the liability is made to rest upon the broader ground of a duty imposed by public policy, no limitation arising from the character of the drawer is imposed. In a recent Massachusetts case, the court prefers to base the cause of action solely upon. contract, and says: "The cause of action, though sometimes spoken of as in the nature of a tort, arises out of the breach of the contract, implied by the relation of the parties, that the banker will honor the checks of the depositor.""

Damages for Wrongful Dishonor

Where the views as to the nature of the liability are so divergent, the courts are naturally not in accord as to the rules of damages, although they agree that the plaintiff may, upon proper pleading and proof, recover any damages which are the natural and reasonable consequences of the dishonor. The rules generally prevailing may be stated as follows: If the plaintiff is a merchant or trader, injury to his credit may be inferred from that fact, and substantial damages may be recovered, without allegation or proof of special damages; while if the plaintiff is not a trader, only upon allegation and proof of special damages may substantial damages be recovered, and without such allegation and proof, if the act of the bank was without malice, only nominal damages may be recovered. On the other hand, upon the ground that the refusal to honor a check is necessarily a discredit to the drawer,

7 Wiley v. Bunker Hill Nat. Bank, 183 Mass. 495, 67 N. E. 655. See, also, Kleopfer v. First Nat. Bank, 65 Kan. 774, 70 Pac. 880. See "Banks and Banking," Dec. Dig. (Key No.) § 143; Cent. Dig. § 414.

8 Rolin v. Steward, 14 C. B. 595; Third Nat. Bank of St. Louis v. Ober, 178 Fed. 678, 102 C. C. A. 178; Schaffner v. Ehrman, 139 Ill. 109, 28 N. E. 917, 15 L. R. A. 134, 32 Am. St. Rep. 192; Wiley v. Bunker Hill Nat. Bank, 183 Mass. 495, 67 N. E. 655; Burroughs v. Tradesmen's Nat. Bank, 87 Hun, 6, 33 N. Y. Supp. 864, affirmed 156 N. Y. 663, 50 N. E. 1115; T. B. Clark Co. v. Mt. Morris Bank, 85 App. Div. 362, 83 N. Y. Supp. 447, affirmed 181 N. Y. 533, 73 N. E. 1133; J. M. James Co. v. Continental Nat. Bank, 105 Tenn. 1, 58 S. W. 261, 51 L. R. A. 255, 80 Am. St. Rep. 857. See "Banks and Banking," Dec. Dig. (Key No.) § 143; Cent. Dig. § 414.

TIFF.BKS.& B.-10

some cases allow substantial damages without proof of special damages, although the drawer was not a merchant or trader." The damages must not exceed such as are the natural and reasonable consequences of the breach;10 but if the act of the bank was malicious, damages for mental suffering may be awarded.11

When Refusal to Pay Wrongful

Whether a refusal to honor a check is wrongful depends upon the actual state of the account.12 The bank may refuse to pay if there are not sufficient funds to the credit of the depositor after offsetting any indebtedness due from him,13 but not an indebtedness which has not matured.14 If the balance

• Atlanta Nat. Bank v. Davis, 96 Ga. 334, 23 S. E. 190, 51 Am. St. Rep. 139; Hilton v. Jesup Banking Co., 128 Ga. 30, 57 S. E. 78, 11 L. R. A. (N. S.) 224; Patterson v. Marine Nat. Bank, 130 Pa. 419, 18 Atl. 632, 17 Am. St. Rep. 778; Columbia Nat. Bank v. MacKnight, 29 App. D. C. 580; Lorick v. Palmetto Bank & Trust Co., 74 S. C. 185, 54 S. E. 206. See Metropolitan Supply Co. v. Garden City Banking & Trust Co., 114 Ill. App. 318. See "Banks and Banking," Dec. Dig. (Key No.) § 143; Cent. Dig. § 414.

10 American Nat. Bank v. Morey, 113 Ky. 857, 69 S. W. 759, 58 L. R. A. 956, 101 Am. St. Rep. 379; Brooke v. Tradesmen's Nat. Bank, 69 Hun, 202, 23 N. Y. Supp. 802; Bank of Commerce v. Goos, 39 Neb. 437, 58 N. W. 84, 23 L. R. A. 190. See "Banks and Banking,” Dec. Dig. (Key No.) § 143; Cent. Dig. § 414.

