George, J.,
delivered the opinion of the court.
The principal question raised by this record is whether the plaintiff in error, under its charter and by-laws, and the certificates of stock involved in this controversy, has a lien on the stock as against the defendant in error.
By the third section of the charter of the Holly Springs Savings and Insurance Company, now called the Holly Springs Bank, a directory of five persons and a president were provided for, and they were empowered to make “ all needful rules, by-laws, and regulations for the control and management of the business and affairs of said company, its property, and the mode and manner of transferring its stock, and any and all other questions which in their judgment will promote the interest of said company ; provided, the same are not incon[434]*434sistent with the Constitution and laws of the United States or this State.”
Under this section the company made various by-laws, of which sect. 13 provided that “ the stock of the company shall be assignable only on the books of the company ; and a transfer-book shall be kept, in which all assignments and transfers-of stock shall be made, and no transfer of the stock of the association shall be made by any stockholder who shall be liable to the' company for any sum of indebtedness, either as principal or otherwise, and certificates of stoclc shall contain upon them notice of this provision” Sect. 14 provided that “certificates of stock, signed by the president and cashier, may be issued to stockholders, and the certificates shall state on their face that the stock is transferable only upon the transfer-books of the company ; and when stock is transferred, the certificates-thereof shall be returned to the company and cancelled, and new certificates issued.”
In February, 1874, a certificate for stock, duly signed, was issued to B. S. Crump, as follows: “This is to certify that B. S. Crump is entitled to eighty-two shares, of fifty dollars-each, numbered 78, in the HolU Springs Savings and Insurance Company, transferable at the office, in person or by attorney.” At the same time a similar certificate, numbered 79, was-issued to William Crump.
In March, 1878, B. S. and W. Crump, being in possession of these certificates, borrowed $6,000 from the defendant in error, and assigned both these certificates to her as collateral security for the loan. This assignment was indorsed on the back of each certificate, and is in the following words : “ For value received, I assign this certificate of stock to S. D. Pinson, and authorize her, as my attorney, to demand and have transfer of the same made to her on the books of the company,” and signed by the assignor.
Mrs. Pinson, before advancing the money, gave notice of this pledge to the bank; and the note given for the loan not falling due till the fall of the year, when yellow fever was raging in [435]*435Holly Springs, and the bank on that account was closed, she made no demand for a transfer on the books till in December of the same year, which transfer being refused by the bank, she brought this action to recover damages on account of said refusal. She recovered judgment for the full value of the-stock, $8,200.
The cause has been argued with distinguished ability on both, sides, both at the bar and in writing. The authorities cited on both sides are very numerous, and their perusal has-greatly aided us in arriving at the conclusion we have reached -
It is well settled that at common law a corporation has no-lien on the stock of its shareholders for an indebtedness to it. Such liens, when they exist, result either from a provision in the charter to that effect, or from a by-law enacted by the corporation in pursuance of authority conferred by the charter. Usually the lien, when it exists at all, is given by the charter, which, being a public law, as well as the act by which the corporation is created, is notice to all persons dealing with the company. Union Bank v. Laird, 2 Wheat. 390. The lien may, however, be created by a by-law, as was held at an early day by Lord Chancellor Macclesfield in Child v. Hudson Bay Company, 2 P. Wms. 12, and very generally since. When thus created, there seems to be some diversity of opinion as to its effect against an innocent purchaser of the stock for value and without notice of the lien. Morse, in his work on Banks and Banking (p. 442), denies that the lien can be created by by-law alone as against such purchaser, and Potter on Corporations (vol. 1, sect. 99) and Angel; & Ames on Corporations (sect. 355) say this is unsettled.
