1. Relationship Between Bank and Depositor.

A bank is legally viewed in a double aspect, as a bailee and as a debtor. In receiving a special deposit that is to be returned, like a bond or certificate of stock, a bank is a bailee, and governed by the law pertaining to that relation. In receiving money on general deposit, a bank is a debtor, consequently when it is lost, no matter what may be the cause, by improvident lending or theft, by fire or other physical destruction, the bank must respond, like an ordinary borrower of money. Again, the depositor does not expect to receive the identical money deposited, but other money of equal value.1

I Marine Bank v. Fulton Bank, 2 Wall. 252; Matter of Patterson, 18 Hun (N. Y.), 221; Downes v. Phoenix Bank, 6 Hill (N. Y.) 297; Com

2. General Deposit is More Than a Loan.

Nevertheless, the law regards a general deposit as something more than a loan.2 If an individual should borrow on time from another and spend all the money in one hour in speculation or in betting at a horse-race, the lender would have no immediate cause of action against the borrower. But a bank, notwithstanding its relationship towards its creditor, can make no such free use of the borrowed money. It is a borrower with restrictions on its power to lend; and these flow out of the conception that the bank, after all, is the keeper of the depositor's money, and this conception is strengthened by the fact that nothing usually is paid directly for the use of the loan.3

3. Authority to Receive Special and Contingent Deposits.

While the authority of a bank to receive general deposits has always existed, its authority to receive special deposits has on some occasions been questioned, especially that of national banking associations.5 Though not enumerated among their specific powers, the doubt concerning their right was long ago settled in their favor.

In like manner a bank has a right to receive the deposit of

mercial Nat. Bank v. Henninger, 105 Pa. 496; Keene v. Collier, 1 Met. (Ky.) 415, 438.

2 See Chap. XIII. §2.

3 "The contract of deposit is a loan; but not a loan pure and simple. On the acceptance of the deposit, a promise is raised that the bank will repay it on demand, or at the time stipulated; and to that extent the transaction is a loan. But when this much is said, the whole contract is not stated. Here is my money; in consideration of its reception, and such interest as vou pay, you can have its use; but only on this condition, that the use conform to the safeguards provided by the law. The acceptance of money thus tendered, implies that the bank and its directors, so far as they are responsible for the doings of the bank, agree to conform to the conditions named." Boyd v. Schneider, 65 C. C. A., 209, 212.

4 Foster v. Essex Bank, 17 Mass. 479.

5 First Nat. Bank v. Ocean Nat. Bank, 60 N. Y. 278; Wiley v. First Nat. Bank, 47 Vt. 546; Whitney v. First Nat. Bank, 50 Vt. 388; Weckler v. First Nat. Bank, 42 Md. 581.

6 First Nat. Bank v. Graham, 100 U. S. 699; Patterson v. Syracuse Nat. Bank, 80 N. Y. 82, containing a review of authorities; see also First Nat. Bank v. Zent, 39 Ohio St. 105.

a fund in controversy, to abide the event of litigation or an award, or to become payable on a contingency to some other person than the depositor."

Again, a bank ordinarily need not question the source whence a depositor derived his money. It may even receive a deposit from a gambler, suspecting or believing he won it by gaming or some other questionable method. But a bank crosses the forbidden line when, "with the conscious knowledge that the depositor is obtaining the money by fraud or theft," it aids him in thus getting it from others.8

4. Deposits by Trustees, Executors, Guardians, Administrators, etc. An administrator, executor, guardian, or other trustee may deposit funds in possession temporarily in a bank while awaiting investment or distribution, partly for the purpose of their safekeeping and partly to derive an income therefrom. In a recent case the court declared that the trustee "will be held to that degree of care, at least, that prudent and cautious business men ordinarily exercise in their own affairs. But this duty is not discharged by depositing the funds in any bank. Nor would it be depositing it without inquiry or investigation as to the standing of the depository. He must have reasonable grounds to believe, and in good faith believe, the institution to be solvent, before he deposits the estate's funds with it."10

He must therefore exercise proper care in selecting the depository. He should not select one in another state.12 Hav

7 Bushnell v. Chautauqua Co. Nat. Bank, 74 N. Y. 290; Kansas Nat. Bank v. Quinton, 57 Kan. 750; Brown v. Kinsley Ex. Bank, 51 Kan. 359; American Nat. Bank v. Presnall, 58 Kan. 69; Pollock v. Carolina B. & L. Assn., 51 S. C. 420.

8 Wright v. Stewart, 130 Fed. 905, 914. See Chap. XVI. §3.

9 Germania Safety Vault and Trust Co. v. Driskell, 66 S. W. (Ky.) 610.

10 Ibid. See Chap. XIII, §21.

II In re Post's Estate, Myrick, Prob. (Cal.) 230; In re Law's Estate, 144 Pa. 499; State v. Gooch, 97 N. C. 186.

