the money as trustee, and the depositor may follow the fund. if it can be identified and recover it from the receiver or assignee.10

Same-Duty to Receive Deposits

It is almost superfluous to say that the right to receive deposits, even in the case of a banking corporation deriving its banking powers from its charter, does not imply a corresponding duty to receive deposits.11 A bank may decline to do business with those whom, for any reason, it does not wish to serve, and may close an account at any time by tendering to the depositor the amount due and declining to receive more.12 Special Deposits

In the case of a special deposit, the identical money or other thing deposited is to be returned, and the bank consequently does not acquire the ownership in the thing, but is merely intrusted with its temporary custody for safe-keeping. The relation between the bank and the special depositor is therefore not that of debtor and creditor, but of bailee and bailor.18

10 Post, p. 349.

11 Thatcher v. Bank of State of New York, 5 Sandf. (N. Y.) 121. See "Banks and Banking," Dec. Dig. (Key No.) § 120; Cent. Dig. § 293.

12 Munn v. Burch, 25 Ill. 35; Chicago Marine & Fire Ins. Co. v. Stanford, 28 Ill. 168, 81 Am. Dec. 270; Elliott v. Capital City State Bank, 128 Iowa, 275, 103 N. W. 777, 1 L. R. A. (N. S.) 1130, 111 Am. St. Rep. 198. See "Banks and Banking," Dec. Dig. (Key No.) §§ 120, 133; Cent. Dig. §§ 293, 339–352.

13 See Marine Bank v. Fulton County Bank, 2 Wall. 252, 17 L. Ed. 785; First Nat. Bank v. Graham, 100 U. S. 699, 25 L. Ed. 750; Preston v. Prather, 137 U. S. 604, 11 Sup. Ct. 162, 34 L. Ed. 788; First Nat. Bank of Decatur v. Henry, 159 Ala. 367, 49 South. 97; Alston v. State, 92 Ala. 124, 9 South. 733, 13 L. R. A. 659; Chattahoochee Nat. Bank v. Schley, 58 Ga. 369; McLain v. Wallace, 103 Ind. 562, 5 N. E. 911; Butcher v. Butler, 134 Mo. 61, 114 S. W. 564; Pattison v. Syracuse Nat. Bank, 80 N. Y. 82, 36 Am. Rep. 582. See "Banks and Banking," Dec. Dig. (Key No.) §§ 119, 153; Cent. Dig. §§ 289, 483-501.

Same-Power of Incorporated Bank to Receive

16

The receiving of special deposits is not strictly a banking operation, and the deposit in such case is made with the bank, not because it is a bank, but because it owns a strong vault.1* This has led some courts to question or deny the power of a banking corporation to receive special deposits where the power is not expressly conferred,15 and on that ground to hold that national banks do not possess the power. That national banks do possess the power is no longer open to question. And the authorities overwhelmingly support the rule that if a bank be accustomed to take such deposits, and this is known to and acquiesced in by the directors, and the property deposited is lost by the gross carelessness of the bailee, a liability ensues in like manner as if the deposit had been authorized by the terms of the charter.18

14 Dunbar, Theory & History of Banking, 14.

15 First Nat. Bank of Manhattan v. Citizens' Bank of Topeka, Fed. Cas. No. 4,802. See "Banks and Banking," Dec. Dig. (Key No.) §§ 120, 153; Cent. Dig. §§ 293, 483-501.

16 Wiley v. First Nat. Bank of Brattleboro, 47 Vt. 546, 19 Am. Rep. 122; Whitney v. First Nat. Bank of Brattleboro, 50 Vt. 389, 28 Am. Rep. 503. See, also, First Nat. Bank of Lyons v. Ocean Nat. Bank, 60 N. Y. 278, 19 Am. Rep. 181. See "Banks and Banking," Cent. Dig. § 1007.

17 The provision of Rev. St. U. S. § 5228 (U. S. Comp. St. 1901, p. 3506), that it shall be lawful for the bank after failure to "deliver special deposits" is a recognition of its power to receive them. First Nat. Bank v. Graham, 100 U. S. 699, 25 L. Ed. 750; First Nat. Bank of Monmouth v. Strang, 138 Ill. 347, 27 N. E. 903; First Nat. Bank of Mansfield v. Zent, 39 Ohio St. 105.

Under Code Iowa, § 1841, providing that savings banks may receive on deposit the savings and funds of others, preserve and invest the same, etc., a savings bank has power to receive a special deposit of securities for safe-keeping. Sherwood v. Home Sav. Bank, 131 Iowa, 528, 109 N. W. 9. See "Banks and Banking," Cent. Dig. § 1007.

18 First Nat. Bank v. Graham, 100 U. S. 699, 25 L. Ed. 750; Chattahoochee Nat. Bank v. Schley, 58 Ga. 369; Foster v. President, etc., of Essex Bank, 17 Mass. 479, 9 Am. Dec. 168; Patti

Same-Liability of Bank

Usually in the case of a special deposit received by a bank the bailment is gratuitous, and it is therefore laid down that the bank is liable for such loss only as results from its gross negligence.1 Gross negligence has been defined as absence or want of slight care or diligence, and, applying this standard, some cases have declared that it is sufficient if the bank employs the same care which the most inattentive persons take.20 The better rule is that a bank which receives a special deposit is bound to exercise over it such reasonable care as a reasonably prudent and careful man may fairly be expected to take of his own property of similar description.21 "What will constitute such reasonable care will vary with the nature, value, and situation of the property, the general pro

son v. Syracuse Nat. Bank, 80 N. Y. 82, 36 Am. Rep. 582; Scott v. National Bank of Chester Valley, 72 Pa. 471, 13 Am. Rep. 711; First Nat. Bank of Carlisle v. Graham, 79 Pa. 106, 21 Am. Rep. 49. Where a bank was broken into by burglars, and property of its own and of others taken, it may take measures to recover the property for those jointly concerned; and want of proper diligence, skill, and care in the performance of such an undertaking would render it liable in damages for failure. Wylie v. Northampton Nat. Bank, 119 U. S. 361, 7 Sup. Ct. 268, 30 L. Ed. 455. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. $$ 483-501, 1007-1012.