This difference is more apparent than real, for it seems to be well recognized that a by-law has no extra-corporate force, and is only binding on those dealing with the corporation who have notice of it, or who deal with it under such circumstances that they are bound to take notice of it. A solution of the question will be found in the right determination of the categories in which notice is inferred. B}r-laws of private corporations are [436]*436not in the nature of legislative enactments, so far as third persons are concerned. They are mere regulations of the corporation for the control and management of its own affairs. They are self-imposed rules, resulting from an agreement or contract between the corporation and its members to conduct the corporate business in a particular way. They are not intended to interfere in the least with the rights and privileges of others who •do not subject themselves to their influence. It may be said with truth, therefore, that no person not a member of the corporation can be affected in any of his rights by a corporate by-law of which he has no notice. In some instances, as we have seen, if he have no actual notice he will be held to have constructive notice. In dealing with an officer or agent of the company, a third person, as in other cases of agenc}7, is bound to ascertain the authority of the person with whom he deals. If he deal with an officer — as, president or cashier — the general scope of whose duties is well known and ascertained by law, he may rely, without further inquiry, on such officer-possessing the ordinary and usual powers. He is not bound by any secret limitation or restriction placed on them by the by-laws or otherwise. If he deals with such officer in relation to a matter outside of these ordinary and usual powers, or with a special agent, he is bound to inquire into his authority. So, if the transaction be about a matter on which, by the terms of its charter, there must be a regulation of the company as to the mode of doing it, he is bound to make inquiry as to the mode. Applying these principles to the case before us, we find that the president and cashier are the persons usually employed to give certificates of stock, and that the former, as head of the •corporation, is the appropriate person to give the certificate, in so far as it relates to the membership of the shareholder, and that the cashier, the executive hand of the corporation as to its financial matters, may appropriately certify to the pecuniary interest of the shareholder. Mrs. Pinson, therefore, was under no obligations to make any inquiry as to the power of these officers to sign the certificates of stock, and in fact their [437]*437actual authority is uot disputed.
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George, J.,
delivered the opinion of the court.
The principal question raised by this record is whether the plaintiff in error, under its charter and by-laws, and the certificates of stock involved in this controversy, has a lien on the stock as against the defendant in error.
By the third section of the charter of the Holly Springs Savings and Insurance Company, now called the Holly Springs Bank, a directory of five persons and a president were provided for, and they were empowered to make “ all needful rules, by-laws, and regulations for the control and management of the business and affairs of said company, its property, and the mode and manner of transferring its stock, and any and all other questions which in their judgment will promote the interest of said company ; provided, the same are not incon[434]*434sistent with the Constitution and laws of the United States or this State.”
Under this section the company made various by-laws, of which sect. 13 provided that “ the stock of the company shall be assignable only on the books of the company ; and a transfer-book shall be kept, in which all assignments and transfers-of stock shall be made, and no transfer of the stock of the association shall be made by any stockholder who shall be liable to the' company for any sum of indebtedness, either as principal or otherwise, and certificates of stoclc shall contain upon them notice of this provision” Sect. 14 provided that “certificates of stock, signed by the president and cashier, may be issued to stockholders, and the certificates shall state on their face that the stock is transferable only upon the transfer-books of the company ; and when stock is transferred, the certificates-thereof shall be returned to the company and cancelled, and new certificates issued.”
In February, 1874, a certificate for stock, duly signed, was issued to B. S. Crump, as follows: “This is to certify that B. S. Crump is entitled to eighty-two shares, of fifty dollars-each, numbered 78, in the HolU Springs Savings and Insurance Company, transferable at the office, in person or by attorney.” At the same time a similar certificate, numbered 79, was-issued to William Crump.
In March, 1878, B. S. and W. Crump, being in possession of these certificates, borrowed $6,000 from the defendant in error, and assigned both these certificates to her as collateral security for the loan. This assignment was indorsed on the back of each certificate, and is in the following words : “ For value received, I assign this certificate of stock to S. D. Pinson, and authorize her, as my attorney, to demand and have transfer of the same made to her on the books of the company,” and signed by the assignor.
Mrs. Pinson, before advancing the money, gave notice of this pledge to the bank; and the note given for the loan not falling due till the fall of the year, when yellow fever was raging in [435]*435Holly Springs, and the bank on that account was closed, she made no demand for a transfer on the books till in December of the same year, which transfer being refused by the bank, she brought this action to recover damages on account of said refusal. She recovered judgment for the full value of the-stock, $8,200.
