HICKS, Circuit Judge.
Bill in equity by appellant as receiver of The Taylor National Bank, against appel-lee, on two promissory notes. The principal question here is, whether appellee is liable to the receiver upon a note for $10,-000 executed to the bank by appellee on January 12, 1937. The District Court made accurate and complete findings of fact which we reproduce in the margin.1 Upon these findings the court decided, — “(2) That in making the loan upon the note which [767]*767he induced Vest to sign, Morton was acting within the scope of his authority. Morton, being the Bank’s sole representative in procuring the note, it cannot claim any right to it except such as it acquired through him, and it cannot take the benefit of his act without taking also the burdens resulting from the agreement which he made and under which he procured the note to be executed and the withdrawal of the collateral pledged with the original note. The evidence clearly showing a breach of the contract, pursuant to which the note was executed, notice of which, under the ‘sole actor’ doctrine, is imputed to the Bank, recovery on the note of $10,-000.00 is thereby precluded.”
We entertain a contrary view.
On June 16, 1933, Congress, as an addition to the Federal Reserve Bank Act of 1913, enacted a provision that “no executive officer of any member bank shall borrow from or otherwise become indebted to any member bank of which he is an executive officer, and no member bank shall make any loan or extend credit in any other manner to any of its own executive officers.” This provision was in effect on January 24, 1935, when the original transaction between appellee and Morton took place ».nd has continued as the law. 12 U.S.C.A. § 375a. One of its principal purposes was to decrease the hazard of one-man-bank control.
The act was violated. Morton got $10,000.00 from the bank upon appellee’s note. The defense, as averred in the answer to the bill and as set up in the proof, was, that by virtue of an agreement between Morton and appellee, the original note and its various renewals were nullities. We think the defense must fail. Morton had no authority from the bank to make such an agreement. His role was that of borrower and not as representative of the lending bank. He was the only bank official active in the transaction and he obviously did not, nor could, represent the bank, since he was dealing with himself. It was posi[768]*768tively forbidden to make such a loan. Morton took the money in violation of law and appellee’s part in the transaction was to permit his notes to be carried by the bank as a screen to conceal the violation.
It is a criminal violation for any person with intent to defraud or injure, to aid or abet any officer of a bank in the wilful misapplication of its money. 12 U.S. C.A. § 592. It is also provided (Title 18 U.S.C.A. Ch. 15, § 550) that “whoever directly commits any act constituting an offense defined in any law of the United States, or aids, abets, counsels, commands, induces, or procures its commission, is a principal.”
Curiously enough, these statutes were not presented to the District Court for consideration. We must consider them here.
Appellee, by active connivance with Morton, permitted his note and its renewals to remain as receivables among the assets of the bank for more than two years for the admitted purpose of concealing the fact that Morton was a borrower from his own bank. The bank examiners naturally were deceived. Had the truth become disclosed the Comptroller of the Treasury would no doubt have taken corrective measures at once.
It is urged that appellee as a matter of fact did not know that the statute prohibited Morton from borrowing the bank's money. The record does not disclose whether this is true or not, but it is of course immaterial as a matter of law. Appellee cannot avoid the rule that he intended the natural consequences of his acts. It is beside the point to say that he acted in good faith and without intent to defraud the bank or its creditors. The vital question is, whether he wittingly or unwittingly was a party to an act made unlawful by the National Banking law and of this there can be no doubt. It is unfortunate and regrettable [769]*769that he was duped by an unfaithful bank executive, but it is not an excuse. That Morton in the early stages undertook to indemnify appellee by the pledge of collateral is not material.
We think the case must be determined in the light of Deitrick v. Greaney, 309 U.S. 190, 60 S.Ct. 480, 84 L.Ed. 694, decided February 12, 1940, more than three months after the decree herein appealed from. Greaney, a director of a national bank, was sued by its receiver upon a note knowingly given to the bank as a substitute among its assets for shares of its stock illegally purchased and retained. The bank was prohibited by the National Banking Act from purchasing and retaining its own shares. 12 U.S.C.A. § 83.
The court said (309 U.S. at page 195, 60 S.Ct. at page 482, 84 L.Ed. 694) :
“The provisions of the Act requiring periodic examinations and reports and the powers of the Comptroller are designed to insure prompt discovery of violations of the Act and in that event prompt remedial action by the Comptroller. These purposes would be defeated and the command of the statute nullified if a director or officer or any other by his connivamce could place in the bank’s portfolio his obligation good on its face, as a substitute for its stock illegally acquired, and if he remained free to set up that the obligation was, in effect, fictitious, intended only to aid in the accomplishment of the injury at which the statute is aimed.
