate is a forgery? 
 
 The general rule is that no one acquires any rights under a 
 forged instrument. It is an absolute nullity. A forged instru- 
 ment, no matter how the forgery may be effected or how perfect 
 it may be, is ordinarily void even in the hands of a bona fide 
 holder. 
 
 The rule as to certificates of stock is thus stated in Cook on 
 Corporations, 6th Ed., 293 : 
 
 "Where a certificate of stock is forged by persons other than 
 the corporate officers, the corporation is, of course, not liable 
 thereon, unless it has recognized such certificate in some way. 
 But where the forgery was by a corporate officer or has been 
 recognized in some way by the corporation, difficult questions 
 arise. The law on the subject is somewhat unsettled, and at 
 present each case seems to turn -largely on the facts in that 
 29
 
 450 PARK'S BANKING LAW OF GEORGIA. 
 
 case. In Massachusetts the rule seems to be that the corporation 
 is not liable if forgery enters into the transaction. In England 
 the same rule seems to prevail, and in New York the oldest de- 
 cision is to the effect that the corporation is not liable." 
 
 The fact that the seal of the corporation has been attached to 
 the certificate by some one not authorized would not make the 
 certificate genuine or give the holder any rights as against the cor- 
 poration. The seal is no more than the signature of the cor- 
 poration, and if attached by one having no authority would confer 
 no more rights than if the name of the corporation was signed by 
 someone without authority. 
 
 Power of Attorney Authorizing Transfer of Stock May Be in 
 
 Blank. 
 
 Can a bank transfer a certificate of stock to a named person where the 
 power of attorney authorizing the transfer is signed in blank, the name 
 of the transferee not being entered? 
 
 Yes. It is not at all unusual for powers of attorney to be 
 signed in blank. A bank is authorized to transfer stock upon a 
 power so executed. 
 
 Pledgee of Stock Is Entitled to Have Same Transferred to 
 Him on Books of Corporation. 
 
 Can one holding bank stock as collateral have such stock transferred 
 and reissued to him as pledgee? 
 
 The pledgee of a certificate of stock has the right to have the 
 stock transferred to him on the books of the bank or other cor- 
 poration, to collect the dividends declared on the stock and vote 
 the same at all meetings of stockholders, and to exercise all other 
 privileges accorded to the owner of the stock. It is not usual for 
 the pledgee or holder of stock as collateral to have the stock issued 
 to him specifically as pledgee, though this is done in some cases. 
 It is a proper method of indicating his true relation to the stock.
 
 OPINIONS of THE GENERAL COUNSEL. 451 
 
 Transfer of Stock Before Judgment Valid as Against Judg- 
 ment Even Though Not Recorded on Books of Company. 
 
 A share of bank stock was sold under execution against the stockholder. 
 The original certificate had been transferred prior to judgment against 
 the stockholder, but there had been no transfer on the books of the bank. 
 Can the bank issue a new certificate to the purchaser at the sheriff's sale? 
 
 The bank would not be authorized to issue a new certificate of 
 stock to the purchaser of the shares at the sheriff's sale if the 
 original certificate was transferred prior to the judgment against 
 the stockholder, although the transfer had not been made upon 
 the books of the bank. "Except as against the claims of the cor- 
 poration a transfer of stock does not require a transfer on the 
 books of the company." Park's Ann. Code, 2219. And it has 
 been held by the Supreme Court that, where neither the charter 
 nor the by-laws of the corporation require that stock be transferred 
 on the books of the company or the surrender of the certificate 
 and the issuance of a new one to the assignee, any mode or form 
 of conveyance sufficient in law to transfer the absolute title to the 
 assignee entitles such assignee to all the rights and benefits accru- 
 ing to the assignor, just as if the certificate of stock stood in the 
 assignee's name. Sylvania & Girard R. R. Co. v. Hoge, 129 Ga. 
 734. 
 
 Under this decision the original purchaser of this stock would 
 be the stockholder regardless of whether the stock had been trans- 
 ferred on the books or not, and the sheriff's sale could not defeat 
 his rights. It is true that the purchaser at a sheriff's sale has the 
 right, ordinarily, to compel the corporation to transfer to him the 
 stock purchased, but in the event he should undertake to compel 
 a transfer, a complete answer would be that the stock had been 
 transferred before the judgment was obtained and that, therefore, 
 the sheriff's sale was void. 
 
 Pledge of Stock Is Superior to Judgment Against Pledger 
 
 Does a judgment obtained subsequently to the transfer of stock pledged 
 as collateral take precedence over such transfer, if the transfer has not 
 been entered upon the books of the corporation? 
 
 It does not. 
 
 "Except as against the claims of the corporation, a transfer of 
 stock does not require a transfer on the books of the company." 
 Park's Ann. Code, 2219.
 
 452 PARK'S BANKING LAW OF GEORGIA. 
 
 Indeed, the lien of a judgment does not attach to stock in a 
 corporation from the time of its rendition, but only from the 
 date of the levy, and notice to the corporation and the defendant 
 as provided by 6035 of the Code. Quoting from the Supreme 
 Court : 
 
 "Stock in a corporation is a chose in action. In the absence of 
 a statute it would not be subject to levy or sale. By the Act of 
 1822 (Cobb's Digest 511, 512) the lien of the judgment against 
 the shareholder attached from the date of its rendition, but had 
 to be kept alive by giving notice within twenty days to the cor- 
 poration. This policy is reversed by the Civil Code, 5431 ( 
 6035). The lien now does not attach to the stock upon the ren- 
 dition of the judgment, but only after notice acting as a sort of 
 garnishment on the corporation, or withholding the lien until levy 
 as under the Civil Code, 3125 ( 3701). Until this notice is 
 received the statute recognizes that the company may make trans- 
 fers notwithstanding the existence of a judgment against the 
 shareholder. The quasi negotiable character of stock, the fact 
 that certificates indorsed in blank may and do pass from hand to 
 hand, and the necessity of preserving the rights of that large 
 body of the public who buy and lend on the faith of shares, was 
 no doubt the reason for the change made by the Code in the Act 
 of 1822." Owens v. Atlanta Trust & Bkg. Co., 122 Ga. 523. 
 
 Transfer of Stock of Deceased Nonresident Can Be Made 
 Only on Order of Executor or Administrator After Four 
 Weeks' Published Notice. 
 
 Would a bank be safe in transferring stock standing in name of deceased 
 nonresident to party claiming to be only heir, where it is agreed by all 
 parties having knowledge that there was only one heir and such heir 
 makes affidavit that decedent left no debts? 
 
 The only way in which a bank can be safe in transferring the 
 stock of a deceased nonresident is upon the order of an adminis- 
 trator or executor, certified copy of the appointment and qualifica- 
 tion of such executor or administrator being filed with the bank, 
 and notice being given once a week for four weeks in the news- 
 paper in which sheriff's sales are advertised in the county in 
 which the bank is located, of the intention to make the transfer 
 as provided by statute. 
 
 In the case inquired about the stockholder is supposed to have 
 left only one heir and no debts. If this is the fact, no one could 
 complain of the transfer of the stock to this heir, but if the trans- 
 fer is made in any manner except in accordance with the statute,
 
 OPINIONS OF THE GENERAL COUNSEL. 453 
 
 the bank takes the risk of doing so. Should there be other heirs, 
 the transfer to the one would be no protection, and should there 
 be creditors the bank would be liable to them. 
 
 The whole matter is regulated by 4105, Park's Ann. Code. 
 
 STOCKHOLDERS. 
 
 Bank Is Not Required to Furnish a Stockholder with List of 
 
 Stockholders. 
 
 Is a bank required to furnish to one of its stockholders a list of all of 
 its stockholders? 
 
 The National Bank Act provides : 
 
 "The president and cashier of every national banking associa- 
 tion shall cause to be kept at all times a full and correct list of 
 the names and residences of all the shareholders in the associa- 
 tion, 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. A copy 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." U. S. Comp. 
 Stat., 9773; U. S. Rev. Stat., 5210. 
 
 Practically identical provisions governing State banks are con- 
 tained in 189 of the Banking Act of 1919, except that the copy 
 of the list is transmitted to the superintendent of banks. While 
 the list must be kept and is subject to inspection by the stockhold- 
 ers, there is no requirement for furnishing the list to a stock- 
 holder on his demand. 
 
 Stockholder's Liability Is Provable Debt Dischargeable in 
 Bankruptcy. 
 
 Can a stockholder of a failed bank avail himself of the National Bank- 
 ruptcy Act to escape his stock liability, or is this assessment on the shares 
 of stock in the nature of a trust fund and not dischargeable in bank- 
 ruptcy? 
 
 Section 17 of the Bankruptcy Act as amended provides that a 
 discharge in bankruptcy shall release a bankrupt from all of his 
 provable debts, except such as are: 1. Taxes; 2. Liabilities for
 
 454 PARK'S BANKING LAW OF GEORGIA. 
 
 obtaining property by false pretenses, and similar cases ; 3. Debts 
 not scheduled ; or 4. "Where created by his fraud, embezzlement, 
 misappropriation or defalcation while acting as an officer or in 
 any fiduciary capacity." 
 
 It will readily be seen that the stockholder's liability is not 
 comprehended within any of the excepted classes. When the 
 liability becomes fixed, it is a provable debt, and one which would 
 be discharged in bankruptcy. This has been decided in the case of 
 Dight v. Chapman (D. C. Oregon), 12 Am. B. R. 743, holding 
 that a judgment against a stockholder for the amount of his lia- 
 bility "is a provable debt within the meaning of the Bankruptcy 
 Act and is released by his discharge." 
 
 Bank Is Liable as a Stockholder Where Stock Is Transferred 
 to It on the Books of the Corporation, Though as Col- 
 lateral Security Only. ' 
 
 Is a bank to which stock in another bank is transferred as collateral, 
 the stock being issued in the name of the bank, liable as a stockholder in 
 the event of the failure of the bank whose stock it holds ? 
 
 A bank holding stock in another bank is liable just as any other 
 stockholder would be. 
 
 "Where the charter of a bank imposes on all of its stockholders 
 personal liability to its creditors, such liability attaches as well to 
 those who acquire a complete legal title to stock of the bank by 
 having the same transferred to them as collateral security for 
 debts due by the transf errers as to those who purchase such stock 
 outright." Chatham Bank v. Brobston, 99 Ga. 801 (2). 
 
 Nor would the fact that the bank is a national bank make any 
 difference. While it is true that a national bank may not acquire 
 the stock of another as an investment, and that it may^set up the 
 illegality of such acquisition when sought to be held liable for 
 an assessment on such stock, yet the rule is otherwise where the 
 acquisition of the stock results from a pledge or is in satisfaction 
 of a debt. This has been settled by the decision of the Supreme 
 Court of the United States in the case of the Germania National 
 Bank v. Case, 99 U. S. 628, 25 L. Ed. 448. In that case the 
 Germania National Bank held as collateral certain stock in the 
 Crescent City Bank, which subsequently failed. The Supreme 
 Court held that the Germania Bank was liable as a stockholder. I 
 quote from that case :
 
 OPINIONS of THE GENERAL COUNSEL. 455 
 
 "It is thoroughly established that one to whom stock has been 
 transferred in pledge or as collateral security for money loaned, 
 and who appears on the books of the corporation as the owner of 
 the stock, is liable as a stockholder for the benefit of creditors." 
 
 This was held notwithstanding the fact that the Germania 
 Bank had transferred the stock of the Crescent City Bank which 
 it held as collateral to a clerk in the Germania Bank, the transfer 
 to the clerk having been held to be merely colorable, the Ger- 
 mania Bank being regarded as the beneficial owner of the stock. 
 
 Suits Against Stockholders on Their Statutory Liability May 
 Be Brought at Any Time Within Twenty Years. 
 
 What is the period of limitation on suits by a receiver against the 
 stockholders of a bank to enforce their individual liability? 
 
 This question is settled by the case of Wheatley v. Glover, 125 
 Ga. 710. It was there held that the liability being a liability fixed 
 by statute is governed by the period of limitation fixed by 4360 
 of the Code, which is twenty years. 
 
 Person in Whose Name Stock Stands on Books of Bank Is 
 Primarily Liable for Assessment, Though Stock in Fact 
 Transferred. 
 
 A stockholder in a national bank sold his stock to the cashier of the 
 bank. The transfer of the stock was not made on the books of the bank. 
 Shortly after the sale, the bank became insolvent. Would the seller of the 
 stock be liable on his statutory personal liability? Would not the notice to 
 the cashier, who purchased the stock, be notice to the bank of the transfer, 
 and thus relieve the seller of his* statutory liability? 
 
 The stockholder would not be relieved unless the transfer was 
 made on the books of the bank. The rule is thus stated in Michie 
 on Banks and Banking, p. 1865 : 
 
 "A person who appears upon the records of a national bank 
 to be a stockholder at the time the bank becomes insolvent, is sub- 
 ject to statutory personal liability of shareholder, although he has 
 previously, in good faith, sold his stock. To relieve a holder of 
 national bank stock from his liability for the debts of the bank, a 
 transfer by him must be made on the books of the bank; the 
 ordinary method of signing the power of attorney thereon is in- 
 sufficient." 
 
 This quotation is abundantly supported by authority. 
 
 I do not think that the bank had notice through the cashier who
 
 456 PARK'S BANKING LAW OF GEORGIA. 
 
 purchased the stock and to whom it should have been transferred. 
 Since the cashier was acting for himself in the transaction, any 
 knowledge gained by him would not be notice to the bank. It 
 has been held by the Supreme Court of Georgia that " a cor- 
 poration is not to be charged with notice of facts of which its 
 president acquires knowledge while dealing in his private ca- 
 pacity and in his own behalf with third persons." Peoples Bank 
 v. Exchange Bank, 116 Ga. 820. This principle would apply in 
 the case of a cashier or other officer of the bank, as well as in case 
 of the president. The principle of the case above quoted has been 
 repeatedly announced by the Supreme Court. Eng. Amer. L. & 
 T. Co. v. Hiers, 112 Ga. 823 ; Brobston v. Penniman, 97 Ga. 527; 
 Morris v. Banking Co., 109 Ga. 12; National Bank v. Demere, 92 
 Ga. 735. 
 
 It is suggested that the case of Whitney v. Butler, decided by 
 the Supreme Court of the United States, and reported in 118 U. 
 S. 655, 30 L. Ed. 266, conflicts with the principles above an- 
 nounced. It is held in that case that "the responsibility of the 
 defendants ceased upon the surrender of certain stock certificates 
 to the bank, and the delivery to its president of a power of at- 
 torney sufficient to effect, and intended to effect, as that officer 
 knew, a transfer of the stock on the books of the association 
 to the purchaser ; although such transfer Was not in fact made." 
 
 It will be noted from this case, however, that the certificates 
 had been surrendered to the bank itself, accompanied by a power 
 of attorney authorizing the transfer, and that the president of 
 the bank was advised that the transfer should be made, the presi- 
 dent himself not being in any way interested in the purchase of 
 the stock. 
 
 The cases which Mr. Justice Harlan distinguishes in this case, 
 according to his statement of them, hold that the seller is liable 
 as a shareholder, even where the buyer has agreed to have the 
 transfer made on the books of the bank, but fraudulently or neg- 
 ligently failed to do so. They also hold that the liability of the 
 shareholder continues until there is a transfer on the books of 
 the bank, even where he has in good faith previously sold the 
 stock and delivered to the buyer the certificate with power of at- 
 torney in such form as to enable the transfer to be made. Under 
 these rulings, there would seem to be no question as to the seller's 
 liability, unless the bank had some other notice of the transfer
 
 OPINIONS OF THE; GENERAL COUNSEL. 457 
 
 than the knowledge of the cashier to whom the stock had been 
 sold. 
 
 NOTE. Under the Banking Act, 140, the rule is the same with refer- 
 ence to State banks as that above stated. 
 
 SURETY. 
 
 Consent of Surety Necessary to Extension in Favor of Maker. 
 
 Where a note held by a bank is secured by personal security and the 
 maker desires to attach a cotton receipt and extend the note, can the bank 
 hold the personal security without notifying him? 
 
 In order to hold the surety still liable on the note, it would not 
 only be necessary to notify him but also to have his consent to the 
 extension of time. A contract of suretyship is one of strict law, 
 and a surety's liability cannot be extended or changed in any way, 
 without his consent. A change of the terms of a contract without 
 the consent of the surety discharges him. Any act of the creditor 
 which injures the surety or increases his risk or exposes him to 
 greater liability will discharge the surety. A mere failure by the 
 creditor to sue as soon as the debt becomes due will not release 
 the surety, but any extension based upon additional security or 
 any other consideration will release the surety unless he consents. 
 This is very clearly provided by 3543 and 3544 of Park's Ann. 
 Code. 
 
 TAXATION. 
 
 How Return of Banks for State and County Taxes Should 
 
 Be Made. 
 
 What is the proper way to make the returns of a bank for State and 
 county tax? 
 
 The statute makes this quite plain, but neither the tax authori- 
 ties nor the banks generally seem to understand how it should be 
 done. The Act of 1909, which is codified as 991, Park's Ann. 
 Code, provides : 
 
 "No tax shall be assessed upon the capital of banks, or banking 
 associations, organized under the authority of this State, or of the 
 United States, located within this State, but the shares of the 
 stockholders of the banks or banking associations, whether resi-
 
 458 PARK'S BANKING LAW OF GEORGIA. 
 
 dent or nonresident owners, shall be taxed in the county where 
 the banks or banking associations are located, and not elsewhere, 
 at their full market value, including surplus and undivided profits, 
 at the same rate provided in this article for the taxation of 
 moneyed capital in the hands of private individuals; provided, 
 that nothing in this section contained shall be construed to re- 
 lieve such banks or banking associations from the tax on real 
 estate held or owned by them ; but they shall return said real 
 estate at its fair market value, in the county where located. 
 Provided, further, That where said real estate is fully paid for, 
 the value at which it is returned for taxation may be deducted 
 from the market value of their shares ; and if said real estate 
 is not fully paid for, only the value at which the equity owned 
 by them therein is returned for taxation shall be deducted from 
 the market value of their shares. 
 
 "The banks or banking associations themselves shall make the 
 returns of the property and the shares herein mentioned, and pay 
 the taxes herein provided. Provided, further, That all property 
 used in conducting or operating a branch bank shall be returned 
 for taxation in the county where such branch bank may be lo- 
 cated. The true intent and meaning of this section is that the 
 bank itself shall return for taxation and pay the taxes on the 
 full market value of all shares of said bank stock." 
 
 As a concrete example a bank has a capital of $50,000.00, 
 surplus and undivided profits, $25,000.00. This would make the 
 book value of its stock $150.00 per share. As there are 500 shares 
 at $150.00 per share, the amount would be $75,000.00. However, 
 the market value is hardly ever as much as the book value. If 
 from recent sales a market value has been established, this market 
 value should be substituted for the book value in determining 
 the value of the shares. If there have been no recent sales from 
 which the market value can be arrived at, I think the bank would 
 be safe in making the market value somewhat less than the book 
 value. Having arrived at the value of the stock, the bank would 
 be authorized to reduce the value in the same proportion that the 
 market value of other property in the county is reduced in making 
 returns for taxes. This proportion varies somewhat in the dif- 
 ferent counties, usually ranging from approximately sixty to 
 seventy-five per cent. If the aggregate market value of its shares 
 is $75,000.00, and other property is returned at seventy-five per 
 cent, of its value, the bank would be authorized to deduct twenty- 
 five per cent, from the $75,000.00 to arrive at the market value of 
 its shares. Now, suppose the bank owns its building and other 
 real estate amounting to $10,000.00. This should be separately 
 returned on the same proportional basis that other property bears,
 
 OPINIONS OF THE GENERAL COUNSEL. 459 
 
 and this amount should be deducted from the market value of the 
 shares so that the return would show market value of shares 
 $56,250.00 (being $75,000.00 at seventy-five per cent.) less real 
 estate $7,500.00 (being $10,000.00 at seventy-five per cent, of ac- 
 tual value), total value of shares and real estate, $56,250.00. 
 
 In the blank furnished by the taxing authorities are questions to 
 be answered by the presidents of the banks, framed with a view 
 to arriving at the result above reached. The questions asked 
 are, how many shares in the bank, and what is the market value ; 
 also what is the market value of real estate ; then the question 
 is also asked how much capital, surplus and undivided profits. 
 The idea apparently is to get this as a basis for determining 
 whether or not the market value of the shares is correctly given. 
 These are not questions to be answered by the bank in making 
 its own return, but seem to be framed with a view to reaching the 
 conscience of the president and determining from his return 
 whether or not the bank's return is correct. 
 
