Where there is no statute either expressly or impliedly forbidding the acquisition by a bank of real-estate security, there can be no objection to such a dealing by the bank.1 This right would include the power to take assignments of mortgages.2 The bank, as a mortgagee, is entitled to the same remedies that any other mortgagee would have.3 A bank may take realestate security to cover anticipated liabilities if not forbidden so to do.4 A mortgage given directly to the bank is good, although the statute may require it to be given to an officer.5 But in the case of national banks there is an implied prohibition against loaning on real-estate security, except to secure a pre-existing indebtedness. Originally, in New York under a similar statute, it had been held that a loan made at the time of taking the security was a preexisting indebtedness.6 But the courts at first held that national banks could not take real-estate security, either to secure an indebtedness concurrently created or to be created in the future.7 But this statute was capable of producing so much injustice that it was authoritatively decided that the debtor could not make the objection.8 This ruling reconciles the law upon this subject to the distinction between ultra vires contracts and prohibited contracts stated in section 33, ante. There never was any doubt as to the right of a national bank to take real-estate security to secure a past indebtedness;9 or to take a mortgage made to a third party as collateral security for a loan to the mortgagee;10 or to take an agreement that the mortgage security should .inure to the benefit of the bank, if its debtor, owning the mortgage, should make default.11 The right of the bank to be subrogated to the rights of the mortgagee would not be defeated by the statute.12 It was also held that the bank might take an assignment of a mortgage as collateral security even though the mortgage was made contemporaneously with the assignment.13 A renewal note was held to be not the creation of a new indebtedness, but simply evidence of the past indebtedness,14 which is, of course, the general rule. The effect of the statute against taking real-estate security is reduced to the effect the transaction would have as against the state complaining of a violation by the bank of its charter. Such a statute does not, however, abridge the bank's rights as to the acquisition of personal property,15 nor does it enlarge those powers.16 It should be stated in this connection that a bank has the undoubted right to mortgage its real estate to secure its debts.17

10Mapes v. Scott, 88 111. 352; Libby v. Union Nat. Bank, 99 111. 622.

11 Upton v. National Bank, 120 Mass. 153.

12 Roebling v. First Nat. Bank, 30 Fed. R 744.

13 Wherry v. Hale, 77 Mo. 20; Jackson v. Brown, 5 Wend. 590. If the bank conveys land it may make covenants of warranty. Talman v. Rochester Bank, 18 Barb. 123. If the deed of the bank is insufficient because not authorized, the deed may take effect as an equitable mortgage. Stapylton v. Stockton, 91 Fed. R. 326.

14 National Bank v. Raymond, 29 La. Ann. 355; First Nat. Bank v. Kidd, 20 Minn. 234.

15 Chatauqua Co. Bank v. Resly, 19 N. Y. 369; Sparks v. State Bank, 7 Blackf. 469; Perkins v. Church, 31 Barb. 84; Richards v. Kountze, 4 Neb. 200.

16 Leazure v. Hillegas, 7 S. & R 313. As to national banks the rule is the same. Mapes v. Scott, 94 111. 379.

17 See Zantzingers v. Gunton, 19 Wall. 32.

1 Baird v. Bank of Washington, 11 S. & R 411; Thomaston Bank v. Stimpson, 21 Ma 195; Merchants' Bank v. Harrison, 39 Mo. 433.

2 Trenton Banking Co. v. Woodruff, 2 N. J. Eq. 117.

3 Gage v. Sanborn, 108 Mich. 269; Ahl v. Rhoads, 84 Pa. 319; Lewis v. Jeffries, 86 Pa. 340.

4 Crocker v. Whitney, 71 N. Y. 161. The case was decided wrongly.

5 Kennedy v. Knight, 21 Wis. 345.

6 Silver Lake Bank v. North, 4 Johns. Ch. 370.

7 Matthews v. Skinner, 62 Mo. 329; Kansas Nat. Bank v. Rowell, 2 Dill. 371; Fowler v. Scully, 72 Pa. 456; Wood v. People's Nat. Bank, 83 Pa. 57. The statute could not be evaded by taking the mortgage to an officer of the bank. Fridley v. Bowen, 87 I1l. 151. One case held a statute to be directory. Magruder v. State Bank, 18 Ark. 9.

8 National Bank v. Matthews, 98 U. S. 621; National Bank v. Whitney, 103 U. S 99; Winton v. Little, 94 Pa. 64; Graham v. National Bank, 5 Stew. 804; State Nat. Bank v.

Flathers, 45 La. Ann. 75; First Nat. Bank v. Elmore, 52 Iowa, 541; Oldham v. First Nat. Bank, 85 N. C. 240. The same rule applies to a mortgage to secure future advances. Sessions v. First Nat. Bank, 93 N. Y. 269; National Bank v. Whitney, 103 U. S. 99.

9 Owen v. Merchants' Nat. Bank, 16 Kan. 341. A reorganized state bank might, as a national bank, take the assignment of a note along with the real-estate collateral Sco-field v. State Bank, 9 Neb. 316.

10Fortier v. New Orleans Nat. Bank, 112 U. S. 439; Worcester Nat Bank v. Chieney, 87 III 602; Merchants' Nat. Bank v. Mears, 8 Biss. 158.

% 124. Dealings in negotiable paper. - One of the proper functions of a banking institution being the acquisition of commercial paper, there can be no doubt as to the general authority of a bank to deal in promissory notes;' but some courts have denied the power of a bank to purchase negotiable paper;2 but the better reason and authority is that the power of discounting includes the power of purchasing paper.3 Sometimes the statute prescribes the paper in which pays.3 It may loan borrowed money to its own directors if the loan is not otherwise illegal.4 National banks, for money loaned to them or deposited, may issue certificates of deposit payable on demand or a future day. Such certificates are not post notes within the prohibition of section 5183 of the Revised Statutes of the United States.5 But such certificates must represent an actual loan.6

11 First Nat. Bank v. Haire, 36 Iowa, 443.

12 Matthews v. Abbott, Fed. Cas. No. 9275.

13 First Nat. Bank v. Andrews, 7 Wash. 261. See also Richards v. Kountze, 4 Neb. 200; Oldham v. First Nat. Bank, 85 N. C. 240; Thornton v. Nat. Ex. Bank, 71 Mo. 221.

14 Howard Nat. Bank v. Loomis, 51 Vt. 349.

15 Farmers' Bank v. Detroit, etc. R. R Co., 17 Wis. 372.

16Talmage v. Pell, 7 N. Y. 328.

17 Leggett v. New Jersey, etc. Co., Saxt. 541.

1 State Bank v. Criswell, 15 Ark. 230; Commonwealth v. Comm. Bank, 28 Pa. 391.

2 Farmers' Bank v. Baldwin, 23 Minn. 198; First Nat. Bank v. Pier-son, 24 Minn. 140. See also Sec. 34, ante; Lazear v. Nat. Union Bank, 52 Md. 78.

3Pape v. Capitol Bank, 20 Kan. 440; Atlantic State Bank v. Savery, 82 N. Y. 291; Salmon Falls Bank v. Leyser, 116 Mo. 51; First Nat. Bank a bank shall deal; but such a provision does not prevent the bank taking other paper in order to secure a previous indebtedness.4 A bank has also the undoubted right to transfer its negotiable paper in the ordinary course of business,5 and it may indorse the same,6 and may guaranty the paper for its own benefit.7 One case holds that a bank may not assign its notes,8 but this was due to an absurd construction of an absurd statute. The statute sometimes prohibits a bank from issuing its bills or notes except in certain forms,9 or to circulate as money,10 but even in such case a bank may issue its note in the ordinary course of business.11