covery of a certificate ?66 If it is non-negotiable, the original holder can plead the statute of limitations, as previously explained,67 payment, 68 or set-off.69

A negotiable certificate is protected until maturity, like other negotiable paper.70 Thus a bank cannot successfully interpose lack of consideration against another who has loaned money in good faith thereon.71 Nor can a surety, who has signed a certificate, make a similar defence against one who has foreborne to withdraw his deposit, though without stipulating the period, and surrendered his certificate for another containing the name of such surety.72

After the certificate is due, the same defences are open against subsequent purchasers as in the case of other negotiable paper.

73

13. When is a Certificate a Loan?

Sometimes a certificate of deposit represents a loan by or to a bank; in a case of this nature the lender must be treated like others of his kind. Thus a bank, desiring a loan of another bank, gave for the money a certificate of deposit, was credited with the amount, and at different times drew portions. After the borrower's failure the other bank claimed to be a depositor and entitled to a dividend thereon, for which the stockholders

66 In an action by the endorsee against the bank it may show that the endorsement was made and the certificate was received in furtherance of an illegal contract. Thomas v. First Nat. Bank, 116 Ill. App. 20, affd. 213 Ill. 261.

67 Renfro v. Merchants' & Mech. Bank, 83 Ala. 425.

68 First Nat. Bank v. Security Nat. Bank, 34 Neb. 71. 69 Ibid.

70 First Nat. Bank v. Security Nat. Bank, 34 Neb. 71; Kirkwood v. First Nat. Bank, 40 Neb. 484.

71 Holland Trust Co. v. Waddell, 75 Hun (N. Y.) 104. A bank is not the bona fide purchaser in due course of business of a certificate of deposit received conditionally in payment from a sending bank that it should be payment if paid. Commercial Nat. Bank v. Citizens' State Bank, 109 N. W. (Iowa) 198.

72 Ballard v. Burton, 64 Vt. 387.

73 Coye v. Palmer, 16 Cal. 158; First Nat. Bank v. Security Nat. Bank, 34 Neb. 71; Gregg v. Union Co. Nat. Bank, 87 Ind. 238.

were liable by statute. The contention, however, was not sustained.74

14. Effect of Certificate Given by Insolvent Bank.

In every state, by common law or statute, as we have seen, banks that are known by their officers to be insolvent are forbidden to receive deposits. This prohibition applies with no less force to certificates of deposit, regardless of the time of repaying the deposit. If the certificate is not to be paid for a year or other period, the money received by the bank is none the less a deposit within the meaning of the statutes enacted on this subject.75

15. Asssignment of Certificate After Issuing Bank's Failure. InterPleader.

A certificate of deposit assigned after the issuing bank's failure and appointment of a receiver cannot be set off by the assignee against the claim he owes the bank to the prejudice of other creditors.76

Sometimes a certificate of deposit is assigned by the holder, and after his death rival claims thereto spring up between the assignee and the holder's executor. In such a case interpleader may be brought by the bank to determine the ownership." Of course, a bank should not pay a certificate when enjoined not to pay, 78

74 State Sav. Bank v. Foster, 118 Mich. 268.
75 State v. Shove, 96 Wis. 1. See Chap. VI. §9.

76 Ingwersen v. Buckholz, 88 Ill. App. 73; Smith v. Mosbey, 9 Heisk. (Tenn.) 501. A banker who, knowing of a debtor's insolvency, accepts from him notes, nominally for collection, and issues a negotiable certificate of deposit for their face with a secret agreement that it shall not be transferred and then buys it at a discount is a trustee of the funds collected and personally liable therefor to the debtor's creditors. Sabin v. Anderson, 31 Or. 487.

77 Harris Bkg. Co. v. Miller, 89 S. W. (Mo.) 629.

78 Springfield Marine & Fire Ins. Co. v. Peck, 102 Ill. 265.

The first step in making a deposit is to enter the items, money, checks and other matters in detail on a slip prepared by the bank for that purpose. These entries are made by the depositor himself or his agent, and not by any officer of the bank, and, being original, are the highest evidence in any subsequent dispute. But a bank that receives a deposit without such a ticket is none the less liable.2

2. Is Acknowledgment of Money Received.

The deposit slip is an acknowledgment that the amount of money named therein has been received; a memorandum or

I Weisinger v. Bank, 10 Lea (Tenn.) 330; Andrews v. State Bank, 9 N. Dak. 325; Talcott v. First Nat. Bank, 53 Kan. 480.

2 Jackson Ins. Co. v. Cross, 9 Heisk. (Tenn.) 283; Winter v. Bank, 2 Caines (N. Y.) 337; Talcott v. First Nat. Bank, 53 Kan. 480; Andrews v. State Bank, 9 N. Dak. 325.

