Commonwealth Trust Co. v. First-Second National Bank

Citations

• 260 Pa. 223
• 103 A. 598
• 1918 Pa. LEXIS 498

Syllabus

<p>Banks and banking — National banks — President—Implied powers — Power of national bank to act as guarantor — Employees’ beneficial fund — Loans to trustees of fund — Liability of bank — Evidence.</p> <p>1. The president of a national bank has no authority to obligate it as guarantor, surety or endorser.</p> <p>2. A national bank has only such powers as are given it expressly or by necessary implication. Its implied powers are only such as are reasonably necessary for its main purpose.</p> <p>3. A national bank has no power to borrow money or to guarantee the payment of money borrowed by trustees for use in the purchase of its stock to be parcelled out among employees as a benefit fund.</p> <p>4. A national bank has no power to purchase its own stock except for the purpose of preventing loss upon a debt previously contracted.</p> <p>5. A national bank cannot be held liable on an alleged guaranty of a loan to the trustee of a beneficial fund created by it for the benefit of its employees, where it does not appear that the corporation received any of the funds obtained by means of the loan, or any pecuniary benefit therefrom.</p> <p>6. A national bank created a benefit fund to which its employees were permitted to subscribe. The plan as adopted by the directors was that the fund should be invested by the trustees and they were allowed to subscribe for 1,000 shares of the bank’s new stock, conditioned upon their procuring and paying the bank cash for the stock. It was provided that the bank could under no circumstances derive a profit from the plan. The president of the bank was one of the trustees. He requested of a trust company a loan of $60,000 and stated that the request was made on behalf of the bank and explained the plan for the employees’ benefit fund, and that the money was to purchase stock of the bank, which would be put up as collateral. He further stated to the trust company that the bank was back of the loan. The bank merged with another bank, which pu