is that the Act of March 25, 1869, by authority | proposition was never approved by the directof which the bonds were issued, did not au- ors of the company and, therefore, that the thorize an election to be held on the question bonds issued to carry this proposition into efof subscribing stock in the railway company, fect were issued without authority, and are, thereat which only legal voters should vote; that the fore, invalid. word "inhabitants," whose approval the Act requires, cannot be construed to mean "voters" electors." or " No copies of the bonds appear in the pleadings in this case. The special finding of the court, to which alone we are authorized to look to ascertain the facts, upon which the judgment of the court rests, declares that the bonds recited on their face that they were issued in pursuance of a vote of the people of said Town, held and taken June 25, 1870." There are two answers to this claim: 1. The Act of March 25, 1869, does not require the approval of the directors of the company to the proposition, as a condition precedent to the subscription of stock and the issue of bonds. 2. The court finds that the bonds contained recit als averring that they were issued by authority of the Act of March 25, 1869, and in pursuance of a vote of the people of said Town, which is, in effect, an averment that the conditions prescribed by said Act to be performed, before said bonds could be issued, had been in fact performed. Whether the conditions precedent had been complied with, was a question which was thorities" who issued the bonds, to decide. The plaintiff, therefore, being a bona fide holder, was not bound to look beyond the legislative Act and the recitals in the bonds. Coloma v. Eaves, 92 U. S., 484 [XXIII., 579]; Marcy v. Oswego, 92 U. S., 639 [XXIII., 749]. The popular signification of the words "people of a town" and "inhabitants of a town" is the same; so that, according to the finding of the court, the bonds recited on their face a sub-in effect left by the law to the "corporate austantial compliance with the requirement of the statute, that the proposition for the subscription to the stock of the railroad company should be submitted to the "inhabitants of the town and affirmed by them." The plaintiff being, as appears from the findings of the court, a bona fide holder of the bonds without notice, is not bound to go behind this recital. But it is not necessary, in order to maintain the validity of the bonds, to rely on this finding. The findings of the court show that the "voters" of said Town, on June 25, 1870, voted in favor of the proposition to subscribe $30,000 to the stock of the said railroad company. We think that, by a fair construction of the Act of March 25, 1869, this was all that was necessary. The Act, it is true, requires the approval of the inhabitants" of the Town. In its broadest sense this would include all sexes, ages and conditions. To require the approval by a vote of the inhabitants" in this sense would be an absurdity. The Act itself is its own interpreter, and shows that this is not its meaning. It provides that, upon the application of ten voters, it shall be the duty of the clerk "to call an election, in the same manner that other elections for said city, town or township are called, for the purpose of determining whether said city, town or township will subscribe to the stock of said railway." The calls for "other elections for said city, town or township" are addressed to the legal voters, and legal voters only are allowed to vote. The Act, though carelessly drawn, clearly meant to restrict the election to the voters, and the approval of the "inhabitants" was to be indicated by the vote of a majority of the legal voters. This approval, the findings of the court show, was obtained. The intimation that the law required two elections for precisely the same purpose; one at which the inhabitants and the other at which the electors of the Town should vote, imputes to the General Assembly an absurdity in legislation which the language of the Act utterly fails to justify. We think, therefore, that this assignment of error is without substantial ground to rest on. It appears from the findings of the court that an election was held on June 25, 1870, on the proposition to subscribe $30,000 to said railroad company. The plaintiff in error claims that this The bill of exceptions shows that the plaintiff in error objected to the admission in evidence of the coupons sued on, because, (1) they were not presented to the proper officers or