son primarily liable upon a negotiable instrument. Even if a promissory note be payable on demand, an action accrues against the maker, and the statute of limitations begins to run from the moment of issue. For the reason that a certificate of deposit is a promissory note, some courts hold that upon a demand certificate an action accrues upon its issue, and the statute of limitations then begins to run.230 Whatever justification there may be for the doctrine that demand is unnecessary upon an ordinary demand note, different considerations apply to a certificate of deposit. It is universally conceded that, upon a deposit where no certificate is issued, the contract of a bank, based on business custom, is to pay upon demand, and action does not lie until demand has been made.231 The holder of a certificate is a depositor, and, like any other depositor, may leave the money in bank for an indefinite period. Moreover, by the certificate as it is usually worded the bank promises to pay upon its return; that is, upon its presentment at the bank.232 Accordingly, by the weight of authority it is properly held that upon a certificate of deposit in ordinary form presentment must be made to charge the bank,233 and until presentment has been made the statute

W. 1016, 24 L. R. A. 444, 42 Am. St. Rep. 683. See "Banks and Banking," Dec. Dig. (Key No.) § 152; Cent. Dig. §§ 465-482.

230 Brummagim v. Tallant, 29 Cal. 503, 89 Am. Dec. 61; Mereness v. First Nat. Bank of Charles City, 112 Iowa, 11, 83 N. W. 711, 51 L. R. A. 410, 84 Am. St. Rep. 318; Tripp v. Curtenius, 36 Mich. 494, 24 Am. Rep. 610; Birch v. Fisher, 51 Mich. 39, 16 N. W. 220; Beardsley v. Webber, 104 Mich. 88, 62 N. W. 173; Mitchell v. Easton, 37 Minn. 335, 33 N. W. 910; Curran v. Witter, 68 Wis. 16, 31 N. W. 705, 60 Am. Rep. 827. See "Banks and Banking," Dec. Dig. (Key No.) § 152; Cent. Dig. §§ 465-482.

231 Post, p. 90.

232 Sanbourn v. Smith, 44 Iowa, 152; 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.) § 152; Cent. Dig. §§ 465-482.

233 Auten v. Crahan, 81 Ill. App. 502; 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; Brown v. McElroy, 52 Ind. 404; Cottle v. Marine

of limitation does not begin to run.234 In states where the courts have so held and where the Negotiable Instruments Law has been enacted, these rules have been changed for the worse by the provision that "presentment for payment is not necessary in order to charge the person primarily liable on the instrument," without excepting certificates of deposit.235

If a certificate of deposit is payable upon a day certain, it is overdue, as has been said, so far as concerns the rights of subsequent purchasers, after that day.236 When a demand certificate is to be considered overdue in this sense depends upon the rule as to the necessity of demand in the particular jurisdiction. If the certificate be regarded as a mere demand note, it becomes overdue after the lapse of a reasonable time after its date, although no demand is made.237 Where the

Bank of Buffalo, 166 N. Y. 53, 59 N. E. 736; Young v. American Bank, 44 Misc. Rep. 308. 89 N. Y. Supp. 915; Tobin v. McKinney, 14 S. D. 52, 84 N. W. 228, 91 Am. St. Rep. 688; Id., 15 S. D. 257, 88 N. W. 572, 91 Am. St. Rep. 694; Bellows Falls Bank v. Rutland County Bank, 40 Vt. 377. See "Banks and Banking," Dec. Dig. (Key No.) § 152; Cent. Dig. $$ 465-482.