 NOTE. Since this opinion was written, the Banking Act was passed. 
 Section 3 of this act contains this further provision as to the taxation of 
 branch banks : "Branch banks shall be taxed on the capital set aside to 
 their exclusive use in the counties, municipalities and districts in which 
 they are located, and the parent bank shall be relieved of taxation to the 
 extent of the capital set aside for the exclusive use of such branches." 
 
 Real Estate Owned by Bank Must Be Returned in County in 
 Which It Is Located. 
 
 How is real estate owned by a bank in a county other than that in which 
 the bank is located returned for State, county and municipal taxation? 
 
 Under 991, Park's Ann. Code, real estate owned by a bank 
 is to be returned for taxation in the county in which it is located 
 and the value thereof may be deducted from the market value of 
 the shares of stock. The bank's return would show so much real 
 estate in the county in which the bank is located, so much real 
 estate in other counties. This should then be deducted from the 
 market value of its shares, and the bank would pay taxes in the 
 county in which it is located on the difference.
 
 460 PARK'S BANKING LAW OF GEORGIA. 
 
 Liberty Bonds Cannot Be Deducted from the Market Value 
 of the Shares of Stock in Making Tax Returns. 
 
 A considerable portion of a bank's surplus is invested in Liberty Bonds. 
 The bank bought these bonds with the understanding that they would not 
 be subject to taxation. Can county and city authorities tax the capital 
 and surplus as though the bank had no such investment in bonds? 
 
 Under our law, banks are not taxed upon their capital and 
 surplus, nor upon their properly, except real estate. The taxes 
 which the banks are required to pay are taxes against the stock- 
 holders on the market value of their shares of stock. The bank 
 is required to pay on its real estate, and is authorized to deduct 
 the value of the real estate from the aggregate market value of 
 the shares of stock ; but, except on the real estate, the tax is not 
 against the bank, but is against the stockholders. 
 
 Our tax act, so far as banks are concerned, is practically copied 
 from the National Bank Act which prohibits the States from tax- 
 ing national banks, but authorizes them to tax shareholders of 
 national banks on the value of their shares of stock. 
 
 The Supreme Court of the United States has held that, under 
 the National Bank Act, taxes may be levied on the full value of 
 the shares of stock, regardless of the fact that the bank may own 
 bonds which are free from taxation. Said the court in one case : 
 
 "The Van Allen case (3 Wall. 573, 18 L. Ed. 229), has settled 
 the law that a tax upon the owners of shares of stock in corpora- 
 tions, in respect of that stock is not a tax upon linked States se- 
 curities which the corporations own. Accordingly, such taxes 
 have been sustained by this court, whether levied upon the shares 
 of national banks by virtue of the congressional permission, or 
 upon shares of State corporations by virtue of the power inherent 
 in the State to tax the shares of such corporation. The tax as- 
 sessed to shareholders may be required by law to be paid in the 
 first instance by the corporations themselves, as the debt, and in 
 behalf of the shareholder, leaving to the corporation the right to 
 reimbursement for the tax paid from their shareholders, either 
 under some express statutory authority for their recovery or 
 under the general principle of law that one who pays the debt 
 of another, at his request, can recover the amount from him. 
 * * * The theory sustaining these cases is that the tax was 
 not upon the corporations' holdings of bonds, but on the share- 
 holders' holdings of stock." Home Savings Bank v. City of Des 
 Moines, 205 U. S. 503, 51 L. Ed. 901. 
 
 Under the decisions of the Supreme Court, the amount of taxes 
 to be paid by the shareholders, or by the bank for them, will not 
 be affected one way or the other, because among the bank's assets 
 are Government bonds which are tax free. The stock is assessed
 
 OPINIONS OP THE GENERAL COUNSEL. 461 
 
 on its market value regardless of the property in which the bank's 
 assets may be invested. 
 
 Bank Must Itself Make the Return and Pay the Taxes for Its 
 
 Stockholders. 
 
 Can a bank furnish the county tax receiver a list of the stockholders of 
 the bank, so that the taxes may be assessed against the individual stock- 
 holders and the bank in that way relieved of the payment of any taxes 
 whatever? 
 
 It is not possible to handle the matter in this way. Section 991 
 of Park's Ann. Code, providing for the taxation of banks, re- 
 quires that : 
 
 "The shares of the stockholders of the banks or banking asso- 
 ciations, whether resident or nonresident owners, shall be taxed 
 in the county where the banks or banking associations are located 
 and not elsewhere. * * * The banks or banking associations 
 themselves shall make the returns of the property (real estate) 
 and the shares herein mentioned and pay the taxes herein pro- 
 vided. * * * The true intent and meaning of this section is 
 that the bank itself shall return for taxation and pay the taxes 
 on the full market value of all shares of said bank stock." 
 
 This obviously settles the question ; the bank itself being re- 
 quired to make the return and to pay the taxes for the stock- 
 holders. 
 
 Banks Are Not Required to Produce Books to Tax Officers Ex- 
 cept Under Subpoena, Where Returns of Particular Tax- 
 payer Are Under Investigation. 
 
 Has the legislature passed an act making it incumbent upon a bank to 
 open its books for the inspection of the tax collector? 
 
 It has not. There is a section of the Tax Equalization Act of 
 1913, Park's Ann. Code, 1116 (m), which gives to the county 
 board of tax assessors authority to issue subpoenas for the attend- 
 ance of witnesses and "to require the production by any person 
 of all his books, papers and documents which may throw any 
 light upon the question of the existence or liability of property of 
 any class for taxation." Under this section the county boards of 
 assessors in a number of the counties have called on the banks to 
 produce their books showing their individual depositors or to fur- 
 nish lists of such depositors with their balances. The banks have
 
 462 PARK'S BANKING LAW OF GEORGIA. 
 
 generally declined to do this, except in cases where the return of 
 a particular taxpayer was being investigated by the board and 
 the bank was called on to produce the book showing the account 
 of this particular taxpayer. Where the board is investigating a 
 particular return and regularly issues a subpoena requiring the 
 production of the bank's books in connection with this particular 
 return, and the bank fails to comply, the assessors have the au- 
 thority to report the matter to the ordinary, who may upon a 
 hearing impose a fine not to exceed $100.00 or imprisonment not 
 exceeding ten days, in his discretion. But the county board of 
 assessors has no authority to require a bank to produce its books 
 generally or to open its books for their inspection, and the bank 
 is justified in declining to permit any such inspection by the 
 county board of assessors or the tax collector, or any other agent 
 or authority. 
 
 State Banks Are Liable for Corporation Tax. 
 
 Is a bank liable to the corporation tax in Georgia? 
 
 This tax applies to all corporations incorporated under the laws 
 of Georgia, except 1 those that are not organized for pecuniary gain 
 or profit and those that neither charge or contemplate charging 
 the public for services rendered, and is expressly made in addition 
 to all other taxes required of them by law. Banks are not ex- 
 cepted, and are liable for the payment of the tax. 950, Park's 
 Ann. Code. 
 
 Municipalities May Levy Special License or Business Tax 
 on State Banks. 
 
 Can a municipality levy a special license or business tax on a chartered 
 State bank? 
 
 This question has been decided by the Supreme Court of 
 Georgia in the case of the City of Macon v. Macon Savings 
 Bank, 60 Ga. 133. It was held in that case that where the city 
 charter gives to the city "authority to tax all persons exercising 
 within the city any profession, trade, or calling, or business of any 
 nature whatever," the city may tax chartered banks on their 
 business, to the same extent that private banks are taxed therein. 
 This decision has been followed several times in later cases and 
 seems to be the fixed law of the State.
 
 OPINIONS OF THE GENERAL COUNSEL. 463 
 
 National Banks Are Not Subject to License Taxes. 
 
 Has a city the right to require national banks to pay license taxes ? 
 
 In the case of City of Macon v. First National Bank, 59 Ga. 
 648, it was held : 
 
 "Whilst the property owned by the bank may be taxed by State 
 authority, and the shares owned by the stockholders may be also 
 taxed, the business of the bank its right to operate and do bank- 
 ing business cannot be taxed by the States. * * * The dis- 
 tinction between the right to tax property and that to tax business 
 in cases of agencies working under Federal authority is well 
 settled, we think, by the Supreme Court of the United States." 
 
 And in the case of Johnston v. Mayor and Council of Macon, 
 62 Ga. 645, it was said : 
 
 "It could not tax the business of the national bank, because it 
 was chartered by Congress, and the Government of the United 
 States used its business for their fiscal operations, or could use it, 
 and any interference by State taxation might, if allowed at all, 
 amount to prohibition by making the tax so high as to be pro- 
 hibitory." 
 
 In the case of Linton v. Childs, 105 Ga. 567, after quoting from 
 the 59 Ga. and 62 Ga. cases above referred to, the court says : 
 
 "Considering, then, the propositions that a State cannot, by 
 taxation or other legislation, impair or destroy the efficiency of 
 the operation of any Federal agency created by a constitutional 
 act of Congress to further and serve the purposes of the Govern- 
 ment of the United States, and that national banking associations 
 are one of such agencies whose business cannot be taxed by the 
 State as fully established, it may be well to inquire into the na- 
 ture of the tax imposed." 
 
 The court then held that the tax imposed on the presidents of 
 each of the banks of the State, including all banks doing business 
 in the State, is inoperative when sought to be applied to the presi- 
 dents of national banking associations organized under the Acts 
 of Congress, because the State had no right to tax the business 
 of such banks. 
 
 These cases are based on the leading case of McCulloch v. 
 Maryland, 4 Wheaton 316, 4 L. Ed. 579, which was the famous 
 decision by Chief Justice Marshall, in which it was held that the 
 States had no right to tax the Bank of the United States or its 
 branches. 
 
 "The State governments," said the Chief Justice, "have no 
 right to tax any of the constitutional means employed by the Gov- 
 ernment of the Union to execute its constitutional powers."
 
 464 PARK'S BANKING LAW OF GEORGIA. 
 
 Since this decision the power of the Government to carry on its 
 business through any means or. instrumentalities which it might 
 choose and free from any interference by taxation or otherwise 
 on the part of the States, has been universally recognized. 
 
 National Banks Cannot Be Taxed on Their Deposits, but Tax 
 May Be Levied Against the Depositors and Collected 
 Through the Bank as Their Agent. 
 
 If the State should tax banks on their deposits, would such a law apply 
 to national banks? Can the State compel a national bank to furnish the 
 taxing authorities a list of depositors with the amounts of their balances? 
 
 The Supreme Court of the United States has held that a State 
 is without power to tax national banks except under the per- 
 missive legislation of Congress. Under 5219 of the United 
 States Revised Statutes the power of a State to tax national banks 
 is confined to the taxation of the shares of stock in the hands of 
 the shareholders and to an assessment on the real estate of the 
 bank. Any other tax than this is void. Owensboro National 
 Bank v. City of Owensboro, 173 U. S. 664, 43 L. Ed. 850. 
 
 There have been numerous cases in which State tax acts in 
 conflict with this rule have been held to be void, so far as national 
 banks are concerned. There is no doubt that if the State should 
 undertake to levy a tax against the bank itself based on its de- 
 posits such tax would not apply to national banks. 
 
 But there is nothing in the National Bank Act which prohibits 
 the States from taxing the depositors of a national bank on the 
 amount of their deposits. Indeed, in Georgia, and in most of the 
 States, the amounts of their deposits are supposed to be included 
 by the taxpayers in their returns for taxation, just as any other 
 indebtedness due the taxpayer is returned. 
 
 There is no reason why a national bank may not be appointed 
 as the agent of the State to collect the taxes from its depositors, 
 just as it pays for its stockholders the taxes on their shares of 
 stock. Acting as such agent would not interfere with the bank in 
 the discharge of any of its obligations to the Federal Govern- 
 ment ; and, as such tax would not be against the bank, there 
 would seem to be no reason why it should not be levied On the 
 depositor and collected through the bank. 
 
 This has been decided by the Supreme Court of Vermont, con- 
 struing an act of that State, similar in its terms to the recent act
 
 OPINIONS OF THE GENERAL COUNSEL. 465 
 
 of Kentucky, so much discussed in Georgia. This decision is 
 summarized in Pratts' Digest, p. 159, as follows: 
 
 "The rule that a State can exercise no control over a national 
 bank, except as Congress may permit, does not prevent the States 
 from taxing the deposits therein against the depositors ; and the 
 State may make the bank its agent to collect the tax. State v. 
 Clement Nat. Bank, 84 Vt. 167." 
 
 The case itself, reported in 78 Atl. 944, goes very fully into the 
 whole question of the exemption of national banks from State tax- 
 ation, but says "there is no provision in the Federal law depriv- 
 ing a State of the power to tax deposits in national banks to 
 depositors." 
 
 The right of the State to tax a national bank on its deposits, 
 is altogether different from the right of a State to tax the de- 
 positors themselves on their deposits in a national bank. A tax 
 against the bank would be in the nature of a business tax, and the 
 State would be unauthorized to put such tax on a national bank, 
 Congress not having given to the State the right to tax a national 
 bank, except upon its real estate, although it authorizes a tax upon 
 the market value of the shares of stock, as hereinbefore stated. 
 
 The question as to the right of the State to compel a national 
 bank to furnish a list of depositors with amounts of their de- 
 posits, etc., for the purpose of taxation, seems also to have been 
 decided. I quote from the case of the First National Bank of 
 Youngstown v. Hughes, 6 Fed. 737 : 
 
 "A national bank may be compelled to disclose the names of 
 its depositors, and the amounts of their deposits, under the com- 
 pulsory process of a state court, in order to ascertain whether any 
 money deposited therein, ^subject to taxation within the county, 
 has not been duly returned for that purpose by the owners." 
 
 Municipality Cannot Tax Its Own Bonds. 
 
 Can a municipality levy a tax on its own bonds? 
 I do not think so. The Supreme Court in the case of Penick, 
 Tax Collector, v. Foster, 129 Ga. 217, says: 
 
 "The general rule is that public property and the various in- 
 strumentalities of government are not subject to taxation. This 
 immunity rests upon the most fundamental principles of govern- 
 ment ; being necessary in order that the functions of government 
 be not unduly impeded, and that the government be not forced 
 into the inconsistency of taxing itself in order to raise money to 
 pay over to itself. * * * 
 30
 
 466 PARK'S BANKING LAW OF GEORGIA. 
 
 "Bonds issued by a municipal corporation, as evidence of a loan 
 made to it, are instrumentalities of the government which creates 
 the municipal corporation. * * * 
 
 "Bonds issued by a municipal corporation of this State in the 
 hands of a resident of this State are not taxable by this State or 
 any county thereof." 
 
 And in the earlier case of the City of Macon v. Jones, 67 Ga. 
 489, the court said : 
 
 "The grant of power in the charter of a municipal corporation 
 to tax all property, real and personal, within the corporate limits 
 of the city will not be construed to include the taxing of its own 
 bonds in the absence of express authority for that purpose." 
 
 It seems clear from these decisions that a city or town has no 
 power to tax its own bonds in the absence of express legislative 
 authority for the purpose. 
 
 Money Is Personal Property and Subject to Taxation. 
 
 Is there any form of money in circulation that is not subject to tax by 
 local authorities? 
 
 Money is generally regarded as a proper subject for taxation. 
 The rule is thus stated by the Cyclopedia of Law and Procedure, 
 Vol. 37, p. 783 : 
 
 "Money is not only the standard of value, but is also taxable 
 personal property of the owner, provided he has it in his posses- 
 sion at the time of the assessment or it is held for him by a person 
 from whom he is entitled to receive it on demand." 
 
 The Supreme Court of the United States has recognized the 
 right of the States to tax money, and this although capital was 
 employed in interstate or foreign commerce, which itself is not 
 taxable. People v. N. Y. Tax Commissioners, 104 U. S. 466, 26 
 L. Ed. 632. 
 
 It is not meant, of course, that a State or a municipality could 
 tax as such treasury notes or other forms of currency issued by 
 the United States or its agencies as a means of borrowing money 
 on the credit of the United States. It has been frequently held, 
 following the decision of Chief Justice Marshall in Weston v. 
 City Council of Charleston, 2 Peters 449, 7 L. Ed. 481, that the 
 States have no power by taxation or otherwise to retard, or 
 burden, or in any manner control the operations of the Federal 
 Government or limit its power in the discharge of its constitu- 
 tional rights. If the State could tax treasury notes as such, it
 
 OPINIONS of THE GENERAL COUNSEL. 467 
 
 could, of course, drive them out of the market, and thus prevent 
 Congress from employing this means of borrowing money. But, 
 a tax on personal property, including money, notes and securities, 
 is not considered a tax on the operations of the government or re- 
 garded as unconstitutional, although the taxpayer might have on 
 hand on the day fixed for the assessment a quantity of treasury 
 notes or other currency, issued by the government or through its 
 instrumentalities. Such a tax would not be levied on these notes 
 as such, but simply on the money as personal property, regardless 
 of the particular character of circulating medium in which it 
 might chance to be. 
 
 Bills Receivable Due Individual Are Subject to Taxation. 
 
 Are bills receivable due an individual operating a private bank subject 
 to taxation? 
 
 The law expressly provides that : 
 
 "Promissory notes, accounts, judgments, mortgages, liens of 
 all kinds, and all choses in action shall be given in at their value, 
 whether solvent or partially solvent." Park's Ann. Code, 1003. 
 
 If the law is strictly followed, bills receivable should be re- 
 turned and taxed just exactly like horses or mules or physical 
 property, and without deduction because the taxpayer may have 
 liabilities. 
 
 Of course, a different rule applies to banks, that is, incorpor- 
 ated banks, the Code section clearly indicating that the tax on 
 "banks" applies only to corporations doing a banking business, for 
 it is provided that 
 
 "The shares of the stockholders of the banks or banking asso- 
 ciations * * * shall be taxed, etc." Park's Ann. Code, 
 991. 
 
 TAX FL FAS. 
 
 Duration of Lien of Tax FL Fas. on Property. 
 
 How long is a tax fi. fa. a lien on property after it is recorded, and when 
 does the lien run out? 
 
 The question is fully answered by the Code. I quote the sec- 
 tions applicable: 
 
 1147: "All State, county, city or other tax fi. fas., before or 
 after legal transfer and record, shall be enforced within seven
 
 468 PARK'S BANKING LAW of GEORGIA. 
 
 years from the date of their issue; or within seven years from 
 the time of the last entry upon the tax fi. fa. by the officer au- 
 thorized to execute and return the same, if said entry is properly 
 entered by said officer upon the execution docket and books .in 
 which said entries are now required to be made in cases of entries 
 on executions issued on judgments." 
 
 1148: "All laws in reference to a period of limitation as to 
 ordinary executions for any purpose, or to the length of time or 
 circumstances under which they lose their lien in whole or in 
 part, are made applicable to tax fi. fas." 
 
 5950 : "When any person has bona fide, and for a valuable 
 consideration, purchased real or personal property, and has been 
 in the possession of such real property for four years, or of such 
 personal property two years, the same shall be discharged from 
 the lien of any judgment against the person from whom he pur- 
 chased." 
 
 TIMBER. 
 
 What Is a Reasonable Time Within Which to Cut and Re- 
 move Timber, Depends upon the Facts and Circumstances 
 of the Particular Transaction. 
 
 Where timber is sold without any time limit for its removal, what is 
 regarded by the law as a reasonable time within which to cut and remove 
 the timber? 
 
 What is a reasonable time is always a question of fact, de- 
 pending upon the circumstances of each particular case. The law 
 never fixes a reasonable time. The time might be so long or 
 so short that it could be said as a matter of law that it was or 
 was not reasonable, but a reasonable time is a question of fact, 
 rather than of law. In order to determine what is a reasonable 
 time all the facts and circumstances must be taken into considera- 
 tion. For instance, the purpose for which the timber is sold, the 
 quantity of timber, its accessibility, the nearness of tram-road or 
 other facilities for hauling, whether the timber is in a large or 
 small tract, in other wards, everything that would illustrate the 
 intention of the parties at the time the contract was made, what 
 they contemplated as to the removal of the timber, and every- 
 thing that would throw any light on the length of time, which 
 under normal conditions would be proper and reasonable to be 
 consumed in cutting and removing the timber. The average 
 time usually fixed in timber leases of the same class, and in the
 
 OPINIONS OF THE GENERAL COUNSEL. 469 
 
 same general locality, would naturally be something of a guide in 
 determining what was or was not a reasonable time. 
 
