It is settled that a national bank cannot have a lien upon its own shares for claims against its stockholders.1 But in the case of other banks such a lien is provided for in some cases by the charter or the governing statute, in others by a by-law, in others by the words of the stock certificates.2 In the absence of such a provision the bank can have no lien.3 The lien where permitted does not extend to dividends upon the stock.4 Where the lien is provided for by charter or by general statute, which is, of course, a part of the charter, the unregistered transferee of stock takes subject to the lien,5 and the bank may refuse to make a transfer until its claim is satisfied.6 Such a lien is general in its nature. It covers all indebtedness of every kind of the stockholder to the bank - overdrafts,7 individual and partnership liabilities,8 liability as principal debtor,9 whether secured by indorsement or not,10 contingent liability as an indorser.11 But the lien does not reach the indebtedness of an intermediate assignee who is not entered on the books,12 nor the indebtedness of a stockholder contracted after notice to the bank of a transfer by him.13 It has been held that the lien does not give the power to sell.14 The lien seems to apply also on the principle of subrogation for the benefit of the sureties or indorsers of the debtor.15 This lien the bank may waive by permitting a transfer without insisting upon its right.16 One aberrant case has held that the lien is waived by taking security;17 another, that it is waived by issuing certificates without making some mention of the right thereon,18 an absurdly wrong conclusion. "Where a bank releases its lien for a specified time its lien is postponed to any claim created in the released period.19 Where the lien is created by a by-law of the bank, a stockholder is charged with notice of the by-law.20 But where the by-law provided that the certificates of stock should contain on their face notice of the provision in the by-law for the bank's lien that no transfer should be made by any stockholder indebted to the company, and the certificates of stock contained no such notice, and the transferee had no notice of the by-law, it was held that he took by an assignment a good title free from any lien of the bank.21 Where the by-law prevented a transfer so long as the holder of the stock was in arrears or in any form indebted to the bank, the strict construction was adopted that arrears meant unpaid calls, and other indebtedness meant indebtedness other than the stock subscription, and that, therefore, a transfer could not be refused where no call had been made which remained unpaid and where no other indebtedness existed.22 Where the statute provided that holders of bank shares might transfer them unconditionally unless otherwise agreed in the articles of association, a lien in favor of the bank cannot be created by a by-law.23 The doctrine has been ventured by another court that a by-law of this kind does not bind judgment creditors of the stockholders, but that position is, of course, untenable.24 The bank has no lien in the nature of a set-off to apply the dividends accruing upon stock after the death of the stockholder upon notes indorsed by him.25

If stock is transferable on the books, the phrase must mean that by a transfer on the books the title passes, and not till then. This is the legal title, and the unregistered transferee has an equitable title until transfer on the books.

8 Smith v. Northampton Bank, 4 Cush. 1.

9 See 1 .Cook on Corp., sees. 284, 388.

1 Bullard v. Bank, 18 Wall 589. See also Bank v. Lanier, 11 "Wall. 369; Evansville Nat. Bank v. Met. Nat Bank, 2 Biss. 527. But in Maine it appears that the bench and bar have not access to any report of recent date, because that court lately held that a national bank could have a lien on its own shares. Bath Sav. Inst. v. Sagadahoc Nat, Bank, 36 Atl. R 996. The court cited Knight v. Bank, in 3 Cliff., expressly overruled by the Supreme Court, Judge Clifford dissenting, and Bank v. Laird, 2 Wheat. 390. Probably the Maine court preferred to follow Judge Clifford.

2 Jennings v. Bank of Cal., 79 Cal. 323; Wain v. Bank of N. America, 8 S. & R. 89; Vansands v. Bank, 26 Conn. 144.

3 Merchants' Bank v. Shouse, 14 Wkly. Notes Cas. 133; Dana v. Brown, 1 J. J. Marsh. 304. See also Neale v. Janney, 2 Cranch C. C. 86; Duncan v. Biscoe, 7 Ark. 175.

* Brent v. Bank of Washington, 2 Cranch C. C. 517.

5 Union Bank v. Laird, 2 Wheat. 390; Mohawk Nat. Bank v. Schenectady Bank, 151 N. Y. 665; Rogers v. Huntingdon Bank, 12 S. & R. 77; Farmers' Bank v. Iglehart, 6 Gill, 50; Hammond v. Hastings, 134 U. S. 401; Reese v. Bank of Commerce, 14 Md. 271.

6Leggett v. Bank of Sing Sing, 24 N. Y. 283; Downer v. Zanesville Bank, Wright, 477.

7 Reese v. Bank of Commerce, 14 Md. 271.

8 Franklin Bank v. Comm. Bank, 5 Ohio Dec. 339; Mechanics' Bank v. Earp, 4 Rawle, 384

9 Even if pledged for other indebtedness of the stockholder to the bank. In re Peebles, 2 Hughes, 394

10 In re Morrison; Fed. Cas. No. 9839.

11Leggett v. Bank of Sing Sing, 24 N. Y. 283; Bank of Ky. v. Bonnie, 43 S. W. R. 407; Brent v. Bank of Washington, 10 Pet. 596. Contra, Reese v. Bank of Commerce, 14 Md. 27f.

12 Helm v. Swiggett, 12 Md. 194

13Nesmith v. Washington Bank, 6 Pick. 324; Conant v. Reed, 1 Ohio St. 298.

14 Tete v. Farmers' Bank, 4 Brewst. 308. Contra, In re Farmers' Bank, 2 Bland, 394; Hammond v. Hastings, 134 U. S. 401.

15 Klopp v. Lebanon Bank, 46 Pa. 88.

16 Nat. Bank v. Watsontown Bank, 105 U. S. 217; Hill v. Pine River Bank, 45 N. H. 300; Presbyterian Cong. v. Carlisle Bank, 5 Barr, 345.

17 McLean v. Lafayette Bank, 3

McLean, 587; Fitzhugh v. Bank, 3 T. B. Mon. 126, semble.

18 Lee v. Citizens' Nat. Bank, 2 Cin. R, 298,5 Ohio Dec. 21. Contra, Reese v. Bank of Commerce, 14 Md. 271.

19 Bank of America v. McNeil, 10 Bush, 54

20 Tete v. Farmers' Bank, 4 Brewst 308.

21 Bank of Holly Springs v. Pin-son, 58 Miss. 421. This case is certainly wrong. Both transferror and transferee were charged with notice of the by-law. How could either be prejudiced by a failure to state the fact on the certificate? But see note 18 to this section.

22 Kahn v. Bank of St Joseph, 70 Mo. 262.

23 Bank of Attica v. Manuf. Bank, 20 N. Y. 501.

24 Byron v. Carter, 22 La. Ann. 98; Sewell v. Lancaster Bank, 17 S. & R.285.

Sec. 55. Statutory Prohibition Of Transfers

Where the statute prohibits a transfer, as, for example, before the whole amount of subscription has been paid in, no legal transfer of the stock can be made until it is fully paid.1 So where the right of the subscriber to his stock is forfeitable for failure to pay an instalment or call, no right in the stock can be transferred before the instalment is paid, even though the assignee paid the instalment.2