“Here, respondent, with full knowledge of the unlawful purpose to conceal the presence of the stock among the bank’s assets, gave in exchange for it, first another’s note and then his own, knowing that it was to be availed of as an apparently valid and lawful asset so as to forestall the remedies available under the statute for the unlawful purchase. * * *” (Italics ours.)
Again: “But it is enough for present purposes that the respondent, after placing his note among the bank’s receivables in substitution for the shares of stock, as the means of avoiding the consequences of violation of the statute, may not now take the benefit of the secret and illegal agreement that his note except for purposes of deceiving the bank examiners was to be regarded as a nullity. If respondent were free to set up the unlawful agreement as a defense and thus cast the loss from the unlawful stock purchase on the creditors of the bank in receivership, he would be enabled to defeat the purpose of the statute by taking advantage of an agreement which it condemns as unlawful. That, we think, the law does not allow.”
Again: “It is a principle of the widest application that equity will not permit one to rely on his own wrongful act, as against those affected by it but who have not participated in it, to support his own asserted legal title or to defeat a remedy which except for his misconduct would not be available. See United States v. Dunn, 268 U.S. 121, 133, 45 S.Ct. 451, 454, 69 L.Ed. 876, Independent Coal & Coke Co. v. United States, 274 U.S. 640, 648, 47 S.Ct. 714, 717, 71 L.Ed. 1270.
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HICKS, Circuit Judge.
Bill in equity by appellant as receiver of The Taylor National Bank, against appel-lee, on two promissory notes. The principal question here is, whether appellee is liable to the receiver upon a note for $10,-000 executed to the bank by appellee on January 12, 1937. The District Court made accurate and complete findings of fact which we reproduce in the margin.1 Upon these findings the court decided, — “(2) That in making the loan upon the note which [767]*767he induced Vest to sign, Morton was acting within the scope of his authority. Morton, being the Bank’s sole representative in procuring the note, it cannot claim any right to it except such as it acquired through him, and it cannot take the benefit of his act without taking also the burdens resulting from the agreement which he made and under which he procured the note to be executed and the withdrawal of the collateral pledged with the original note. The evidence clearly showing a breach of the contract, pursuant to which the note was executed, notice of which, under the ‘sole actor’ doctrine, is imputed to the Bank, recovery on the note of $10,-000.00 is thereby precluded.”
We entertain a contrary view.
On June 16, 1933, Congress, as an addition to the Federal Reserve Bank Act of 1913, enacted a provision that “no executive officer of any member bank shall borrow from or otherwise become indebted to any member bank of which he is an executive officer, and no member bank shall make any loan or extend credit in any other manner to any of its own executive officers.” This provision was in effect on January 24, 1935, when the original transaction between appellee and Morton took place ».nd has continued as the law. 12 U.S.C.A. § 375a. One of its principal purposes was to decrease the hazard of one-man-bank control.
The act was violated. Morton got $10,000.00 from the bank upon appellee’s note. The defense, as averred in the answer to the bill and as set up in the proof, was, that by virtue of an agreement between Morton and appellee, the original note and its various renewals were nullities. We think the defense must fail. Morton had no authority from the bank to make such an agreement. His role was that of borrower and not as representative of the lending bank. He was the only bank official active in the transaction and he obviously did not, nor could, represent the bank, since he was dealing with himself. It was posi[768]*768tively forbidden to make such a loan. Morton took the money in violation of law and appellee’s part in the transaction was to permit his notes to be carried by the bank as a screen to conceal the violation.
It is a criminal violation for any person with intent to defraud or injure, to aid or abet any officer of a bank in the wilful misapplication of its money. 12 U.S. C.A. § 592. It is also provided (Title 18 U.S.C.A. Ch. 15, § 550) that “whoever directly commits any act constituting an offense defined in any law of the United States, or aids, abets, counsels, commands, induces, or procures its commission, is a principal.”
Curiously enough, these statutes were not presented to the District Court for consideration. We must consider them here.
Appellee, by active connivance with Morton, permitted his note and its renewals to remain as receivables among the assets of the bank for more than two years for the admitted purpose of concealing the fact that Morton was a borrower from his own bank. The bank examiners naturally were deceived. Had the truth become disclosed the Comptroller of the Treasury would no doubt have taken corrective measures at once.