 It should be borne in mind that it is quite possible for timber 
 to be conveyed in perpetuity without any limit of time, and so that 
 the purchaser, his heirs or assigns, would have the right to re- 
 move it any time without regard to the reasonableness of the 
 period, or might delay indefinitely the removal of the timber. 
 I quote from a case decided by the Supreme Court : 
 
 "The paramount consideration in the construction of every 
 instrument conveying growing trees, with the right to cut and re- 
 move them, is the intention of the parties as contained in the writ- 
 ing. If that intention be a sale and purchase of the trees, to be 
 held as land, with a perpetual right of entry to remove them, the 
 vendor is estopped by his own grant from compelling the vendee 
 to cut and remove the trees at his own will, or even within a 
 reasonable time. But if the instrument reflects the intention of 
 the parties to sell the timber, to be cut and removed within a rea- 
 sonable time, the interest or estate therein conveyed terminates 
 and becomes forfeited by a failure to cut and remove the timber 
 according to the terms of the grant. The grant of a perpetual 
 right of entry upon the land of another to remove the timber 
 thereon operates so harshly and unreasonably upon the owner of 
 the land that it should never be given this effect, unless it is 
 plainly manifest from the terms of the deed that such was the 
 intention of the parties." North Georgia Co. v. Bebee, 128 Ga. 
 563. 
 
 TRANSFER PENDING SUIT. 
 
 Transfer of Property Is Not Prevented by Filing of Suit. 
 
 After suit is begun on a note, but before judgment is obtained, the 
 debtor transfers his property to his wife. Is this transfer valid? 
 
 The mere filing of a suit does not prevent the transfer or sale 
 of property so long as it is sold or transferred for a valuable 
 consideration and the transfer is made in good faith, and not for 
 the purpose of hindering, delaying or defrauding creditors. It 
 does not appear from the statement whether this transfer was for 
 value or not. Of course, a person cannot make a gift of his prop- 
 erty, so as to defeat the payment of his debts, and such a trans- 
 fer could be set aside. However, if the wife purchased property 
 from her husband, paying full value, and the transaction was 
 bona fide and not for the purpose of hindering, delaying or de- 
 frauding creditors, the title would pass, and could not be sue-
 
 470 PARK'S BANKING LAW OF GEORGIA. 
 
 cessfully attacked. All transactions between husband and wife, 
 where the husband is in debt, are very closely scrutinized, how- 
 ever, and the burden is upon them to show that the transaction 
 is fair in every particular. Of course, after a judgment has been 
 rendered and properly entered upon the execution docket, no sale 
 could be made. The lien of the judgment would attach to the 
 property, and no transfer could be made so as to defeat the lien. 
 
 TRUST COMPANY. 
 
 Cannot Issue Ordinary Negotiable Bonds. 
 
 Has a trust company the power to issue bonds? 
 
 I do not think so. The powers of trust companies organized 
 under the general law of Georgia do not seem to include the right 
 to issue ordinary negotiable bonds. The nearest approach to the 
 power is this : 
 
 "When moneys or securities for moneys are borrowed or re- 
 ceived on deposit or for investment, the bonds or obligations of 
 the company may be given therefor." Park's Ann. Code, 2817 
 (11). 
 
 While this language is not altogether clear, I understand it to 
 mean that the company can issue certificates of deposit or obliga- 
 tions substantially equivalent to certificates of deposit therefor. I 
 do not think this would authorize the pledging of the company's 
 securities with a trustee and issuing negotiable bonds secured 
 by such pledge. So far as I am advised, the issuance of bonds by 
 trust companies is altogether unusual. In fact, it does not seem 
 to be a proper power, and I do not think there is any doubt but 
 that the power is not granted to a trust company organized under 
 law of Georgia. 
 
 Use of Word "Trust" in Name of Company Chartered to Do 
 General Real Estate Business Is Not Prohibited. 
 
 Can a company chartered to do a general real estate business use the 
 word "trust" in its name without being regularly incorporated as a trust 
 company ? 
 
 In order to organize a regular trust company, authorized to do 
 trust company business, the charter must be granted by the sec-
 
 OPINIONS OF THE GENERAL, COUNSEL. 471 
 
 retary of State in much the same way that a bank charter is 
 granted. The capital must not be less than $100,000.00. There 
 is, however, no prohibition upon the use of the word "trust" 
 by corporations other than authorized trust companies, and 
 there are quite a large number of such companies doing business 
 in the State, most of whom are really nothing more than real 
 estate companies. The propriety of the use of the word "trust" 
 as a part of the name of such a company is doubtful, but there is 
 no legal prohibition of such use. 
 
 A charter can be granted by the Superior Court to do the 
 kind of business mentioned in the question, and there is no re- 
 quirement as to the amount of capital which such a company must 
 have. 
 
 Under an act passed in 1910, Park's Ann. Code, 2821 (a-e), 
 a corporation chartered by the Superior Court to do a general real 
 estate business may have conferred upon it the powers of a trust 
 company. A corporation desiring to exercise such powers must 
 file with the Secretary of State an application for an amendment 
 to its charter conferring upon it the powers and privileges of trust 
 companies. The amendment must be authorized by a majority 
 vote of the board of directors at a regular meeting, and it cannot 
 be granted to a corporation which does not have a paid in capital 
 of at least $100,000.00. 
 
 USURY. 
 
 Penalty for Usury Is Forfeiture of Entire Interest Charged. 
 
 Can an individual lending money at a usurious rate, taking as security 
 deed to real estate, obtain judgment on the note? Does the rule making 
 the transaction void in cases of a corporation's charging usuary in papers 
 secured by real estate apply to individuals? 
 
 Formerly, titles infected with usury were void, whether the 
 loans were made by individuals or corporations. This did not 
 prevent the holder of the note containing usury from getting 
 judgment on the note, but the judgment could only be for the 
 principal and legal interest. The legislature in 1916 passed an 
 act repealing the two sections of the Code fixing penalties for 
 charging usurious rates of interest, and enacted in lieu thereof 
 the following:
 
 472 PARK'S BANKING LAW of GEORGIA. 
 
 "Any person, company or corporation violating the provisions 
 of 3436 of the Code of 1910 shall forfeit the entire interest so 
 charged or taken or contracted to be reserved, charged or taken." 
 
 And it was further enacted that 
 
 "no further penalty or forfeiture shall be occasioned, suffered or 
 allowed further than as stipulated in Section 1 hereof." Acts 
 1916, p. 48; Park's Ann. Code, Supp. 1917, 3438, 3438(a), 
 3442. 
 
 Under the law as now in force, the only penalty for charging 
 usury is the forfeiture of the entire interest on the debt. Titles 
 taken as security for usurious debts are valid to the same extent 
 as though no usury had been exacted. 
 
 Usury in Homestead Waiver Note Will Not Relieve Indorser 
 Since Act of 1916. 
 
 Under the Act of 1916, changing the penalty for usury, would a personal 
 indorser or an accommodation indorser be relieved where the note was 
 tainted with usury? 
 
 I do not think so. The reason an indorser or other person 
 secondarily liable on a note tainted with usury was held to be re- 
 leased under the old law was that the usury voided the waiver 
 of homestead contained in the note, and as the waiver was void 
 the risk of the surety or other person secondarily liable was 
 increased. The Act of 1916 repeals 3442 of the Code, which 
 made all titles to property taken as a part of usurious contract or 
 to evade the laws against usury void. This section having been 
 repealed, the waiver of homestead is good, although the note may 
 be tainted with usury, and consequently the surety's risk is not 
 increased, and he would be liable on the note. 
 
 Clause in Note That Surety or Indorser Knows % That More 
 Than 8 Per Cent. Is Charged Is of No Value Since Act of 
 1916. 
 
 What is the value of a clause in a note to the effect that the principal, 
 surety, guarantor or indorser acknowledges that at the time of signing the 
 note he was aware that more than 8 per cent, per annum interest was 
 charged ? 
 
 Since the passage of the Act of 1916 I do not think there is 
 any advantage in putting the clause in a note. The homestead
 
 OPINIONS OF THE; GENERAL COUNSEL. 473 
 
 waiver would be perfectly good now whether usury was charged 
 or not, and as the surety was only released on account of the fact 
 that usury rendered void the homestead waiver, and, therefore, 
 increased his risk, there seems to be no longer any necessity for 
 such a provision. 
 
 Renewal of Loan Infected with Usury, Though at Lawful 
 Rate, Is Usurious. 
 
 How is it best to renew loans secured by deeds or bonds for title, upon 
 which interest at 8 per cent, was added to the face of the paper, making 
 the loan usurious, so as to preserve the security? 
 
 Any renewal which includes usury, although the new loan is at 
 a lawful rate, would be usurious. 
 
 "A renewal of a contract infected with usury and the payment 
 of the illegal interest to the date of renewal, cannot divest the 
 contract of its taint. Where the original transaction was usuri- 
 ous, the usury infects all the securities given in renewal of the 
 same debt, however varied in form and amount, and the law ap- 
 plies all payments made on the debt to the principal and legal 
 interest. Archer v. McCray, 59 Ga. 546." Lockwood v. Muhl- 
 berg, 124 Ga. 660. 
 
 While this is true, a usurious debt can be paid even out of the 
 proceeds of another loan made to the same party, provided it is 
 an actual payment and not a mere cloak to cover the usury. 
 Bates v. Harris, 112 Ga. 32. 
 
 In the event the loan is not paid, but simply renewed, care must 
 be taken to purge the transaction from all usury, both the usury 
 in the original loan and in any renewal thereof. 
 
 Renewing Debt, Eliminating Excessive Interest, Relieves 
 Taint of Usury. 
 
 Where usury has been charged on a note, and the note is renewed with 
 the excess interest formerly charged eliminated, the new transaction con- 
 taining no usury, could the maker plead usury on account of the excess 
 rate having been originally charged? 
 
 I do not think so. Indeed, the Supreme Court has held that : 
 
 "If one who owes to another a debt infected with usury obtains 
 from him a loan of money at a lawful rate of interest, executes a 
 deed to secure the payment of this loan, and out of the proceeds 
 thereof actually and bona fide pays off the old debt, the deed is 
 not void for usury ; aliter, if the transaction as a whole be merely
 
 474 PARK'S BANKING LAW of GEORGIA. 
 
 colorable and designed as a cloak to cover up the usury in the 
 original indebtedness." Bates v. Harris, 112 Ga. 32. 
 
 In discussing this ruling, Justice Lumpkin said : 
 
 "A debtor has an undoubted right to pay a debt infected with 
 usury ; and if he actually does it, that debt ceases to exist. That 
 the payment is made out of the proceeds of a loan from the same 
 creditor upon which a lawful rate of interest is charged cannot 
 render usurious this loan or a deed given to secure it. If there be 
 no actual payment of the old debt, and the amount thereof is 
 simply included in the debt secured by the deed, the same is 
 usurious and therefore void; for in that event, the transaction 
 resulting in its execution is merely colorable, and obviously, a 
 cloak designed to cover up the usury." 
 
 If a usurious debt can be paid from a loan of money subse- 
 quently made, there would seem to be no reason why a debt with- 
 out the usury could not be renewed so as to relieve the transac- 
 tion of its original taint. 
 
 Note Given Since Act of 1916 in Renewal of Usurious Note 
 Given Before Act, Governed by New Law. 
 
 Where a new note is given since the passage of the Act of 1916 
 in payment of a note infected with usury given prior to that Act, is it 
 governed by the old law or the new? 
 
 Under the question as stated, there is no doubt but that the new 
 note would be governed by the new law. When the old note is 
 taken up and cancelled, the taking of a new one constitutes a new 
 transaction, though given in settlement of the old. 
 
 Loan Made at Legal Rate to Pay Usurious Debt to Third 
 Party Is Not Infected With Usury. 
 
 If the president of a bank individually has for some years been carry- 
 ing a note, secured by real estate, on which there was usury charged, and 
 he should decide to lend the borrower funds of the bank to take up the 
 loan, a new note and mortgage being given to the bank at the legal rate, 
 can the borrower plead usury on account of the original transaction? 
 
 I do not think so. The Supreme Court in the case of Thomp- 
 son v. First State Bank of Dawson, 99 Ga. 651, held that: 
 
 "Where the lender of money neither charges nor receives any 
 more than the legal rate of interest, the fact that the money was, 
 with his knowledge, borrowed for the purpose of paying a debt 
 infected with usury due by the borrower to a third person, does 
 not make the loan usurious."
 
 OPINIONS of THE GENERAL COUNSEL. 475 
 
 Contract Requiring That Part of 8 Per Cent. Loan Be Kept 
 on Deposit with Lender Makes Loan Usurious. 
 
 Is an eight per cent, loan usurious where the bank requires the customer 
 to maintain a balance equal to twenty-five per cent, of the amount of the 
 loan? 
 
 In the case of Cooper v. National Bank of Savannah, the Court 
 of Appeals of this State reviewed the authorities on the subject 
 and quoted approvingly this rule from the American & English 
 Encyclopedia of Law : 
 
 "In the case of loans or discounts by a bank at the highest 
 legal rate of interest, a provision that the proceeds of the loan or 
 discount or any part thereof shall be kept as a deposit in the bank 
 during the period or a portion of the period of the loan renders 
 the transaction usurious, for the reason that the borrower thus 
 pays interest on money which he does not receive or have the use 
 of. But the fact that the borrower voluntarily allows a part of 
 the loan to remain on deposit with the banker, without any agree- 
 ment therefor, will not constitute the giving or taking of usury, 
 though such deposit is made with the expectation by the borrower 
 that he will thereby be enabled to obtain further loans more 
 readily." 
 
 Other authorities are quoted, and the conclusion is definitely 
 announced that : 
 
 "If the requirement of the lender that the borrower should 
 maintain such a deposit was in fact merely a scheme or device by 
 which the usurious intent could be concealed, then the transaction 
 would be illegal, whatever its form." Cooper v. National Bank 
 of Savannah, 21 Ga. App. 356. 
 
 This expresses clearly the law on the subject. 
 
 Advising Customers That Rates of Interest Are Based on 
 Balances Does Not Make Loan Usurious. 
 
 If in a general way a bank should require borrowers to carry balances 
 on deposit in order to entitle them to loans, would such requirement 
 cause a loan made under such conditions to be regarded as usurious? 
 
 I do not think that a general requirement that borrowers should 
 carry balances, and that rates of interest would be fixed in accord- 
 ance with such balances, would be sufficient to render the contract 
 usurious, although a rate of 8 per cent, was made for a particular 
 loan. The question would be different if the borrower was re- 
 quired to maintain a fixed balance, and not allowed to check 
 against that balance, or was not permitted to reduce his balance
 
 476 PARK'S BANKING LAW OF GEORGIA. 
 
 below a given figure. I do not think a loan would be considered 
 usurious where a bank at the time the loan is made advises the 
 customer that he would be expected to carry a balance, and that 
 in consideration of his doing so a particular rate is agreed upon, 
 even though the loan is made at eight per cent. 
 
 Commissions Paid to Closely Allied Bank for Negotating 
 Loan, Would Constitute Usury. 
 
 Where a savings bank, whose charter gives it the right to negotiate loans 
 and charge a commission, is operated in connection with a national bank, 
 would it render the transactions usurious for it to charge a commission for 
 handling loans made by the national bank? 
 
 It would be of very doubtful propriety to charge a commission 
 for a loan negotiated from the national bank with which the sav- 
 ings bank is connected; and, of course, if the national bank had 
 any interest, directly or indirectly, in the commission charged, the 
 loan would be usurious. I hardly see how, where one of the 
 customers of the national bank applied for a loan, it could nego- 
 tiate the loan through the savings bank and allow the savings 
 bank to charge a commission. Even if the application was made 
 in the first instance to the savings bank, it certainly seems an 
 evasion of the usury law to pay the savings bank a commission 
 for negotiating a loan with its own officers or with the officers 
 of a closely allied institution. 
 
 The Code provides that where the lender neither takes nor 
 contracts to take more than lawful interest, the loan is not ren- 
 dered usurious by money paid or agreed to be paid others by 
 the borrower in order to obtain the loan. Park's Ann. Code, 
 3437. But if the commissions are shared in by the lender, 
 the loan, of course, becomes usurious. With two banks occupy- 
 ing the same banking house, officered by the same people, and 
 closely connected in every way, the national bank would have a 
 rather difficult task to show that the commission paid was for any 
 real service rendered by the savings bank and was not a part of 
 the interest charged.
 
 OPINIONS OP THE GENERAL COUNSEL. 477 
 
 Usury Can Be Pleaded Even Against Bona Fide Holder. 
 
 The payee of a note tainted with usury sells it to a bank for the amount 
 of the principal without interest. Can the borrower plead usury? 
 
 The Supreme Court has held : 
 
 "The defense of usury is good even against a bona fide holder 
 of a negotiable promissory note, who acquired the same before its 
 maturity." Atlanta Savings Bank v. Spencer, 107 Ga. 630. 
 
 As there was usury in the original transaction, the note was 
 given for an illegal consideration, and under this decision usury 
 could be pleaded against the bank even if it is a bona fide holder. 
 There are many cases to the same effect. See Campbell v. Mor- 
 gan, 111 Ga. 200; Clark v. Havard, 111 Ga. 242; Russell v. 
 Turner, 14 Ga. App. 344; Angier v. Smith, 101 Ga. 844. 
 
 Debtor May Recover Usury Paid. 
 
 As usury is a personal plea, if the borrower does not avail himself of 
 the defense of usury before he pays a note, can he maintain a suit for the 
 recovery of usury paid? 
 
 It is true that usury is a personal plea. I am unable to see, 
 however, that this has anything to do with the question whether a 
 debtor can recover a usurious payment after it has been made. 
 When the law says that usury is a personal plea, it means simply 
 that nobody but the debtor can plead it. 
 
 A debtor who has paid a note can recover any usurious interest 
 which is a part of the amount paid. This is covered by 3436 
 of Park's Ann. Code, which provides that it shall not be lawful 
 for any person to reserve, charge or take for any loan or ad- 
 vance of money or forbearance to enforce the collection of any 
 sum of money, any rate of interest greater than eight per cent., 
 and 3438, as amended by the Act of 1916, which provides : 
 
 "Any person, company or corporation violating the provisions 
 of section 3436 shall forfeit the entire interest so charged or taken 
 or contracted to be reserved, charged, or taken." Park's Ann. 
 Code, Supp., 3438. 
 
 Section 3441 is as follows: 
 
 "Any plea or suit for the recovery of such forfeiture shall not 
 be barred by lapse of time shorter than one year." 
 
 It thus appears that a suit can be maintained for the recovery 
 of usury which has been paid by the debtor. The only limitation
 
 478 PARK'S BANKING LAW OF GEORGIA. 
 
 upon the right to recover is, that the suit for the recovery must 
 be brought within one year. 
 
 A State Bank in Georgia Can Not Discount Paper by Reserv- 
 ing Interest at the Highest Rate Permitted by the Georgia 
 Statute. 
 
 Can a state bank deduct interest in advance from a loan made at the 
 rate of eight per cent, per annum? 
 
 The question has been decided by the Supreme Court of 
 Georgia : 
 
 "The reserving of interest in advance by a bank at the highest 
 legal rate of interest on a loan, whether it be a short or long term 
 loan, is usurious." Loganville Banking Company v. Forrester, 
 143 Ga. 302. 
 
 Under this decision, banks organized under the laws of Georgia 
 can not deduct interest at eight per cent, in advance even on short 
 time loans. 
 
 Section 19, Article 19, of the Banking Act of 1919, 163, which 
 authorizes a bank to charge interest at not exceeding eight per 
 cent, per annum, makes no change in the law. 
 
 Discount of Note by Third Party at More Than Lawful Rate 
 Is Not Usurious. 
 
 Where a promissory note is sold with indorsement by the payee and 
 the discount amounts to more than the lawful rate of interest, is the trans- 
 action usurious? 
 
 The precise question has been decided by the Supreme Court of 
 Georgia in the case of Campbell v. Morgan, 111 Ga. 200, from 
 which I quote: 
 
 "When the payee of a negotiable promissory note sold it out- 
 right to another, the mere fact that the seller indorsed the paper 
 did not place him in the attitude of a borrower of money from 
 the purchaser, nor as between the latter and the maker of the note 
 was the transaction usurious, because the discount amounted to 
 more than the maximum lawful rate of interest." 
 