234 Riddle v. First Nat. Bank (C. C.) 27 Fed. 503; Hillsinger v. Georgia Railroad Bank, 108 Ga. 357, 33 S. E. 985, 75 Am. St. Rep. 42; Fells Point Sav. Inst. of Baltimore v. Weedon, 18 Md. 320, 81 Am. Dec. 603; Shute v. Pacific Nat. Bank, 136 Mass. 487; Sharp v. Citizens' Bank of Stanton, 70 Neb. 758, 98 N. W. 50; Bank of Commerce v. Harrison, 11 N. M. 50, 66 Pac. 460; Howell v. Adams, 68 N. Y. 314; Smiley v. Fry, 100 N. Y. 262, 3 N. E. 186; In re Gardner's Estate, 228 Pa. 282, 77 Atl. 509, 29 L. R. A. (N. S.) 685; Tobin v. McKinney, 14 S. D. 52, 84 N. W. 228, 91 Am. St. Rep. 688; Id., 15 S. D. 257, 88 N. W. 572, 91 Am. St. Rep. 694. Cf. Baker v. Leland, 9 App. Div. 365, 41 N. Y. Supp. 399. See "Banks and Banking," Dec. Dig. (Key No.) § 152; Cent. Dig. §§ 465–482.

235 Negotiable Instruments Law, § 70. See criticism of the late Dean James Barr Ames, in Brannan, Neg. Inst. Law, pp. 53, 78, 80; and Id. pp. 59, 68, 81, 89, 91, 151, 152.

236 Ante, p. 79.

237 Tripp v. Curtenius, 36 Mich. 494, 24 Am. Rep. 610. See Negotiable Instruments Law, § 71; post, p. 134.

A demand certificate falls within a statute requiring promissory

TIFF.BKS. & B.-6

rule prevails that presentment is necessary to charge the bank, however, it follows that a certificate is overdue only after demand.2 238

OVERDRAFTS

25. Where a bank permits a customer to draw from it more money than is standing to his credit in his deposit account, the transaction is in effect a loan by the bank to the customer, and the bank may recover him the amount of the overdraft.

An overdraft arises when a customer of a bank draws from it more money than is standing to his credit in his account.239 Of course, a bank is under no obligation to a customer, in the absence of special agreement, to honor a check which will overdraw his account.240 If it does so, the transaction is in effect a loan.241 An agent merely authorized to draw upon his principal's account is not thereby authorized to make overdrafts, and consequently the principal is not liable therefor unless he ratifies the agent's act, or is by reason of special cir

notes payable on demand to be presented within 60 days as a condition of charging an indorser. Mitchell v. Easton, 37 Minn. 335, 33 N. W. 910. See "Banks and Banking," Dec. Dig. (Key No.) § 152; Cent. Dig. $$ 465-482; “Bills and Notes," Cent. Dig. §§ 62, 8762:

238 National Bank of Ft. Edward v. Washington County Nat. Bank, 5 Hun (N. Y.) 605. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 465–482.

239 Low v. Taylor, 41 Mo. App. 517 (under agreement by which a third person was to be liable for overdrafts); Marine Bank of Buffalo v. Butler Colliery Co., 52 Hun, 612, 5 N. Y. Supp. 291; State v. Jackson, 21 S. D. 494, 113 N. W. 880. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455-4642.

240 American Exch. Nat. Bank v. Gregg, 138 Ill. 596, 28 N. E. 839, 32 Am. St. Rep. 171; Harrington v. First Nat. Bank of Marseilles, 85 Ill. App. 212. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455-4642.

241 Hennessy Bros. & Evans Co. v. Memphis Nat. Bank, 129 Fed. 557, 64 C. C. A. 125. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455-4641⁄2.

cumstances estopped to deny his authority; 242 but if the principal allows his agent habitually to overdraw his account, honoring the overdrafts, the bank may assume that such acts are authorized.243

A bank may maintain an action to recover the amount of an overdraft from the drawer.24 In the absence of agreement, 245 the bank may not recover interest upon an overdraft; 246 but after demand for payment interest runs by way

242 Merchants' Nat. Bank of Peoria v. Nichols & Shepard Co., 223 Ill. 41, 79 N. E. 38, 7 L. R. A. (N. S.) 752. See City of Pittsburg v. First Nat. Bank of Sheraden, 230 Pa. 176, 79 Atl. 406.

