His statement to a person who was in treaty to purchase that the bank was not the owner of a certain security in his manual possession as cashier, was clearly within the line of his duty and was binding on the bank.

§ 133. Cashier has inherent power to deal in bills of exchange. A bill of exchange is "A written order from one person to another, directing the person to whom it is addressed to pay to a third person a certain sum of money therein named." 3

"A foreign bill of exchange is one which the drawer and drawee are residents of countries foreign to each other." In this respect the States of the United States are held foreign to each other.*

An inland bill of exchange is one of which the drawer and drawee are residents of the same State or country."

A cashier has the inherent power to buy and sell foreign or inland bills of exchange.

The National Banking Act, by provisions of section 5197, Revised Statutes of the United States, authorizes national banks to purchase, discount or sell a bona fide bill of exchange.

It is not a violation of the National Banking Act for a cashier to discount bills of exchange drawn in good faith against actually existing values, though the amount exceeds the amount, which by the law may be loaned to any one perIt is not construed as money borrowed.

son.

Dealing in bills of exchange is a part of the business of banking and it becomes the duty of the cashier in the purchase and sale of the same to endorse them over to the buyer."

If the bank's charter being a savings bank, forbids this branch of the business, the cashier has no authority to buy and sell bills of exchange, but should he do so, in violation of the charter, or the direction of the board of directors, the presumption of his authority, without notice to the contrary to a customer, will bind the bank.

The cashier of a national bank, being authorized to buy

3 Wood Byles on Bills, 1.

4 Dickens v. Beal, 10 Peters 572; Phoenix Bk. v. Hussey, 12 Pick. 483; Green v. Jackson, 15 Me. 136; Armstrong v. American Ex. Bk., 133 U. S. 433.

5 Ragsdale v. Franklin, 25 Miss. 143.

6 Fleckner v. United States Bank, 8 Wheat. 338; Bank of New Haven v. Perkins, 29 N. Y. 554.

and sell bills of exchange, a national bank may charge the rate of interest allowed by the State, or a rate that may be allowed to State banks of issue.

§ 134. Cashier has charge of personal property.

The cashier, by the very nature of his office, has charge of all the personal property of every nature belonging to the bank; and is held to a strict account for the same.

He has full charge of the cash. Chief Justice Mitchell holds that he should be able to give an account of the same at any time when called upon to do so.

If he is charged with the responsibility of giving an account of the cash of the bank at any time, inherently he is endowed. with the power of paying all the lawful demands when due and presented against the bank. He may open an account with a customer or refuse the same. Being held accountable for the cash, he may open an account, and select a correspondent bank and deposit with such bank such portion of the funds or cash, as in his judgment is prudent and for the best interests of the bank. Having authority to select a correspondent, and establish such a depositary for the bank, he has authority to withdraw the same at any time.

He is also charged with the care and safe keeping of all the notes, bonds, bills and other securities and valuable papers belonging to the bank; and may, when the necessity arises, during the ordinary course of business, sell, transfer and dispose of the same, and, it will be presumed, until the contrary is shown, that he sold the same on behalf of the bank and was authorized to do so by the directors, or that they ratified his act.

The inherent powers of his position, holding him responsible for and, placing in his charge, all the personal property of the bank, and the auxiliary power, when the necessity arises to surrender and transfer notes, fixes a very great responsibility upon him and the office.

Having charge of the personal property of the bank, a person dealing with him in his capacity as cashier, may assume

7 Hawkins v. Fourth National Bank, 49 N. E. 957; Wild v. Bank of Pasa Maquoddy, 3 Mason 505;

Story on Agency, § 114: Jones v. Hawkins, 17 Ind. 550, 559; Ryan v. Dunlap, 17 Ill. 40.

that he has authority to dispose of the property, and in the ordinary transactions and dealings with him, such person is not required to inquire into the limitations or restrictions placed upon him or his authority.

If, however, the transactions of the cashier in the disposition of property belonging to the bank, raises a doubt as to his authority to do and perform the act; it would be the duty of the person dealing with him to investigate and inquire into his authority.

In the case of Franklin Bank v. Stewart, 37 Me., 519, the court in discussing the powers and duties of agents and referring to the power of a cashier, says that: "When a bank presents its cashier as habitually performing certain acts or duties, these may be regarded as official acts or duties, and for the performance of them he may be considered as its general agent.'