 I also quote from the case of McCall v. Herring, 116 Ga. 242: 
 
 "It is perfectly clear that in pure discount or the absolute pur- 
 chase by one of the promissory note of another, laws relating to 
 usury ought not to apply, for the reason that one may give such 
 a price in the purchase of a promissory note of an individual as
 
 OPINIONS OF THE GENERAL COUNSEL. 479 
 
 he may see fit, just as he may for a horse or other article of per- 
 sonal property. In that case the note put on the market by the 
 maker represents property which the makes wishes to sell; and 
 if one choose in open market to buy it, the price concerns no one 
 except the owner and the purchaser. Such a transaction is not, 
 however, the loan of money." 
 
 It should be borne in mind, however, that the National Bank 
 Act prescribes different rules with regard to usury so far as 
 national banks are concerned. The Supreme Court of the United 
 States, in the case of National Bank of Gloversville v. Johnson, 
 104 U. S. 271, 26 L. Ed. 742, held : 
 
 "A national bank is liable at the suit of the indorser to the 
 penalties imposed by 5197 and 5198 of the U. S. R. S. for 
 discounting business paper transferred to it by indorsement im- 
 posing the ordinary liability upon the indorser, at a greater rate 
 of interest than seven per cent, per annum. To buy or purchase 
 a debt is always in commerce termed to discount it. Discount is 
 the difference between the price and the amount of the debt." 
 
 In this case the Supreme Court says it is possible that the 
 transfer of a note by indorsement may be distinguished from 
 cases where the title to the paper is transferred by indorsement 
 without recourse or by mere delivery. The court decline to ex- 
 press an opinion upon such a transfer. It has been held, however, 
 by a number of the State courts in States having laws substan- 
 tially the same as the National Bank Act on the subject of usury 
 and by the United States Circuit Court of Appeals for the Third 
 Circuit, "That a discount without indorsement at more than the 
 lawful rate is usurious." I quote from Danforth v. National 
 State Bank, 48 Fed. Rep. 271, a case decided by the United States 
 Circuit Court of Appeals for the Third Circuit : 
 
 "The purchase of accepted drafts by a national bank from the 
 holder without his indorsement at a greater reduction than lawful 
 interest on their face value is a discounting of those drafts, within 
 the meaning of Rev. St. U. S., 5197, which prohibits such bank 
 from taking interest on any loan or discount made by it at a 
 greater rate than is allowed by the laws of the State where it is 
 situated." 
 
 My conclusion is, therefore, that a State bank in Georgia may 
 purchase a note offered to it at any price which the seller may 
 agree to take for it, and whether the note is indorsed or trans- 
 ferred without recourse or merely by delivery, the transaction is 
 not usurious; but a national bank cannot purchase a note at a 
 greater rate of discount than the legal rate of interest, no matter 
 whether it is transferred by indorsement, without recourse, or
 
 480 PARK'S BANKING LAW OF GEORGIA. 
 
 by mere delivery, without being liable for the penalties provided 
 by the National Bank Act for charging usury. 
 
 VOLUNTARY DEED. 
 
 Whether Deed Reciting a Nominal Consideration and Love 
 and Affection Is Voluntary Depends on Intention of the 
 Parties. 
 
 Is a deed reciting a nominal consideration of, say, $5.00, and love and 
 affection, to be regarded as a deed of bargain and sale for a valuable con- 
 sideration or a deed of gift? The question being important for the reason 
 that a married woman cannot sell her property to her husband unless the 
 sale be approved by the judge of the Superior Court, but she can make 
 to her husband a valid gift of her property. 
 
 The rule as announced by the Supreme Court in the case of 
 Shackelford v. Orris, 135 Ga. 29, is: 
 
 "Whether a deed which expresses as a consideration love for 
 the grantee and a small sum of money is a voluntary conveyance 
 depends upon the intention of the parties; and this intention is 
 to be ascertained by an inquiry into all the facts and circum- 
 stances at the time of its execution, which will throw light upon 
 the question as to whether the deed was executed as the con- 
 summation of a sale or as the evidence of a gift. Martin v. 
 White, 115 Ga. 866 (42 S. E. 279)." 
 
 To the same effect is American Insurance Company v. Bagley, 
 6 Ga. App. 736. 
 
 Voluntary Deed, Though Recorded, Void as Against Pur- 
 chaser Without Notice. 
 
 A wife makes a deed of gift of her property to her husband. The deed 
 is properly recorded. Subsequently she sells the property to a bona fide 
 purchaser who has no actual notice of the deed to the husband. Which 
 deed is superior, that of the husband or of the purchaser? 
 
 Under the Georgia law, a wife may not sell her property to her 
 husband unless the sale is approved by an order of the Superior 
 Court, but she can make valid a gift of her property to her hus- 
 band without such approval. Park's Ann. Code, 3009, 3010. 
 But a voluntary deed, whether made by a married woman or any 
 other person, is void as against subsequent bona fide purchasers 
 for value without notice. This notice must be actual. Con-
 
 OPINIONS OF THE GENERAL COUNSEL. 481 
 
 structive notice by the record of the deed is not sufficient, the 
 registry laws only applying to conveyances based upon considera- 
 tion. This is expressly provided by 4110, Park's Ann. Code, 
 and as said by Mr. Justice Cobb in Martin v. White, 115 Ga. 867 : 
 
 "It is the settled law of this State that a voluntary conveyance 
 is not within the operation of the laws providing for the registry 
 of deeds, and that, therefore, the recording of such a conveyance 
 is not notice to a subsequent purchaser for value." 
 
 Therefore, if the purchaser had no notice save that from the 
 record of the prior voluntary deed to the husband, his rights 
 would be superior to such deed. 
 
 VOTING BY PROXY. 
 
 Directors Cannot Vote by Proxy. 
 
 Can a director of a bank vote at a directors' meeting by proxy? 
 
 No; the directors of a corporation cannot vote at a directors' 
 meeting by proxy, but must be personally present and act for 
 themselves. 
 
 WAREHOUSE RECEIPTS. 
 
 Transferee or Pledgee of Receipts How Far Protected Against 
 Liens on Cotton Stored. 
 
 To what extent is the holder of warehouse receipts pledged as collatera 
 security protected against liens on the cotton? 
 
 The pledge of a warehouse receipt as security for a loan trans- 
 fers to the pledgee the title to the cotton pledged, the holder of the 
 receipt standing in the same position as though the cotton itself 
 had been turned over to and was held by him. While ordinarily 
 the delivery of personal property is essential to its pledge, the 
 Code provides: 
 
 "* * * Promissory notes and evidences of debt, warehouse 
 receipts, elevator receipts, bills of lading, or other commercial 
 paper, symbolic of property, may be delivered in pledge." Park's 
 Ann. Code, 3528. 
 
 Construing this section, the Supreme Court has held that: 
 
 "The transfer or surrender of warehouse receipts or other 
 symbols representing cotton may very properly be regarded as
 
 482 PARK'S BANKING LAW OF GEORGIA. 
 
 equivalent to an actual, physical delivery of the cotton itself, and, 
 therefore, will operate as a constructive delivery passing title." 
 Central Company v. Exchange Bank, 101 Ga. 353. 
 
 And quoting again : 
 
 "It is plainly established now that when warehouse receipts for 
 cotton or other goods are delivered in pledge, the legal effect of 
 such delivery is to put in the possession of the pledgee the prop- 
 erty described in such receipt." Citizens Banking Company v. 
 Peacock, 103 Ga. 171. 
 
 It was also held in the case last cited : 
 
 "The pledgee of a warehouse receipt given as collateral to 
 secure the payment of a debt for money loaned to the pledger, 
 has a special property in the cotton represented by such ware- 
 house receipt, and can maintain an action of trover against the 
 warehouseman to recover the cotton represented in the receipt, 
 when on demand the latter fails or refuses to deliver the cotton 
 for which such receipt was issued." Citizens Banking Company v. 
 Peacock, 103 Ga. 171 (6). 
 
 But while the transfer of a warehouse receipt puts the title to 
 the cotton in the transferee, the warehouse receipt is not such a 
 negotiable instrument as that a bona fide holder for value will be 
 protected against equities and claims against the pledgor, as he 
 would be in the case of a promissory note or other negotiable in- 
 strument. In other words, the pledgeee of the warehouse receipt 
 occupies the same position and has the same rights, but no greater 
 rights than he would if the cotton itself was actually delivered to 
 him. This is well expressed by the Court of Appeals : 
 
 "The transfer of warehouse receipts and similar paper, sym- 
 bolic of property, operates to transfer the title to the property 
 when it is so intended, but it gives to the holder of the receipt 
 no higher rights than if the property itself had been physically 
 transferred, sold or delivered." Booze v. Neal, 6 Ga. App. 279. 
 
 What, then, is the status of a bona fide purchaser of cotton 
 with regard to liens thereon? It has been repeatedly held that 
 such a purchaser of personal property, without notice of statu- 
 tory liens which have not been foreclosed, takes the property 
 freed of such liens. Quoting from a few of the cases : 
 
 "A bona fide purchaser of the absolute title to personal prop- 
 erty without notice of any unforeclosed statutory lien upon it 
 takes the same divested of any such lien. Our statutory lien 
 laws secure priority of judgment to favored classes of debts out 
 of certain property of the person who incurred the debts. When 
 such property passes into the hands of a bona fide purchaser with- 
 out notice and before foreclosure, it is no longer the property of 
 the person incurring the debt, and not having gone into the pos-
 
 OPINIONS OF THE GENERAL COUNSEL. 483 
 
 session of one affected with notice the lien is lost." Frazer v. 
 Jackson, 46 Ga. 621. 
 
 "A bona fide purchaser, without notice, of a crop grown on 
 rented premises will be protected against the lien, general or spe- 
 cial, of the landlord for rent." Thornton v. Carver, 80 Ga. 397. 
 
 And to the same effect : Holmes v. Pye, 107 Ga. 784. 
 
 "The lien of a laborer on the property of his employer will not 
 prevail against a purchaser who buys before foreclosure of the 
 lien, and without notice." Beall v, Butler, 54 Ga. 43. 
 
 And it has been held that a warehouseman who, without notice 
 of a lien, makes advances on cotton produced on rented land and 
 stored with him by the tenant has such a qualified property in the 
 cotton as to entitle him to reimbursement for such advances and 
 pay for warehouse charges before the landlord can enforce his 
 claim for rent. Clark v. Dobbins, 52 Ga. 656. 
 
 The transfer of a bill of lading issued by a railroad or other 
 carrier transfers the title to the property shipped and covered by 
 the bill of lading, as does the transfer of a warehouse receipt, 
 and it has been several times held that the title of the transferee 
 is superior to subsequent liens against the transferrer of the bill 
 of lading. National Bank v. Everett, 136 Ga. 372; Farmers 
 Bank v. Allen Holmes Co., 122 Ga. 67 ; American National Bank 
 v. Lee, 124 Ga. 863. 
 
 Not only is the holder of a warehouse receipt protected against 
 unforeclosed statutory liens against the pledger, of which he 
 has no notice, but he 'has a qualified title to the property, which 
 can not be affected by any act of the pledger or by the warehouse- 
 man issuing the receipt. I quote again from the Court of Ap- 
 peals : 
 
 "The pledgee of warehouse receipts, receiving the same as col- 
 lateral upon a bona fide loan or discount of commercial paper, 
 stands in the same privileged position as a bona fide purchaser 
 for value of the property represented by the receipts. 
 
 "The bona fide pledgee for value of a warehouse receipt is 
 vested with an indefeasible title to the property, of which the 
 receipt is symbolic. This title cannot be affected or incumberecl 
 by any act of the pledger or warehouseman, and is subject to de- 
 feasance only by the payment of the debt secured by the receipt. " 
 Bank of Sparta v. Butts, 4 Ga. App. 308. 
 
 But while the transferee or pledgee of the warehouse receipt 
 is protected as against stautory liens, of which he has no notice, 
 and while the pledger cannot defeat his title by any subsequent 
 act, the transferee's title is subject to mortgages and other
 
 484 PARK'S BANKING LAW OF GEORGIA. 
 
 recorded liens against the cotton to the same extent as though 
 he were the purchaser of the cotton itself, although he may have 
 no actual knowledge of the existence of such mortgages, the 
 record being notice thereof. 
 
 A growing crop may be mortgaged in Georgia. Stephens a 
 Tucker, 55 Ga. 544. Indeed, mortgages on crops given to secure 
 the payment of debts for money, supplies, and other articles of 
 necessity, including live stock, to aid in making and gathering 
 such crops, are favored under our Code, and are superior even 
 to judgments of older date than such mortgages, and this is so 
 whether they are recorded or not. Park's Ann. Code, 3349; 
 Franklin v. Callaway, 120 Ga. 382. 
 
 Where a mortgage is given on a crop and duly recorded, the 
 mortgage creditor would have the right to follow the cotton into 
 the hands of a purchaser, the record of his mortgage being con- 
 structive notice, and, therefore, preventing the purchaser from 
 being such a bona fide purchaser as that he would take the prop- 
 erty freed of the lien. Not only has the owner of a crop the right 
 to mortgage it, but even a cropper, or one cultivating the crop 
 on shares, has a mortgagable interest in the crops which he is 
 cultivating, and any purchase of the crop would be subject to the 
 lien of a mortgage given by a cropper. Fountain v. Fountain, 7 
 Ga. App. 361. 
 
 In the case last cited, it was also held that an unrecorded mort- 
 gage on a growing crop made by a cropper could not be defeated 
 by applying the mortgage property to an indebtedness existing at 
 the time the mortgage was made, even though with the consent 
 of the tenant and to one without actual notice of the mortgage. 
 The court saying : 
 
 "The general rule is that one who takes property in discharge 
 of an existing indebtedness is not regarded as a purchaser for 
 value, and it is only as to such a purchaser that an unrecorded 
 mortgage on personalty is invalid." 
 
 Again, a judgment, where properly entered on the general exe- 
 cution docket, is a lien on all the property of the defendant, both 
 real and personal. Park's Ann. Code, 5946. 
 
 As a defendant could not sell his cotton freed of the lien, he 
 could not pledge a warehouse receipt for the cotton, so as to give 
 to the pledgee title to the cotton superior to the judgment. 
 ::It should be remembered, too, that a warehouse receipt is only 
 a symbol of the property covered by it, and that the transfer of 
 such receipt is mere constructive delivery of the property, and,
 
 OPINIONS OF THE GENERAL COUNSEL. 485 
 
 therefore, where there can be no actual delivery of the property, 
 because it is not then in the warehouseman's possession, the con- 
 structive delivery will not suffice to transfer title. Livingston v. 
 Anderson, 2 Ga. App. 274; Commercial Bank v. Flowers, 116 Ga. 
 219. 
 
 Except as to negotiable instruments, a seller can convey no 
 better title than he has himself. Park's Ann. Code, 4118. 
 Therefore, the transfer of a warehouse receipt covering stolen 
 cotton, or other cotton to which the depositor has no title, will 
 not convey title to the transferee. 
 
 Under our statute, cotton, corn, rice and other products sold 
 by planters and commission merchants on cash sale, do not be- 
 come the property of the buyer until fully paid for, although they 
 may have been delivered to the buyer. Park's Ann. Code, 4126. 
 And the Supreme Court has held under this section : 
 
 "Under the law oi this State, where there is a delivery of 
 cotton by a planter or commission merchant 'on cash sale,' the 
 title of the seller remains undivested until payment in full of the 
 purchase price, and may be asserted by him even as against a bona 
 fide purchaser from his vendee." Flannery v. Harley, 117 Ga. 
 483. 
 
 To summarize: The pledgee or transfee of a warehouse re- 
 ceipt is regarded as a bona fide holder of the property covered by 
 the receipt. His title can not be affected by any subsequent claims 
 or liens against the pledger or transferrer or by any act of the 
 pledgor or of the warehouseman issuing the receipt. His title is 
 superior to statutory liens, such as the general or special Hen of 
 landlords for rent or for supplies furnished, the liens of laborers, 
 or other liens of similar character, but it is inferior to a duly re- 
 corded mortgage or bill of sale to secure debt, and to judgments 
 where properly entered on the general execution docket. The 
 transferee or pledgee of a warehouse receipt gets no title as 
 against the true owner of the property covered by the receipt, 
 where the property has been stolen, or in the case of farm prod- 
 ucts sold by farmers or commission merchants, where it has been 
 sold for cash and not paid for.
 
 486 PARK'S BANKING LAW OF GEORGIA. 
 
 Cotton Levied On Under Judgment Against Tenant or 
 Cropper Rights of Parties. 
 
 A landlord secures a loan from a bank, pledging as collateral ware- 
 house receipts for cotton, the receipts being issued jointly to the landlord 
 and tenant. A common law fi. fa. against the tenant is levied on the cotton 
 covered by the warehouse receipts, the judgment creditor claiming that one- 
 half of the cotton belongs to the tenant. What are the relative rights of the 
 bank, the warehouseman, and the judgment creditor? 
 
 The question depends largely on whether the person designated 
 as tenant was a tenant or a cropper. Under the Code : 
 
 "Where one is employed to work for part of the crop the rela- 
 tion of landlord and tenant does not arise. The title to the crop, 
 subject to the interest of the cropper therein, and the possession 
 of the land remain in the owner." Park's Ann. Code, 3707 : 
 
 The Code also provides : 
 
 "Whenever the relation of landlord and cropper exists, the title 
 to and right to control and possess the crops grown and raised 
 upon the lands of the landlord by the cropper, shall be vested in 
 the landlord until he has received his part of the crops so raised 
 and is fully paid for all advances made to the cropper in the 
 year said crops were raised to aid in making said crops." Park's 
 Ann. Code, 3705. 
 
 A judgment or lien against the cropper cannot be levied on his 
 part of the crop until the landlord has been paid. Therefore, if in 
 the case under consideration this cotton was raised by a cropper, 
 and there has been no final settlement between the landlord and 
 the cropper, and no final division of the crop, the judgment 
 against the cropper cannot be levied on the cotton, and the land- 
 lord, or the bank, as the holder of the warehouse receipts which 
 carry with them the title to the cotton could claim the cotton and 
 defeat the judgment creditor of the cropper. If, on the other 
 hand, the relation of landlord and tenant existed, the title to the 
 tenant's part of the crop would vest in him and not in the land- 
 lord, and if any part of the cotton covered by the warehouse re- 
 ceipts belonged to the tenant it would be subject to levy and sale 
 for the tenant's debts. Of course, the landlord, if he has not 
 been paid his rent for the year, could protect himself by suing out 
 a distress warrant and foreclosing a lien, the landlord's lien for 
 rent on the crops raised on the lands being superior to judgment 
 liens against the tenant. Park's Ann. Code, 3701. 
 
 The bank as the holder of the warehouse receipts is in the same 
 position as though it held the cotton itself, the Code recognizing 
 the right to pledge warehouse receipts, and it having frequently 
 been held that the pledgee of warehouse receipts is a bona fide
 
 OPINIONS OF THE GENERAL COUNSEL,. 487 
 
 holder of the property covered by the receipts. As stated by the 
 Supreme Court: 
 
 "The transfer or surrender of warehouse receipts, or other 
 symbols representing cotton, may very properly be regarded as 
 equivalent to an actual physical delivery of the cotton itself, and, 
 therefore, will operate as a constructive delivery passing title." 
 Central Company v. Exchange Bank, 101 Ga. 353. 
 
 I do not think that the warehouseman has any particular in- 
 terest in this controversy. To the extent of the storage charges, 
 or actual advances made against the cotton, the warehouseman's 
 lien would be superior to the judgments against either the land- 
 lord or the cropper, or the tenant as the case may be. 
 
 The Phrase "Customary Charges and Advances" Does Not 
 Include Advances Made by Warehouseman. 
 
 A warehouse receipt has in it the clause, "deliverable on the payment of 
 all customary charges and advances." When the receipt is hypothecated 
 with a bank, can the warehouseman hold the cotton for past advances, 
 and continue to advance on it, though the party storing the cotton does not 
 present the receipt or have the advances noted thereon? 
 
 The warehouseman under the circumstances cannot hold the 
 cotton as against the bank, if nothing more appears on the face of 
 the receipt than the clause quoted. This precise question has 
 been decided by the Court of Appeals of Georgia, from whose 
 decision I quote: 
 
 "The title to property represented by warehouse receipts be- 
 comes vested in the bona fide pledgee for value, and this title 
 cannot be defeated or incumbered by any act of the warehouse- 
 man, nor by any act of the pledger. The pledgee has not only a 
 lien on the property represented by the receipt, for his advances, 
 but he has an absolute title to the property, which is indefeasible 
 except by payment of the debt. 
 