3 First Nat. Bank v. Clark, 134 N. Y. 368, 372. This case contains a full description of its use.

note to help the memory. It is not proof of liability and will not support an action against the bank. The slip is not conclusive, and may be explained."

3. Deposit Without Entry in Pass-Book.

A deposit is often made without simultaneously entering the amount on the depositor's pass-book. Even then he may have forgotten to bring it or may not have one. Should a rule require a teller to receive no money without a deposit ticket or pass-book, the bank would be liable for a deposit received and wrongly credited. Again, when no pass-book is kept, the entries of deposits made by the receiving teller, or other proper officer, are prima facie correct.

4. Nature of Entries in Pass-Book.

Formerly entries in a pass-book were regarded in a more technical manner than they are to-day. Once, an entry made by a bank officer at the time of receiving a deposit was deemed original and binding on the bank," but not on the depositor;10

4 Weisinger v. Bank, 10 Lea (Tenn.) 330.

5 Hotchkiss v. Mosher, 48 N. Y. 478; First Nat. Bank v. Clark, 134 N. Y. 368.

6 Andrews v. State Bank, 9 N. Dak. 325.

7 Jackson Ins. Co. v. Cross. 9 Heisk. (Tenn.) 283. A depositor is not required "to examine his bank book to discover whether the bank cashier has blundered in counting the money deposited." Kemble v. National Bank, 94 N. Y. App. Div. 544, 548. "In such case the loss to the bank is not innocently suffered, but is the direct result of its own gross neglect, in which case, the depositor can in no case be estopped."

8 Bastrop State Bank v. Levy, 106 La. 586, and cases cited. The entries in a pass book furnish better evidence of the amounts deposited than the entries in a bank's daily balance book. Zang v. Wyant, 25 Colo. 551. 9 Hepburn v. Citizens' Bank, 2 La. Ann. 1007; Mechanics & Traders' Bank v. Banks, 11 La. 260; Manhattan Co. v. Lydig, 4 Johns. (N. Y.) 377. See Wasson v. Lamb, 120 Ind. 514.

ΙΟ Mech. & Farmers' Bank v. Smith, 19 Johns. (N. Y.) 115; Asher v. National Park Bank, 7 Alb. L. J. 43. A depositor's pass book "does not prove itself, and the entries it contains furnish no better evidence of the [depositor's] claim than the entries in the books of the bank, when admitted, they are of equal weight." Watson v. Phoenix Bank, 8 Met. (Mass.) 217.

and on neither when the entry was made afterward by copying from the ledger.11 The modern law has swept away all this refining. The rights of neither party are absolutely fixed by the entries, and they are always "open to examination and correction."12 Prima facie they are correct, but not conclusive.13 Consequently, a depositor who proves that an entry is incorrect can recover the amount not credited to him.1 Nor will a by

law or rule of a bank, declaring that all payments must be examined at the time, prevent a depositor from showing afterward that there was a mistake in his account of deposits and receipts. 15

A bank is not required to notify a depositor of an error in entering a deposit; how its silence must be regarded depends on circumstances.16 On the other hand, a depositor's silence is an admission of the correctness of entries until action is taken to overcome them.17

5. Pass-Book is Not Negotiable.

A pass-book is not negotiable, nor by virtue of a written order signed by the depositor.1

18

6. Duty to Examine Balanced Pass-Book.

A bank, of course, is liable to a depositor for errors, forgeries and the like before balancing his book. After it has been bal

II

Manhattan Co. v. Lydig, 4 Johns. 377; Hepburn v. Citizens' Bank, 2 La. Ann. 1007.

12 Quattrochi v. Farmers' & Merch. Bank, 89 Mo. App. 500; Branch v. Dawson, 36 Minn, 193; Talcott v. First Nat. Bank, 53 Kan. 480, and cases cited.

13 Ibid; Mechanics Bank v. Earp, 4 Rawle (Pa.) 384; Boston & Me. R. v. Oliver & Salmon Falls Bank, 32 N. H. 172; Commercial Bank v. Rhind, 3 Mac. H. of L. (Eng.) 643; First Nat. Bank v. Whitman, 94 U. S. 343, 346. "A pass book is not always the most reliable evidence." Simmons Hardware Co. v. Bank, 41 S. C. 177, 187.

14 Mechanics & Farmers' Bank v. Smith, 19 Johns. (N. Y.) 115.

15 Asher v. National Park Bank, 7 Alb. L. J. 43.

16 Poor v. National Union Bank, 17 N. Y. Week. Dig. 320.

17 McLaughlin v. First Nat. Bank, 71 Ill. App. 329.

18 McCaskill v. Conn. Sav. Bank, 60 Conn. 300; Eaves v. People's Sav.

Bank, 27 Conn, 229; Witte v. Vincenot, 43 Cal. 325; Stewart v. State, 42 Tex. 242.