12 State v. Gooch, 97 N. C. 186; Moore v. Eure, 101 N. C. II. The soundness of this position may be questioned; the state fence is no protection. On one occasion a guardian deposited his ward's money with a

ing made a proper selection, he is relieved, unless the institution at a later period becomes unsafe and he is negligent in not learning of its changed condition. A deposit made by judicial order furnishes complete protection. 13

The deposit must be made in a way to indicate its true trust character. A guardian or other trustee who makes the deposit in his own name, whatever be his intention, is liable for the consequences.14 "No matter what he intends to do," says Justice Porter, "or what the cashier or clerk may think he is doing, the deposit must wear the impress of the trust.

He cannot so enter them as to call them his own to-day if they are good, and to-morrow, if bad, ascribe them to the estate, or shift them in an emergency from one estate to another."15 In some jurisdictions a less stringent rule has been applied, but it ought not to be favored.16 Furthermore, to permit a depositor to set aside the entry of his deposit by showing that really the deposit belonged to another, or vice versa, is a dangerous proceeding.17 Such evidence might be safely used to show that a mistake had been made in entering the deposit, but it ought not, we think, to be employed for any other purpose.

5. Bank May Select Depositors.

A bank is required to keep the deposits only of those persons whom it wishes to serve, ,18 and may close an account at

banking firm of which he was a member, but the impropriety of the act was not questioned. Ogburn v. Wilson, 93 N. C. 115 and 96 N. C. 211. 13 O'Hara v. Shepherd, 3 Md. Ch. 306. See State v. Gooch, 97 N. C. 186.

14 Booth v. Wilkinson, 78 Wis. 652; Williams v. Williams, 55 Wis. 300, reviewing many decisions; Mason v. Witthorne, 2 Cold. (Tenn.) 242; Jenkins v. Walter, 8 Gill & J. (Md.) 218; Norris v. Hero, 22 La. Ann. 605; Robinson v. Ward, 2 Car. & Payne, (Eng.) 59.

Contra.-Parsley v. Martin, 77 Va. 376.

15 McAlister v. Commonwealth, 30 Pa. 536, 538; Estate of Law, 14 Pa. 499.

16 Parsley v. Martin, 77 Va. 376; Beasley v. Watson, 41 Ala. 234. 17 Ibid.

18 Thatcher v. Bank, 5 Sand. (N. Y.) 121; People v. Bank of North America, 75 N. Y. 547, 563. See Chap. XIII. §3.

any time by tendering the amount due and declining to receive more. 19 Some banks decline to open accounts with depositors who are in every way worthy because they do not expect to keep a deposit large enough to be remunerative.

6. Cannot Receive Deposits When Insolvent.

An insolvent bank has no right to receive a deposit. By common law and statute bank officers are liable, civilly and criminally, for receiving deposits when their institutions are in this condition.20 Of late, statutes of this nature have been generally enacted, which apply also to private banks and bankers. Such legislation is constitutional, nor is a statute declaring that the failure, suspension, or involuntary liquidation of a banker within thirty days, or other fixed period, prima facie evidence of his intent to defraud, unconstitutional in depriving him of the presumption of innocence.21 Furthermore, a state law aimed at banks for receiving deposits when insolvent does not apply to national banking associations or other officers.22

7. Construction of Prohibitory Statutes.

In construing these statutes, the place where the deposit was received is not essential,23 nor the receiver.24 Officers who

19 Chicago Marine & Fire Ins. Co. v. Stanford, 28 Ill. 168.

20 See notes 31, 32, and Chaps. VIII, §27, note 42, and Chap. XVIII, §17. McClure v. People, 27 Colo. 358, is one of the most fully considered cases of recent date dealing with the criminal aspects of an officer's liability.

21 State v. Beach, 147 Ind. 74; Robertson v. People, 20 Colo. 279; McClure v. People, 27 Colo. 358; Meadowcroft v. People, 163 Ill. 56; Brown v. People, 173 Ill. 34; State v. Buck, 120 Mo. 479; Baker v. State, 54 Wis. 368. In Alabama a statute providing that a banker who receives a deposit knowing that he is insolvent is guilty of a misdemeanor is declared to be a violation of the constitutional provision that no person shall be liable for a debt. Carr v. State, 106 Ala. 35.

22 Stout v. Lusk, 9 Kan. App. 694; Easton v. Iowa, 188 U. S. 220, revg. 113 Iowa 516. State v. Leland, 91 Minn. 321.

23 State v. Yetzer, 97 Iowa, 423; Carr v. State, 104 Ala. 4.

24 Carr v. State, 104 Ala. 4; State v. Yetzer, 97 Iowa, 423; State v. Eifert, 102 Iowa, 188; State v. Cadwell, 79 Iowa, 432; State v. Sattley, 131