 "It is contended in this case that the statement in the warehouse 
 receipt, that the cotton which it represents is only deliverable to 
 the holder of the receipt on payment of "customary charges and 
 all advances," is sufficient to put anyone who takes it on notice 
 that any advance made on the cotton will have to be paid be- 
 fore the cotton can be demanded. These general words are 
 printed in the receipt with a blank space left for the statement of 
 the amount of the advances ; and in the present case no amount 
 is inserted in the receipts. We think that where warehouse re- 
 ceipts containing these words are pledged as collateral security, 
 they do not convey notice to the pledgee that any advances have 
 in fact been made, or that the pledgee would be required to pay
 
 488 PARK'S BANKING LAW OF GEORGIA. 
 
 any advances which may have been made or will be made on the 
 cotton represented by the receipts. If, when the pledgee took the 
 receipt as collateral, it contained a definite statement that, in addi- 
 tion to the customary charges, such as storage and insurance, a 
 certain sum stated had been advanced to the pledger, on the 
 cotton, the pledgee would take it subject to that advance. It was 
 the duty of the warehouseman, when he issued the receipt, if he 
 had made an advance to the owner of the cotton at that time, to 
 so state in the body of the receipt ; and if he subsequently ad- 
 vanced to the owner any money for supplies, on the cotton in his 
 possession as warehouseman, he should have required the produc- 
 tion of the receipt and have entered thereon a statement of such 
 advance. Any other rule would render warehouse receipts 
 worthless as collateral security. It would enable the pledger and 
 the warehouseman to perpetrate a fraud on the pledgee, against 
 which he would have no protection. A mere inquiry made by the 
 pledgee of the pledger, at the time of the pledge, as to the fact 
 of advances would furnish no protection to the pledgee ; and to 
 require that the pledgee should go to the warehouseman and in- 
 quire as to the fact of advances would be wholly unreasonable. 
 The receipt itself should bear upon its face the definite expression 
 of the fact of advances. If advances have been made, it should 
 so state specifically ; and if not so stated, the pledgee is pro- 
 tected. Of course, after the pledgee obtains possession of the re- 
 ceipts, the title to the property thereby represented is in him, and 
 cannot be incumbered by any act, as before stated, of the ware- 
 houseman or the pledger." Bank of Sparta v. Butts, 4 Ga. App. 
 308, 311, 312. 
 
 I think this covers very clearly the question. It should be noted 
 that under this decision such a general statement in the receipt 
 covers charges necessary to the protection of the property, such as 
 storage and insurance, but it covers nothing else. 
 
 Right of Pledgee of Warehouse Receipt to Sell Property 
 Covered Thereby. 
 
 Is a bank which holds, as collateral security for advances made for the 
 purchase of cotton, warehouse receipts for the cotton purchased, author- 
 ized to sell the cotton so held in pledge in the absence of a special contract 
 giving it such right? 
 
 Under 3528, Park's Ann. Code, warehouse receipts, bills of 
 lading, and similar paper symbolic of property, may be delivered 
 in pledge, the delivery of the receipt placing the holder in the 
 same position as though the cotton itself had been delivered to 
 him. But a pledgee has no right to sell the property pledged until 
 after the debt for which it is pledged becomes due, and he must
 
 OPINIONS OF THE GENERAL COUNSEL. 489 
 
 always give notice for thirty days to the pledger of his intention 
 to sell, and the sale must be in public and to the highest bidder. 
 3530, Park's Ann. Code. 
 
 These sections have been held by the Supreme Court to apply 
 to the holder of warehouse receipts as collateral. Citizens Bank- 
 ing Co. v. Peacock, 103 Ga. 171, 179. 
 
 Therefore, in the absence of a special contract authorizing the 
 sale of the cotton, a bank holding warehouse receipts as collateral 
 would have to wait the maturity of its debt before selling, and 
 could only sell then after thirty days' notice, and the sale would 
 have to be at public outcry to the highest bidder. Banks usually 
 avoid this by taking a collateral form note which authorizes the 
 sale of the collateral in the event the maker of the note fails when 
 called on to deposit additional collateral. Many of the banks have 
 a special cotton contract, which provides that a definite margin of 
 so many dollars per bale shall be maintained, and in the event 
 such margin is not maintained the bank has the right to sell the 
 cotton at private sale and without notice to the pledger. 
 
 YEAR'S SUPPORT. 
 
 Year's Support Is Superior to Claim of Creditor on Collateral 
 
 Pledged. 
 
 Is the year's support allowed to a widow and minor children out of the 
 property of the deceased husband and father superior to the claim of a 
 creditor on collateral security pledged for the payment of a promissory 
 note or other indebtedness? 
 
 Yes ; this has been distinctly ruled by the Supreme Court in the 
 case of Ullman v. Brunswick Title Guarantee & Loan Co., 96 
 Ga. 625. 
 
 It is also superior to the claim of a mortgage creditor. Cully v. 
 Bloomingdale, 68 Ga. 756. 
 
 Year's Support Is Inferior to Deed to Secure Debt. 
 
 Is a deed to secure debt under section 3306, et seq., of the Code of 1910, 
 good as against a claim for year's support, where no bond for title, as 
 provided for in that section, is given? 
 
 The precise question has been decided by the Supreme Court 
 in the case of Williamson v. Orient Insurance Company, 100 Ga. 
 791, from which I quote the first headnote :
 
 490 PARK'S BANKING LAW OF GEORGIA. 
 
 "Though a deed to realty purporting upon its face to have 
 been made for the purpose of securing a debt, and reciting that 
 it was executed under the provisions of 1969 of the Code of 
 1882 (Code of 1910, 3306) did not fall strictly within the pro- 
 visions of that section, for the reason that there was no bond to 
 reconvey upon the payment of the debt, yet if such deed by its 
 express terms conclusively manifested an intention on the part 
 of the maker to pass title to the grantee and contained no defeas- 
 ance clause or other language authorizing it to be construed as a 
 mortgage only, the mere reference in the deed to the section above 
 mentioned and the grantee's failure to execute and deliver to the 
 grantor a bond for titles did not affect the efficiency or validity 
 of the paper as an instrument passing title but its effect was to 
 pass title to the grantee." 
 
 As a year's support can only be set apart out of property the 
 title to which is in the husband and father, and as title, as held by 
 the Supreme Court, is in the creditor, the grantee, and not in the 
 grantor in the deed to secure debt, no year's support can be 
 set apart out of the property. A year's support is superior to 
 a mortgage, but this is because a mortgage in Georgia does not 
 convey title but is only a lien. A year's support is superior to a 
 lien, but cannot be taken in property, title to which has been con- 
 veyed, though only as security for a debt.
 
 TABLE OF CASES CITED IN THE 
 OPINIONS. 
 
 Page 
 
 Ainsworth v. Mobile, Etc., Co., 102 Ga. 123 404 
 
 Allen v. Lathrop, 46 Ga. 133 384 
 
 American Insurance Co. v. Bagley, 6 Ga. App. 736 480 
 
 American Mortgage Co. v. Walker, 119 Ga. 341 358 
 
 American National Bank v. Lee, 124 Ga. 863 483 
 
 American National Bank of Nashville, Tenn., v. Miller, 185 Fed. 339 271 
 
 Angier v. Smith, 101 Ga. 844 477 
 
 Apple v . Lesser, 93 Ga. 751 429 
 
 Archer v. Guill, 67 Ga. 195, 200 359 
 
 Archer v. McCray, 59 Ga. 546 473 
 
 Atlanta National Bank v. Burke, 81 Ga. 589 226, 288 
 
 Atlanta Savings Bank v. Spencer, 107 Ga. 630 477 
 
 Averback v. Spivey, 122 Ga. 18 339 
 
 Baggett v. Edwards, 126 Ga. 463 412 
 
 Bagley v. Columbus Southern Railway Co., 98 Ga. 626 318 
 
 Bailey v. Baker Ice Machine Co., 239 U. S. 268, 60 L. Ed. 275 235 
 
 Bailie v. Augusta Savings Bank, 95 Ga. 277 302 
 
 Bank v. Bangs, 106 Mass. 441 258 
 
 Bank of Commerce v. Barrett, 38 Ga. 126 397 
 
 Bank of Culloden v. Bank of Forsyth, 120 Ga. 575 243 
 
 Bank of Lawrenceville v. Rockmore, 129 Ga. 582 408, 409 
 
 Bank of Pittsburgh v. Neal, 22 How. 107, 16 L. Ed. 328 292 
 
 Bank of Richland v. Nicholson, 120 Ga. 622 415 
 
 Bank of Sparta v. Butts, 4 Ga. App. 308 483, 488 
 
 Barnes v. Carter, 114 Ga. 886, 889 ; s. c., 120 Ga. 895, 897 349 
 
 Barrow v. E. Tris Napier Co., 16 Ga. App. 309 232 
 
 Bates v. Harris, 112 Ga. 32 473, 474 
 
 Baxendale v. Bennett, L. R. 3 Q. B. D. 525 292 
 
 Beall v. Butler, 54 Ga. 43 483 
 
 Bedford Bank v. Acoam, 125 Ind. 584, 25 N. E. 713, 9 L. R. A. 560, 
 
 21 Am. St. Rep. 258 442 
 
 Betts-Evans Co. v. Bass, 2 Ga. App. 718 232 
 
 Bishop v. Mathews, 109 Ga. 790 445 
 
 Blackshear Manufacturing Co. v. Stone, 8 Ga. App. 661 404 
 
 Booze v. Neal, 6 Ga. App. 279 482 
 
 Brennan v. Merchants and Manufacturers Bank, 62 Mich. 343, 28 N. 
 
 W. 881 270 
 
 Brimberry v. Mansfield, 86 Ga. 792 364 
 
 Brobston v. Penniman, 97 Ga. 527 456 
 
 Bromley v. Commercial National Bank, 9 Phila. 522 265 
 
 Brown's Estate, 113 Iowa 351, 86 N. W. 617 249 
 
 Bunn v. Commercial Bank, 98 Ga. 647 223 
 
 491
 
 492 TABLE OF CASES CITED. 
 
 Page 
 
 Burkhalter v. Perry, 127 Ga. 438 229 
 
 Burney Tailoring Co. v. Cuzzort, 132 Ga. 852 242 
 
 Butler v. Frank, 7 Ga. App. 655 351 
 
 Butts County v. Jackson Banking Co., 129 Ga. 801 311 
 
 California National Bank v. Kennedy, 167 U. S. 362, 42 L. Ed. 198. . 391 
 California National Bank v. Utah National Bank, 190 Fed. 318 
 
 (8 C. C. A.) 305 
 
 Campbell v. Morgan, 111 Ga. 200 477, 478 
 
 Campbell v. Trunnell, 67 Ga. 518 380 
 
 Central Co. v. Exchange Bank, 101 Ga. 353 482, 487 
 
 Chastain v. Peak, 111 Ga. 889 378 
 
 Chatham Bank v. Brobston, 99 Ga. 801 454 
 
 City National Bank v. Gunter, 67 Kan. 227, 72 Pac. 842 398 
 
 City of Macon v. First National Bank, 59 Ga. 648 463 
 
 City of Macon v. Jones, 67 Ga. 489 466 
 
 City of Macon v. Macon Savings Bank, 60 Ga. 133 462 
 
 Citizens Banking Co. v. Peacock, 103 Ga. 171 482, 489 
 
 Clark v. Dobbins, 52 Ga. 656 483 
 
 Clark v. Havard, 111 Ga. 242 477 
 
 Coaling Coal Co. v. Howard, 130 Ga. 807 229 
 
 Coder, Trustee, v. Arts, 213 U. S. 223, 53 L. Ed. 772 298 
 
 Comer v. Dufour, 95 Ga. 376 304 
 
 Commonwealth v. Felton, 101 Mass. 204 391 
 
 Commonwealth v. Ketner, 92 Pa. St. 372 391 
 
 Commercial Bank v. Flowers, 116 Ga. 219 485 
 
 Continental & Commercial Tr. & Sav. Bank v. Chicago Title & Tr. 
 
 Co., 229 U. S. 434, 57 L. Ed. 1268 236, 438 
 
 Cooper v. National Bank of Savannah, 21 Ga. App. 356 393, 475 
 
 Crine v. Tifts, 65 Ga. 644 320 
 
 Critten v. Chemical National Bank, 171 N. Y. 219, 57 L. R. A. 529 . . 275 
 
 Cully v. Bloomingdale, 68 Ga. 756 489 
 
 Cunningham v. Cureton, 96 Ga. 489 338 
 
 Danforth v. National State Bank, 48 Fed. 271 479 
 
 Danvers v. Salem Bank, 151 Mass. 280, 24 N. E. 44 261 
 
 Davenport v. State Banking Co., 126 Ga. 136 440 
 
 Davis v. Baker, 71 Ga. 33 352 
 
 Dawson Water Works Case, 106 Ga. 696 373 
 
 Detwiler v. Commonwealth, 18 Atl. 990 243 
 
 Dickinson v. Leominster Savings Bank, 152 Mass. 51, 25 N. E. 12.. 324, 325 
 
 Dight v. Chapman (D. C. Oregon), 12 Am. B. R. 743 454 
 
 District of Columbia v. Cornell, 130 U. S. 655, 32 L. Ed. 1041 293 
 
 Dobbins v. Blanchard, 94 Ga. 500 380 
 
 Dotterer v. Pike, 60 Ga. 42 359 
 
 Dougherty v. Western Bank of Ga., 13 Ga. 288 402 
 
 Dunbar v. Mize, 53 Ga. 439 359 
 
 Earle v. Pennsylvania, 178 U. S. 449, 44 L. Ed. 1146 340 
 
 Easton v. State of Ohio, 188 U. S. 220, 47 L. Ed. 452 391
 
 OF CASES CITED. 493 
 
 Page 
 
 Edalgo v. Southern Ry. Co., 129 Ga. 258 347 
 
 Empire Cotton Oil Co. v. Continental Gin Co., 21 Ga. App. 16 338 
 
 Eng. Amer. L. & T. Co. v. Hiers, 112 Ga. 823 456 
 
 Equitable Loan & Security Co. v. Lewman, 124 Ga. 190 358 
 
 Equitable Mortgage Co. v. Butler, 105 Ga. 555 358 
 
 Espy v. First National Bank, 18 Wall. 604, 21 L. Ed. 947 275 
 
 Evans, Receiver, v. National Bank of Savannah, (U. S.), 34 Sup. 
 
 Ct. 58, 64 L. Ed. 69 393 
 
 Farmer v. Bank, 107 N. W. 170 398 
 
 Farmers & Traders Bank v. Eubanks, 2 Ga. App. 839 381 
 
 Farmers Bank v. Allen Holmes Co., 122 Ga. 67 483 
 
 Farmers Bank v. Johnson, King & Co., 134 Ga. 486 273, 336 
 
 Fifth National Bank v. Ashworth, (Pa.), 2 L. R. A. 491 303 
 
 First National Bank v. Owens, 147 Ga. 599 313 
 
 First National Bank v. Whitman, 94 U. S. 343, 24 L. Ed. 229 409 
 
 First National Bank of Trinidad v. First National Bank of Denver, 
 
 Fed. Cases, No. 4810 306, 307 
 
 First National Bank of Youngstown v. Hughes, 6 Fed. 737 465 
 
 Flannery v. Harley, 117 Ga. 483 485 
 
 Forsyth Manufacturing Co. v. Castlen, 112 Ga. 199 320 
 
 Foster v. Chase, 75 Fed. 797 382 
 
 Fountain v. Fountain, 7 Ga. App. 361 484 
 
 Fourth National Bank v. Mayer, 89 Ga. 108 261 
 
 Franklin v. Callaway, 120 Ga. 382 484 
 
 Frazer v. Jackson, 46 Ga. 621 483 
 
 Garmany v. Lawton, 124 Ga. 876 368 
 
 Ga. Pacific Ry. Co. v. Strickland, 80 Ga. 776 358 
 
 Ga. R. R. & Banking Co. v. Love and Good Will Society, 85 Ga. 
 
 293 257, 258 
 
 Georgia Seed Co. v. Talmadge, 96 Ga. 254 436 
 
 Germania National Bank v. Case, 99 U. S. 628, 25 L. Ed. 448 454 
 
 Gordon v. Lansing State Savings Bank, 133 Mich. 143, 94 N. W. 741 283 
 
 Green v. Equitable Mortgage Co., 107 Ga. 536 329 
 
 Gregory v. Sturgis National Bank, 71 S. W. 66 * 354 
 
 Griffith v. Collins, 116 Ga. 420 241 
 
 Grissom v. Com. Nat. Bank, 87 Tenn. 350, 10 S. W. 774, 3 L. R. A. 
 
 273, 10 Am. St. Rep. 669 443 
 
 Gross v. Whitely, 128 Ga. 79, 57 S. E. 94 379 
 
 Guarantee Co. of N. A. v. East Rome Town Co., 96 Ga. 511 331, 448 
 
 Guilford v. Stacer, 53 Ga. 618 228 
 
 Habersham v. Lehman, 63 Ga. 380 355 
 
 Hall v. Greene County, 119 Ga. 253 312 
 
 Hall v. State, 2 Ga. App. 739 320 
 
 Hamer v. Sears, 81 Ga. 288 345 
 
 Harden v. Birmingham Tr. & Sav. Bank, 55 Sou. 943 418 
 
 Harrell v. National Bank of Commerce, 128 Ga. 504 399 
 
 Hastey v. Roberts, 149 Ga. 479, 100 S. E. 569 233 
 
 Heard v. DeLoach, 105 Ga. 500 355 
 
 Henderson v. Hughes, 4 Ga. App. 52 364
 
 494 TABLE OF CASES CITED. 
 
 Page 
 
 Henry v. McAllister, 99 Ga. 557 359 
 
 High v. Cox, 55 Ga. 662 415 
 
 Hixon v. Callaway, 2 Ga. App. 678 318 
 
 Holmes v. Pye, 107 Ga. 784 483 
 
 Home Savings Bank v. City of Des Moines, 205 U. S. 503, 51 L. 
 
 Ed. 901 460 
 
 Hull v. Myers, 90 Ga. 674 432 
 
 Humphrey v. Copeland, 54 Ga. 543 296 
 
 Johnson v. Leffler Co., 112 Ga. 670, 50 S. E. 488 378, 379 
 
 Johnston v. Mayor and Council of Macon, 62 Ga. 645 463 
 
 Johnston v. Schnabaum, 109 S. W. 1163 354 
 
 Jones v. Harrold, 110 Ga. 373 380 
 
 Jones v. Weichselbaum, 115 Ga. 369, 41 S. E. 615 378 
 
 Kennedy v. McCardle, 88 Ga. 454 349 
 
 Kight v. Robinson, 10 Ga. App. 548 384 
 
 Kinard v. First National Bank of Sylvester, 125 Ga. 228 402 
 
 Knoxville National Bank v. Clark, 51 la. 264, 33 Am. Rep. 129 293 
 
 Lamar v. Taylor, 141 Ga. 228 248, 444 
 
 Langdale v. Citizens Bank of Savannah, 121 Ga. 105 305, 410 
 
 Leather Manufacturers National Bank v. Merchants National Bank, 
 
 128 U. S. 26, 32 L. Ed. 342 289 
 
 Lewis v. Lofley, 92 Ga. 804 312 
 
 Linton v. Childs, 105 Ga. 567 463 
 
 Lippincott v. Behre, 122 Ga. 546 395 
 
 Livingston v. Anderson, 2 Ga. App. 274 485 
 
 Lockwood v. Muhlberg, 124 Ga. 660 473 
 
 Logan County Nat. Bank v. Townsend, 139 U. S. 67 392 
 
 Loganville Banking Co. v. Forrester, 143 Ga. 302 394, 478 
 
 Longley v. Bank, 19 Ga. App. 701 378 
 
 Love v. Lamar, 78 Ga. 323, 3 S. E. 90 378 
 
 Loyless v. Hodges, 44 Ga. 647 343 
 
 McCall v. Herring, 116 Ga. 242 478 
 
 McCary v. Grandy, 92 Ga. 327 379 
 
 McCulloch v. Maryland, 4 Wheaton 316, 4 L. Ed. 579 463 
 
 McDaniel v. Gray, 69 Ga. 434 238 
 
 Maclntyre v. Ferst's Sons & Company, 101 Ga. 682 317 
 
 McLaren v. Marine Bank, 52 Ga. 131 415 
 
 Martin v. White, 115 Ga. 867 480, 481 
 
 Maynard & Co. v. Maynard, 12 Ga. App. 279 378 
 
 Merchants National Bank v. Parker, 142 Ga. 265 231 
 
 Merchants Nat. Bank of Savannah v. Demere, 92 Ga. 735 299, 456 
 
 Miller v. Southwestern R. R. Co., 55 Ga. 143 349 
 
 Minor v. Bank, 1 Peters (U. S.) 46 406 
 
 Morris v. Banking Co., 109 Ga. 12 4 "(i 
 
 National Bank v. American Exchange Bank (Mo.), 52 S. W. 265 .. 303 
 
 National Bank v. Everett, 136 Ga. 372 230, 483 
 
 National Bank of Gloversville v. Johnson, 104 U. S. 271, 26 L. Ed. 
 