demand of payment made thereon and notice given to the drawers before suit; (2) because they were detached from and not annexed to any bond, and the absence of the bond was not accounted for, and the same were not negotiable paper,sufficient to base an action upon; and (3) because said coupons never were indorsed, and are not negotiable by delivery. None of these grounds of objection are tenable. The form of the coupons does not change their nature. They are evidences of the sums due for interest on the bonds. The fact that they are made payable at a particular place does not make a presentation for payment at that place necessary, before a suit can be maintained on them. Wallace v. McConnell, 13 Pet., 148; Irvine v. Withers, 1 Stew., 234; Montgomery v. Elliott, 6 Ala., 701. 66 The second and third grounds of objection are answered by the decision of this court in Clark v. Iowa City, 20 Wall., 583 [87 U. S., XXII., 427], where it is said: Coupons for installments of interest when severed from bonds are negotiable, and pass by delivery. They then cease to be incidents and become in fact independent claims; and they do not lose their va lidity if, for any cause, the bonds are canceled or paid before maturity, nor their negotiable character, nor their ability to support separate actions." See, also, Aurora v. West, 7 Wail.. 82 [74 U. S., XIX., 42]; Thompson v. Lee Co., 3 Wall., 327 [70 U. S., XVIII., 177]. It is next alleged for error that the circuit court allowed interest on the coupons sued on to be included in the judgment. The coupons bore interest from the day when they were payable. Aurora v. West, supra, Clark v. Iowa City, supra; Geneva v. Woodruf, 92 U. S., 502 [XXIII., 586]. There is nothing in the Act, by authority of which these bonds, to which the coupons be longed, were issued which takes them out of these decisions, And we have been referred to no legislation in the State of Illinois, which forbids the allowance of interest on this kind of commercial paper. The failure to present the coupons for payment does not prevent the running of interest. If the Town had shown that it had money ready to pay the coupons at the time and place where they were payable, this would have been a defense to the claim for interest. Wallace v. McConnell, supra. But no such proof was offered, nor was it claimed that the fact existed. Finally: the fact that the corporate authorities of the plaintiff in error issued bonds to the amount of $40,000, when the election held on June 25, 1870, only authorized the issue of $30,000, can have no effect on the rights of the defendant in error to his judgment in this case. The finding of the court is, that his bonds recited on their face that they were issued by authority of the Act of March 25, 1869, and in pursuance of the vote taken June 25, 1870. There was nothing in the Act which placed any limit to the amount of stock which the Town might subscribe, and the recitals of the bond gave no notice to the holder that the bonds issued exceeded the amount of stock which the Town had voted to subscribe. There was nothing to arouse the suspicions of a purchaser; nothing to put him on inquiry. As the defendant in error is a bona fide holder for value, the fact that the amount of the bonds, issued by the corporate authorities, exceeded by $10,000 the amount of stock voted for by the inhabitants of the plaintiff in error, on June 25, 1870, can have no influence upon his right to a recovery upon the bonds which he holds. of the Circuit Court must, therefore, be affirmed. We find no error in the record. The judgment True copy. Test: James H. McKenney, Clerk, Sup. Court, U. S. Cited-103 U. S., 697; 104 U. S., 677; 105 U. S., 3. TOWN OF OHIO, Piff. in Err., v. AUGUSTUS FRANK. (See S. C., 13 Otto, 697, 698.) Case followed-interest on bonds. 1. Walnut v. Wade, ante, followed. 2. In Illinois, where bonds by their terms bear interest at the rate of ten per cent per annum, in eatering judgment upon them, interest may be included at that rate, from their maturity until the NOTE-Interest after maturity, at what rate. A note, payable two months after date with interest at five per cent a month, bears interest at the conTract rate after maturity. Kohler v. Smith, 2 Cal., 17; Overton v. Bolton, 9 Heisk., 762; S. C., 24 Am. Rep., 367. Legal rate of interest at date of note regulates rate where none is named until same is paid. Change of law does not affect it. Lee v. Davis, 1 A. K. Marsh, 7; 8. C., 10 Am. Dec., 746; Cox v. Marlatt, 36 N. J., 39; Hubbard v. Callahan, 42 