It is urged that appellee as a matter of fact did not know that the statute prohibited Morton from borrowing the bank's money. The record does not disclose whether this is true or not, but it is of course immaterial as a matter of law. Appellee cannot avoid the rule that he intended the natural consequences of his acts. It is beside the point to say that he acted in good faith and without intent to defraud the bank or its creditors. The vital question is, whether he wittingly or unwittingly was a party to an act made unlawful by the National Banking law and of this there can be no doubt. It is unfortunate and regrettable [769]*769that he was duped by an unfaithful bank executive, but it is not an excuse. That Morton in the early stages undertook to indemnify appellee by the pledge of collateral is not material.
We think the case must be determined in the light of Deitrick v. Greaney, 309 U.S. 190, 60 S.Ct. 480, 84 L.Ed. 694, decided February 12, 1940, more than three months after the decree herein appealed from. Greaney, a director of a national bank, was sued by its receiver upon a note knowingly given to the bank as a substitute among its assets for shares of its stock illegally purchased and retained. The bank was prohibited by the National Banking Act from purchasing and retaining its own shares. 12 U.S.C.A. § 83.
The court said (309 U.S. at page 195, 60 S.Ct. at page 482, 84 L.Ed. 694) :
“The provisions of the Act requiring periodic examinations and reports and the powers of the Comptroller are designed to insure prompt discovery of violations of the Act and in that event prompt remedial action by the Comptroller. These purposes would be defeated and the command of the statute nullified if a director or officer or any other by his connivamce could place in the bank’s portfolio his obligation good on its face, as a substitute for its stock illegally acquired, and if he remained free to set up that the obligation was, in effect, fictitious, intended only to aid in the accomplishment of the injury at which the statute is aimed.
“Here, respondent, with full knowledge of the unlawful purpose to conceal the presence of the stock among the bank’s assets, gave in exchange for it, first another’s note and then his own, knowing that it was to be availed of as an apparently valid and lawful asset so as to forestall the remedies available under the statute for the unlawful purchase. * * *” (Italics ours.)
Again: “But it is enough for present purposes that the respondent, after placing his note among the bank’s receivables in substitution for the shares of stock, as the means of avoiding the consequences of violation of the statute, may not now take the benefit of the secret and illegal agreement that his note except for purposes of deceiving the bank examiners was to be regarded as a nullity. If respondent were free to set up the unlawful agreement as a defense and thus cast the loss from the unlawful stock purchase on the creditors of the bank in receivership, he would be enabled to defeat the purpose of the statute by taking advantage of an agreement which it condemns as unlawful. That, we think, the law does not allow.”
Again: “It is a principle of the widest application that equity will not permit one to rely on his own wrongful act, as against those affected by it but who have not participated in it, to support his own asserted legal title or to defeat a remedy which except for his misconduct would not be available. See United States v. Dunn, 268 U.S. 121, 133, 45 S.Ct. 451, 454, 69 L.Ed. 876, Independent Coal & Coke Co. v. United States, 274 U.S. 640, 648, 47 S.Ct. 714, 717, 71 L.Ed. 1270. Applied in cases like the present, the rule that the illegal agreement may not be set up to defeat the obligation of the note is sometimes denominated an equitable estoppel. * * * But stated more precisely, the doctrine with which we are now concerned is not strictly that of estoppel as thus defined. It is a principle which derives its force from the circumstances that respondent’s act, apart from its possible injurious consequences to creditors, is itself a violation of the statute; and that the statute, read in the light of its purposes and policy, precludes resort to the very acts which it condemns, as the means of thwarting those purposes by visiting on the receiver and creditors whom he represents the burden of the bank’s unlawful purchase. * * *” (citing authorities).
Again: “Since it is by virtue of the statute that respondent’s agreement is unlawful and that the benefit of it as a defense to the note is denied; and as the purpose of the statute is to protect creditors of the bank from the hazard of violations of the Act like the present, it is immaterial that the bank’s officers were participants in the illegal transaction * *
We have quoted liberally from the Greaney case because we regard it as decisive. Being so, there is no necessity for an extended discussion of the “sole actor” theory upon which the District Court dismissed the bill. Further, we need not determine whether, under the parol evidence rule, appellee should be permitted to make his defense. He was allowed a liberal application of the rule in the court below.
Finally, we think that the District Court was correct in holding that appellee was entitled to have returned to him the 500 shares of Formica Insulation Company common stock. There is no substantial proof that appellee ever pledged this stock as collateral upon his $10,000 note.
[770]*770The decree appealed from is reversed and the case remanded to the District Court, with directions to enter.a decree against appellee in accordance herewith.