 743 . 479
 
 TABM; OF CASES CITED. 495 
 
 Page 
 
 National Bank of N. J. v. Berrall, 66 L. R. A. 599 284 
 
 National Exchange Bank v. Kimball, 66 Ga. 753 432 
 
 National Safe Deposit Co. v. Stead, 250 111. 584, 95 N. E. 973 344 
 
 Nelms v. Keller, 103 Ga. 745, 30 S. E. 572 378, 379 
 
 Newton County v. Boyd, 148 Ga. 761, 98 S. E. 347 318 
 
 North Georgia Co. v. Bebee, 128 Ga/563 469 
 
 Owens v. Atlanta Trust & Bkg. Co., 122 Ga. 523 310, 452 
 
 Owensboro National Bank v. City of Owensboro, 173 U. S. 664, 43 
 
 L. Ed. 850 464 
 
 Pannell v. Phillips, 55 Ga. 618 414 
 
 Parker-Fain Gro. Co. v. Orr, 1 Ga. App. 628 283 
 
 Parmelee v. Williams, 72 Ga. 42 332 
 
 Patton v. Bank of Lafayette, 124 Ga. 965 360, 429 
 
 Peagler v. Davis, 143 Ga. 11, 84 S. E. 59, Ann. Cas. 1917A, 232 233 
 
 Penick, Tax Collector, v. Foster, 129 Ga. 217 465 
 
 People v. Fonda, 62 Mich. 401 391 
 
 People v. N. Y. Tax Commissioners, 104 U. S. 466, 26 L. Ed. 632 . . 466 
 
 Peoples Bank v. Exchange Bank, 116 Ga. 820 456 
 
 Perkins v. Rowland, 69 Ga. 661 378 
 
 Pettey v. Dunlap Hardware Co., 99 Ga. 300 341 
 
 Pollack v. National Bank of Commerce, 151 S. W. 774 273 
 
 Pollak Bros. v. Niall-Herin Co., 137 Ga. 23 303 
 
 Quin v. Sterne, 26 Ga. 223 405 
 
 Redd v. Burrus, 58 Ga. 574 319, 320 
 
 Reese v. Fidelity Assurance Society, 111 Ga. 482 291 
 
 Reinisch v. Consolidated National Bank, 45 Pa. Supr. Ct. 236 268 
 
 Reviere v. Chambliss, 120 Ga. 714 342 
 
 Rodgers v. Black, 99 Ga. 139 364 
 
 Roland v. Coleman, 76 Ga. 652 412 
 
 Rountree v. Finch, 120 Ga. 743 241 
 
 Ruffin v. Paris, 75 Ga. 654 359 
 
 Russell v. Turner, 14 Ga. App. 344 477 
 
 Salley v. Terrill, 95 Me. 553, 55 L. R. A. 730 294 
 
 Sawyer v. Cargile, 72 Ga. 290 301 
 
 Schofield v. Jones, 85 Ga. 816, 11 S. E. 1032 379 
 
 Scott v. Armstrong, 146 U. S. 499, 36 L. Ed. 1059 444 
 
 Scott v. Pound, 61 Ga. 579 363 
 
 Second National Bank v. Wrighston, 63 Md. 81 249 
 
 Sewell v. Norris, 128 Ga. 824 358 
 
 Sexton v. Dreyfus, 219 U. S. 339, 55 L. Ed. 244 298 
 
 Shackelford v. Orris, 135 Ga. 29 .359, 480 
 
 Sherburne v. Rickards, 15 Banking Law Journal 536 268 
 
 Shipsey v. Bowery National Bank, 59 N, Y. 485 307 
 
 Sigman v. Austin, 112 Ga. 570 350 
 
 Simmons v. Council, 5 Ga. App. 386 397 
 
 Smith v. Maddox-Rucker Banking Co., 8 Ga. App. 289 279 
 
 Smith Roofing & Contracting Co. v. Mitchell, 117 Ga. 772 301 
 
 Sou. Iron & Equip. Co. v. Voyles, 138 Ga. 258 232 
 
 Spalding v. Paine, 81 Ky. 416 389
 
 496 TABLE OF CASES CITED. 
 
 Page 
 
 State v. Clement Nat. Bank, 84 Vt. 167, 78 Atl. 944 465 
 
 Stephens v. Tucker, 55 Ga. 543 '. 320, 484 
 
 Stimpson Computing Scale Co. v. Holmes-Hartsfield Co., 6 Ga, App. 
 
 569 232 
 
 Stout v. Benoist, 39 Mo. 277, 90 Am. Dec. 468 250 
 
 Sullivan v, Sullivan, 56 N. E. 116 249 
 
 Swann v. Morris, 83 Ga. 143 363 
 
 Swan Edwards Co. v. Union Savings Bank, 17 Ga. App. 572 257 
 
 Sylvania & Girard R. R. Co. v. Hoge, 129 Ga. 734 451 
 
 Tate v. City of Elberton, 136 Ga. 301 312, 374 
 
 Temples v. Equitable Mortgage Co., 100 Ga. 503, 28 S. E. 232, 62 Am. 
 
 St. R. 326 378 
 
 Third National Bank of Columbus v. Poe, 5 Ga. App. 113, 62 S. E. 
 
 826 295, 379 
 
 Thompson v. First State Bank of Dawson, 99 Ga. 651 474 
 
 Thornton v. Carver, 80 Ga. 397 483 
 
 Thornton v. Martin, 116 Ga. 115 300 
 
 Thornton v. The State, 5 Ga. App. 397 347 
 
 Tillinghast v. Johnson, 82 Atl. 788, 41 L. R. A. (N. S.) 764 343 
 
 Town of Wadley v. Lancaster, 124 Ga. 354 373 
 
 Tribble v. Anderson, 63 Ga. 56 329 
 
 Trowbridge v. Spinning, 23 Wash. 48, 62 Pac. 125, 54 L. R. A. 204 . . 344 
 
 Ullman v. Brunswick Title Guarantee & Loan Co., 96 Ga. 625 489 
 
 Union Savings Bank & Tr. Co. v. Dottenheim, 107 Ga. 606 356 
 
 United States v. Barrett, 111 Fed. 369 309 
 
 United States v. Kuhl, 85 Fed. 624 (D. C. Iowa) 309 ' 
 
 Van Allen case, 3 Wall. 573, 18 L. Ed. 229 460 
 
 Van Dyke v. Van Dyke, 123 Ga. 686 229 
 
 Verdery v. Dotterer, 69 Ga. 194 349 
 
 Wade v. Powell, 31 Ga. 3 360 
 
 Walker v. Maddox, 105 Ga. 254 241 
 
 Wall v. County of Monroe, 103 U. S. 77, 26 L. Ed. 430 413 
 
 Walton Guano Co. v. McCall, 111 Ga. 114 228 
 
 Washington, Etc., Co. v. Susquehanna Coal Co., 26 App. D. C. 149. . 344 
 
 Watson v. Mayor and Council of Thomson, 116 Ga. 546 345 
 
 Watt-Harley-Holmes Hdw. Co. v. Day, 1 App. 646 343 
 
 Weisberger Co. v. Barberton Sav. Bank (Ohio), 34 L. R. A. (N. S.) 
 
 1100 289 
 
 Weld v. Eliot Five Cent Savings Bank, 158 Mass. 339, 33 N. E. 519 283 
 
 Western & Atlantic R. R. v. Atlanta, 113 Ga. 536 347 
 
 Weston v. City Council of Charleston, 2 Peters 449, 7 L. Ed. 481 . . 466 
 
 Wheatley v. Glover, 125 Ga. 710 455 
 
 Whirtington v. Wright, 9 Ga. 23 359 
 
 Wilkinson v. Bertock, 111 Ga. 187 446 
 
 Williams v. Lewis, 69 Ga. 825 415, 432 
 
 Williamson v. Orient Insurance Co., 100 Ga. 791 489 
 
 Wilson v. The Citizens & Southern Bank, 23 Ga. App. 654, 99 S. 
 
 E. 239 . 411
 
 TABLE OF CASES CITED. 497 
 
 Page 
 
 Whitney v. Butler, 118 U. S. 655, 30 L. Ed. 266 456 
 
 Wolff v. Hawes, 105 Ga. 153 359, 377 
 
 Wood v. The State, 12 Ga. App. 651 345 
 
 Woodbury v. Roberts, 59 Iowa 348, 13 N. W. 312 398 
 
 Woods v. Colony Bank, 114 Ga. 683 257 
 
 Wynn & Robinson v. Tyner, 139 Ga. 765 309 
 
 Youmans Jewelry Co. v. Blackshear Bank, 141 Ga. 357 305
 
 INDEX TO OPINIONS OF GENERAL 
 COUNSEL. 
 
 [For References to Statutes, See Separate Index.] 
 
 A. 
 
 Page 
 ACCOMMODATION INDORSERS. 
 
 Extension, without consent of, discharge 223 
 
 ADMINISTRATOR. 
 
 Certificate of deposit, must produce before payment 250 
 
 Interest, estate of decedent not exempt from 361 
 
 Note signed by, bound personally, but estate not bound 229 
 
 Stock, may vote 449 
 
 ADVANCE. 
 
 Deducting interest in, usurious 478 
 
 ADVANCES. 
 
 Securities for, made in good faith, not preferences, although 
 
 given within four months of bankruptcy 234 
 
 Warehouseman, made by, "customary charges and advances," 
 
 not included 487 
 
 ADVERTISEMENT. 
 
 Currency, stamping on, criminal, 321 
 
 AGENCY. 
 
 Administrator, note signed by, binds personally, but estate not 
 
 bound 229 
 
 Bank paying to supposed agent of payee does so at its peril . . . 226 
 
 Check indorsed by agent, bank must look to authority of 223 
 
 Deposit in name of agent; liability of 
 
 Bank to principal 224 
 
 Principal for overdraft 225 
 
 Garnishment, deposit in name of agent, subject to 341 
 
 Messenger of bank, payment of drafts to, without production 
 
 of draft, at payer's risk 227 
 
 Note signed by named party as agent is the individual undertak- 
 ing of the maker 228 
 
 "ALL OTHER INDEBTEDNESS." 
 
 Collateral, pledged to secure, valid 299 
 
 ANSWER. 
 
 Garnishment : 
 
 Covers what debts 340 
 
 Filed when 338 
 
 ATTACHMENT. 
 
 Draft, amount paid on, with order notify bill of lading, not sub- 
 ject to, when discounted by drawer 230 
 
 499
 
 500 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 ATTACHMENT continued. 
 
 Foreign creditors of Georgia bank can subject its account in an- 
 other State by 230 
 
 ATTESTATION OF INSTRUMENTS. 
 
 Crop mortgages, same as mortgages on real estate 318 
 
 Employees of bank, unless pecuniarily interested, not disquali- 
 fied to attest papers in bank's favor 232 
 
 Notary public, by, not necessary to state when commission ex- 
 pires 233 
 
 B. 
 BANK. 
 
 Stock, holding, liable as a stockholder 454 
 
 BANK BOOKS. 
 
 Taxation, production of, to tax officers 461 
 
 BANKING ACT OF 1919. 
 See Separate Index. 
 
 BANKRUPTCY. 
 
 Collateral, interest does not stop, where proceeds of cover prin- 
 cipal and interest of original note 298 
 
 Depositor : 
 
 Indebtedness of, bank can set off 236 
 
 Note of, bank may set-off against deposit of 438 
 
 Joint note, proof of, not necessary to hold co-debtor 233 
 
 Mortgaged property, trustee can sell free of lien 236 
 
 Note waiving homestead is a debt dischargeable in 235 
 
 Pledger of -collateral, rights of holder of 298 
 
 Securities for advances made in good faith not preferences . . . 234 
 
 Stockholder's liability debt dischargeable in 453 
 
 Waiver of right to go into, in face of note, is not valid 234 
 
 BILL OF EXCHANGE. 
 
 "With exchange," payable, negotiable 399 
 
 BILL OF LADING. 
 Railroad delivering goods shipped order notify without surrender 
 
 of bill of lading liable to transferee 237 
 
 BILLS RECEIVABLE. 
 
 Taxation, subject to 467 
 
 BLANK. 
 
 Indorsement in, payable to bearer : 
 
 Holder may sue in own name 355 
 
 Notwithstanding subsequent limited indorsement 355 
 
 BOOKS OF THE BANK. 
 
 Stockholder, whose name appears on, liability of 455 
 
 BONA FIDE HOLDER. 
 
 Usury, can be pleaded against 477 
 
 BOND FOR TITLE. 
 
 Lien of, transferred, inferior to lien of prior mortgage 241
 
 INDEX TO OPINIONS. 501 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 BOND FOR TITLE continued. 
 
 Mortgage, his interest, holder of, may 385 
 
 Vendor : 
 
 Land, possession of, how recovered when vendee defaults in 
 
 payment 240 
 
 Rights of, upon default 238 
 
 BONDS. 
 
 Trust company, negotiable, ordinary, cannot issue 470 
 
 BORROWING POWER. 
 
 National banks, of 392 
 
 BRANCH BANK. 
 
 Protest of check, drawn on, presentment of 428 
 
 BUSINESS. 
 
 Holidays, banks may carry on 345 
 
 BY-LAWS. 
 
 Directors, election of, governed by 242 
 
 Lien created by : 
 
 Cannot be asserted against holder of stock without notice . . 243 
 Not affect purchaser of stock without notice at judicial sale 244 
 Transferrer of stock not liable to criminal prosecution 244 
 
 C. 
 CASHIER. 
 
 Certificate of deposit, payable to himself, cannot issue 246 
 
 Checks in his own favor, cannot draw on bank's correspondents 246 
 Loans made by, relieved of responsibility when approved by di- 
 rectors 327 
 
 Power to bind bank by contract, has none, except in the dis- 
 charge of ordinary duties 245 
 
 CASHIER'S CHECK. 
 
 Garnishment, subject to 341-342 
 
 Holder, bona fide, good in hands of 247 
 
 Lost, duplicate issued, protection against 375 
 
 Payee's name, mistake in, non-drawee bank not liable 290 
 
 Payment, stop, bank cannot, against bona fide holder 286 
 
 "CASH OR ORDER." 
 
 Check, payable to, is payable to bearer 294 
 
 CERTIFICATION OF CHECKS. 
 Payment of : 
 
 Certified check: 
 
 Cannot be stopped 254 
 
 Not stopped by notice to payee 254 
 
 Check certified after business hours cannot be stopped 255 
 
 Telephone or telegraph : 
 
 Cannot be by 251-253 . 
 
 Payee notified by that check good, drawer may stop payment 255
 
 502 INDSX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 CERTIFICATE OF DEPOSIT. 
 
 Cashier cannot issue to himself 246 
 
 Deposit, ranks as 248 
 
 Garnishment, subject to 341 
 
 Holder of, bona fide, protected 251 
 
 Husband, issued to, payable to wife in event of death, must be 
 
 paid to administrator 248 
 
 Production and surrender necessary before payment 250 
 
 Protestable, is not 416 
 
 Signature of payee, bank must know 250 
 
 CERTIFIED CHECK. 
 
 Post-dated, not paid before date it bears 278 
 
 CHECKS. 
 
 Agent, indorsement by : 
 
 Bank must look to authority of 223 
 
 Unauthorized, bank paying liable 226 
 
 Cashier's : 
 
 In his own favor, cannot draw on bank's correspondent .... 246 
 
 Payee's name, mistake in, non-drawee bank not liable 290 
 
 Stop payment of, bank cannot, against bona fide holder 286 
 
 "Cash or order," payable to, is payable to bearer 294 
 
 Death : 
 
 After negotiation, not revoke 270 
 
 Revokes 269 
 
 Deposited after banking hours, payment stopped, charged to de- 
 positor, when 286 
 
 Depositor credited with, by bank on which drawn, cannot be 
 
 charged back 272 
 
 Exchange, may be made payable only in 335 
 
 Forged : 
 
 Bank cannot recover amount paid on from : 
 
 Merchant who accepted without notice 259 
 
 Payee of 257 
 
 Illiterate, bank may recover from merchant witnessing mark 
 
 of drawer 260 
 
 Funds, insufficient: 
 
 All presented simultaneously, none should be paid 267 
 
 Bank may decline to make any payment on 264 
 
 Drawer liable to holder 277 
 
 First presented, held by bank for collection, subsequent 
 
 check covered by funds must be paid 268 
 
 National bank, drawer criminally liable 278 
 
 Holder, bona fide: 
 
 Drawer liable to, though check lost or stolen 262 
 
 Protected 261 
 
 Illiterate, bank may require witness to signature of 263 
 
 Indorsements :
 
 INDEX TO OPINIONS. 503 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 CHECKS continued. 
 
 Collection, identification of party making, for, bank may re- 
 quire 307 
 
 Forged, payment of, bank is liable for 288 
 
 Name: 
 
 Payee of, same as person paid, non-drawee bank liable 290 
 
 Person paid same as payee, bank liable 289 
 
 Note, payment of, given in, not paid and surety not released . . . 402 
 
 Overpaid through mistake of fact, money can be recovered .... 281 
 Payment of : 
 
 Bank may refuse if not presented by bank through which 
 
 payable 273 
 
 Drawee bank, by, final as againsf "insufficient funds" 270 
 
 Drawer may stop 283 
 
 Indorser for loan cannot stop 287 
 
 Payee cannot stop 285 
 
 Stopped : 
 
 Bank pays at its own risk 284 
 
 Holder has right of action against drawer and indorser 285 
 When raised : 
 
 Drawer negligent, must stand loss 274 
 
 Money recoverable from person receiving 274 
 
 Pencil, written in, fraudulently altered, drawer must stand loss 275 
 Post-dated : 
 
 Certified, not paid before date it bears 278 
 
 Money paid on, right of bank to recover 279 
 
 Protest : 
 
 Agent, indorsed by, authority not shown, authorized 418 
 
 Fees on, may be charged to drawer's account 430 
 
 Forged, of 419 
 
 Payment not refused, bank protesting liable for fees and 
 
 damages 431 
 
 Required, where payment stopped 415 
 
 Subject to, immediately upon legal presentment 425 
 
 Protestable, not indorsed by payee, are not 417 
 
 Signature unlike authorized signature, protest safer 420 
 
 Stolen, signed, amounts, etc., fraudulently filled in, drawer not 
 
 liable on 291 
 
 Stranger, identification by customer not make liable for worth- 
 less check 269 
 
 Taxes due United States, in payment of, must be remitted at par 335 
 
 Undated, valid, and bank may pay 281 
 
 See Certification of Checks. 
 CO-DEBTOR. 
 
 Joint note, bankruptcy, not necessary to prove to hold 233 
 
 COLLATERAL. 
 
 "All other indebtedness," pledged to secure, valid 299 
 
 Bankruptcy :
 
 504 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Inaex.] 
 
 Page 
 COLLATERAL continued. 
 
 Interest, does not stop, where proceeds of cover principal 
 
 and interest of original note 298 
 
 Pledger, of, rights of holder of 298 
 
 Indorsements, all indebtedness, pledged to secure would cover . . 300 
 
 Insolvency of bank pledging, holder of, may collect 299 
 
 Lost negligently, pledgee liable for value of 296 
 
 Note: 
 
 Holder, for value of, is purchaser 295 
 
 Security, given as, renewal of debt not relieve maker of 
 
 liability 297 
 
 Protestable, paper held as, is though principal debt not due 417 
 
 Sale of : 
 
 Public or private, without notice, under terms of agreement, 
 
 valid 300 
 
 Valid if terms of power followed 300 
 
 Sunday newspapers, sale of, advertised in, invalid 301 
 
 Wife's property pledged by husband, pledgee without notice pro- 
 tected 295 
 
 Year's support, superior to claim of creditor on 489 
 
 COLLECTIONS. 
 
 Diligence of correspondent bank required 306 
 
 Indorser, identification of, on check, bank may require 307 
 
 Liability for, general rules governing 301 
 
 COMMISSIONS. 
 
