surrendered up the note, upon the same principle such a payment would not have bound the bank. Banks must be held responsible for the conduct of their officers within the scope of their apparent authority. When one goes into a bank and finds behind the counter one of its officers employed in its business, and upon his demand pays a debt due the bank in good faith, without any knowledge that the officer's authority is so limited that he has no right to receive it, he must be protected and the bank must be bound by the payment."

The rule then is, as stated in Cyclopedia of Law and Proceedure, volume five, p. 516, The payment of a deposit to anyone serving behind the counter of a bank is valid, and if he retains the money for his own use, the bank is liable."

31

The same authority lays down the rule that "the same principle applies to a bank whose officers receive special deposits of bonds and other securities." 32

The rule would be different if a person dealing with the agent knew at the time that the agent was acting without authority.

§ 177. Kinds of deposits received.

A special deposit when authorized to be received by a bank, must as formerly stated, be safely kept and that identical thing returned to the party making the deposit.

Where a customer presents to a bank a certain amount of money, and directs that it be received to be applied at some future date, to the payment of a check specifying it, which may be presented, or to be used in the payment of a claim which may be presented against him (the depositor), such a deposit is not a general, but a special deposit. The deposit, although in money, cannot be placed to the credit of the depositor and become a general liability of the bank. It must be retained for the specific purpose named.

31 East River Nat. Bank v. Gove, 57 N. Y. 597; Sweet v. Barney, 23 N. Y. 335: Hotchkiss r. Artisans' Bank, 2 Abb. Dec. (N. Y.) 403,.2 Keyes (N. Y.) 564; Ihl r. St. Joseph Bank, 26 Mo. App. 129; McCann v. State, 4 Nebr. 324; Rich r. Niagara County Sav. Bank, 5 Thomps. & C.

(N. Y.) 589; Jumper r. Commercial Bank, 39 S. C. 296, 17 S. E. 980, 48 S. C. 430, 26 S. E. 725; Bickley r. Commercial Bank, 39 S. C. 281, 17 S. E. 977, 39 Am. St. Rep. 721.

32 Foster . Essex Bank, 479, 9 Am. Dec. 168.

It is advisable, where special deposits are received by banks, to have a special deposit book or ledger for the purpose of entries, and in which should be entered the conditions upon which each deposit is received. Where such a record is not kept by the bank, written instructions should accompany the deposit directing the nature of, and disposition of the same.

It frequently occurs that a customer will deliver to his bank, a check drawn upon some foreign bank, directing that it be used for a specific purpose for example, " when 'A' presents a deed accompanied by a certificate of title showing the title to be perfect in the grantor mentioned in the deed; the money is then to be applied in payment for the property conveyed."

Such transactions are common, and the deposit of the check cannot be presented and cashed until the deed and certificate of title are delivered to the bank. In this case, the bank cannot be held for failure to present the check; but if the bank is instructed to collect the check and hold the money for the purpose designated, and it fails to present it for collection within a reasonable time, the bank may be held liable.

If such a deposit is made, and the bank accepts the conditions it will be held as by a contract and must comply with the same. The court holds, in the case of American National Bank v. Presnall (48 Pac. 556), that where a check was delivered to the cashier of the bank, and for which he gave a writing as follows: "Deposited with American National Bank, Arkansas City, Kansas, by J. K. Presnall, October 18th, 1890, $22,200, to be delivered to Presnall upon clear abstract of property, on deeds left with me. H. M.. Lamsen C."

It was shown by the evidence, that the document signed "H. Lamsen, C" was executed by the cashier in his official capacity, and that in fact he only received a check. In con

struing the document the court says, "In effect it is stated that the deposit is made with the bank; that the deposit is money and not a check."

As stated in this case, a check was deposited, but the bank through its cashier, acting in his official capacity, gave a “deposit slip" showing upon its face that money was deposited and the court contended that the bank was held by the document and must make good the amount in money.

