FIRST NAT. BANK OF CONCORD v. HAWKINS, 79 F. 51

PUTNAM, Circuit Judge. This case is based by the plaintiff in error on the proposition that it had no power under the law of its creation to acquire the stock of another national bank as an investment. It is not necessary for us to consider this proposition. It is settled that it had full power to loan on the stock as collateral, or to take it in settlement of a doubtful debt, and' in either case, as incidental thereto, to cause the stock to be transferred into its own name absolutely, if it deemed it for its interest so to do. First Nat. Bank of Charlotte v. National Exch. Bank of Baltimore, 92 U.

S. 122; Bank v. Case, 99 U. S. 628. Therefore, on the face of the transaction, no illegality, appeared, and nothing to advise either the bank whose stock it acquired, or the existing or future creditors of that bank, or the comptroller of the currency, who was their quasi public representative, that the transaction was not within the scope of the unquestionable powers of the plaintiff in error. Under these circumstances, the entire trend of the law is that the plaintiff in error is estopped to deny its liability in this case. Chubb v. Upton, 95 U. S. 665; Pullman v. Upton, 96 U. S. 328, 330; Bank v. Case, 99 U.

S. 628; Scovill v. Thayer, 105 U. S. 143, 149; Anderson v. Warehouse Co., 111 U. S. 479, 483, 4 Sup. Ct. 525. There might arise some exceptional instances where, for special reasons, this estoppel would not apply; as where stock had been issued in excess of the authorized limit (Scovill v. Thayer, ubi supra), or where, in the cases represented by

section 5152 of the Revised Statutes, there are no interests capable of binding themselves either by contract or estoppel, or where the substance of the transaction appears on its face, as in Beal v. Bank, decided hy us and reported in 15 C. C. A. 128, and 67 Fed. 816, although the latter class is not strictly exceptional. But none of those special elements are found here. We have no need to reconcile Burgess v. Seligman, 107 U. S. 20, 2 Sup. Ct. 10, which arose on a statute of Missouri, as the decisions referred to by us apply directly to national banks, and come down to a later date.

The plaintiff in error maintains that the liability sought to be enforced here is merely contractual, flowing out of the acquisition of the slock in question and continuous upon it; so that, therefore, if the original investment was unauthorized, the liability, being still in fieri, cannot be enforced. But this does not correctly state the nature of the liability. There can be no substantial doubt that, whether the purchase of the stock was authorized or not, the plaintiff in error was, after its transfer, by the force of the transaction, its owner, and that no one else could stand as such.

Under these circumstances, the liability sought to be enforced here arises by -orce of the statute, and is not contractual. Keyser v. Hitz, 133 U. S. 138, 151, 10 Sup. Ct. 290. Indeed, the expressions of the supreme court found in Bank v. Case, ubi supra, are so much in harmony with the rules deducible from the practical conclusions of that court in the cases to which we have referred, that we accept them as disposing of this suit.

The court said, at page 633; “There is nothing in the argument on behalf of the appellant that the bank was not authorized to make a loan witb the stock of another bank pledged as collateral security. That is an ordinary mode of loaning, and there is nothing in the letter or spirit of the national banking act that prohibits it. But, if there were, the lender could not set up its own violation of law to escape the responsibility resulting from its illegal action.” The judgment of the circuit court is affirmed, with interest, and with the costs of this court to the defendant in error.