 Usury, paid for loans, when constituting 476 
 
 COMMITTEE. 
 
 Loans, authority to make, directors may delegate to 328 
 
 COMMON STOCK. 
 
 Definition of 447 
 
 CONDITIONAL BILL OF SALE. 
 
 Mortgages, cannot be foreclosed as, title to the personalty being 
 
 retained 308 
 
 CONFEDERATE MONEY. 
 
 Passing not a violation of United States statutes 309 
 
 CONTRACT. 
 
 Cashier cannot bind bank by, except in the discharge of ordinary 
 
 duties 245 
 
 CORPORATE STOCK. 
 
 Judgments against vendor, transferee of not affected by 310 
 
 Power of attorney, transfer of, should be accompanied by 311 
 
 CORPORATION TAX. 
 
 State banks, liable for 462 
 
 COTTON. 
 
 "Customary charges and advances," warehouseman, advances 
 
 made by, does not cover 487 
 
 Tenant, judgment against levied on, warehouse receipts trans- 
 ferred, rights of parties 486
 
 INDEX TO OPINIONS. 505 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 
 COTTON continued. 
 Warehouse receipts : 
 
 Pledgee of, right to sell property 488 
 
 Stored, transferree or pledgee of, how far protected against 
 
 liens 481 
 
 COUNTY BOARDS OF EDUCATION. 
 
 Loans to 371 
 
 COUNTY LOANS. 
 
 Money for current expenses, county authorities cannot make . . . 311 
 COUNTY WARRANTS. 
 
 Interest, do not bear 313 
 
 Payment of, order of 312 
 
 Protestable, are not 412 
 
 School teacher's salary, valid ; 313 
 
 Taxes, whether can be used to pay 314 
 
 CREDITORS. 
 
 Depositors of insolvent bank, share equally with other 323 
 
 Foreign, of Georgia bank, can subject its account in another 
 
 State by attachment 230 
 
 CREDIT STATEMENTS. 
 
 Advantages of 315 
 
 CROP. 
 
 Growing, must be, before it can be mortgaged 319 
 
 Peaches, mortgage on, valid 319 
 
 CROP MORTGAGES. 
 
 Attestation, same as mortgages on real estate 318 
 
 Crop, growing, must be to be mortgaged 319 
 
 Judgment, older: 
 
 Crop subject to, handled how 317 
 
 Superior to 317 
 
 Peaches, mortgage on, valid 319 
 
 Purpose for which given, advantages of reciting 321 
 
 CROPPER. 
 
 Judgment against, levied on cotton, warehouse receipt trans- 
 ferred, rights of parties 486 
 
 CURRENCY. 
 
 Advertisement, stamping on, criminal 321 
 
 "CUSTOMARY CHARGES AND ADVANCES." 
 
 Warehouse receipt, phrase in, covers what 487 
 
 CUSTOMER. 
 
 Credit statement of, advantages of 315 
 
 D. 
 DATE. 
 
 Check without, valid, and bank may pay 281 
 
 DAYS. 
 
 Interest, number allowable in calculating 360
 
 506 IND^X TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 DEATH. 
 
 Check: 
 
 After negotiation, does not revoke 270 
 
 Revokes 269 
 
 Power of sale in collateral note, not revoked by 411 
 
 DEBT. 
 
 Mortgage, may cover additional, when 384 
 
 Subsequently created, mortgage not cover 383 
 
 DEBTOR. 
 
 Usury paid, may recover, when 477 
 
 DEED. 
 
 Consideration nominal and love and affection, whether vol- 
 untary depends on intention of parties 480 
 
 DEED TO SECURE DEBT. 
 
 Year's support inferior to : 489 
 
 DEMAND. 
 
 Protest, waiver of, is equivalent to waiver of 432 
 
 DEMAND NOTE. 
 
 Bona fide holder of, there can be no 400 
 
 Check payable to maker of, bank may set-off against 437 
 
 DEPOSITS. 
 
 Agent, in name of, liability of : 
 
 Bank to principal 224 
 
 Principal for overdraft 225 
 
 Certificate of deposit ranks as 248 
 
 Check deposited after banking hours, payment stopped, charged 
 
 to depositor when 286 
 
 Creditors of insolvent bank, depositors share equally with other 323 
 Demand and time notes, set-off against, when bank insolvent . . 444 
 
 Garnishment, check not charged against, subject to 342 
 
 Gift of, to take effect at death of donor, invalid except by will . 323 
 
 Heirs of deceased depositor, payment of balance to 322 
 
 Insolvent bank, note in, depositor may set-off against 444 
 
 Interest on, depositor's status not changed by payment of 323 
 
 Minor son, father cannot check out when made by 324 
 
 Notes : 
 
 Bank's right to set-off, when payable at 441 
 
 Matured, of customer, bank may set-off against 436 
 
 Series of, purchased by bank may set-off against 437 
 
 Special, may be checked out for other purposes 324 
 
 Two names, payable how 325 
 
 Usury, portion of 8 per cent, loan required to be kept on deposit 
 
 with lender, constitutes 475 
 
 DEPOSITOR. 
 
 Bankruptcy of, bank can set-off indebtedness of 236 
 
 Check credited to, by bank on which drawn, cannot be charged 
 back . 272
 
 INDEX TO OPINIONS. 507 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 
 DEPOSITOR continued. 
 Deceased, note of : 
 
 Matured, deposit may set-off against 438 
 
 Unmatured, deposit of, cannot be set-off against 439 
 
 Funds of, insufficient to pay check: 
 
 Bank may decline to make any payment 264 
 
 Collection, held for, bank must pay subsequent check cov- 
 ered by funds .*. . 268 
 
 Presented simultaneously, none should be paid 267 
 
 DIGEST OF DECISIONS. 
 
 See Part II. 
 DILIGENCE. 
 
 Collections, required of correspondent bank making 306 
 
 DIRECTORS. 
 
 By-laws govern election of 242 
 
 Committee, authority to make loans, may delegate to 328 
 
 Discount paper payable to themselves, cannot 330 
 
 Dividends, declare 330 
 
 Indorser on note held by bank, sale of stock, not relieve of lia- 
 bility 328 
 
 Loans made by cashier, approval of by, relieves him 327 
 
 National bank, stock ownership necessary to qualify 326 
 
 Proxy, vote by, cannot 481 
 
 Stock, must hold in own right 326 
 
 DISCOUNT. 
 
 National banks may, at highest legal rate 393 
 
 Officer or director cannot, paper payable to himself 330 
 
 Seven per cent, or more, amount reserved not exceeding 8 per 
 
 cent., not usurious though not in writing 329 
 
 Usury, note of third party, at more than lawful rate, is not .... 478 
 DISHONOR. 
 
 Notice of, mailed when 429 
 
 DIVIDENDS. 
 
 Collateral, stock held as, payable to pledgee 331 
 
 Directors declare 330 
 
 Stock transferred between date of declaration and date of pay- 
 ment, payable to whom 331 
 
 Stockholder, payable to only, or his legal representative ... 332 
 
 DRAFTS. 
 
 Attachment, amount paid on, with order notify bill of lading 
 
 attached, not subject to when discounted by drawer 230 
 
 Bill of lading delivered, order notify shipment, bank must for- 
 ward money received 333 
 
 Collection of, general rules governing liability 301 
 
 Liability of drawer and acceptor of 332 
 
 Messenger of bank, payment to without production of draft, at 
 payer's risk 227
 
 508 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 DRAFTS continued. 
 
 Telegram, forged, bank wiring instruction to pay on authority 
 
 of, must protect bank paying 334 
 
 "With exchange," payable, negotiable 399 
 
 DRAWER. 
 
 Check raised, negligent drawer must stand loss 274 
 
 E. 
 EMPLOYEE. 
 
 Attest paper in bank's favor, may unless pecuniarily interested . 232 
 ERROR. 
 
 Pass book credited through, money may be recovered 409 
 
 ESTOPPEL. 
 
 Wife witnessing transfer of insurance policy is estopped from 
 
 claiming proceeds under 357 
 
 EXCHANGE. 
 
 Checks may be made payable only in 335 
 
 Rate of not fixed 334 
 
 Taxes due the United States, checks for, must be remitted at par 335 
 EXECUTOR OR ADMINISTRATOR. 
 
 Deposits of, personal debts, cannot be set-off against 445 
 
 EXPENSES. 
 
 Current, county authorities cannot borrow for 311 
 
 EXTENSION. 
 
 Accommodation indorsers, not consenting, discharged by 223 
 
 Surety, consent of, necessary to 457 
 
 F. 
 FEE. 
 
 Protest, paper presented before due, notary public not entitled to 430 
 FIXTURES. 
 
 Title retained to, vendor's rights protected how : 337 
 
 FORGERY. 
 Check: 
 
 Bank cannot recover money paid on from : 
 
 Merchant who accepted without notice 259 
 
 Payee of 257 
 
 Illiterate drawer of, bank can recover from merchant 
 
 witnessing mark of 260 
 
 Holder of, acquires no rights under 449 
 
 FRACTIONAL CURRENCY. 
 
 Legal tender, as 364 
 
 FUNDS. 
 
 Checks, insufficient to pay: 
 
 Bank may decline to make any payment 264 
 
 Collection held for, bank must pay subsequent check cov- 
 ered by funds 268 
 
 Drawer liable to holder . . . 277
 
 INDEX TO OPINIONS. 509 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 FUNDS continued. 
 
 National bank, drawer criminally liable 278 
 
 Several, all presented simultaneously, none should be paid . 267 
 
 G. 
 GARNISHMENT. 
 
 Agent, deposit in name of, subject to 341 
 
 Answer : 
 
 Covers what debts 340 
 
 When filed 338 
 
 Cashier's check subject to 341, 342 
 
 Check, bona fide holder of, protected against 261 
 
 Deposit, subject to, against check not charged to account * 342 
 
 Names, several deposits in same or similar, answered how 344 
 
 National banks are subject to 340 
 
 Negotiable instruments are subject to 341 
 
 Safety deposit boxes, contents of, subject to 343 
 
 GIFT. 
 
 Deposit, gift of, to take effect at death of donor, invalid except 
 
 by will 323 
 
 GUARDIAN. 
 
 Stock may vote ward's 449 
 
 H. 
 
 HEIRS. 
 
 Deceased depositor, payment of balance to 322 
 
 HOLDER. 
 
 Cashier's check, good in hands of bona fide 247 
 
 Certificate of deposit, bona fide, protected 251 
 
 Check, bona fide: 
 
 Drawer liable to though lost or stolen 262 
 
 Protected 261 
 
 HOLIDAY. 
 
 Business on, banks may carry on 345 
 
 Note due on, payable when 346 
 
 Stockholders meeting may be held on 346 
 
 Sunday, falling on 346 
 
 HOMESTEAD. 
 
 Continues until death of wife and majority or marriage of chil- 
 dren 350 
 
 Proceeds of property of also exempt 350 
 
 Waiver of existing, invalid 350 
 
 HUSBAND AND WIFE. 
 
 Certificate of deposit issued to husband, payable to wife in event 
 
 of death, must be paid to administrator 248 
 
 Joint mortgage by, valid 379 
 
 Partners in business, may be 351 
 
 Wife's property, pledged by husband as collateral, pledgee with- 
 out notice protected 295
 
 510 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 I. 
 IDENTIFICATION. 
 
 Stranger, customer not liable though check worthless 269 
 
 ILLITERATE. 
 Check of: 
 
 Bank may require witness to signature 263 
 
 Forged, bank may recover of merchant witnessing mark of 
 
 drawer 260 
 
 INDORSEMENT. 
 
 Accommodation, bank has no power to make 353 
 
 Check : 
 
 . Agent, by, bank must look to authority of 223 
 
 Forged, bank is liable for payment of 288 
 
 Collateral, pledged to secure all indebtedness, would cover 300 
 
 Collection, identification of party making, bank may require .... 307 
 In blank : 
 
 Bearer, payable to, and holder may sue in own name 355 
 
 Check, payable to bearer notwithstanding subsequent limited 
 
 indorsement 355 
 
 Indorser, suit against, without joining maker 352 
 
 Liability of indorser 351 
 
 "Pay to any bank or banker" for collection only 353 
 
 Prior indorsements, warrants 353 
 
 INDORSER. 
 Deposit of : 
 
 Bank cannot set-off against 440 
 
 Maker of note, failure of bank to set-off against, not dis- 
 charge 440 
 
 Liability of 351 
 
 Mortgage given to secure, principal debtor cannot enforce 390 
 
 Suit cannot be brought against maker and indorser in county of 
 
 residence of later 396 
 
 Usury in homestead waiver note, will not relieve 472 
 
 INFORMATION. 
 
 Depositor's account, bank should not give as to 264 
 
 INSOLVENCY. 
 
 Collateral, holder of, may collect when bank pledging becomes 
 
 insolvent 299 
 
 Deposit, bank may set-off against unmatured note in event of . . 436 
 INSTALLMENT LOANS. 
 
 Saving banks paying interest on deposits not subject to check, 
 
 may make 356 
 
 INSURANCE. 
 
 Title to property, change in without notice to company void,s 
 
 policy 357 
 
 Wife witnessing transfer of policy estopped from claiming pro- 
 ceeds under 357
 
 INDEX TO OPINIONS. 511 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 INTEREST. 
 
 County warrants do not bear 313 
 
 Days, number allowable in calculating 360 
 
 Decedent, estate of, not exempt from 361 
 
 Deposit, payment of not change status of depositor 323 
 
 Partial payments, method of calculating 360 
 
 Usury, penalty for 471 
 
 J. 
 JOINT NOTE. 
 
 Bankruptcy, proof of not necessary to hold co-debtor 233 
 
 Makers of, must be sued together 395 
 
 JUDGMENT. 
 
 Crop mortgage superior to older 317 
 
 Judgment notes unknown in Georgia 403 
 
 Stock, transfer before, valid 451 
 
 K. 
 KITING. 
 
 Definition of 361 
 
 L. 
 LAND. 
 
 Bond for title, rights of vendor upon default of vendee 238 
 
 Vendor, bond for title given, possession recovered how when 
 
 vendee defaults in payment 240 
 
 LANDLORD. 
 
 Warehouse receipts transferred, judgment against tenant levied, 
 
 rights of parties 486 
 
 LANDLORD'S LIEN FOR RENT. 
 
 Indorsement of rent note, transfers 362 
 
 Rank of 434 
 
 Record of 435 
 
 LANDLORD'S LIEN FOR SUPPLIES FURNISHED. 
 
 Existence of, when furnished by another 362 
 
 LEGAL TENDER. 
 
 Fractional currency as 364 
 
 LIABILITY. 
 
 Collections by banks, general rules governing 301 
 
 LIBERTY BONDS. 
 
 Taxation, cannot be deducted in making returns for 460 
 
 LICENSE TAX. 
 
 State bank, subject to and must register with ordinary 365 
 
 LIENS. 
 
 By-laws, created by: 
 
 Holder of stock without notice cannot be asserted against . 243 
 Purchaser of stock without notice at judicial sale, not af- 
 fected by 244 
 
 Transferrer of stock not criminally liable 244
 
 512 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 
 LIENS continued. 
 
 Cotton, stored, transferree or pledgee of warehouse receipts, 
 
 how far protected against 481 
 
 Junior, holder of, may take up prior debt and sell property 367 
 
 Mortgages, rank of 387 
 
 Sale of personal property not divest senior 366 
 
 Tax, fi. fas., limitation of 467 
 
 LIVE STOCK. 
 
 Loans to dealers in, to buy stock 369 
 
 LOANS. 
 
 Boards of education may make 371 
 
 Cashier, made by, relieved of responsibility when approved by 
 
 directors 327 
 
 Committee, authority to make, directors may delegate to 328 
 
 Live stock dealers, to buy stock 369 
 
 Local school districts, trustees of, cannot borrow money 373 
 
 Married woman, loans to, when valid 378 
 
 Officers, authority to borrow, shown how 368 
 
 Public service corporations, for more than twelve months, rail- 
 road commission must approve 374 
 
 Year, officers power to make conferred for one 367 
 
 LOANS TO PUBLIC CORPORATIONS. 
 
 Education, county boards of 371 
 
 Local school districts, trustees of, without authority to borrow 
 
 money 373 
 
 Municipality, no right to borrow money except to supply casual 
 deficiencies 373 
 
 LOCAL SCHOOL DISTRICTS. 
 
 Borrow money, trustees, cannot 373 
 
 LOSS IN MAILS. 
 
 Addressee, falls on 375 
 
 Check, drawer liable to bona fide holder of 262 
 
 Collateral negligently lost, pledgee liable for value of 296 
 
 LOST INSTRUMENTS. 
 
 Duplicates, protection against 375 
 
 Stock certificates, established how 376 
 
 M. 
 
 MAILS. 
 
 Loss in, falls on addressee 375 
 
 MARRIED WOMAN. 
 
 Debt of another, cannot be surety for 377 
 
 Husband and wife, joint mortgage of, valid 379 
 
 Loans to, valid, when 378 
 
 Note of, used as collateral, valid in hands of bona fide holder 380
 
 INDEX TO OPINIONS. 513 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 MATURITY. 
 
 Paper, postcard notice of, mailable 411 
 
 Protest : 
 
 After maturity, paper not subject to 424 
 
 Date due not date to which extended, proper time for 426 
 
 MESSENGER. 
 
 Payment of draft to, without production of draft, at payor's risk 227 
 
 MINORS. 
 
 Deposit of, parent cannot check out though made by 324 
 
 Stock, father liable for assessment on, bought in name of 381 
 
 MONEY. 
 
 Taxation, subject to 466 
 
 MORTGAGES. 
 
 Additional indebtedness, may cover, when 384 
 
 Bankruptcy, trustee can sell property free of lien of 236 
 
 Bond for title, holder of, may mortgage his interest 385 
 
 Conditional bill of sale to personalty retaining title cannot be 
 
 foreclosed as 308 
 
 Corporation property, superior to pledges of its stock 389 
 
 Debt subsequently created, not covered by 383 
 
 Husband and wife, joint, valid 379 
 
 Indorsement, given to secure, principal debtor cannot enforce . . 390 
 Liens : 
 
 Bond for title subsequently transferred, superior to lien of . 241 
 
 Rank of 387 
 
 Peaches, on crop of , %. 319 
 
 Personalty, residence of mortgagor changed, does not have to be 
 
 re-recorded 386 
 
 Purchase money, holder of, recorded, can subject property in 
 
 hands of second purchaser 385 
 
 Renewals of original note will not affect . . .- 382 
 
 Stock, corporate, not subject to 387 
 
 Year's support superior to 489 
 
 MUNICIPALITIES. 
 
 Bonds, cannot tax their own 465 
 
 Business tax, may levy on state banks 462 
 
 Loans to, valid only when to supply casual deficiencies 373 
 
 N. 
 NAMED BANK. 
 
 Note, providing for payment at, liability of maker and indorsers 401 
 
 NAMES. 
 
 Check, paid to person of the same name as the payee : 
 
 Bank liable 289 
 
 Non-drawee bank liable 290 
 
 Garnishment on bank having several accounts in same or similar 
 
 names, answered how 344 
 
 33
 
 514 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 NATIONAL BANKS. 
 
 Borrowing power of 392 
 
 Director, stock ownership necessary to qualify 326 
 
 Discount at highest legal rate 393 
 
 Garnishment, are subject to 340 
 
 License taxes, not subject to 463 
 
 Officers not punishable under State laws 391 
 
 Stock in State banks and other corporations, cannot own 391 
 
 Taxation of deposits in 464 
 
 NEGOTIABLE INSTRUMENTS. 
 
 Collection of, general rules governing liability 301 
 
 Garnishment, are subject to 341 
 
 NONRESIDENT. 
 
 Deceased, stock of, transferred how 452 
 
 Indorser of note, cannot be sued in same action with resident 
 
 maker : 396 
 
 "NO PROTEST." 
 Slip: 
 
 Attached, though paper sent protestable, bank not liable for 
 
 failure to protest 423 
 
 Detached, draft becomes protestable 423 
 
 Stamped on paper billed protestable, should be protested 422 
 
 NOTARY PUBLIC. 
 
 Attesting paper, not necessary to state when commission expires 233 
 Employee of bank, may attest paper in bank's favor unless pe- 
 cuniarily interested 232 
 
 Stockholder, protest paper* not disqualified to 429 
 
 NOTES. 
 
