Unless something in the law or the charter forbids it, a bank may loan either upon personal1 or real-estate security.2 There have been in certain states banking schemes which compelled the bank to make loans to its stockholders,3 either upon real-estate security or upon the security of the stock in the bank.4 Such loans were a preferential lien Upon the property mortgaged.5 Such schemes are now considered unsafe banking, and are rarely heard of, except in times of commercial depression, when crude visionaries revive them as if they were new devices.6 "Where the statute forbids certain loans, either by implication or by positive enactment, the legal result must be ascertained in accordance with principles already pointed out.7 Some of these statutes are considered as existing for the protection of the bank,8 and others for the protection of borrowers from the bank.9 Where the statute is made for the protection of the loaning bank, there is no difficulty in permitting a recovery of the loan by the bank, even though the note be void.10 But there is a case which is under a statute making the loan void, and another case which cannot be reconciled with well-understood principles.11 The statutes which are made for the protection of borrowers as against the bank will be considered under the head of usury.12 But in order that a loan may be enforced against either the surety or the maker of the note, it must appear that the note was actually transferred to the bank.13

1 Biscoe v. Tucker. 11 Ark. 145.

2 Bank of Martinez v. Hemme Co., 105 Cal. 876. But where a bank was permitted to loan to a planter, farmer, miner, manufacturer or other person, a merchant on the principle of noscitur a sociis was held not to be included Hanover v. Williams, 79 N. a 129. This is a curious appearance of the vulgar superstition that only those classes which put labor upon a thing by producing it are producers. Of course, labor in getting a thing to a proper market and in place for a sale is just as productive.

3 Instances that may be profitably studied by the vendors of populist nostrums may be found in Louisiana, Florida and Arkansas. See Dawson v. Real Estate Bank, 5 Ark. 283, and the cases in the next two notes.

4 Real-estate security: Citizens' Bank v. Nicolas, 3 La. Ann. 112; Mitchell v. Logan, 34 La. Ann. 998; Union Bank v. Parkhill, 2 Fla. 660. Stock of the bank: Nutt v. Citizens' Bank, 22 La. Ann. 346; Mitchell v. Logan, 34 La. Ann. 998.

5 Haynes v. Courtney, 15 La. Ann. 630; Nutt v. Citizens' Bank, 22 La. Ann. 346.

6 Government banks to lend to farmers are excellent specimens.

7 See Sec. Sec. 32 and 33, ante.