deemed personal property, and transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association. Every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all the rights and liabilities of the prior holder of such shares; and no change shall be made in the articles of association by which the rights, remedies, or security of the existing creditors of the association shall be impaired.

By this section shares of stock in National banks are distinctly given the legal status of "personal property," and this being the case the owner of any such shares has the same right to dispose of his shares as he has to dispose of other personal property, provided he does so in good faith, and not for the purpose of fraudulently evading the liability which attaches to the stock.

When disposed of in good faith it is only necessary that he should see that his shares are transferred on the books of the bank "in such manner as may be prescribed in the by-laws or articles of association," for this is plainly required by law. The courts have decided that the purpose of this requirement is the translation of the title from one owner to another, and is for the protection of all parties concerned, and also to enable the bank to know who are its actual shareholders. It has also

been decided, however, that this section does not give the association any preferred lien on the shares of a stockholder indebted to it, and that the association has no right, therefore, to refuse to transfer the shares of a stockholder who is indebted to it, and that any restriction of this kind which may be attached to any certificate of stock is void and without effect. In other words, as between the bank and the shareholder, the bank in proceeding to recover a debt from its shareholder has the same rights in respect to his stock as any other party under the same circumstances, but no more. the following decisions on these points: Johnson vs. Laflin, 103 U. S., 800; Bullard vs. Nat. Bank, 18 Wall., 589; Bank vs. Lanier, 11 Wall., 369.

See

SEC. 5140. At least fifty per centum of the capital stock of every association shall be paid in before it shall be authorized to commence business; and the remainder of the capital stock of such association shall be paid in installments of at least ten per centum each, on the whole amount of the capital, as frequently as one installment at the end of each succeeding month from the time it shall be authorized by the Comptroller of the Currency to commence business; and the payment of each installment shall be certified to the Comptroller, under oath, by the president or cashier of the association.

SEC. 5141. Whenever any shareholder, or his assignee, fails to pay any installment on the stock when the same is

required by the preceding section to be paid, the directors of such association may sell the stock of such delinquent shareholder at public auction, having given three weeks' previous notice thereof in a newspaper published and of general circulation in the city or county where the association is located, or, if no newspaper is published in said city or county, then in a newspaper published nearest thereto, to any person who will pay the highest price therefor, to be not less than the amount then due thereon, with the expenses of advertisement and sale; and the excess, if any, shall be paid to the delinquent shareholder. If no bidder can be found who will pay for such stock the amount due thereon to the association, and the cost of advertisement and sale, the amount previously paid shall be forfeited to the association, and such stock shall be sold as the directors may order, within six months from the time of such forfeiture, and if not sold it shall be canceled and deducted from the capital stock of the association. If any such cancellation and reduction shall reduce the capital of the association below the minimum of capital required by law, the capital stock shall, within thirty days from the date of such cancellation, be increased to the required amount; in default of which a receiver may be appointed, according to the provisions of section fifty-two hundred and thirty-four, to close up the business of the association.

These sections provide how the capital stock must be paid in when the bank is organized, and prescribe the course to be pursued by the directors when shareholders fail to pay in their installments at the proper time. It may be noted that while the letter of the law requires only that installments

equal in the aggregate to the proportions required should be paid in at the appointed periods (which may be accomplished if the prepayments of some shareholders offset the arrears of others), the intent of the law appears to be that each shareholder should pay in at least the minimum proportion of his subscription at the periods stated.

It is evident from the use of the words " paid in," in section 5140, that it was contemplated by the framers of the law that the capital stock should be paid in money, or the equivalent of money, and the law in this respect is not complied with, therefore, when the promissory notes of shareholders are accepted from them in payment of their subscriptions to stock.

SEC. 5142. Any association formed under this Title may, by its articles of association, provide for an increase of its capital from time to time, as may be deemed expedient, subject to the limitations of this Title. But the maximum of such increase to be provided in the articles of association shall be determined by the Comptroller of the Currency; and no increase of capital shall be valid until the whole amount of such increase is paid in, and notice thereof has been transmitted to the Comptroller of the Currency, and his certificate obtained, specifying the amount of such increase of capital stock, with his approval thereof, and that it has been duly paid in as part of the capital of such association.

Sections 1 and 2 of an Act to enable National banking associations to increase their capital stock and to change their names or location, approved May 1, 1886.

SEC. 1. That any National banking association may, with the approval of the Comptroller of the Currency, by the vote of shareholders owning two-thirds of the stock of such association, increase its capital stock, in accordance with existing laws, to any sum approved by the said Comptroller, notwithstanding the limit fixed in its original articles of association and determined by said Comptroller; and no increase of the capital stock of any National banking association, either within or beyond the limit fixed in its original articles of association, shall be made except in the manner herein provided.

SEC. 2. That any National banking association may change its name or the place where its operations of discount and deposit are to be carried on, to any other place within the same State, not more than thirty miles distant, with the approval of the Comptroller of the Currency, by the vote of shareholders owning two-thirds of the stock of such association. A duly authenticated notice of the vote and of the new name or location selected shall be sent to the office of the Comptroller of the Currency; but no change of name or location shall be valid until the Comptroller shall have issued his certificate of approval of the same.

Section 5142 originally provided that any contemplated increase of capital stock should be provided for in the bank's original articles of association, the maximum of such increase being determined by the Comptroller at the time of its organization. This provision was amended, however, by section 1, act May 1, 1886, quoted above, which pro