CHAPTER XIII.

KINDS AND Keeping of DEPOSITS.

As we have seen, the chief business of a bank is to receive and lend money. No little confusion has arisen in regarding

a deposit which in truth is only a loan and a debt, as a bailment. In many cases a deposit is a bailment, the depositor expecting to receive the identical thing demanded;1 generally, he expects to receive only something of similar value.2

2. Difference Between Deposit and Loan.

"A deposit differs essentially from a loan. That is for the benefit of the borrower, while a deposit is for the benefit of the depositor. The depository may obtain an incidental advan

I Keene v. Collier, 1 Met. (Ky.) 415, 417; State v. Clark, 4 Ind. 316. 2 Marine Bank v. Fulton Bank, 2 Wall. (U. S.) 252; Matter of Patterson, 18 Hun (N. Y.) 221; Commercial Bank v. Hughes, 17 Wend. (N. Y.) 94, 100; Downes v. Phoenix Bank, 6 Hill (N. Y.) 297; Commercial Nat. Bank v. Henninger, 105 Pa. 496; Kenne v. Collier, I Met. (Ky.) 415; Hawes v. Blackwell, 107 N. C. 196, 200; Perth Amboy Gas Light Co. v. Middlesex Co. Bank, 60 N. J. Eq. 84; Carr v. National Security Bank, 107 Mass. 45, 48.

Contra.-Elliott v. Capital City State Bank, 128 Iowa 275; Officer v. Officer, 120 Iowa 389; Hunt v. Hopley, 120 Iowa 695. In Law's Estate, 144 Pa. 499, 507, Clark, J., said: "Whilst the relation between the depositor and his banker is that of debtor or creditor simply, the transaction cannot in any proper sense be regarded as a loan, unless the money is left, not for safekeeping, but for a fixed period at interest, in which the transaction assumes all the characteristics of a loan." And the same rule was declared in Eshleman v. Bolenius, 144 Pa. 269. But it is opposed by the general current of authority, if not by Commercial Nat. Bank v. Henninger, 105 Pa. 496, 500, in which Paxson, J., remarks: "The money deposited does not, as is popularly assumed, continue to be the property of the depositor. It becomes the money of the bank the moment it is deposited. The depositor becomes the creditor of the bank." In Foley v. Hill, 2 H. of L. (Eng.) 27, 44, the Lord Chancellor says: "This trade of a banker is to receive money, and use it as if it were his own, he becoming debtor to the person who has lent or deposited with him the money to use as his own, and for which money he is accountable as a debtor." In Bank v. Brewing Co., 50 Ohio St. 151, 157, the court said: "The bank is accountable as a debtor; and the relation between it and the general depositor is essentially that of debtor and creditor. In legal effect, the deposit is a loan to the bank." In Alston v. State, 92 Ala. 124, 128, it is said that "money received by a bank on general deposit becomes the property of the bank and can be loaned or otherwise used by it as other moneys belonging to it. The depositor's claim is a mere chose in action for so much money." In Watts v. Christie, 11 Beav. 546, 551, the court said: "In the ordinary relation between banker and customer, the customer is a mere common creditor of .he banker."

tage, but that is seldom the original object contemplated. In a loan, the borrower promises to return the money at a future time; in a deposit, whenever the money is demanded."

3. Deposit May be Declined.

A bank is not like an inn-keeper, who is obliged to serve everybody applying for admission, fit to be received. A bank can select its customers, and exercises this right. Some of the larger banks decline to receive deposits because the amount is not large enough to yield a profit commensurate with the risk and expense of keeping them. In like manner a bank can

dissolve the relation."

4. Acceptance and Delivery of Deposit.

If a deposit be accepted and delivered at the counter to one of the bank's officers who has apparent or ostensible authority to receive it, the depositor is justified in his action." And if he gives money to the president in the building, intended for deposit, the depositor is not required to follow him and oversee the work of the recorder."

5. Deposit Made by Telegraph.

A deposit may be made by telegraph. And money deposited in one bank to the account of another with directions to pay

3 Ladd, J., Hunt v. Hopley, 120 Iowa 695, 698. See also Law's Estate, 144 Pa. 499, and Officer v. Officer, 120 Iowa 389, 392. A bank that receives a deposit promising to repay at the end of a year or other period with interest, and sooner after a notice of thirty days or other period, becomes simply the debtor therefor. Leaphart v. Commercial Bank, 45 S. C. 563. A bank taking state funds subject to check and agreeing to pay interest on the daily balance is a deposit and not a loan. State v. First Nat. Bank, 88 Fed. 947.

4 Thatcher v. State Bank, 5 Sand. (N. Y.) 121. 54 Wis. 368. See Chap. VI. §5.

See Baker v. State,

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

6 Burnell v. San Francisco Sav. Union, 136 Cal. 499. "If the conduct of the bank has been such as to justify the depositor in believing that he is authorized to receive the money, the bank cannot exonerate itself from liability by showing that no express authority therefor had been given by the board of directors." Ibid, 502.

7 Jumper v. Bank, 48 S. C. 430

the amount by telegram to a third is a specific deposit. Again, an entry made by a bank, acting on a telegraphic dispatch from a person that he had deposited with the bank's correspondent a fund for the use of one of its customers, with which he is credited, while debiting the amount to its correspondent, is a provisional deposit. It therefore does not operate to transfer the title to the fund before its receipt.

