A corporation can be formed only under authority from the sovereign power. In the divided sovereignty as between the general government and the states, it was early settled l that congress had the power to charter a United States bank. A state court has given encouragement to congress by deciding that it had power to pass the national bank act.2 The state legislatures have, of course, power to charter banking corporations. This power, in the absence of constitutional restrictions, may be exercised either by a grant of a special charter, a proposition never disputed, or by the passage of a general law permitting the formation of such corporations. . But the granting of special charters is now forbidden in almost all the states, and congress has forbidden such a power to the territories. In some of the states the legislature is forbidden to pass any banking law unless the law is ratified by a vote of the people. If the law is passed, it ought not to be amended except by a law ratified by popular vote.3 Under such a provision it is questionable whether additional powers not of a banking character can be given to banks unless the law be referred to the people and adopted by them.4

5 See Sec. 29, infra.

1 McCulloch v. Maryland, 4 Wheat. 316.

2 Pollard v. State, 65 Ala. 628. See Farmers' Bank v. Dearing, 91 U. S. 29.

3 Porter v. State, 46 Wis. 375, citing earlier cases. Contra, Smith v. Bryan, 34 I11. 364, citing earlier cases. These last decisions have been condemned by the provision in the Illinois constitution of 1870, which applies to amendments.

4 The Illinois constitution provides (art. 11, sec. 5) that no act authorizing or creating corporations or associations with banking powers, whether of issue, deposit or discount, nor amendments thereto, shall be in force unless ratified by a vote of the people. An act ratified by a vote of the people (1 Starr & Curtis, ch. 16a, sec. 4) provides that banking corporations organized under the act shall have power "to accept and execute trusts." An act not so ratified (1 Starr & Curtis, ch. 32, sec. 89 et seq.) authorized all trust companies, and all companies authorized to accept trusts, to be appointed to execute such trusts as assignee or trustee by deed, or executor or guardian or trustee by will; and the statute further contained numerous provisions as to the performance by such companies of their trust duties. This later act, so far as it applies to banks with trust powers, is amendatory of the banking act The one statute gives the power, the other defines the manner of its execution. As to a banking corporation given trust powers after the constitution of 1870, it seems a palpable evasion to give the bank trust powers by a statute ratified by popular vote, and then to define those powers and the manner of their execution by a statute not so ratified. There is reason in the idea, because the trust operations of a bank might bring upon it liabilities that would destroy the security of the depositors. We may suppose a case where the capital of a bank is $100,000. This with the statutory liability would make the capital $200,000. Suppose the bank becomes trustee for claims aggregating a much larger sum. Conceding that the statutory liability would not go to aid the trust claimants, and also that a deposit is required from trust companies, nevertheless, the trust claims being preferred (see Sec. 235, post), the assets would leave perhaps little for the depositors in case a crash came. But as to banks organized before the constitution of 1870 it would have no retroactive application. Henderson Loan Ass'n v. People, 163 I11 196. Trust companies without banking powers would not come under the provision. Roane Iron Co. v. Wisconsin Trust Co., 74 N. W. R. 818. But as to banks with trust powers, a statute defining the powers ought to have a popular adoption. See the principle of the decision in Van Steen-wyck v. Sackett, 17 Wis. 645; Rusk v. Van Nostrand, 21 Wis. 161.