19 See cases cited in preceding note.

20 First Nat. Bank of Allentown v. Rex, 89 Pa. 308, 33 Am. Rep. 767. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. §§ 483-501, 1007-1012.

21 Giblin v. McMullen, 2 L. R. P. C., 317; 137 U. S. 604, 11 Sup. Ct. 162, 34 L. Ed. 788; Mansfield v. Zent, 39 Ohio St. 105.

Preston v. Prather,
First Nat. Bank of

A bank is liable if it is negligent in delivering a special deposit to the wrong person. Ganley v. Troy City Nat. Bank, 98 N. Y. 487; Lancaster County Nat. Bank v. Smith, 62 Pa. 47; Manhattan Bank v. Walker, 130 U. S. 267, 9 Sup. Ct. 519, 32 L. Ed. 959; Cf. Walker v. Manhattan Bank (C. C.) 25 Fed. 247. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. §§ 483-501, 1007

TIFF.BKS.& B.-2

tection afforded by the police of the community against violence and crime, and the bearing of surrounding circumstances upon its security. * * * Gross negligence in such cases is nothing more than a failure to bestow the care which the property in its situation demands." 22

The question of the bank's liability has frequently been raised by the theft or embezzlement of a cashier or other officer of the bank. In some cases it has been held that the bank was not liable, upon the ground that the act of the officer was not one committed while acting within the scope of his authority.23 These cases have been justly criticised so far as they hold that the bank is exempt from liability for the fraudulent act of an employé whose employment embraces a supervision of its property. Later cases impose upon the bank the duty of taking such measures as will ordinarily secure the property from burglars outside and thieves within, and of employing fit men for the discharge of their duties, and of removing an employé upon notice of his untrustworthiness, and hold the bank liable for a loss that results from failure so to do.25

24

22 Preston v. Prather, 137 U. S. 604, 11 Sup. Ct. 162, 34 L. Ed. 788. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. $$ 483-501, 1007-1012.

23 Foster v. President, etc., of Essex Bank, 17 Mass. 479, 9 Am. Dec. 168; Scott v. National Bank of Chester Valley, 72 Pa. 471, 13 Am. Rep. 711. See, also, Giblin v. McMullen, 2 L. R. P. C. 317. A bank is liable to a special depositor for the loss of his deposit through its diversion by its officers. El Paso Nat. Bank v. Fuchs (Tex. Civ. App.) 34 S. W. 203. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. §§ 483–501, 1007–1012.

24 See opinion of Field, J., in Preston v. Prather, 137 U. S. 604, 11 Sup. Ct. 163, 34 L. Ed. 788, criticising Foster v. President, etc., of Essex Bank, 17 Mass. 479, 9 Am. Dec. 168, and Scott v. National Bank of Chester Valley, 72 Pa. 471, 13 Am. Rep. 711. Cf. Smith v. First Nat. Bank in Westfield, 99 Mass. 605, 97 Am. Dec. 59. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. §§ 483-501, 1007-1201.

25 In an action against private bankers to recover the value of

A bank may of course render itself responsible in any event by a special contract with the depositor.20

Same-Collateral Security, etc.

Where a deposit is made with a bank, not merely for safekeeping, but as collateral security for a loan or an overdraft, or for some other purpose in which the bank has a direct interest, the bailment not being gratuitous, a more stringent obligation is said to be imposed. In such case, it is said, the bank must exercise the same care and diligence that a prudent owner would exercise over his own property of a similar kind. The same rule applies to paper deposited for collection, 28

bonds placed with them as a special deposit, and stolen by an absconding cashier, it appeared that, about a year before his flight, the managing partner became aware that he had been speculating, and, on charging him therewith, was told that he was not doing so then, and would not thereafter; that no efforts were made to verify his statements, or ascertain whether he had used property not his own; that later it was learned that he had been speculating again, but he stated that these were deals for friends, and were closed; that an examination of the books and securities, though not of the special deposits, was then made, but the cashier was retained. Held, that this was gross negligence, and defendants were liable, whether regarded as gratuitous bailees or bailees for hire. Preston v. Prather, 137 U. S. 604, 11 Sup. Ct. 162, 34 L. Ed. 788. See, also, Merchants' Nat. Bank of Savannah v. Carhart, 95 Ga. 394, 22 S. E. 628, 32 L. R. A. 775, 51 Am. St. Rep. 95; Gray v. Merriam, 148 Ill. 179, 35 N. E. 810, 32 L. R. A. 769, 39 Am. St. Rep. 172; Sherwood v. Home Sav. Bank, 131 Iowa, 528, 109 N. W. 9. Cf. Town of Fairfield v. Southport Nat. Bank, 80 Conn. 92, 67 Atl. 471. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. §§ 483-501, 1007-1012.

26 Hale v. Rawallie, 8 Kan. 136; Maury v. Coyle, 34 Md. 235. See "Banks and Banking," Dec. Dig. (Key No.) § 153; Cent. Dig. $$ 483-501, 1007-1012.

27 Preston v. Prather 137 U. S. 604, 11 Sup. Ct. 162, 34 L. Ed.

28 First Nat. Bank of Birmingham v. First Nat. Bank of Newport, 116 Ala. 520, 22 South. 976. See "Banks and Banking," Dec. Dig. (Key No.) §§ 153, 156; Cent. Dig. §§ 483-501, 539–546.