The superintendent of banking indorses his approval upon the certificate, and issues two certificates, one authorizing the corporation to transact the business of banking and the other certifying that such business can be safely entrusted to it. Both certificates are filed and recorded in duplicate in the office of the superintendent of banking and in the office of the clerk of the county where the bank is to be located," and from the time of such filing and recording, or from the time specified in the original certificate of incorporation, the bank becomes a corporation, authorized to transact business as such. FORMATION OF SAVINGS BANKS 16. Savings banks may be incorporated by a special charter, but they are usually incorporated under general laws. They are formed, in some states, by an association of not less than thirteen persons acknowledging a certificate in duplicate and filing it in the office of the clerk of the courts, and in the office of the superintendent or commissioner of banking, or in the office of the auditor general." Notice of intention to organize must be given by publication in a local newspaper." The certificate must set forth: (1) The name by which the corporation shall be known; (2) the place where its business is to be transacted; (3) the name, residence, occupation, and address of the corporators; (4) a declaration that each member of the corporation will accept the responsibilities and faithfully discharge the duties of a trustee in such corporation." It is the duty of the officer in whose office the certificate is filed, whether the superintendent of banking or the auditor general, to ascertain from the best sources of information at his command: (1) Whether greater convenience of access to a savings bank will be afforded to any considerable number of depositors by opening a savings bank at the place designated in the certificate; (2) whether the density of the population in the neighborhood designated for such savings bank, and in the surrounding country, affords a reasonable promise of adequate support for the enterprise; (3) whether the responsibility, character, and general fitness for the discharge of the duties appertaining to such trusts of the persons named in the certificate are such as to command the confidence of the community in which the savings bank is proposed to be located." If the application for a charter be found to be a proper one in these and other respects, a certificate of authorization, or letters patent, are issued by the proper officer, authorizing the persons named therein to open an office for the deposit of savings as designated in the certificate. From the time of the issuing of letters patent, or from the time of the recording of the certificate of authorization in the office of the clerk of the court in the county in which the savings bank is to be located, the persons named and their successors become a corporation, vested with all the powers and charged with all the liabilities conferred and imposed by law upon savings banks." FORMATION OF TRUST COMPANIES 17. Trust companies are usually incorporated under a general law of the state in which they are proposed to be located. In some states, as in Pennsylvania, where they are classed among corporations for profit, their incorporation is the same as that of other corporations of the same class. But in other states, as in New York, the incorporation of trust companies is made the subject of a separate and distinct statute, but as it is in all respects similar either to that of a savings bank, or to that of a corporation incorporated under the statutes providing in general for the chartering of corporations, the procedure by which to effect their incorporation need not be detailed here. 33 Pa. Act of May 20 (1889), P. L. 246, Sec. 3; Gen. Laws of N. Y. (1900), Vol. 3, c. 37, Sec. 103. 34 Gen. Laws of N. Y. (1900), Vol. 3, c. 37, Sec. 105. POWERS AND FUNCTIONS PRINCIPAL FUNCTIONS 18. The principal functions of a bank are to receive and take care of deposits, to issue and circulate notes as money, and to discount commercial paper;" but corporate banking powers are limited to those expressly granted by the charter of a bank, and such others incidental thereto by implication as the courts will deem to be essential to the exercise of the express powers.3 Incorporated companies have no rights except such as are especially granted, and those that are necessary to carry into effect the powers granted. Many powers and capacities are tacitly annexed to a corporation duly created, but they are such only as are necessary to carry into effect the purposes for which it was established. The specification of certain powers operates as a restraint to such objects only, and is an implied prohibition of the exercise of other and distinct powers." As before stated, the term bank implies a place for the deposit of money, as that is the most obvious purpose of such an institution. The importance that the business men of a community should have banks in which to deposit their funds subject to drafts for purposes of trade is just as obvious. Besides, the business of a country demands, for the convenience of transactions, a certain amount of circulating medium. The gold and silver of any country are insufficient to meet this want; it has, therefore, to be supplied in part by paper currency, which circulates as money 36 Am. & Eng. Encyc. Law (2d Ed.), Vol. 3, p. 595, note, citing 23 Ill. 579 (1860); 60 N. Y. 294 (1875). because its value is secured by a quantity of money being actually laid by at the time of its issue to redeem it when presented, or by the names and credit of responsible business men, so that, in either case, the paper can be turned into cash at the will of the holder. The paper currency of a country is issued by its banks, and, since they are required by law to give security to cover the currency issued by them, such money circulates without question, as if it were actually the money which it only represents. By discounting commercial paper, banks facilitate the transmission of money from place to place, and, by enabling bills and notes to pass as money among business men, still further increase the circulating medium of the country. INCIDENTAL POWERS 19. To Borrow Money. - Banks possess certain powers which are more or less incidental or connected with characteristic banking functions. These are the implied powers. to borrow money and to secure such indebtedness by mortgage, or otherwise." "Borrowing money to lend again is a part of the legitimate business of banking. A banker is a dealer in capital, an intermediate party between the borrower and lender. He borrows of one party and lends to another, and the difference between the terms at which he borrows and lends is the source and measure of his profits."" In some states, however, statutes forbid the borrowing of money payable at a future day certain." 20. To Act as Broker. - Among the other incidental powers is the authority to act as broker in negotiating loans for customers;" but this power is held to be no part of a legitimate banking business, unless it be the recognized practice of the bank, or the authority of law has made it so." 21. To Purchase and Hold Property. - A bank has implied authority to purchase personal property, at a sale on 38 Am. & Eng. Encyc. Law (2d Ed.), Vol. 3. pp. 796, 797. 39 15 N. Y. 166 (1857). 40 18 Ill. 563 (1857). 41 Am. & Eng. Encyc. Law (2d Ed.), Vol. 801. 3. p. execution in its own favor, or under a mortgage or pledge of the property taken by it as security for a loan, and to receive chattels in settlement of claims due to it, and it may assign or convey property so acquired and held by it." As to real estate, the general rule applicable to all banking institutions that are incorporated is that they can acquire land only as permitted by their charters or governing statutes. They have the power to acquire land and buildings only for the accommodation of their banking business." Yet, generally, under their charters a bank may acquire and convey whatever real estate "may have been conveyed to it on satisfaction of debts contracted in the course of its dealings, or purchased by it under a mortgage in its favor, or at an execution sale.' The power of a bank to purchase and acquire real property, other than such as may be necessary for the conduct of its business, extends no further than its power to purchase and acquire personal property; that is, the property must be acquired in order to save a debt due to the bank-one contracted in the regular course of its dealings, as by a foreclosure under a mortgage, or otherwise. Property thus taken- in order to save a debt - may be held by the bank for a reasonable time, in order to enable the bank to realize by an advantageous sale of it, and then turn it into money. And, in order to save its claim, a bank may even engage temporarily in a business entirely foreign to its business, and, for that purpose, may do any act that a prudent man would do under the circumstances." ILLUSTRATIONS.-In a Georgia case, a bank, in order to secure a claim, levied on the B Iron Works, and X, the manager of the works, told the bank that if he could work off the raw material on hand, convert it into pig iron and sell it, the debt due the bank could be paid, but he must have supplies to do this, and the bank thereupon furnished supplies to carry on the business. This was held not to be in excess of the powers of the bank, and the court said: "Where a banking corporation acquires possession of property, either by a lien = 43 Am. & Eng. Encyc. Law (2d. Ed.), Vol. 3, p. 798. 4481 Ky. 1 (1883). 45 Am. & Eng. Encyc. Law (2d Ed.), Vol. |