Conn., 524; 8. C., 19 Am. Rep., 564; Seymour v. Continental L. Ins. Co., 44 Conn., 300; 8. C., 26 Am. Rep., 469; Cecil v. Hicks, 29 Gratt., 1; S. C., 26 Am. Rep., 391. Where there is a rate of interest established by law and a rate fixed by the contract, the contract rate is parable after as well as before maturity, and until the debt is paid. Pridgen v. Andrews, 10 Tex., 461; Hopkins v. Critenden, 10 Tex., 189; Thompson v. Pickel, 20 Iowa, 490; Hand v. Armstrong, 18 Iowa, 34; Morgan v. Jones, 20 Eng. L. & E., 454; Etnyre v. Mr. Justice Woods delivered the opinion of the court: This was an action upon bonds issued by the Town of Ohio, the plaintiff in error, and upon certain unpaid coupons attached to them. The bonds were issued by authority of the Act of the Legislature of Illinois of March 25, 1869, referred to in the case of Walnut v. Wade, No. 258, in which the opinion has just been read [ante, 526]. That case decided every question raised in this except one. That question relates to the matter of interest on the bonds. The bonds sued on bore interest at the rate of ten per cent per annum. In entering judgment, the court below included interest upon the bonds at that rate, from their maturity until the date of the judgment. This was assigned for error because, there being no agreement in the bonds to pay interest after maturity, it was claimed that no interest at all should have been allowed on them after they fell due; but that if any interest was allowed it should have been computed only at the rate of six per cent per Illinois fixed the rate of interest at six per cent annum, which is the legal rate in Illinois. per annum, where it was not settled by the contract, but allowed parties to contract for any rate not exceeding ten per cent per annum. At the date of the bonds sued on, the law of No authority is cited by the plaintiff in error in support of the proposition that no interest should have been allowed on the bonds after their maturity. The plaintiff in error relies upon the case of Holden v. Trust Co., 100 U. S., 72 [XXV., 567], to support the claim that only six per cent interest should have been computed on the bonds after their maturity. That case arose in the District of Columbia, where substantially the same regulations on the subject of interest were prescribed by statute as in Illinois. The court in that case said: "The rule heretofore applied by this court, under the McDaniel, 38 Ill., 210; Cox v. Smith, 1 Nev., 171; McLane v. Abrams, 2 Nev., 199; Adams v. Way, 33 Conn., 431; Spencer v. Maxfield, 16 Wis., 178; Pruyne v. Milwaukee, 18 Wis., 368; Findlay v. Hall, 12 Ohio, 610; Cecil v. Hicks, 20 Gratt., 1; S. C., 26 Am. Rep., 391; Kellogg v. Lavender, 15 Neb., 256; S. C., 48 Am. Rep., 339; Jersey City v. O'Callaghan, 41 N. J. L., 349; Hydraulic Co. v. Chatfield, 38 Ohio St., 575; Meaders v. Gray, 60 Miss., 400; S. C., 45 Am. Rep., 414; Shaw v. Rigby, 84 Ind., 375; S. C., 43 Am. Rep., 96. A note, stipulating for a special rate of interest, will, after maturity, draw interest at statutory rate only, unless special rate is expressly agreed to be paid after maturity. Eaton v. Boissonnault, 67 Me., 540; S. C., 24 Am. Rep., 52; Lidwick v. Huntzinger, 5 Watts & S., 51; Cook v. Fowler, 7 L. R. H. L.. 27; Newton v. Kennerly, 31 Ark., 626; S. C., 25 Am. Rep., 592; Pearce v. Hennessy, 10 R. 1., 223; Suffield Eccl. Soc. v. Loomis, 42 Conn., 570; Burns v. Anderson, 68 Ind., 202; S. C., 34 Am. Rep., 250; Goodchap v. Roberts, 42 L. T. N. S., 666, circumstances of this case, has been to give the contract rate up to the maturity of the contract, and thereafter the rate prescribed for cases where the parties themselves have fixed no rate." But the court added: "When a different rule has been established, it governs, of course, in that locality. The question is always one of local law." Messrs. Henderson & Shields, for appel. lant: Shareholders are conclusively charged with notice of the trust character of the capital stock and assets of the association. As against creditors or other stockholders, they cannot hold as to such trust funds the relation of innocent purchasers. They are privies to the trust, and if by any means they become possessed of this trust fund, they hold it subject to all equities of the creditors and other stockholders; and equity will compel them to account to the Re A different rule has been established in Illinois by the decisions of the Supreme Court of that State. In Phinney v. Baldivin, 16 Ill., 108, it was held that a note given for a sum of