Caselaw on Bank Credit


Farmer's and Miner's Bank v. Bluefield Bank 11 F2d 83, 271 US 669
  "National bank has no power to lend its credit to another."

State v. Neilon 73 Pac. 321, 43 Ore. 168
  "Checks, drafts, money orders and BANK NOTES are not lawful money 
   of the United States.

Federal Int. Credit Bank v. Herisson  33 F2d 841
  "National bank cannot lend its credit to another in any way."

First National Bank of Tallapoosa v. Monroe 135 Ga. 614, 69 SE 1123.
  "A bank can lend its money but not its credit."
  See also:
˙˙˙˙˙Howard & Foster v. Citizens Nat. Bank 133 SC 202, 130 SE 758
     Norton Grocery Co v People's Nat. Bank 144 SE 501, 151 Va195
     National Bank of Commerce v Atkinson 55 Fed Rep 465

Lane v Raily 280 KY 319, 133 SW 2nd 74
  "The word money ... means gold, silver or paper money used as a 
circulating medium of exchange, and does not embrace NOTES, bonds,
EVIDENCES OF DEBT or ..." (See 12 USC 411)

American Express v Citizens State Bank 181 Wis. 172 (1923)
   Banks cannot lend credit. Ultra vires act.

Best v State Bank of Bruce 221 NW 379  (1928)
   Bank cannot lend its credit or become accomodation endorser.

Bowen v Needles National Bank 94 Fed Rptr 925 (1899)
   National banks forbidden to "cash" checks with credit.

U.S. v Neifert-White Co. 247 F Supp 878  (1965)
   Substance of money in loan contract.

U.S. v Williams 282 Fed Rptr 324  (1922)
   Excellent case distinguishing Money, Cash, money substitutes.

Rose v National Bank of Omaha 352 NW 2nd 594
   UCC 3-802 = "obligation suspended until presentment"

Incitti v Ferrante  175 Atlantic Rptr 908
   UCC 3-104 = "to be negotiable, note need not be payable in lawful 
money or legal tender". Good commentary on Law Merchant.

Bank of US v Drapkin  11 NY Supp 2nd 334
   Credit not a loan. Definition of credit.

Brigham v McCabe  232 NE 2nd 327
   Definition of LOAN, obligation to pay money.

Nixon v St. Joseph Mortgage 615 Fed Supp 898
   Contracts need not be based on money, coin.

Bennett v Bank of Commerce  220 Fed Rep 950
   UCC 1-201{24} = MONEY not limited to legal tender, coin.

Craig v Missouri 25 US 411  (1830)
   Bills of Credit and tender laws, both forbidden to the federal 
government by U.S. Constitution.  (MUST READING!)

Liberty National Bank & Trust v Travelers  295 NYS 2nd 983 (1968)
   Loans - Payment in Kind.

Kirkland v Bailey  155 SE 2nd 701 (1967)
   Definition of loan, implied promise to pay.

Batchelor v Mandigo  213 Pac 2nd 762  (1950)
   Definition of loan. Form versus substance.

Franklin v Safeco Insurance  737 Pac 2nd 1231  (1987)
   UCC 3-104 = Giving credit not the same as paying. Draft as 
negotiable instrument.

Community Federal S&L v Fields  128 F2d 705  (1942)
   Good definition of Ultra Vires act.

Milana v Credit Discount Co.  163 P2d 869  (1945)
   Definition of loan, usury.

Christensen v Beebe 91 Pac 129  (1907)
   Promise to pay does not equal payment.

OREGON CONSTITUTION, Article XI, section 1
   The Legislative assembly shall not have the power to 
establish, or incorporate any bank or banking company, or monied 
institution whatever; nor shall any bank company or institution 
exist in the state, with the privilege of making, issuing, or 
putting in circulation, any bill, check, certificate, promisory 
note, or other paper, or the paper of any bank company or person, 
to circulate as money.    (WOW!)

WASHINGTON CONSTITUTION, Article 12, section 11
   Stockholder Liability - No corporation, association, or 
individual shall issue or put in circulation AS MONEY, anything 
but the lawful money of the United States. (See 12 USC 152)

Stephanus v Anderson  26 Wash App. 326,334; 613 Pac 2nd 533 (1980
   EQUITY FOLLOWS LAW and cannot provide a remedy where legislation 
denies it.  

Norlin v Montgomery  59 Wash 2nd 268,273; 367 Pac 2nd 621  (1962)
   EQUITABLE PRINCIPLES cannot be asserted to establish equitable 
relief in derrogation of statutory mandates.

Mulhausen v Bates  9 Wash. 2nd 264,270; 114 Pac 2nd 995  (1941)
   Courts will not entertain a bill in equity . . . for the 
determination of a case for which a special statutory method has 
been provided.

EQUITY MAY NOT INTERVENE WHERE THE LAW PROVIDES A COMPLETE REMEDY!