The cause has been argued with distinguished ability on both, sides, both at the bar and in writing. The authorities cited on both sides are very numerous, and their perusal has-greatly aided us in arriving at the conclusion we have reached -
It is well settled that at common law a corporation has no-lien on the stock of its shareholders for an indebtedness to it. Such liens, when they exist, result either from a provision in the charter to that effect, or from a by-law enacted by the corporation in pursuance of authority conferred by the charter. Usually the lien, when it exists at all, is given by the charter, which, being a public law, as well as the act by which the corporation is created, is notice to all persons dealing with the company. Union Bank v. Laird, 2 Wheat. 390. The lien may, however, be created by a by-law, as was held at an early day by Lord Chancellor Macclesfield in Child v. Hudson Bay Company, 2 P. Wms. 12, and very generally since. When thus created, there seems to be some diversity of opinion as to its effect against an innocent purchaser of the stock for value and without notice of the lien. Morse, in his work on Banks and Banking (p. 442), denies that the lien can be created by by-law alone as against such purchaser, and Potter on Corporations (vol. 1, sect. 99) and Angel; & Ames on Corporations (sect. 355) say this is unsettled.
This difference is more apparent than real, for it seems to be well recognized that a by-law has no extra-corporate force, and is only binding on those dealing with the corporation who have notice of it, or who deal with it under such circumstances that they are bound to take notice of it. A solution of the question will be found in the right determination of the categories in which notice is inferred. B}r-laws of private corporations are [436]*436not in the nature of legislative enactments, so far as third persons are concerned. They are mere regulations of the corporation for the control and management of its own affairs. They are self-imposed rules, resulting from an agreement or contract between the corporation and its members to conduct the corporate business in a particular way. They are not intended to interfere in the least with the rights and privileges of others who •do not subject themselves to their influence. It may be said with truth, therefore, that no person not a member of the corporation can be affected in any of his rights by a corporate by-law of which he has no notice. In some instances, as we have seen, if he have no actual notice he will be held to have constructive notice. In dealing with an officer or agent of the company, a third person, as in other cases of agenc}7, is bound to ascertain the authority of the person with whom he deals. If he deal with an officer — as, president or cashier — the general scope of whose duties is well known and ascertained by law, he may rely, without further inquiry, on such officer-possessing the ordinary and usual powers. He is not bound by any secret limitation or restriction placed on them by the by-laws or otherwise. If he deals with such officer in relation to a matter outside of these ordinary and usual powers, or with a special agent, he is bound to inquire into his authority. So, if the transaction be about a matter on which, by the terms of its charter, there must be a regulation of the company as to the mode of doing it, he is bound to make inquiry as to the mode. Applying these principles to the case before us, we find that the president and cashier are the persons usually employed to give certificates of stock, and that the former, as head of the •corporation, is the appropriate person to give the certificate, in so far as it relates to the membership of the shareholder, and that the cashier, the executive hand of the corporation as to its financial matters, may appropriately certify to the pecuniary interest of the shareholder. Mrs. Pinson, therefore, was under no obligations to make any inquiry as to the power of these officers to sign the certificates of stock, and in fact their [437]*437actual authority is uot disputed. On looking at the charter, she learned that the “mode and manner” of making the transfer of the stock was subject to the regulation of the company by its by-laws, but she found nothing which specifically authorized the company to interfere with the power of disposing of his stock possessed by each stockholder. The president and directors were authorized to regulate the “ mode and manner” of the transfer of stock. This did not include the authority to prevent, or even to restrict the power of disposition. If this authority exists at all, it results from the general power conferred in the charter to make all needful rules and regulations for the management and control of the business of the corporation. She did not, therefore, have notice from the charter that there would be anv by-law preventing a disposition of his stock by a debtor to the bank. The utmost that can be inferred against her on this subject is, that as there must be some mode in which the jus disponencli