8

§ 135. Power to indorse negotiable paper.

The power of the cashier to indorse negotiable paper of the bank is inherent in the office; and it becomes his duty, when so required, to make the indorsement and transfer such paper. The power to transfer paper for collection is one which authorizes the cashier to indorse the same.

The various forms (or language) employed in the indorsement of negotiable paper is important.

There are several variations of the simple indorsement "for collection," evidencing the same intent to retain title in the indorser.

For example, an indorsement in the following form "For collection for account" of a certain person named does not pass the title to the paper."

Nor does the indorsement which reads as follows, "Pay to B or order, for account of (" pass the title of the paper.

Neither do the indorsements, "For collection on account," or, "For collection and credit," pass the title of the paper."1

8 Franklin Bank v. Stewart, 37 Me. 519.

9 First National Bank of Crown Point . First National Bank of Richmond, 76 Ind. 561.

10 White . National Bank, 162 U. S. 658.

11 Armstrong r. National Bank of Boyertown, 90 Ky. 431.

It is held, however, in the case of Fawsett v. National Life Insurance Company, 5 Ill., App. 272, that an indorsement made by the payee in the following form, "Pay to the Second National Bank of M for collection of account of H, executor of A, deceased," passes the title to the paper.

If the indorsement is made by the cashier in his individual capacity, it may become a question whether the transaction is one which will bind the bank. As previously stated in the discussion of the question as to the individual or official signing of the signature of the cashier, an indorsement signed by him in a personal capacity may raise the question of fact. Is the signing a personal or, an official act? If it can be shown that it was a bank transaction, the bank is bound by the language of the indorsement.

§ 136. Indorsement for accommodation.

The cashier of a bank has no inherent authority to indorse paper of another in behalf of the bank, for accommodation. Neither can this power be conferred upon a cashier by the board of directors. The bank has no authority to enter into such transactions.

There are certain limitations placed upon him as cashier in the indorsement of paper belonging to the bank, but he has the right inherently in his office to indorse for collection and discount, but has no authority to transfer judgments standing in favor of the bank. His authority in this respect only extends to negotiable instruments. The president and directors are the only persons who can legally make a transfer of a judg ment; and where the cashier acts as their agent, it should appear in evidence.12.

It has been held in the case of Crockett & Harper v. Young et al, 1 S. M. & M. (Miss.) 214, that the cashier has the authority under the direction of the board of directors to indorse negotiable paper in payment of the bank's debts.

This power, under direction of the board of directors, authorizes the cashier to settle with all legitimate creditors of the bank while the same remains solvent, by assigning to them the negotiable promissory notes of the bank.

12 Holt et al. v. Bacon et al., 25 Miss. 567.

The question, plainly stated, is, can a bank transfer its securities to depositors in settlement of their deposits?

The cashier has no inherent power or implied authority to make transfers or assignments of the bank's negotiable instruments for this purpose, but, under authority by the board of directors, he may assign and deliver negotiable notes to any depositor of the bank in payment and settlement therefor.

In the case of Schneitman v. Noble, 75 Iowa, 120 (39 N. W., 224), the court holds that in the absence of a more special authority, the cashier would be restricted in his power, to bind his principal to the doing of such acts as are usually performed by persons who occupy the position he held.

The court holds in this case that in the absence of proof of special authority which the cashier did not have, he was devoid of the power inherently in his office to settle with depositors, by transferring to them promissory notes or other securities

of the bank.

The opinion denies the inherent power upon the following grounds, that the agent cannot bind his principal "only by acts done in the usual and ordinary course of business."

We find then that the law establishes the rule to be that the cashier of a bank may, without special authority from the board of directors, transfer and indorse the negotiable paper of the bank in its ordinary course of business; but that he is precluded from making such indorsements with the intent and purpose of settling with a creditor or depositor of the bank, and that before such settlements are made, direct or special authority must be obtained, or his acts afterwards ratified by the board of directors.

The rule, as laid down and universally adopted and sus tained by the courts, cannot be questioned, and possibly should not be in any way criticized, but it is certainly open to discussion, as stated, the rule gives the cashier the inherent power to assign and indorse all negotiable paper belonging to the bank in the ordinary transactions which may daily occur.

The cashier of the bank is inherently endowed with the power to receive or reject a deposit. He may also at any time upon demand, and when requested so to do, repay such deposits. He has the inherent power to repay a deposit before