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United States Supreme Court


No. 164

Argued: Decided: March 6, 1917

Messrs. Charles A. Beardsley, R. M. Fitzgerald, and Carl H. Abbott for plaintiffs in error.

Messrs. William H. Orrick, H. A. Powell, T. C. Coogan, and Julius Kahn for defendants in error.

Mr. Chief Justice White delivered the opinion of the court:

McBoyle and his wife sued the bank to recover 599 shares of the stock of the Burnham-standeford Company, [243 U.S. 26, 27]   which it was alleged they had purchased from the bank, and which, after payment of the cash part of the price, had been placed with it as collateral to secure a note evidencing the credit price. It was alleged that, despite a tender of the purchase money due, the bank had refused to deliver the stock. The answer of the bank, while not denying the sale of the stock to McBoyle, charged that the sale had been fraudulently procured by him, and, besides, that the sale was void because it was made by the cashier, who was without authority to do so. It was, moreover, alleged that the sale had been repudiated by the board of directors, and that there had been a tender of the cash price paid and of the note given for the balance.

The supreme court of the state, in reviewing and reversing a judgment of the trial court in favor of the bank, held that there was no proof of fraud in the sale from the bank to McBoyle, and that from a consideration of the authority of the cashier, in the light of the power conferred upon that officer by the board of directors, and the nature and character of the transaction, the cashier had authority to make the sale, and it was therefore valid. The case was remanded for a new trial. 162 Cal. 277, 122 Pac. 458. Before that trial the bank amended its answer by asserting that authority in the cashier to sell shares of stock belonging to the bank could not be sustained without a violation of the National Bank Law. The supreme court, to which the case was again taken, in affirming a judgment of the trial court, awarding the stock to McBoyle, pointed out that while the National Bank Law conferred no authority on national banks to buy stock for speculation or investment, yet such law did not prevent them from taking stock as security for loans made in the due course of business, from realizing on the security in default of payment of the loan, and consequently, when needs be, from buying in the security to protect the bank, and from selling the security after it had been bought in, for the purpose of [243 U.S. 26, 28]   realizing on the same. Thus recognizing the right of the bank, consistently with the National Bank Act, to acquire the stock, and treating the power to sell it as being indisputably vested at least in the board of directors, the court adhered to the opinion which it had previously expressed that the power in the cashier to make the sale in question was susceptible of being deduced by fair implication from the rules adopted by the board of directors for the government of the business of the bank and from the circumstances of the case. 168 Cal. 263, 142 Pac. 837.

The case is here in reliance upon the Federal question supposed to have been raised by the amended answer and the ruling just stated; that is, the asserted violation of the National Bank Act which arose from implying from the rules adopted by the board of directors, authority in the cashier to make the sale. We say this because there is no pretense that the case, as presented below or as here made, raised any question concerning the power of a national bank in good faith, in the due course of business, under the law, to loan on capital stock as collateral and realize on the same. But when the issue is thus accurately fixed, it is apparent that while in mere form of expression it may seemingly raise a question under the National Bank Act, in substance it presents no question of that character whatever, since it simply concerns an interpretation, not of the statute, but of the rules adopted by the board for the government of the bank, involving, in whatever view be taken, no exercise of power beyond that which it is conceded the National Bank Act conferred. To illustrate, if in express terms the board of directors had clothed the cashier with power to make the sale, there can be no question that they would have had authority to do so under the statute,-a conclusion which makes it clear that the determination of whether, by a correct interpretation of the rules adopted by the board, power did or did not exist in the cashier, involves not the statute, [243 U.S. 26, 29]   but the mere significance of the rules. That, coming to this, the contention involves no question under the National Bank Law upon which to base jurisdiction to review, is so conclusively settled as not to be open. Le Sassier v. Kennedy, 123 U.S. 521 , 31 L. ed. 262, 8 Sup. Ct. Rep. 244; Chemical Nat. Bank v. City Bank, 160 U.S. 646 , 40 L. ed. 568, 16 Sup. Ct. Rep. 417; Union Nat. Bank v. Louisville, N. A. & C. R. Co. 163 U.S. 325 , 41 L. ed. 177, 16 Sup. Ct. Rep. 1039; Leyson v. Davis, 170 U.S. 36 , 42 L. ed. 939, 18 Sup. Ct. Rep. 500; Capital Nat. Bank v. First Nat. Bank, 172 U.S. 425 , 43 L. ed. 502, 19 Sup. Ct. Rep. 202. It follows, therefore, that as there is nothing within our competency to review, the writ of error must be and it is dismissed for want of jurisdiction.

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