of the shareholder as to his stock must be exercised, she was bound to take notice that there was a regulation on this subject. She was bound only'to know as to the “ mode and manner ” of the transfer, and this information was conveyed to her in the certificate itself, in the phrase, “ transferable at. the office, in person or by attorney.” Having this information on the face of the certificate itself, issued by the proper officers of the company, she was not bound to inquire further. She had a right to repose confidence in the terms of the certificate of the stock. That the form in which certificates are issued is material and binding on the bank, and may be relied on by a purchaser, is well settled. It is also settled that the statements of such certificates as to the manner of their transfer constitute the regulation on that subject. Lanier v. Bank, 11 Wall. 369 ; Vansands v. Middlesex County Bank, 26 Conn. 144. The power of a shareholder to dispose of his stock is not derived from the bank. It is inherent in him as a part of his proprietorship. The bank’s power is simply to regulate the mode of its éxercise. When this certificate said that Crump was entitled to the [438]*438named shares of stock, and that they were “transferable at the office, in person or by attorney,” it.asserted the right of a purchaser to have the transfer made at that place, and it asserted no more. The certificate did not say even that there vvere by-laws of the bank according to which the transfer was to be made, as is usual in such certificates. It contained no intimation on its face of any restriction on the power of transfer, nor did it refer to any other instrument in which such restriction might be found. The assignability of these certificates resulted from a right of the shareholder to dispose of his property. The ease with which assignments could be made was an essential element in the value of the shares, enhancing it both to the shareholder and the bank. It is true, they are not commercial paper; but, as was said in Lanier v. Bank, 11 Wall. 369, they approximate it as near as practicable. The bank having adopted a form, in this case, which asserted the right to transfer with no other limitation on it than that it should be done at the office of the bank, and with no reference to the existence of any by-law or regulation which might impose other restrictions, good faith and fair dealing require that the purchaser in good faith, acting according to the terms of the certificate, should be protected. But there is another ground equally conclusive against the right of the bank to assert this lien .against Mrs. Pinson. The by-law under which the lien is asserted directed that notice of the lien should be given by the certificate. This was not done. It is not claimed that this certificate, as it was phrased, was unauthorized ; in fact, it was admitted in the argument that all the certificates ever issued by the bank were in the same form. This would therefore be held to have been done with the consent of the directors, who, being stockholders, received their certificates framed as these were. The- provision in the by-law requiring the notice must be held to mean that the lien would not be asserted against a person not having this notice. The by-law was binding on the company and its members as a legislative act. The company cannot be heard to assert a [439]*439•claim in violation of its own by-law, especially when the violation is in a matter essential to the protection of the party ■against whom the claim is asserted. Moreover, the power to make the by-law was not by the charter vested in the shareholders, but in the directory. The board could therefore waive •or repeal it. Ang. & Ames on Corp., sect. 354. There was here both a waiver and a repeal, so far as the purchasers of the stock were concerned. The waiver was in the issuance •of these particular certificates with the omission of the provision as to the notice. The repeal arose from the uniform course pursued by the bank in issuing certificates with the omission. Corporations are not permitted to pass bylaws in secret, and by their conduct to the outside world induce a belief in their non-existence. This uniform conduct, at least as to' all who are not members of the corporation, will he held as making a by-law repealing the other. By-laws need not be in writing. They may be adopted as well by the company’s conduct, and the acts and conduct of its officers, as by an express vote or an adoption in a meeting. Field on Corp., sect. 305.
We therefore conclude that the corporation had no lien as against the rights of Mrs. Pinson. Probably the lien exists as against the Crumps, and for this reason the judgment will be reversed, so that the recovery of Mrs. Pinson may be limited to the amount of her debt and interest and the reasonable attorneys’ fees stipulated to be paid in the contract of loan. And the defendant in error agreeing to remit all but the principal and interest of the debt, and that judgment should be ■entered for that amount, it is ordered accordingly.