Opinion of the Court.

Barclay had no authority, right or power to make for or on account of defendant the contract set out in the petition; that defendant had itself no right, power or authority to make it; and that it was a mere gambling transaction, a mere dealing in and betting upon the future value of the bonds, and unauthorized by the defendant's charter or by law.

The general demurrer to the petition was overruled. The plaintiff filed a demurrer to the fourth and fifth paragraphs of the answer, which was overruled as to the former and sustained as to the latter.

The plaintiff filed a reply to the third and fourth paragraphs of the answer, denying all the allegations of each, and charged that Barclay was engaged in June, 1879, and after that time, in an effort to depress the value of bonds, not on his own account, but as cashier and director of the bank, with its knowledge and consent, the bank endeavoring to enrich itself by depressing the value of the bonds of the county. To this reply the bank filed a rejoinder.

The jury returned a general verdict for the plaintiff, and also made a special finding in answer to specific questions. In response to the question, "Did Townsend sell the bonds to the defendant bank or to Hugh Barclay, Jr.," the jury answered, "To defendant bank;" and to the question "What was the contract made at date of sale," the answer was, "That defendant would replace the bonds to plaintiff at the price paid at that time or less."

Among other instructions given to the jury for the plaintiff was the following: "The court instructs the jury that if they believe from a preponderance of the proof that the plaintiff Townsend sold to the defendant, the Logan County National Bank, the bonds mentioned in the petition, and the defendant agreed and promised on demand to return the bonds to the plaintiff at the price paid, or less, and upon demand refused to do so, they must find for the plaintiff the difference between the price paid and the value of the bonds at the time the demand was made." The court refused to give the following instruction asked by the bank: "That the defendant is a national banking association, capable of exercising only such

Opinion of the Court.

powers as are expressly or impliedly conferred upon it by its act of incorporation, and that the power to buy and sell municipal bonds for purposes of speculation, or to engage in the purchase or sale of such securities for the purpose of manipulating or controlling their market value, is not conferred upon the defendant bank by the provisions of its charter; and that if the jury believe from the evidence that the cashier Barclay paid Townsend the full market value for his bonds, and bought them for the sole purpose of enabling him or the bank to manipulate or control the price of said bonds in the market for speculative purposes, they must find for the defendant, provided that they shall believe that the plaintiff at the time knew that the bonds were to be used for such purposes." Other instructions were given and refused, but none of them distinctly involved the question of the liability of the defendant to the plaintiff under its charter and the act of Congress relating to national banking institutions.

The Court of Appeals of Kentucky thus disposed of that question: "The last ground is that the contract is ultra vires the corporate authority of the bank, in direct violation of its 'charter, and, consequently, is not such an obligation as will charge the bank or make it to any extent, either in law or conscience, liable in damages or otherwise for breach of the conditions. It seems to us that if the proposition be conceded it would not avail appellant, for if it had no authority under its charter to purchase the bonds it cannot, in justice and conscience, refuse to abide by the judgment in this case, which involves nothing more than the return of the bonds and receipt of what it paid for them. To do less cannot be justified without permitting it to profit by its own wrong in violating the law of Congress under which it exists. Probably according to a fair construction of the national bank act, the power is not expressly given to appellant to purchase and deal in bonds of the character in question; but neither is it expressly prohibited by the act to do so, and there is a proper and well recognized difference between the case of an engagement made by a corporation to do an act expressly prohibited by its charter or some other law and a

Opinion of the Court.

case where legislative power to do the act has not been granted.' See Hitchcock v. Galveston, 96 U. S. 341, and numerous authorities there cited. In that case the following from the State Board of Agriculture v. The Citizens' Street Railway Co., 47 Indiana, 407, was quoted with approval: 'Although there may be a defect of power in a corporation to make a contract, yet if a contract made by it is not in violation of its charter or of any statute prohibiting it, and the corporation has by its promise induced a party relying on the promise, and in execution of the contract, to expend money and perform his part thereof, the corporation is liable on the contract.' If the special findings of the jury in this case be taken as true, there needs no argument to show that the rule thus laid down applies to the contract we are considering, and to adopt the opposite of that rule would invite a disregard of the provisions of the national bank act, as well as fraud and bad faith towards those dealing with a corporation existing under it."

