National Banks! Proidian, Chase, Discover,MBNA,Bank One etc!

Posted by computerguy (204.180.131.3) on December 12, 2003 at 15:51:24:

NATIONAL BANKS IN FEDERAL COURTS

“IN THE FEDERAL COURTS, IT IS WELL SETTLED THAT A NATIONAL BANK HAS NO POWER TO LEND ITS CREDIT TO ANOTHER BY BECOMING SURETY, ENDORSER, OR GUARANTOR FOR HIM.” THEY ARE NOT ALLOWED TO GUARANTEE THE PAYMENT OF ANOTHER PERSON’S DEBT.

No where under a national bank’s express powers, granted by Congress under 12 U.S.C. § 24 is any reference to lending credit. It is true that under the National Bank Act, a national bank has the power to exercise all such incidental powers as shall be necessary to carry on the business of banking, however, incidental powers arise out of the carrying out of a national bank’s express powers, even though they are not limited merely to activities essential to the exercise of express powers. An activity constitutes an incidental power if it is closely related to an express power and is useful in carrying out the business of banking. See First Nat. Bank of Eastern Arkansas v. Taylor, 907 F.2d 775. But even with this latitude no hint of lending credit is provided in 12 U.S.C. § 24 that would give rise to an incidental power to lend credit. Further, it is laid down as a general rule that a national bank cannot lend its credit by becoming surety, indorser, or guarantor for another. “In the federal courts, it is well settled that a national bank has not power to lend its credit to another by becoming surety, indorser, or guarantor for him.” Farmers’ & Miners’ Bank v. Bluefield Nat. Bank, C.C.A.W.Va., 11 F.2d 83. See also, C.E. Healey & Son v. Stewardson Nat. Bank, 1 N.E.2d 858, 285 Ill.App. 290. People’s Nat. Bank of Winston-Salem v. Southern States Finance Co., 122 S.E. 415, 192 N.C. 69, 48 A.L.R. 519. Colley v. Chowchilla Nat. Bank, 255 P. 188, 200 C. 760, 52 A.L.R. 569. Rice & Hutchins Atlanta Co. v. Commercial Nat. Bank of Macon, 88 S.E. 999, 18 Ga.App. 151. First Nat. Bank of Hagerman v. Stringfield, 235 P. 897, 40 Idaho 587. First Nat. Bank v. National Produce Bank of Chicago, 239 Ill.App. 376. Howard & Foster Co. v. Citizen’s Nat. Bank of Union, 130 S.E. 758, 133 S.C. 202. City Nat. Bank of Wellington v. Morgan, Civ.App., 258 S.W. 572. Norton Grocery Co. v. People’s Nat. Bank of Abington, 144 S.E. 501, 151 Va. 195. Farmers’ & Merchants’ Bank of Reedsville v. Kingwood Nat. Bank, 101 S.E. 734, 85 W.Va. 371. Best v. State Bank of Bruce, 221 N.W. 379, 197 Wis. 20.

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