In receiving a check, as a special deposit, the bank may elect to collect the same and hold the money in its place, if not otherwise specifically instructed; but in such a case, the bank cannot open an account in the name of the party depositing the check, but must retain and hold the money to execute the trust and purpose for which it is to be used.

Where a clerk of a Court of Record, under order of the court, deposits money in a bank and the money is mingled with and becomes a part of the common fund, and the bank becomes a debtor therefor, the deposit is general.

"If the deposit had been placed in a separate package and so deposited and never mingled with the funds of the bank; or had it been so kept that its identity could be established, it would no doubt have been different."

A special deposit may be changed to a general one or vice versa, for example, "A" may deposit a note with a bank for collection, while the note remains unpaid it assumes the nature of a special deposit, to be returned if not collected; but after collection, the proceeds may be in the absence of other instructions, placed to the credit of the owner. It then becomes a general deposit.

In California it is held in Howard v. Roeben, 33 Cal. 399, that where one makes a special deposit of gold coin and afterward contracts with the bailee to pay interest on the same, the special deposit is turned into a general one.

CHAPTER XX.

DEPOSITS REPAID.

§ 178. When and how paid.

A general deposit of money when made and placed to the credit of the depositor, from that time becomes a debt due from the bank to the depositor, and unless a stipulated time is agreed upon between the depositor and the bank when the deposit is to be repaid, the law implies a liability upon the part of the bank for its repayment to the depositor at any time when demand is made.

It is not necessary that the depositor should have a contract or agreement in writing, executed by the bank, agreeing to repay the same. The entry of his deposit in a book furnished by the bank showing its liability to the depositor is sufficient.

It is a presumption of law, that when money is deposited. in a bank and credit is given in the name of the party depositing the same, that it belongs to the party making the deposit, and the bank is justified in honoring the check of the party making such deposit. A third party may make a claim of ownership to the funds, but a simple claim or notice to the bank verbally made by the claimant that such funds when deposited in the name of another, are his funds or property, cannot be construed by the law as a sufficient notice to the bank, and as a justification of its right or refusal in the payment of checks signed and presented by the depositor. But if the bank has been enjoined by process of law from paying such funds to the depositor, it may refuse to pay the same until the injunction is dissolved.

Where deposits are made in the name of a firm, complications may arise in the payment of checks, especially so, if the bank should pay out money upon the individual check of one member of the firm. If this is done, and the firm should claim that the funds withdrawn were withdrawn without authority, the bank can only justify its action by proving that the money drawn by the individual member was applied to

the use of the firm. To avoid such danger and complications, it is advisable that the bank, when such an account is opened, and before checks are paid, require the firm to empower some one member thereof to draw and sign checks in the name of the firm, upon the account in the bank. The power of attorney, authorizing this, being filed with the bank would establish the right of the party to draw checks and relieve the bank from all complications and liability.

Savings banks have two classes of deposits, ordinary and term. The ordinary deposit is somewhat in the nature of a commercial deposit. It may be one wherein the bank will agree to repay up to a certain sum or fixed amount on demand and without notice. When this rule or agreement is entered into between the parties, interest upon the sums are generally waived.

The depositor in a savings bank, however, where his deposit is classed as ordinary, is governed by the same law in relation to his rights and claims against the bank in case of insolvency, or liquidation, and is placed in the same position as the term depositor.

But the law is well established that before an action can be maintained by a depositor against the bank, he must first have made a demand upon the bank for repayment. This demand may be in the presentation of a check signed by the depositor against his account held by the bank.

A depositor's account or deposit in the bank remains a liability against the bank until the statute of limitations bars a right of action. In some of the States the statute will not run against the depositor. The depositor is not entitled to interest upon his deposit made in a commercial bank, unless by special contract entered into by the bank, interest is agreed to be paid; and it seems to be a well settled principle of law upon this subject that, unless the by-laws of the bank authorize interest to be paid to depositors, that the officers of the bank who enter into such contracts with depositors without first having such authority from the board of directors, have violated certain principles of banking, and as between themselves and the bank, are personally liable. It is not claimed, however, that as between the depositor and the bank that the bank would not be held liable.