11 Davis v. Standard Nat. Bank, 50 App. Div. 210, 63 N. Y. Supp. 764.

As to exemplary damages, see Wood v. American Nat. Bank, 100 Va. 306, 40 S. E. 931. See "Banks and Banking," Dec. Dig. (Key No.) § 143; Cent. Dig. § 414.

12 American Exchange Nat. Bank v. Gregg, 138 Ill. 596, 28 N. E. 839, 32 Am. St. Rep. 171. See "Banks and Banking," Dec. Dig. (Key No.) § 143; Cent. Dig. § 414.

18 Garnett v. McEwen, L. R. 8 Exch. 10; Mt. Sterling Nat. Bank v. Green, 99 Ky. 262, 35 S. W. 911, 32 L. R. A. 568. Cf. Callaham v. Bank of Anderson, 69 S. C. 374, 48 S. E. 293; ante, p. 61. See "Banks and Banking," Dec. Dig. (Key No.) §§ 134, 143; Cent. Dig. §§ 353-374, 414.

14 Wiley v. Bunker Hill Nat. Bank, 183 Mass. 495, 67 N. E. 655; ante, p. 64. See "Banks and Banking," Dec. Dig. (Key No.) § 134; Cent. Dig. 88 353-374.

is not sufficient to pay the check in full, the bank is not required to make part payment, for it is entitled to possession of the check as a voucher.1 15 The bank is entitled to a reasonable time after presentment of a check in which to ascertain the state of the account, but after the expiration of a reasonable time it will be liable for refusal to pay, if the depositor's funds were sufficient.16 If a check is by its terms payable only when presented through a designated bank, the drawee bank is not required to pay the check when presented by another bank.17

The duty and authority of a bank to pay a check are determined by countermand of payment 18 or by notice of the depositor's death19 It may refuse to pay if it has been notified that the money belongs to another than the depositor.20

15 In re Brown, 2 Story, 502, Fed. Cas. No. 1,985, per Story, J. See, also, Beauregard v. Knowlton, 156 Mass. 395, 31 N. E. 389; Murray v. Judah, 6 Cow. (N. Y.) 484.

So held in jurisdictions where a check was held to operate as an assignment upon presentment. Bank of Antigo v. Union Trust Co., 149 Ill. 343, 36 N. E. 1029, 23 L. R. A. 611; Henderson & Co. v. United States Nat. Bank, 59 Neb. 280, 80 N. W. 898.

It has been said that the bank may, if it wishes, credit the amount of the deposit on the check. Dana v. Third Nat. Bank in Boston, 13 Allen (Mass.) 445, 90 Am. Dec. 216; Bromley v. Commercial Nat. Bank, 9 Phila. (Pa.) 522. See "Banks and Banking," Dec. Dig. (Key No.) § 134; Cent. Dig. §§ 353–374.

16 Marzetti v. Williams, 1 B. & Ad. 415; Whitaker v. Bank of England, 1 C., M. & R. 744. See "Banks and Banking," Dec. Dig. (Key No.) § 134; Cent. Dig. §§ 353–374.

17 So held where a check drawn on a bank in N. was stamped, "Payable through the C. bank of V. at current rate." Farmers' Bank of Nashville v. Johnson, King & Co., 134 Ga. 486, 68 S. E. 85, 30 L. R. A. (N. S.) 697, 137 Am. St. Rep. 242. See "Banks and Bank

ing," Dec. Dig. (Key No.) § 138; Cent. Dig. §§ 398–405.

18 Post, p. 152.

19 Post, p. 153.

20 Hanna v. Drovers' Nat. Bank, 194 Ill. 252, 62 N. E. 556; Pearce v. Dill, 149 Ind. 136, 48 N. E. 788. See “Banks and Banking," Dec. Dig. (Key No.) §§ 138, 139; Cent. Dig. §§ 380-405.

RIGHTS OF BANK UPON PAYMENT

41. IN GENERAL-Where a bank pays the check of a depositor in accordance with the order therein contained, it has the right to charge the payment to his account, and he is liable to the bank for any deficiency if his deposit was less than the amount paid. Although the bank has paid the check under the mistaken assumption or belief that the deposit was sufficient, the bank cannot, by the weight of authority, recover back the money from the payee upon the ground of mistake.