money, bearing interest at a given rate perceiver for all such trust property. month, continues to bear that rate of interest, as long as the principal remains unpaid. This rule was followed by the court below in computing the amount of the judgment in this case. There is, therefore, no error in the record, and the judgment of the Circuit Court must be affirmed. True copy. Test: Woods v. Dummer, 3 Mas., 308; Gratz v. Reld, 4 B. Mon., 178; Adler v. Brick Co., 13 Wis., 62; Thompson, Liability of Stockh., sec. 13; Sawyer v. Hoag, 17 Wall., 610 (84 U. S.,XXI., 731); Curran v. Ark., 15 How., 304; Bartlett v. Drew, 57 N. Y., 587; Webster v. Upton, 91 U. S., 65 (XXIII., 384); Bk. v. Wulfekuhler, 19 Kan., 60. Laflin did not part with any value. The CorJames H. McKenney, Clerk, Sup. Court, U. S. poration was wholly insolvent; his stock posses SYLVESTER H. LAFLIN ET AL. (See S. C., 13 Otto, 800-806.) Principal chargeable with notice to his agentsale of stock-power of attorney-validity of sale. 1. A principal in a transaction is chargeable with notice of matters affecting its validity, coming to the knowledge of his agent, pending the proceeding. 2. As between the parties to a sale of stock of a bank, the sale is concluded when the certificate is delivered, and the price is paid. It is not necessary, in order to complete the sale, that there be a subsequent transfer of the certificate on the books of the bank. 3. The subsequent filling up of the blank power of attorney indorsed thereon with another name, does not so connect the vendor with the party named as to charge him with the latter's knowledge, and thus affect the previous transaction. 4. The validity of a sale and its completeness must be determined by the relation which the contracting parties, at the time, openly bear to each other. [No. 184.] Argued Jan. 6, 1881. Decided Apr. 18, 1881. PPEAL from the Circuit Court of the United States for the Eastern District of Mis AF souri. The case is fully stated by the court. A note, payable on demand, with ten per cent interest, draws interest at that rate until date of verdict or entry of judgment on default. Paine v. Caswell, 68 Me., 80; S. C., 28 Am. Rep., 21. A contract to pay a certain sum at a future day, with a conventional rate of interest, bears interest at that rate until due, and from that time upon the aggregate of principal and interest, at the legal rate. Briggs v. Winsmith, 10 S. C., 133; S. C., 30 Am. Rep., 46. Where one contracts to pay a sum at a certain date, with interest, the interest prior to the maturity of the contract is payable by virtue of the contract; and thereafter as damages for its breach, and at the statutory rate. Macomber v. Dunham, 8 Wend., 550; U. S. Bk. Chapin, 9 Wend., 471; Hamilton v. Van Rensselaer, 43 N. Y., 244; Ritter v. Phillips, 53 N. Y., 586; S. Cent. R. R. Co. v. Moravia, 61 Barb., 180; Brewster v. Wakefield, 63 U. S., XVI., 301; Bernhisel v. Firman, 89 U. S., XXII., 766; Holden v. Trust Co., 100 U.S., XXV., 567: O'Brien v. Young, 95 N. Y., 428; S. C., 47 Am. Rep., 64. When the amount of the note represents a princi sed no value. The bank got nothing for its money. Laflin did not change his position for the worse by the sale, nor put himself in a position that cannot be retracted. Therefore, he does not occupy the position of bona fide purchaser in point of fact. 2 Ld. Cas. Eq., pp. 75,82,83; McLeod v. Bk.,42 Miss., 99; Curran v. Ark.,15 How.,304; Wright v. Petrie, 1 Sm. & M.Ch.,282; Boon v. Barnes,23 Miss., 136. By statute, Laflin was liable to the creditors to an amount equal to his stock; and was subject to assessment to pay the same. Revised Statutes, U. S., sec. 5151. stock register, required by law to be kept pubHis name appeared as a stockholder on the lic by the Bank, and creditors were induced to credit the Bank on the strength of his name. R. S., U. S., sec. 5210; Rosevelt v. Brown, 11 N. Y., 148; Magruder v. Colston, 44 Md., 349. The transfer of the stock avoiding this liabil ity could not be complete until made on the books of the bank. This was required by its organic law. It was so expressed on the face of the certificates so transferred, and in the power of attorney given by Laflin to make the transfer. R. S., U. S., 5139; Brown v. Adams, 5 Biss., 181; Bowden v. Bk.,1 Hughes,309; Bk. v. Laird, 2 Wheat., 390; Brentv. Bk., 10 Pet.,596; Black v. Zacharie, 3 How., 483; Bowden v. Santos, 1 Hughes, 158; Ins. Co. v. Sax, 2 Tenn. Ch., 507; pal sum, and interest at a rate higher than the legal rate, and nothing is said in the note itself about