Summary
From the circuit court of Lee county.
This was a suit upon two promissory notes executed by appellee to a national bank. The bank was placed in the hands of a receiver, appellant being appointed receiver. The second, fourth, and amended 'sixth pleas all averred, in variant forms, that the notes were executed for subscriptions to the capital stock of the bank. ' The plaintiff demurred to each of these pleas, and the court below overruled the demurrers. Judgment was rendered for defendant, and plaintiff appealed.
The question is as to the validity of a note given for capital stock of a national bank. Is such a note valid and collectible ? Our contention is that such a note is valid and collectible between the parties. The sections of the revised statutes of the United States upon which the defense is based are sections 5140, 5141, 5142, and 5201. It will be observed that while these sections do by implication forbid transaction of the kind set up in the pleas, there is no penalty of the kind here sought to be set up provided for by any of said sections. Gold Mining Go. v. First National Bank, 96 U. S., 640. This case refers to'and approves Harris v. Bvmiolds, 12 How. (U. S.), 79, wherein the court held that the whole statute must be looked to; that when .negroes were carried into a state and sold, contrary to a statute, that the purchaser would be forced to pay notwithstanding the statute; that the rule was allowed not for the benefit of either party to the illegal contract, but altogether upon grounds of public policy. So the statute of the United States prohibits a national bank from taking mortgages for securities for loans. But when the mortgagor has given the mortgage, even to secure future advantages, he cannot enjoin its foreclosure. National Bankv. Matthews, 98 U. S., 621; National Bank v. Whitney, 103 U. S., 99. In the .case at bar the statute only by implication forbids transactions of this kind, and provides no such penalty as is insisted on. Fortier v. N. O. Bank, 112 U. S., 439; Oates v. National Bank, 100 U. S., 239; National Bank v. Gase, 99 U. S., 628; Logan County Bankv. Townsend, 139 U. S., 67; Thompsons. St. Nicholas National Bank, 146 U. S., 240.
The law governing the case is that of the acts of congress on the subject of national banks, and the question, therefore, arises as to the validity of a note given for the capital stock of such a bank. Is such a note valid and collectible? The law is emphatic that no such associations shall begin and carry on business unless they have a certain amount of capital in cash paid in, and if, at any time, this capital shall be reduced by failure of some shareholder to pay any assessment and the forfeiture of his stock on that account, so that the capital stock shall be below that required by the national banking laws, then it must in so many days, be made up to the original amount — the minimum — or the association shall be placed into the hands of a receiver. So, it can be clearly seen that the policy of the law, in relation to these associations, is that the capital stock shall be as is represented — so much cash money. To permit a man to give his note for the capital stock of such associations, would be a fraud upon the law requiring them to have so much capital. If one man can pay, so to speak, in notes for his capital stock, all may do the same, and then we would have an association, under this law, strict as is its provisions, doing business on nothing but the notes of the shareholder of the association. It seems to me that there cannot be any proposition plainer than this, that there cannot be a plain violation of the act of congress on this subject, and then permit the offending association to reap the fruit of such acts. This would be a premium on fraud and a violation of law. Bank v. Lanier, 11 Wall., 369; Bullard v. National Bank, 18 Wall., 589; National Bank v. Stewart, 107 U. S., 676.
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
