by John Marshall Harlan

“ But will a violation of this provision by the bank relieve from liability one who holds a certificate of its stock and enjoys the right of a shareholder?
The statute forbids a national bank to lend money upon real estate as security. Rev. Stat. § 5137. Nevertheless, this court has frequently held that the borrower cannot escape liability for the repayment of the money so borrowed, nor dispute the right of the bank to enforce the security taken in violation of the statute ”

“ Deweese, above cited, which involved a construction of § 5205, providing that no increase of a bank's capital stock shall be valid until the whole amount of such increase shall have been paid in, and until the Comptroller certifies that the amount of the increase has been duly paid in as part of the capital of the association. This court said: 'The statute does not, in terms, make void a subscription or certificate of stock based upon increased capital stock actually paid in, simply because the whole amount of any proposed or authorized increase has not in fact been paid into the bank. ”

“ Whether a decree based upon the facts set forth in the answer, even if established in a suit in equity, brought against the bank and the receiver after the appointment of a receiver, would be consistent with sound principle or iwth the statute regulating the affairs of national banks and securing the rights of creditors, is a question upon which we do not express an opinion. ”

“ The receiver continued to make the statement that the bank was in a solvent condition up to the time the order of assessment was issued by the Comptroller as alleged in the petition. By reason of the statements and representations made by the receiver the defendant was led to believe, and did believe, that the bank was solvent and would pay all its obligations, and that its embarrassments were due to the complication of business matters, and would only be temporary. ”

“ The defendant, however, contends that the present suit is not embraced by the rule just announced, because, he insists, the purchase by the bank of its stock-which he was induced thereafter by its fraud to purchase from it-was not simply voidable, but was absolutely void; consequently, the sale to him of such stock was void, and he did not, by his purchase and by taking a certificate of stock, become a shareholder within the meaning of § 5151.
It is true that the statute declares that no national bank shall be the purchaser or holder of any of its own shares of capital stock. Rev. Stat. ”

“ The sale of the stock to the defendant after the bank had purchased the same was not unlawful, since it operated to restore that part of the capital that had been retired, and to that extent repaired the wrong which might otherwise have been done to the bank's creditors.' 38 C. C. A. 510, 514, 97 Fed. 865, 868.
It only remains to inquire whether, in any view of the case, the cross petition or counterclaim can be sustained. We think not. ”

“ During such preliminary negotiations Rieger continued to act as president of and for the bank, and all statements made by him during the negotiations were made in his capacity as president of the bank, with its knowledge, consent, and authority. ”

“ Ct. Rep. 324. See also Bennett v. Butterworth, 11 How. 669, 13 L. ed. 859; Thompson v. Central Ohio R. Co. 6 Wall. 134, 18 L. ed. 765; Scott v. Neely, 140 U.S. 106, 35 L. ed. 358, 11 Sup. Ct. Rep. 712 ”