interest, it bears interest after maturity at the legal rate. Ewell v. Daggs, 108 U. S., 143, XXVII. Where the contract provides that the interest shall be at a specified rate until the principal shall be paid, the contract rate governs until payment of the prin cipal, or until the contract is merged in judgment. Where one contracts to pay on demand "with inter est," or generally with interest, without specifying the time of payment, the statutory rate then exist ing becomes the contract rate and must govern until payment, or at least until demand and actual de fault. O'Brien v. Young, 95 N. Y., 428 ; S. C., 47 Am. Rep., 64. Upon a mortgage, executed May 10, 1876, the prin cipal of which was due May 10, 1881, interest was allowed at seven per cent up to the latter date, and at six per cent thereafter, the statutory rate of interest having been changed Jan. 1, 1880, from seven to six per cent. Bennett v. Bates, 94 N. Y., 354. Weyer v. Bk., 57 Ind., 198; Pinkerton v. R. R. | Co., 42 N. H., 424; Hale v. Walker, 31 Ia., 344; Subin v. Bk., 21 Vt., 353; Shipman v. Ins. Co., 29 Conn., 245; Mfg. Co. v. Smith, 2 Conn., 579; Northrop v. Newton & B. T. Co., 3 Conn., 545; Wheelock v. Kost, 77 Ill.. 296. This is so as to the bank, whether the signing of the power to transfer in blank and delivery of the certificate conferred only an equitable title to the transferee, as held in Union Bk. v. Laird, and cases cited supra, or whether it conveyed both the legal and equitable title, as between the parties. R. R. Co. v. Schuyler, 34 N. Y., 30; McNeil v. Bk., 46 N. Y., 325; Bk. v. Smalley, 2 Cow., 770; Grymes v. Hone, 49 N. Y., 17; Cushman v. Mfg. Co., 76 N. Y., 365. If the transfer was not complete as to the bank, until made on the transfer books, it was not complete as to the creditors of the bank. Thompson, Liability of Stockholders, sec. 220; Bosanquet v. Shortridge, 4 Exch., 699; Walker's Case, L. R., 2 Eq.,554; Burke v. Smith, 16 Wall., 390 (83 U. S., XXI., 361). If the transfer was not complete until regis tered, then Laflin is bound by the knowledge of Geralt, his transfer attorney, upon familiar principles. Laflin is estopped to complain of the result of Geralt's knowledge, as he executed a power to transfer in blank, and is responsible for all consequences of the act. Geralt had a right to insert his name in the blank, and transfer his stock, and thus became Laflin's agent, and Laflin is charged with Geralt's knowledge. Thomp. Liab. Stockh, and cases cited, sec. 240, p. 306; Wade, Notice, sec. 672. Laflin could only transfer his stock to a person capable of taking and holding the same,and who was able to assume and respond in his place, to his liability as a shareholder. The transfer to the bank being prohibited, it was incapable of taking. Being insolvent, it could not respond for Laflin to the creditors. Hence, the transaction stands as if no transfer was made, and the transferer is still a shareholder. If this is true, Laflin cannot retain the bank's funds even as against the bank, much less its creditors and the other shareholders. R. S.,U. S., sec. 5159; Thomp. Liab. Stockh., secs. 205, 215-217, 234-237; Nickalls v. Merry, L. R., 7 H. L.,530; Symon's Case, L. R., 5 Ch., 298; Weston's Case, L. R., 5 Ch., 614-620; Re Imperial Asso., L. R., 9 Eq., 223; Zulueta's Claim, L. R., 5 Ch., 444; Walter's 2d Case, 3 DeG. & S., 244; Webster v. Upton, 91 U. S., 65 (XXIII., 384); Currier v. Slate Co., 56 N. H., 262; Matter of Reciprocity Bk., 22 N. Y., 18; Johnson v. Laflin, 5 Dill., 72. Mr. A. W. Slayback, for appellees: If a shareholder has sold bona fide, and the sale has been recorded upon the transfer book of the corporation, there is no such thing as constructive fraud, but there must be shown actual notice to the shareholder, in order to make him a participator in the misapplication of funds by a corporate officer. Bigelow, Fraud, sec.317; Bargate v.Shortridge, 5 H. L. Cas., 297; Nixon v. Green, 11 Exch., 550; Austin v. Daniels, 4 Den., 299; McCullough V. Moss, 5 Den., 567; Bond v. Appleton, 8 Mass., 472, Child v. Coffin, 17 Mass., 64; Coffin v. Collans, 17 Me., 442; Merrill v. Walker, 24 Me., 237; Hoagland v. Bell, 36 Barb., 57; Mann v. Stanley v. Stanley, 26 Me., 191; Turnbull v. Payson, 95 U. S., 421 (XXIV., 438). The issuing of a new certificate to Britton was immaterial. Field, Corp., secs. 110, 113; Comins v. Coe, 117 Mass., 45. The vendee of shares in a bank can enforce the issue of a certificate to him. Hill v. Bk., 45 N. H., 300; Moses, Mandamus, 181. The sale of the shares was