But where a depositor notified the bank not to allow the account to be overdrawn beyond a certain amount, and checks exceeding the limit, drawn by one authorized, were paid, it was held that the depositor could not by mere notice defeat the rights of the holders, nor the right of the bank to pay and charge to the account-the decision resting apparently on the right of a check holder in Iowa to sue the bank. Bremer County Bank v. Mores, 73 Iowa, 289, 34 N. W. 863; post, p. 129. See "Corporations,” Dec. Dig. (Key No.) §§ 425, 463; Cent. Dig. §§ 1820-1831; "Principal and Agent," Dec. Dig. (Key No.) § 109; Cent. Dig. §§ 318-322, 360-365.

243 Merchants' & Planters' Nat. Bank of Union v. Clifton Mfg. Co., 56 S. C. 320, 33 S. E. 750. See "Corporations," Dec. Dig. (Key No.) $425; Cent. Dig. §§ 1697-1705.

244 McLean County Bank v. Mitchell, 88 Ill. 52; Thomas v. International Bank, 46 Ill. App. 461; Franklin Bank v. Byram, 39 Me. 489, 63 Am. Dec. 643. See, also, Burwell v. Burgwyn, 105 N. C. 498, 10 S. E. 1099. But see Lancaster Bank v. Woodward, 18 Pa. 357, 57 Am. Dec. 618.

The authority of a cashier to allow an overdraft cannot be questioned in an action by the bank. Union Gold Mining Co. v. Rocky Mountain Nat. Bank, 2 Colo. 248. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455–4641⁄2.

245 Loan & Exchange Bank v. Miller, 39 S. C. 175, 17 S. E. 592. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455-4642.

246 Owens v. Stapp, 32 Ill. App. 653; Union Bank v. Sollee, 2 Strob. (S. C.) 390. See, also, Hubbard v. Charlestown Branch R. Co., 11 Metc. (Mass.) 124. Cf. Talbot v. First Nat. Bank, 106 Iowa, 361, 76 N. W. 726. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455-4642.

of damages, and the rendering of an account showing a balance due from overdrafts is a sufficient demand.24 247 In an action for an overdraft, mere production of the check does not make a prima facie case; 248 but the bank must establish the overdraft by showing the whole state of the account, and all evidence going to show it, including checks, drafts, and notes paid, is admissible.249

When an account is overdrawn, the bank may, of course, apply subsequent general deposits to the payment of the balance due. 250

STATEMENT OF ACCOUNT

26. EFFECT-Where a bank renders a statement of a de

positor's account, accompanied by his checks and other vouchers for payments made and charged, such statement, if retained by the depositor without objection within a reasonable time, constitutes an account stated, which may be impeached only for fraud or mistake.

27. DUTY OF DEPOSITOR-It is the duty of the depositor, within a reasonable time, to examine such statement and vouchers, and to exercise reasonable diligence therein, and to notify the bank of an erroneous charge, such as a charge for the payment of a forged check; and if he fails so to do, and the

247 Casey v. Carver, 42 Ill. 225. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455-4642.

248 State Bank v. Clark, 8 N. C. 36; Bank of the United States v. Washington, Fed. Cas. No. 940, 3 Cranch C. C. 295. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. §§ 455-4642.

249 Jack v. Moyer, 187 Pa. 87, 40 Atl. 1013. See, also, Hudson Trust Co. v. Chappelle (Sup.) 108 N. Y. Supp. 1005; Cox v. Bank of Hartsville (Tenn. Ch.) 63 S. W. 237; Walker Bros. v. Skliris, 34 Utah, 353, 98 Pac. 114. See "Banks and Banking," Dec. Dig. (Key No.) § 150; Cent. Dig. $$ 455-4642.

250 First Nat. Bank v. City Nat. Bank, 102 Mo. App. 357, 76 S. W. 489. See Nichols v. State, 46 Neb. 715, 65 N. W. 774. Cf. Hale v.