The state has the right to forfeit a charter either for failure to observe the law in forming the corporation or for acts done in violation of law after the corporation is formed; thus, a failure to pay in the capital stock as required by law,1 or any other failure to observe the provisions of the law governing the formation of the corporation. But the commoner grounds of forfeiture are those based upon acts done by the corporation after the formation thereof. But the act must be the act of the corporation. The unauthorized act of the cashier is no ground for forfeiture.2 Nor do the acts as to which a discretion may be said to exist, such as the propriety of selling stock for a failure to pay assessments.3 The grounds of forfeiture will be as various as are the devices of men to escape statutory restrictions or their capabilities in the way of poor banking. But the corporation by abandoning its corporate franchises and surrendering its assets certainly incurs a liability for forfeiture.4 Such ground would be an assignment of all its effects for creditors,5 or the failure to hold an annual election of officers for five years.6 Its refusal to report its condition as required by the law,7 its suspension of specie payments continued for a long period, or absolutely and generally,8 but not a suspension for a short period;9 exchanging bills contrary to law;10 the making of unauthorized loans by the directors;11 the contraction of debts or the issuance of bills to an amount greater than allowed by its charter;12 the declaration of large dividends, while suspending specie payments, or the embezzlement of special deposits,13 have been held grounds for forfeiting the charter. Insolvency and a refusal to pay its debts, united with violations of its charter,14 or "gross and illegal" mismanagement under a statute,15 or without a statute, are sufficient grounds for forfeiture. Usurious agreements have been held to be no ground for forfeiture.16 Under the national banking act forfeitures are incurred by a violation of the various provisions of law applicable to the national banks.17 The act charged, whatever it may be, must be alleged, as to national banks, to have been done by the directors or with their knowledge.18 Statutes providing for forfeitures do not apply to acts done before their passage,19 but banks may be required to make their payments in specie, though chartered before the passage of the law.20

16 Bellows v. Hallowell Bank, 2 Mason, 31.

17Wyman v. Hallowell Bank, 14 Mass. 62. It is needless to say that these last two cases were not cases of a transformation of one bank into another bank. The change from one bank to another does not release the old corporation unless the creditor consents. Ray v. Bank of Kentucky, 10 Bush, 344.

18 See the last note.

19 Donally v. Hearndon, 41 W. Va. 519. If the statute or agreement imposes a liability on the new corporation, the rule is just the opposite. So it is if the new corporation receives assets of the old corporation without paying value therefor.

1 People v. City Bank, 7 Colo. 226; People v. Nat. Sav. Bank, 129 111. 618. Compare Commercial Bank v. State, 6 Smedes & M. 599, which held that a failure to sell stock on account of non-payment of an instalment thereon was not a ground of forfeiture. Chief Justice Sharkey found himself in such an astonishing state of mental fog that he held that the state by suing the corporation in quo warranto for a forfeiture admitted the due and regular incorporation of the bank. This error was not indorsed by the other judges.

2 State v. Commercial Bank, 5 Smedes & M. 218.

3 Commercial Bank v. State, 6 Smedes & M. 599.

4 State v. Seneca Co. Bank, 5 Ohio St. 171.

5 State v. Real Estate Bank, 5 Ark. 595; People v. Hudson Bank, 6 Cow. 217. But State v. Commercial Bank, 21 Miss. 569, holds that an assignment of all its property is not sufficient, and that the bank must reach such a condition that it cannot fulfill its purposes. Capital and assets seemed not to be necessary to a bank in those halcyon times " befo' the wah." This opinion is the joint effort of Chief Justice Sharkey and another judge It is impliedly reversed in the next case cited.

6 State v. Commercial Bank, 33 Miss. 474.

7 State v. Seneca Co. Bank, 5 Ohio St. 171.

8 State v. Real Estate Bank, 5 Ark. 595; State v. Commercial Bank, 50 Ohio, 535; Commercial Bank v.

State, 6 Smedes & M. 599; State v. Bank of South Carolina, 1 Spears, 433; Planters' Bank v. State, 7 Smedes & M. 163. Compare State v. Louisiana Savings Co., 12 La. Ann. 568; and State v. Tombeckbee Bank, 2 Stew. 30, is contra. Under statutes. Bank of Circleville v. Iglehart, 6 McLean, 568; State v. New Orleans Gas Co., 2 Rob. (La.) 529; Lockhart v. U. S. Bank, 2 Ashm. 406; Atcha-falaya Bank v. Dawson, 13 La. 497. Payment of legal tenders was, of course, not a ground of forfeiture. Reynolds v. Bank of State, 18 Ind. 467. A statute might require specie payments from a bank chartered before the statute was passed. Commercial Bank v.State,6 Smedes & M. 599; but contra, State v. Tombeckbee Bank, 2 Stew. 30. But forfeiture statutes are not retroactive. People v. Niagara Bank, 6 Cow. 196.

9 State v. Comm. Bank, 10 Ohio, 535.

10 Bank Comm'rs v. Buffalo Bank, C Paige, 497.