[dashboy]

National bank has no right to deal in negotiable paper except in manner provided by law, which is limited to discounting such paper, and it cannot trade negotiable paper held by it for other paper. > National Bank of the Republic v. Price, Utah 1923, 234 P. 231, 65 Utah 57.

The purchase of a note from the payee, with the latter's indorsement, is a purchase by discounting in the usual course of business, and is not a purchase by barter and sale, as would be the case if the note was taken without indorsement, or by indorsement without recourse. > Nicholson v. National Bank of Newcastle, Ky.1891, 17 S.W. 627, 13 Ky.L.Rptr. 478, 92 Ky. 251.

This section contemplates loans and discounts as understood in commercial law and according to the known usage and practice of banks. Greenville First Nat. Bank v. Sherburne, 1884, 14 Ill.App. 566. See, also, > Merchants' Nat. Bank v. Sevier, C.C.Ark.1882, 27 Alb.L.J. 447, 14 F. 662.

The words, "by discounting and negotiating promissory notes, drafts, bills of exchange," do not limit the mode of exercising the "incidental powers" necessary to carry on the business of banking, so that under this section a national bank may carry on banking "by discounting and negotiating promissory notes, drafts, bills of exchange," etc., and may exercise "all such incidental powers as shall be necessary" for that purpose. > Shinkle v. First Nat. Bank of Ripley, Ohio 1872, 22 Ohio St. 516.

In an action by a national bank to recover on a note held by it, it alleged in the petition that the holder of the note "sold, assigned, transferred, and discounted" the note to the plaintiff. Held, that the words "sold" and "discounted" were intended by the pleader to have the same meaning the word "sold" being used to convey the idea of a transfer by discount, according to the usages of business and the regular rates of discount, rather than a barter and sale. Van Leuven v. First Nat. Bank, 1873, 54 N.Y. 671.

> 112. Exchange

Exchange of negotiable paper by national banks, made in good faith and in regular course of business, is protected just as purchase would be, under this section. > National Bank of the Republic v. Beckstead, Utah 1926, 250 P. 1033, 68 Utah 421.

Exchange of notes belonging to a national bank for other notes held by another bank is ultra vires. > Stockmen's Nat. Bank v. First Nat. Bank, Idaho 1923, 221 P. 150, 38 Idaho 395.

> 113. Purchase

The right to "discount and negotiate" includes the right to buy. > Morris v. Third Nat. Bank, C.C.A.8 (Mo.) 1905, 142 F. 25, 73 C.C.A. 211, certiorari denied > 26 S.Ct. 762, 201 U.S. 649, 50 L.Ed. 905. See, also, > Danforth v. National State Bank, N.J.1891, 48 F. 271, 1 C.C.A. 62, 17 L.R.A. 622; Union Nat. Bank v. Rowan, 1885, 23 S.C. 339, 55 Am.Rep. 26; Atlas Nat. Bank v. Savery, 1879, 127 Mass. 75; National Pemberton Bank v. Porter, 1878, 125 Mass. 333, 28 Am.Rep. 235; > Smith v. Exchange Bank, 1875, 26 Ohio St. 141; Rochester First Nat. Bank v. Harris, 1871, 108 Mass. 514.

This section confers no authority on national banks to acquire notes, drafts, etc., otherwise than by way of discount, for the term "negotiating" merely concerns disposal by a bank of the notes, etc., it may have acquired, and authorizes the transfer thereof. > Danforth v. National State Bank, C.C.A.3 (N.J.) 1891, 48 F. 271, 1 C.C.A. 62.

National bank had power to purchase warrants issued by sewer district at their face value. > State ex rel. Boatmen's Nat. Bank of St. Louis v. Webster Groves General Sewer Dist. No. 1 of St. Louis County, Mo.1931, 37 S.W.2d 905, 327 Mo. 594.

A purchase by a national bank of notes of a construction company was not ultra vires, where it appeared that the notes were secured by stocks and bonds of a railroad company and that the construction company was formed by the first mortgage bondholders of the railroad company pursuant to a reorganization plan after the purchase by them of the railroad property on a foreclosure sale. > National Bank of Commerce in St. Louis v. Francis, Mo.1922, 246 S.W. 326, 296 Mo. 169, certiorari denied > 43 S.Ct. 362, 261 U.S. 618, 67 L.Ed. 829.

Purchase by a national bank of notes issued by a construction company organized by railroad first mortgage bondholders, acting under a reorganization agreement after foreclosure of the mortgage, held not ultra vires under this section, empowering a national bank to discount and negotiate promissory notes and other evidences of debt, and to loan money on personal security, such notes being "evidences of debt," although they may not have been, strictly speaking, promissory notes, as containing no absolute promise to repay by the maker, and limiting payment out of stocks and bonds pledged, which were "personal security," upon which the bank was authorized to loan money. Attleborough Nat. Bank v. Rogers, 1878, 125 Mass. 339.