Upon the question raised by the defendant in error as to the jurisdiction of this court, it is sufficient to say that the fifth paragraph of the answer, to which a demurrer was sustained, and one of the defendant's requests for instructions, which was refused, proceeded alike upon the ground that the bank was forbidden by the national banking act to make the contract or agreement set out in the petition, and, consequently, that it was exempted from liability to the plaintiff upon any ground whatever. The exemption or immunity thus specially set up in the court of original jurisdiction, and reasserted in the Court of Appeals of Kentucky, having been denied by the judgment, the authority of this court to reexamine that judgment, so far as it determines that no such. exemption or immunity as that claimed by the bank, under the act of Congress, exists, is entirely clear. That the Court of Appeals of Kentucky may have held the bank liable independently of the question whether the act of Congress forbade or did not forbid a national bank from making such a contract as the petition recites, does not show a want of jurisdiction in this court; for the defendant's contention was, and

Opinion of the Court.

is, that consistently with the act of Congress it cannot be held liable to the plaintiff upon any ground. So that the judg ment necessarily determined, adversely to the bank, that it had no such exemption or immunity as it asserts in virtue of the national banking act. It is not a case-if the bank be right in its contention in which the judgment can rest upon some ground of general law, adverted to by the state court, and sufficiently broad to support it without reference to the act of Congress as interpreted by the bank. We must, therefore, inquire whether the act of Congress protects the bank from liability to the plaintiff in any aspect in which his claim. may be regarded.

Whether the agreement set out in the petition for the sale of the plaintiff's bonds was made by the cashier of the bank upon his individual account, or for the bank, is not a question before us. That was conclusively determined by the finding of the jury. We have no authority to review the finding upon that point, and must assume, in conformity with the finding, that the bonds were sold by Townsend to the bank, at a given price, and that the bank agreed to replace them to him at the same or a less price, upon demand.

It is undoubtedly true, as contended by the defendant, that the national banking act is an enabling act for all associations. organized under it, and that a national bank cannot rightfully exercise any powers except those expressly granted by that act, or such incidental powers as are necessary to carry on the business of banking for which it was established. The statute declares that a national banking institution shall have power "to exercise, by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange and other evidences of debt; by receiving deposits; by buying and selling exchange, coin and bullion; by loaning money on personal security; and by obtaining, issuing and circulating notes according to the provisions" of Title 62 of the Revised Statutes.

Now, the contention of the bank is that the purchase of the

Opinion of the Court.

bonds in question, at a named price, under an agreement to replace them to the plaintiff at the same or a less price, upon the demand of the plaintiff, was not banking business in any proper or legitimate sense; certainly not of the kind it was authorized by the statute to conduct. In the view we take of this case, it is unnecessary to determine that question, or to discuss the authorities cited to show that such a contract as the one set out in the petition is not embraced by any of the clauses of the statute specifying the different modes by which a national bank may carry on the business of banking. If it be assumed, in accordance with the bank's contention, that it was without power to purchase these bonds, to be replaced to the plaintiff, on demand, the question would still remain, whether, notwithstanding the act of Congress defining and limiting its powers, it was exempt from liability to the plaintiff for the value of the bonds, if it refused, upon demand, to replace or surrender them at the same or a less price.

It would seem, upon defendant's theory of its powers, to be too clear to admit of dispute that the act of Congress does not give a national bank an absolute right to retain bonds. coming into its possession, by purchase, under a contract which it was without authority to make. True, it is not under a duty to surrender possession until reimbursed the full amount due to it; it has the right to hold the bonds as security for the return of the consideration paid for them; but when such amount is returned, or tendered back to it, and the surrender of the bonds is demanded, its authority to retain them no longer exists. And from the time of such demand and its refusal to return the bonds to the vendor or owner, it becomes liable for their value upon grounds apart from the contract under which it obtained them. It could not rightfully hold them under or by virtue of the contract, and at the same time refuse to comply with the terms of purchase. If the bank's want of power, under the statute, to make such a contract of purchase may be pleaded in bar of all claims against it based upon the contract — and we are assuming, for the purposes of this case, that it may be it is bound, upon demand, accompanied by a tender back of the price it paid, to surrender the