 Administrator signing, bound personally, but estate not bound . . 229 
 
 Agent, signed by one as, is individual undertaking of the maker 228 
 
 Bankruptcy, waiver of right to go into, not valid 234 
 
 Bill of exchange or draft payable "with exchange," negotiable 399 
 
 Check, given in payment of, not paid surety not released 402 
 
 Collateral security, given as, renewal of debt not relieve maker 
 
 of liability 297 
 
 Contract under which issued, reference to in face of, not affect 
 
 negotiability 397 
 
 Demand note, no one can be a bona fide holder of 400 
 
 Deposit : 
 
 Right of bank to set-off, note payable at 441 
 
 Series of notes, bank purchasing may set-off against 437 
 
 Unmatured, value of clause giving bank right to set-off .... 439 
 
 Holiday, due on, payable when 346 
 
 Homestead, waiving, is a debt dischargeable in bankruptcy 235 
 
 Indorser : 
 
 County of residence of, suit cannot be brought in against 
 
 make'r and indorser 396 
 
 Suit against, without joining maker ' .'.". . '. . '.". . '. 352
 
 INDEX TO OPINIONS. 515 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 NOTES continued. 
 
 Insolvent debtor, bank may set-off against deposit of though 
 
 notes not due 436 
 
 Joint makers must be sued together 395 
 
 Judgment notes, unknown in Georgia 403 
 
 Married woman, notes of, used as collateral, valid in hands of 
 
 bona fide holder . ". 380 
 
 Matured, bank may set-off against deposit 436 
 
 Nonresident indorser cannot be sued in same action with resi- 
 dent maker 396 
 
 Officer, guaranteeing notes for compensation 405 
 
 Partial payments, debtor not entitled to interest on, when 404 
 
 Place of payment, stipulated, liability of maker and indorsers . . 401 
 
 Promissory notes, holder of collateral, is purchaser for value . . 295 
 
 Purchase money notes, good as collateral 401 
 
 Renewal : 
 
 Indefinite, provision for renders nonnegotiable 398 
 
 Notes appearing on face to be on negotiable 399 
 
 Signature, place of surety on, immaterial 404 
 
 Stock in bank, given for, collectible 403 
 
 O. 
 OFFICERS. 
 
 Discount paper payable to themselves cannot 330 
 
 Loans, authority to negotiate, shown how 368 
 
 Note, guarantee of, for compensation 7 405 
 
 Overdrafts, liability for 406 
 
 Resignation, notice of not required 405 
 
 ORDER NOTIFY. 
 
 Draft paid, bill of lading delivered for shipment on, bank must 
 forward money received 333 
 
 ORDINARY. 
 
 License tax, State bank subject to and must register with 365 
 
 OVERDRAFTS. 
 
 Officers, liability for 406 
 
 OVER-PAYMENT. 
 
 Made, through mistake of fact can be recovered 281 
 
 P. 
 
 PAPERS. 
 
 Employee of bank may attest, in bank's favor, unless pecuniarily 
 
 interested 
 
 PARTIAL PAYMENTS. 
 
 Calculation of interest, method of 360 
 
 Debtor not entitled to interest on, when 404 
 
 PARTNERS. 
 
 Husband and wife may be 351
 
 516 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 PARTNERSHIP. 
 
 Deposits of, cannot be set-off against individual debts 445 
 
 Dissolution, notice of necessary to relieve members 408 
 
 PASS BOOK. 
 
 Balancing, equivalent to furnishing statement of account 410 
 
 Entries in, not conclusive against bank 408 
 
 Erroneously credited money may be recovered 409 
 
 Rules of saving bank, printed in, binding on depositor 410 
 
 PAYMENT. 
 Check : 
 
 Bank may refuse if not presented by bank through which 
 
 made payable 273 
 
 Certified : 
 
 After business hours cannot be stopped 255 
 
 Cannot be stopped 254 
 
 Notice to payee, not stopped by 254 
 
 Drawee bank, by final as against "insufficient funds" 270 
 
 Drawer may stop 283 
 
 Indorser for loan cannot stop 287 
 
 Payee cannot stop 285 
 
 Payee notified by telephone or telegraph, good, drawer may 
 
 stop 255 
 
 Stopped : 
 
 Bank pays at its own risk 284 
 
 Holder has right of action against drawer and indorser 285 
 When raised : 
 
 Drawer negligent, must stand loss 274 
 
 Money recoverable from person receiving 274 
 
 County warrants, order of 312 
 
 Deceased depositor, of balance to heirs of 322 
 
 "PAY TO ANY BANK OR BANKER." 
 
 Indorsement for collection only 353 
 
 PEACHES: 
 
 Mortgage on crop of, valid 319 
 
 PENCIL. 
 
 Check written in, fraudulently altered, drawer must stand loss . . 275 
 PLACE. 
 
 Stipulated in note for payment of, liability of maker and in- 
 
 dorsers 401 
 
 PLEDGE. 
 
 Stock, transfer of before judgment valid though not entered . .. 451 
 PLEDGEE. 
 Stock : 
 
 Dividends, entitled to 448 
 
 Entitled to have transferred to him 450 
 
 Warehouse receipts : 
 
 Cotton stored, how far protected against liens 481 
 
 Sell property, right to 488
 
 INDEX TO OPINIONS. 517 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 POST CARD NOTICES. 
 
 Maturity of paper, mailable 411 
 
 POST-DATED CHECK. 
 
 Certified, not paid before date it bears 278 
 
 Paid, right of bank to recover on 279 
 
 POWER OF ATTORNEY. 
 
 Corporate stock, transfer of, should be accompanied by 311 
 
 POWER OF SALE. 
 
 Death of maker of collateral note, not revoke 411 
 
 PREFERRED STOCK. 
 
 Definition of 447 
 
 PRINCIPAL. 
 
 Deposit in name of agent, liability of : 
 
 Bank to 224 
 
 For overdraft 225 
 
 PRIOR INDORSEMENTS. 
 
 Indorsement warrants 353 
 
 PROMISSORY NOTES. 
 
 See Notes. 
 PROTEST. 
 
 Amount involved immaterial 417 
 
 Bankruptcy of party not affect 434 
 
 Branch bank, check drawn on, presentment of 428 
 
 Certificate of deposit not protestable 416 
 
 Check : 
 
 Agent, indorsed by, authority not shown, authorized 418 
 
 Forged, not required 419 
 
 Payee, not indorsed by, not protestable 417 
 
 Payment not 'refused, bank protesting liable for fees and 
 
 damages 431 
 
 Payment stopped, required 415 
 
 Subject to, immediately upon legal presentment 425 
 
 Unsigned, not protestable 420 
 
 Collateral security, paper held as, protestable before principal 
 
 debt due 417 
 
 County warrants not protestable 412 
 
 Dishonor, notice of, mailed when 429 
 
 Fees : 
 
 Check, may be charged to account of drawer of 430 
 
 Notary public, presenting before due, not entitled to 430 
 
 General discussion of 412 
 
 Liability of bank for failure to 424 
 
 Maturity of paper : 
 
 Due date not extended, proper time for 426 
 
 Not protestable after 424 
 
 "No protest" : 
 
 Slip attached, though paper sent protestable, bank not liable 
 for failure to 423
 
 518 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 PROTEST continued. 
 
 Slip detached, draft subject to 423 
 
 Stamped on paper, billed protestable, should be protested . . 422 
 
 Place of payment not stated, presented where 427 
 
 Second, on second presentation of paper, unnecessary 427 
 
 Sight draft, subject to, when 428 
 
 Signature of check, not corresponding with authorized signature, 
 
 protest safer 420 
 
 Stockholder, notary public, not disqualified to protest paper . . . 429 
 
 Sureties not relieved by failure to 423 
 
 Time, presentment for, where place of payment not stated in 
 
 paper 427 
 
 Voucher check, receipt not signed, not protestable 421 
 
 Waived : 
 
 Cannot be after negotiation 432 
 
 Failure to, bank not liable for 433 
 
 May be, in face of paper 432 
 
 Waiver of demand is equivalent to waiver of 432 
 
 PROXY. 
 
 Directors, vote by, cannot 481 
 
 PUBLIC SERVICE CORPORATIONS. 
 
 Loans to, for more than twelve months, railroad commission 
 
 must approve 374 
 
 PURCHASE MONEY. 
 
 Mortgage, recorded, holder of, can subject property in hands of 
 
 second purchaser 385 
 
 Notes, good as collateral 401 
 
 PURPOSE. 
 
 Crop mortgage, advantages of reciting for what given 321 
 
 R. 
 RAILROAD. 
 
 Bill of lading, delivering order notify shipment without sur- 
 render of, liable to transferee 237 
 
 RATE OF EXCHANGE. 
 
 Not fixed 334 
 
 REAL ESTATE. 
 
 Taxation, returned in county where located for 459 
 
 REAL ESTATE COMPANY. 
 
 "Trust," can use word, in name of 470 
 
 "REASONABLE TIME." 
 
 Timber, for cutting and removing 468 
 
 RE-DISCOUNT. 
 
 Statements of bank must show 434 
 
 REGISTRATION. 
 
 Ordinary, license tax, State bank subject to and must register 
 with . 365
 
 INDEX TO OPINIONS. 519 
 
 [For References to Statutes, See Separate Index.] 
 RENEWAL. Page 
 
 Mortgage, renewal of original note not affect 382 
 
 Note: 
 
 Indefinite provision for renders non-negotiable 398' 
 
 Negotiable though appearing on face, to be 399 
 
 Usury : 
 
 Excessive interest, eliminated, relieves from taint of 473 
 
 Loan infected with, usurious 473 
 
 RENT. 
 
 Landlord's lien for : 
 
 Indorsement of note transfers 362 
 
 Rank of 434 
 
 Record of 435 
 
 RESIDENCE. 
 
 Mortgage of personalty, does not have to be re-recorded on 
 
 change of mortgagor's residence 386 
 
 RESIGNATION. 
 
 Notice of officer's, not required 405 
 
 RULES. 
 
 Printed in savings bank pass book, binding on depositor 410 
 
 S. 
 SAFETY DEPOSIT BOXES. 
 
 Garnishment, contents of, subject to 343 
 
 Liability of bank for 435 
 
 SALE. 
 
 Collateral : 
 
 Public or private, without notice, under terms of agreement, 
 
 valid 300 
 
 Valid if terms followed 300 
 
 Personal property, will not divest senior liens 366 
 
 SAVINGS BANKS. 
 
 Installment loans not usurious when 356 
 
 Rules in pass book binding on depositor 410 
 
 SCHOOL WARRANTS. 
 
 Teachers' salaries, valid for 313 
 
 SECURITIES. 
 
 Bankruptcy, given for advances in good faith not preferences, 
 
 although within four months of 234 
 
 Collateral, holder for value is purchaser 295 
 
 SET-OFF. 
 
 Bankruptcy, note of depositor, against deposit, bank may 438 
 
 Demand note against proceeds of, check payable to maker of, 
 
 bank may 437 
 
 Depositor : 
 Deceased : 
 
 Deposit against unmatured note, bank cannot 439 
 
 Matured note, against deposit, bank may 438 
 
 Note of insolvent bank against deposit with, may be 444
 
 520 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 
 SET-OFF continued. 
 Deposits : 
 
 Demand and time with insolvent bank, against notes due, 
 
 depositor may 444 
 
 Executor or administrator against personal debts cannot be 445 
 Note: 
 
 Bank's right to set-off when payable at 414 
 
 Clause giving bank right to set-off, against unmatured, 
 
 value of : 439 
 
 Indorser or guarantor, bank cannot against deposit 440 
 
 Notes : 
 
 Matured notes of customer against deposit, bank may 436 
 
 Series of notes purchased, bank may against deposit of 
 
 maker 437 
 
 Unmatured, against deposit of insolvent debtor, bank may . 436 
 
 Partnership deposit cannot be, against individual debts 445 
 
 Stockholder's deposit against : 
 
 Statutory liability for assessment, cannot be 447 
 
 Stock subscription, cannot be 446 
 
 Surety or indorser, failure of bank to set-off deposit of maker, 
 
 not discharge 440 
 
 SEVEN PER CENT. 
 
 Discount at, or more, amount reserved not exceeding eight per 
 
 cent., not usurious though not in writing 329 
 
 SIGHT DRAFT. 
 
 Protestable, when 428 
 
 SIGNATURE. 
 
 Check, unlike authorized signature, protest safer 420 
 
 Illiterate, bank may require witness to check 263 
 
 Payee of certificate of deposit, bank must know 250 
 
 Place of surety on note, immaterial 404 
 
 SON. 
 
 Minor, deposit of, father cannot check out when made by 324 
 
 SPECIAL DEPOSITS. 
 
 Checked out for other purposes, may be 324 
 
 STATE BANKS. 
 
 National banks cannot own stock in 391 
 
 STATE LAWS. 
 
 Officers of national banks, not punishable under 391 
 
 STATEMENT OF ACCOUNT. 
 
 Balancing pass book equivalent to 410 
 
 STOCK. 
 
 Administrator or other fiduciary may vote 449 
 
 Note given for, collectible by bank 403 
 
 Director : 
 
 Must hold in his own right 326 
 
 Sale of, not relieve of liability as indorser of bank's paper . . 328 
 Dividends on: 
 
 Held as collateral, payable to pledgee 331
 
 INDEX TO OPINIONS. 521 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 STOCK continued. 
 
 Transferred between date of declaration and date of pay- 
 ment, payable to whom 331 
 
 Forged certificate, holder of acquires no rights under 449 
 
 Judgment : 
 
 Pledge before, superior to 451 
 
 Transfer before, valid against 451 
 
 Lien created by by-law cannot be asserted against holder with- 
 out notice 243 
 
 Minor, father 'liable for assessment on, bought in name of 381 
 
 Mortgage, corporate stock not subject to 387 
 
 National bank director, ownership necessary to qualify 326 
 
 Nonresident deceased, stock transferred, how 452 
 
 Pledgee : 
 
 Claim inferior to mortgage on corporations property ... 389 
 
 Dividends, entitled to 448 
 
 Entitled to have transferred to him 450 
 
 Power of attorney in blank transfer authorized 450 
 
 Preferred, common, and watered, definitions of 447 
 
 STOCK CERTIFICATE. 
 
 Lost, established how 376 
 
 STOCKHOLDERS. 
 
 Bank holding stock liable as 454 
 
 Bankruptcy, statutory liability is debt dischargeable in 453 
 
 Books of the bank, liability of those whose names appear on ... 455 
 Deposits of : 
 
 Assessment for statutory liability, cannot set-off against . . . 447 
 
 Stock subscription, cannot set-off against 446 
 
 Dividends payable only to, or his legal representatives 332 
 
 List of, bank not required to furnish to stockholder 453 
 
 Statutory liability, limitation of suits for 455 
 
 Taxation, bank must make return of shares of stock for 461 
 
 STOLEN CHECKS. 
 
 Signed, amounts, etc., fraudulently filled in, drawer not liable on 291 
 STRANGER. 
 
 Check of, worthless, customer's identification not make liable for 269 
 SUIT. 
 
 Transfer of property after filing, valid 469 
 
 SUNDAY. 
 
 Legal holiday, falling on 346 
 
 Sale of collateral advertised in Sunday newspapers, invalid ... 301 
 
 SUPPLIES. 
 
 Landlord's lien for, furnished by another 362 
 
 SURETIES. 
 
 Deposit of maker of note, failure of bank to set-off against, not 
 
 discharge 44
 
 522 IND&X TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 SURETIES continued. 
 
 Extension, consent of, necessary 457 
 
 Married woman cannot be for another 377 
 
 Protest, not relieved by failure to 423 
 
 T. 
 TAXATION. 
 
 Bank books, production of, to tax officers 461 
 
 Bills receivable, subject to 467 
 
 Corporation tax, State banks liable for 462 
 
 Liberty Bonds cannot be deducted in making returns for 460 
 
 Money, subj ect to 466 
 
 Municipalities : 
 
 Bonds, cannot tax their own 465 
 
 Business tax, may levy on State banks : 462 
 
 National banks : 
 
 Deposits in, taxable 464 
 
 License taxes, not subject to 463 
 
 Real estate returned in county where located 459 
 
 Returns for, how made 457 
 
 Stockholders, bank must make return for 461 
 
 TAXES. 
 
 County warrants, whether can be used for the payment of 314 
 
 United States, checks for must be remitted at par 335 
 
 TAX FL FAS. 
 
 Lien of, duration of 467 
 
 TAX RETURNS. 
 
 Banks, how made ' 457 
 
 TELEGRAM. 
 
 Forged, bank wires instruction to pay on authority of, must pro- 
 tect bank paying 334 
 
 TELEGRAPH. 
 Check : 
 
 Cannot be certified by 251 
 
 Payee notified by, good, drawer may stop payment of 255 
 
 TELEPHONE. 
 Check: 
 
 Cannot be certified by 251,253 
 
 Payee notified by, good, drawer may stop payment of 255 
 
 TENANT. 
 
 Judgment against, levied on cotton, warehouse receipts trans- 
 ferred, rights of parties 486 
 
 TIMBER. 
 
 Cutting and removing, "reasonable time" for 468 
 
 TITLE RETENTION CONTRACT. 
 
 Fixtures sold under, vendor's rights protected how 337
 
 INDEX TO OPINIONS. 523 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 TRANSFER OF CORPORATE STOCK. 
 
 Not affected by judgment against vendor 310 
 
 Should be accompanied by power of attorney 311 
 
 TRANSFEREE. 
 
 Warehouse receipts for cotton stored, how far protected against 
 
 liens 481 
 
 TRANSFER PENDING SUIT. 
 
 Valid 469 
 
 TRUST COMPANY. 
 
 Bonds, ordinary negotiable, cannot issue 470 
 
 "Trust," real estate company can use in name , . 470 
 
 TWO NAMES. 
 
 Deposits in, payable, how 325 
 
 U. 
 USURY. 
 
 Balances, interest rate based on, as a general requirement, not 
 
 usurious 475 
 
 Bona fide holder, can be pleaded against rf 477 
 
 Commissions paid, when constituting 476 
 
 Debtor, may recover amount paid, when 477 
 
 Deposit, eight per cent, loan constitutes, portion to be kept with 
 
 lender as 475 
 
 Discount, note of third party, at more than lawful rate 478 
 
 Indorser of homestead waiver note, not relieved by 472 
 
 Interest, deducting in advance, is 478 
 
 Knowledge of, stated in face of paper, immaterial 472 
 
 Penalty for -. 471 
 
 Renewal : 
 
 Act of 1916, new law governs since 474 
 
 Interest, excessive eliminated, relieves from taint of 473 
 
 Loan infected with, usurious 473 
 
 Third party, loan made at lawful rate, to pay usurious debt to, 
 
 not usurious 474 
 
 V. 
 VENDOR OF LAND. 
 
 Bond for title given, possession recovered how when vendee de- 
 faults in payment 240 
 
 Rights of, upon default of vendee holding bond for title 238 
 
 VOLUNTARY DEED. 
 
 Consideration, nominal, and love and affection, intention of 
 parties governs 48 
 
 Void as against purchaser without notice, though recorded . . . 480 
 VOTING BY PROXY. 
 
 Directors cannot 481 
 
 VOUCHER CHECK. 
 
 Protest, receipt not signed, not subject to 421
 
 524 INDEX TO OPINIONS. 
 
 [For References to Statutes, See Separate Index.] 
 
 Page 
 W. 
 WAIVER. 
 
 Homestead, invalid where already existing 350 
 
 Protest, bank not liable for failure to 433 
 
 WAREHOUSE RECEIPTS. 
 
 "Customary charges and advances," includes what 487 
 
 Liens, transferee or pledgee of cotton stored, how far protected 
 against 481 
 
 Pledgee, right of, to sell property 488 
 
 Tenant, judgment against, levied on cotton, rights of parties . . . 486 
 WATERED STOCK. 
 
 Definition of 447 
 
 WIFE. 
 
 Certificate of deposit, issued to husband, payable to in event of 
 death, must be paid to administrator 248 
 
 Husband's deed of gift to, recorded, void as against purchaser 
 without notice 480 
 
 Insurance policy, witnessing transfer of, is estopped from claim- 
 ing proceeds under 357 
 
 Property of, pledged by husband as collateral, pledgee without 
 
 notice protected 295 
 
 "WITH EXCHANGE." 
 
 Bill of exchange draft, or note so payable is negotiable 399 
 
 Y. 
 YEAR. 
 
 Loans, power of officers of bank to make, extends for one 367 
 
 YEAR'S SUPPORT. 
 
 Collateral pledged, superior to claim of creditor on 489 
 
 Deed to secure debt, superior to 489 
 
 Mortgage creditor, superior to claim of 489
 
 A 000 696 447 2