a completed transaction, so far as Laflin was concerned, when he took the checks from Keleher & Co., and surrendered the certificates. The equitable title was then transferred. The legal title was completely vested in Britton, as soon as the transfer book showed record of the transfer. Although neither in form nor character negotiable paper, such stock approximates it as nearly as practicable. Bk. v. Lanier, 11 Wall., 377 (78 U. S.,XX., 174); Bk. v. Bk., etc., 13 Ám. L. Reg. (N. S.), 249. Such record gave notice to the world, and devested Laflin of the legal and equitable title to the stock; from that day, he could not reclaim it, his dominion over it ceased. As to Geralt, whatever power he had from Laflin was exhausted by inserting the name of the vendee in the blank. The power gave him no authority to transfer the stock in any manner not contemplated by his constituent. Denny v. Lyon, 38 Pa., 98; Bk. v. Smalley, 2 Cow., 778. Mr. Justice Field delivered the opinion of the court: The questions raised in this case are important to owners of shares in the national banks, but they are not difficult of solution. The delay in their decision has been caused by the great pressure of business upon the court and not from any doubt as to their proper disposition. The appellant, the complainant below, is the Receiver of the National Bank of the State of Missouri, appointed by the comptroller of the currency on the 27th of June, 1877. The bank failed on the 20th of that month. The defendant, James H. Britton, was its president and had been so for some years. On the 16th of May, 1877, and for some time previously, the defendant, Laflin, was a stockholder of the bank, owning eightyfive shares of full paid stock. He was not a director of the bank, nor had he any personal knowledge of its actual financial condition. It is to be presumed that he regarded that condition as sound, for up to the time of the failure he continued to deposit funds with it for a company of which he was a resident director at St. Louis. On the day mentioned, May 16, 1877, he sold his eighty-five shares to a broker, to whom he delivered his certificate of the stock, with a blank power of attorney indorsed thereon, authorizing the attorney, whose name might be subsequently inserted by the broker, or any other party becoming the owner of the certificate, to transfer it on the books of the bank in such form and manner as might be necessary or required by its regulations. Laflin did not at the time know for whom the stock was bought; information on the subject was withheld from him. He received for the price agreed the broker's check on a banking house in St. Louis, which was paid the same day, on presentation. The broker was, however, in fact acting for Britton, the president of the bank, who represented that he was purchasing for himself or for a party whose name he did not disclose. There was no intimation that he was making the purchase for the bank or in its interest. He gave the broker his individual check on the bank for the price of the stock, which was paid on presentation. Subsequently, but on the same day, he received the certificate and thereupon directed a bookkeeper in the bank, named Geralt, to fill up the power of attorney with his, the bookkeeper's name, and to transfer the certificate to his, Britton's, name as trustee on the transfer book or stock register of the bank, which was accordingly done. He had at the time to his individual credit at the bank several hundred dollars more than sufficient to meet his check. He had for years dealt largely on his own account in its stock, and there was nothing in the transaction between the broker and himself to awaken suspicion as to its legality or propriety. Some days afterwards, on the 29th of the same month, at an election of directors, he represented and voted on the stock purchased. visions of the laws of Congress and the by-laws which may be in force at the time of such transfer." The statute also declares that no association shall be the purchaser of any shares of its own capital stock, unless the purchase be necessary to prevent a loss upon a debt previously contracted. The purchase by the bank, through its president, in the present case, was not made to prevent such a loss. Laflin was not indebted to the bank at the time he sold his shares. The Receiver, therefore, starting with the conceded fact that the purchase by the bank was prohibited and, therefore, illegal on its part, seeks to charge Laflin with the consequences of such illegality, as though he