42. REVOCATION OF ORDER-The duty and authority of a bank to pay a check is determined by countermand of payment, and also (it seems) by notice of the drawer's death.

Payment in General

Where a bank pays a depositor's check, it has, of course, the right to deduct the amount paid from the amount of deposits standing to his credit. And while it is under no obligation to honor his check if he has not sufficient funds to his credit, it may pay the check if it sees fit, and will thereupon be entitled to recover from him the amount of the overdraft.21

To constitute payment, so as to entitle the bank to charge the depositor with the amount, it is not necessary that it shall have actually made the payment in cash. If the holder of the check consents to receive credit with the bank, instead of money, it is enough.22 Or if at his request the bank certifies

21 Ante, p. 82.

22 Second Nat. Bank of New Albany v. Gibboney, 43 Ind. App. 492, 87 N. E. 1064; Albers v. Commercial Bank, 85 Mo. 173, 55 Am. Rep. 355; Consolidated Nat. Bank of New York v. First Nat. Bank of Middletown, 129 App. Div. 538, 114 N. Y. Supp. 308 (cf. Republic Life Ins. Co. v. Hudson Trust Co., 130 App. Div. 618, 115 N. Y. Supp. 504); American Nat. Bank of Nashville, Tenn., v. Miller, 185 Fed.

the check, the transaction operates as payment so far as the drawer is concerned. 28

Payment Under Mistake as to Sufficiency of Deposit

If the bank pays a check under the mistaken assumption or belief that the drawer's deposit is sufficient, by the weight of authority the bank must nevertheless look to him alone for repayment, and cannot recover back the amount from the payee upon the ground of a mistake of fact.24 The payment of a check under such circumstances to a bona fide holder, as between him and the bank, is a finality.25 The rule is perhaps most satisfactorily supported on the ground of commercial convenience, which requires that the drawee bank should be the place of final settlement, where mistakes should

338, 107 C. C. A. 456. See, also, Montgomery County v. Cochran, 126 Fed. 456, 62 C. C. A. 70; Bartley v. State, 53 Neb. 310, 73 N. W. 744. As to checks presented through clearing house, post, p. 179. See "Banks and Banking," Dec. Dig. (Key No.) § 141; Cent. Dig. §§ 347, 348.

23 Ante, p. 132.

24 Chambers v. Miller, 13 C. B. N. S. 125; Pollard v. Bank of England, L. R. 6 Q. B. 623; Riverside Bank v. First Nat. Bank, 74 Fed. 276, 20 C. C. A. 181; First Nat. Bank v. Burkhardt, 100 U. S. 686, 25 L. Ed. 766; City Nat. Bank of Selma v. Burns, 68 Ala. 267, 44 Am. Rep. 138; First Nat. Bank of Denver v. Devenish, 15 Colo. 229, 25 Pac. 177, 22 Am. St. Rep. 394; Manufacturers' Nat. Bank v. Swift, 70 Md. 515, 17 Atl. 336, 14 Am. St. Rep. 381; National Exchange Bank v. Ginn & Co., 114 Md. 181, 78 Atl. 1026, 33 L. R. A. (N. S.) 963; Bank of State v. Hull, Dud. (S. C.) 259; Spokane & Eastern Trust Co. v. Huff (Wash.) 115 Pac. 80, 33 L. R. A. (N. S.) 1023. See "Banks and Banking," Dec. Dig. (Key No.) §§ 142, 150; Cent. Dig. §§ 410413, 455-4642.

25 So where the bank pays after countermand by the drawer. National Bank of New Jersey v. Berrall, 70 N. J. Law, 757, 58 Atl. 189, 66 L. R. A. 599, 103 Am. St. Rep. 821. Cf. Northampton Nat. Bank v. Smith, 169 Mass. 281, 47 N. E. 1009, 61 Am. St. Rep. 283.

It is otherwise if the payee is not a bona fide holder. Starkweather v. Emerson Mfg. Co., 132 Iowa, 266, 109 N. W. 719; James River Nat. Bank of Jamestown v. Weber (N. D.) 124 N. W. 952 (payment to drawer). See "Banks and Banking," Dec. Dig. (Key No.) §§ 142, 150; Cent. Dig. §§ 410–413, 455–4641⁄2.