6. Classification of Deposits.

Deposits are of three kinds, general, special and specific. A general deposit always consists of money,10 and the relationship between bank and depositor is that of debtor and creditor.11 Should the deposit be lost, therefore, the bank would be absolutely responsible like the borrower of money for which he has given his note.12

8 Montagu v. Pacific Bank, 81 Fed. 602. If the second bank fails after receiving the money, but before paying it to the third, the full amount may be recovered by the depositor. Ibid. A debtor having deposited in a New York bank the amount due to his creditor in Helena, Montana, the New York bank telegraphed a bank in Helena to pay the debt and charge the amount to the other. The creditor was unwilling to be credited with the amount, because he questioned its solvency, but accepted a draft on the New York bank on condition that it was to be payment, if honored. As the Helena bank failed before payment of the draft, the deposit in the New York bank was regarded as special and belonging to the creditor. Moreland v. Brown, 30 C. C. A. 23; Farley v. Turner, 26 Law J. Ch. (Eng.) 710. See §19.

9 American Ex. Nat. Bank v. Loretta Mining Co., 165 Ill. 103.

10 Marine Bank v. Fulton Bank, 2 Wall. (U. S.) 252; Bank v. Brewing Co., 50 Ohio St. 151.

II In re Madison Bank, 5 Biss. (U. S.) 515; Balbach v. Frelinghuysen, 15 Fed. 675; City of St. Louis v. Johnson, 5 Dill. (U. S.) 241; Thompson v. Riggs, 5 Wall. 663, affg. 6 D. C. 99; Himstedt v. German Bank, 46 Ark. 537; Collins v. State, 33 Fla. 429; McLain v. Wallace, 103 Ind. 562; Perley v. Muskegon Co., 32 Mich. 132; Neely v. Rood, 54 Mich. 134; Nehawka Bank v. Ingersoll, 2 Neb. (Unof.) 617; Boyden v. Bank, 65 N. C. 13; Matthews v. Creditors, 10 La. Ann. 344; Schmidt v. Barker, 17 La. Ann. 261; National Bank v. Eliot Bank, 5 Am. Law Reg. (N. S.) 711; Knecht v. U. S. Sav. Institution, 2 Mo. App. 563; Baker v. Kennedy, 53 Tex. 200; Bank v. Brewing Co., 50 Ohio St. 151; Bank v. Jones, 42 Pa. 536; Dabney v. State Bank, 3 Rich. (S. C.) 124; Robinson v. Gardner, 18 Gratt. (Va.) 509.

12 Ibid.

A general deposit may be deposited in the name of the owner;13 in the name of an agent as agent or trustee;14 in the agent's name alone;15 in an agent's name while disclosing that of his principal;16 lastly, in the principal's name while adding his own without disclosing in any way his relation to his principal.17 But a deposit to his own credit by an auctioneer, consisting of the proceeds of goods sold by him, cannot be recovered by their owners; they are merely creditors of the depositor.18

Authority to deposit for a principal includes authority to endorse his checks if this be necessary for the purpose of deposit.19 But only those checks are included that rightfully belong to the principal, not those acquired by his agent in an unlawful manner.20

As the funds deposited in an agent's name belong to his principal, he can reclaim them; and if the bank refuses to pay he can obtain them through the aid of the law.21

General deposits may be payable on demand.22 or at a fixed

13 Martin v. Kansas Nat. Bank, 66 Kan. 655. A bank cannot assume that an agent who has made a deposit for a disclosed principal has named a fictitious, and not a real person. Honig v. Pacific Bank, 73 Cal. 464. 14 City Bank v. Kent, 57 Ga. 283.

15 See Chap. XVI. §9a; Farmers' & Mech. Bank v. King, 57 Pa. 202; Ringo v. Field, 6 Ark. 43, 49. An agent who does this without authority is guilty of conversion. Ibid.

16 Keene v. Collier, 1 Met. (Ky.) 415; Van Alen v. American Nat. Bank, 52 N. Y. I.

17 Case v. Hammond Packing Co., 105 Mo. App. 169. Nor will an overdraft drawn on such an account bind his principal. Ibid.

18 Levy v. Cavanagh, 2 Bos. (N. Y.) 100; Marten v. Rocke, 53 Law T. Rep. (Eng. N. S.) 946. And if a sale be not completed, the purchaser cannot recover interest on his deposit with the auctioneer until after making a demand. Walsh v. Meyer, 3 N. Y. State Rep. 579.

19 Jackson Paper Mfg. Co. v. Commercial Nat. Bank, 199 Ill. 151; Jackson v. Bank, 92 Tenn. 154; Graham v. U. S. Sav. Institution, 46 Mo. 186.

20 Fay v. Slaughter, 194 Ill. 157, revg. 94 Ill. App. III. See Jackson Paper Mfg. Co. case, 199 Ill. 151.

21

22

Zeltman v. Zeltman, 28 Pa. Co. Ct. 345.

Williams v. Rogers, 14 Bush (Ky.) 776. A deposit for which a certificate is given is a general deposit like one entered in a depositor's pass