had dealt directly with the bank or had known at the time that the purchase was made for it. He assumes such knowledge by Laflin because the party with whose name the blank power of attorney was filled, to make the transfer of the certificate of stock, was cognizant of the facts. His argument is substantially this: the transfer of the stock is not complete until made on the books of the bank; and the attorney who made it knew that the purchase was by the bank and with its funds; and his knowledge was the knowledge of Laflin. The general doctrine that the principal in a transaction is chargeable with notice of matters affecting its validity, coming to the knowledge of his agent pending the proceeding, is not questioned. Had Geralt, the bookkeeper, been ap pointed by Laflin to make the sale, and had he in negotiating it learned the facts as to the purchase and use of the funds of the bank, there would be ground to invoke the application of the doctrine. But such was not the position of Geralt to Laflin. The sale was consummated, so far as Laflin was concerned, when he delivered the certificate, with the power to transfer it, to the broker. The latter did not mention the name of the principal for whom he was acting. He declined to give it. Laflin had a right, therefore, to treat him as the principal, and if he was competent to make the purchase the sale was valid. Shares in the capital stock of associations, under the national banking law, are salable and transferable at the will of the owner. They are, in that respect, like other personal property. The statute recognizes this transferability, although it authorizes every as It appears, however, that whilst the shares stood on the official stock register in the name of Britton, as trustee, without stating for whom he was trustee, the transaction was entered on the stock ledger in an account with him as trustee of the bank." And by his directions the bookkeeper credited his individual account with the amount of the check given for the shares, and charged the same amount to the "sundry stock account." In other words, the entries on the books, other than the official stock register, showed that the stock was purchased by Britton for the benefit of the bank and paid for with its funds. But neither Laflin nor the broker had any notice of the manner in which the transfer was made, nor of the entries on the books of the bank, nor that the purchase had been made with its funds. The bookkeeper, Geralt, who made the transfer and the entries, had, however, actual knowledge of the facts.sociation to prescribe the manner of their transThe present suit is brought by the Receiver of the bank to set aside the purchase of the eighty-five shares, to compel Laflin to repay the money received, and Britton to retransfer to him the shares on the books of the bank, and to have him declared to be still a stockholder in respect of those shares. fer. Its power in that respect, however, can only go to the extent of prescribing conditions essential to the protection of the association against fraudulent transfers or such as may be designed to evade the just responsibility of the stockholder. It is to be exercised reasonably. Under the pretense of prescribing the The statute declares that the capital stock of manner of the transfer, the association cannot every national banking association shall be di- clog the transfer with useless restrictions or vided into shares of $100 each, and be trans- make it dependent upon the consent of the ferable on its books in such manner as may be directors or other stockholders. It is not necprescribed by its by-laws or articles, and that essary, however, to consider what restrictions every person becoming a stockholder by such would be within its power, for it had imposed transfer shall, in proportion to his shares, suc- none. As between Laflin and the broker, the ceed to all the rights and liabilities of the prior transaction was consummated when the certifi holder. There was no by-law of the associa- cate was delivered to the latter, with the blank tion here, regulating transfers of its shares, but power of attorney indorsed, and the money was each certificate of stock contained this provision: received from him. As between them, the title "Transferable only on the books of the said to the shares then passed; whether that be bank, in person or by attorney, on the return of deemed a legal or equitable one matters not; the this certificate, and in conformity with the pro-right to the shares then vested in the purchaser. |