Opinion
No. 31062.
February 19, 1934.
1. BANKS AND BANKING.
Statute limiting loans by bank to its officers and employees and providing for civil and penal liability of directors, officers, and employees for violation thereof must be strictly construed (Code 1930, section 3812).
2. BANKS AND BANKING.
Bank directors who renewed loan were not civilly liable under statute making directors liable for excessive or dishonest "loans" (Code 1930, section 3812).
APPEAL from Chancery Court of Prentiss County.
C.R. Lacy, of Booneville, and W.I. Stone, of Coffeeville, for appellant.
The law is plain that an officer cannot obtain a loan "without first having obtained the approval of a majority of the board of directors, or of an executive board or discounting committee selected by a majority of the board, such selection to be recorded in the minutes, and the approval of the loan, if obtained, shall be made a part of the records of the bank."
The directors had flown right square in the face of the statute and had not first obtained the approval and having done so and then having farmed this unlawful and legally dishonest paper out to the appellant, they were clearly liable. What could be more clearly dishonest in the law than a note and deed of trust taken in open and flagrant violation of the plain terms of the statute?
Jas. A. Cunningham, of Booneville, for appellees.
The gravamen of the offense is for an officer or director who knowingly effects any loan or makes any loan which has no reference whatever to a renewal of a loan already made.
Murphy v. Penniman, 66 A. 282; State v. Love, 150 So. 196.
A renewal is not a loan.
E.C. Sharp, of Jackson, for appellees.
The statute itself provides that the personal and individual liability of the directors shall be limited to those who participated in or assented to the loan.
The proof in this case shows that this loan to Newhouse was originally made by a former president of the bank and that none of the present officers or directors were executive officers of the bank at the time of the making of the loan originally, and that L.M. Phillips and W.L. Newhouse were the only directors on the board at the time of making the original loan, and there is no proof to show that Phillips participated in the making of the original loan, or assented thereto.
Wynn v. Tallapoosa County Bank, 168 Ala. 469, 53 So. 228.
The wrong in this case, if any, occurred when the original loan was made.
1 Michie on Banks and Banking, sec. 28, page 153; Bramlett v. Joseph, 111 Miss. 379, 71 So. 643; Coffin v. U.S., 156 U.S. 432, 15 Sup. Ct. 394, 39 L.Ed. 481; Coffin v. U.S., 162 U.S. 664, 16 Sup. Ct. 943, 40 L.Ed. 1109; Adler v. U.S., 182 Fed. 464, 104 C.C.A. 608; Mohrenstecher v. Westervelt, 87 Fed. 157, 30 C.C.A. 584.
Argued orally by W.I. Stone, for appellant, and by E.C. Sharp, for appellee.
On the first appeal in this case, Little v. Newhouse, 164 Miss. 619, 145 So. 608, it was alleged by the bill of complaint that the original loan was made on February 25, 1927, and that the note therefor was renewed on January 17, 1928. On the hearing after the remand, it was disclosed by the proof that the original loan was made some considerable time before February 25, 1927, and that the note of that date was merely a renewal of the original loan. It was further shown that none of the directors who are made parties defendants to the bill were directors or officers at the time the original loan was made except W.L. Newhouse and L.M. Phillips; and the testimony fails to show that Mr. Phillips at the time of the original loan "participated in or assented to the same."
The question for determination on this appeal is, therefore, whether the renewal of a loan previously made comes within section 3812, Code 1930, which is a substantial rescript of the statute, as it had existed during the times involved in this transaction. Statutes such as this "are innovations on the common law, and should be strictly construed. In other words, the creditor or party complaining must bring himself within the express terms of the statutes." Bramlette v. Joseph, 111 Miss. 379, 383, 71 So. 643, 645. In State v. Love, 150 So. 196, this court in passing upon this particular statute held that a renewal is not a loan. The officer or director did not borrow the money by the renewal, he had already borrowed it. There are several obvious practical reasons, as well as reasons founded in point of law, which preclude the extension by construction of section 3812, Code 1930, to the renewal of original loans.
Affirmed.