Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/225

 PART II.] ACTS WITHIN THE CORPORATE POWERS. [§ 24] . the same to have had a fraudulent inception. 1 Accordingly, if a cashier takes securities for his bank from a trustee to secure a loan made to the trustee individually, knowing that the trus- tee holds them in trust, the bank is affected with the knowledge of its cashier. 2 § 241. But the duties and powers of a cashier, as recognized judicially, are restricted to the transaction of the ordinary business of the bank and to the care and p^ifr^ management of its affairs in the usual way. 3 Thus, strictedto . „ ... transac- tbe cashier (and president) of a bank cannot bind it tion of by their agreement with an indorser of a promissory business. note that he shall not be liable to the bank on his in- dorsement. 4 The cashier has no power to bind his bank as an accommodation indorser on his individual note; and the payee failing to prove that the cashier had authority to make the in- dorsement cannot recover against the bank. 5 Likewise a cashier Bank v. Penland, 101 Tenn. 445. As to declarations of cashier, see Xenia Bank ». Stewart, 114 U. S. 224. 1 Fall River Union Bk. v. Sturte- vant, 12 Cash. 372. So, by the knowl- edge of a director who takes a note. Nat. Sec'y Bank v. Cushman, 121 Mass. 490. 2 Loring v. Brodie, 134 Mass. 453. 8 First Nat. Bank v. Ocean Nat. Bank, 60 N. Y. 278. The word " or- dinary," as here used, will be seen to be more restricted in its meaning than as applied to transactions falling within the powers of directors. See §223. Pet. 51; Bank of the Metropolis v. Jones, 8 Pet. 12. See Cocheco Nat. Bank v. Haskell, 51 N. H. 116. Com- pare Payne v. Commercial Bank, 6 Smedes & M. 24; Hodge v. First Nat. Bank, 22 Gratt. 51; Ryan v. Dunlop, 17 111. 40. So, the plea that before indorsing, the cashier and a director falsely and fraudulently assured the indorser that the drawer was good, and that it would be safe to indorse, is bad; as such representations are not within the course of the duties of such officers, and therefore, though wilfully false, will not affect the rights of the bank. Mapes v. Second Nat. Bank, 80 Pa. St. 163. "A cashier, as such, has no power to ac- cept a note signed by two parties only, in payment and discharge of a note upon which another party was also bound with the two, so as to relieve such third party from his indebtedness to the bank. Such an act does not fall within the well- known range of powers and duties naturally and necessarily pertaining to the office of cashier. He cannot virtute officii release a surety upon a note even though the bank holds other security to which it might re- sort, nor make collateral contracts or agreements of any kind." Ecker v. First Nat. Bank, 59 Md. 291, 303. A cashier has no authority to release a debt. Delta Lumber Co. v. Williams, 73 Mich. 86. 5 West St. L. Savings Bank v. Shawnee County Bank, 95 U. S. 557. 205
 * Bank of the U. S. ». Dunn, 6