CHAPTER XXXVIII.

SAVINGS BANKS.

§ 616. ANALYSIS. NATURE.

§ 617.

$618.

The depositors in a savings bank stand in the position of stockholders in a commercial bank.

The constitution of the bank determines the relation of depositors and the bank. The fact that the name of the bank contains the word "Savings" does not affect this relation, unless the depositor is misled thereby to his injury.

DEPOSITOR'S LIEN. By-law authorizing withdrawing deposit without reference to the state of the investment.

$619. PASS-BOOK only prima facie evidence.

$620. RULES AND AMENDMENTS.

§ 620 a.

§ 620 b.

§ 620 c.

Those existing at the time a depositor opens an account form part
of his contract with the bank.

Amendments after this time do not bind him without notice, even
as to sums deposited by him after the amendment. All dealings
on his account are done under the contract fixed by the original
deposit until both parties assent to a change.
Production of book.

A common rule is, that any payment made to one producing the
book shall discharge the bank. This is upheld by the courts,
but the bank must exercise due care; the rule will not relieve
it from responsibility for a negligent payment.

Loss of book does not forfeit the deposit.

A payment in violation of by-law makes the bank liable, though the depositor was negligent.

INSOLVENCY OF. See chapter on Insolvency.

§ 617. Nature of a Savings Bank. The depositors are the bank, the trustees and officers are their agents for receiving and loaning their money; and the profits belong to the depositors.2

1 § 617. Cogswell v. Rockingham Ten Cents Savings Bank, 59 N. H. 44; Coite v. Soc. for Savings, 32 Conn. 173; Bunnell v. Collinsville Savings Soc., 38 Conn. 203; Osborn v. Byrne, 43 Conn. 155; Huntington

§ 618. Effect of Name "Savings Bank." Depositor's Lien. Although a bank may be called a savings bank, if it is really a stockholders' bank, where the capital is owned by the shareholders, the name will amount to nothing (unless it produces actual harm to a depositor by misleading him without his fault); and in such a bank a deposit creates the relation of debtor and creditor, and the depositor has no lien or trust in the bonds in which the money he deposits is invested, as is the case in a savings bank, even though the bank officers. promise to hold the bonds for his benefit; such a lien can only be created by mortgage or pledge. A by-law authorizing a savings deposit to be withdrawn after giving due notice, without regard to the condition of the investment at the time, indicates that the depositor has no trust in the investment; otherwise, he would have to await the maturity of the note on which his money was loaned.1

The pass

§ 619. Pass-Book only shows State of Funds. book only shows the state of the funds, and a depositor can prove by parol the terms of a contract for keeping a deposit.1

§ 620. Rules and their Amendment. The regulations of a savings bank for withdrawing deposits, if properly made known to the depositor, are part of the contract between him and the bank. They are intended for the protection of bank and depositor against fraud and forgery. And it is generally held that such a regulation in the shape of a by-law enters into the contract of deposit, and binds the depositor; 2 though in Connecticut it is said that it "must be inserted in the book and assented to by the depositor." 3

v. Savings Bank, 96 U. S. 388; Burrill v. Dollar Savings Bank, 92 Pa. St. 134; Newark Savings Institution Case, 28 N. J. Eq. 552.

2 Francestown Bank Case, 63 N. H. 138.

1 § 618. Ward v. Johnson, 95 Ill. 215.

1 § 619. Davis v. Lenawee County Savings Bank, 53 Mich. 163 (1884). 1 § 620. Israel v. Bowery Savings Bank, 9 Daly, 507; Mitchell v. Howe Savings Bank, 38 Hun, 257.

2 Levy v. Franklin Savings Bank, 117 Mass. 418; Donlon v. Provident Institution, 127 Mass. 183; Goldrick v. Bristol County Savings Bank, 123 Mass. 320; Burrill v. Dollar Savings Bank, 92 Pa. St. 134.

Eaves v. People's Savings Bank, 27 Conn. 234.

(a) It must be carefully noted, however, that it is only the by-laws existing at the time of opening a deposit account that enter into the contract, irrespective of actual notice Amendment to the depositor. By dealing with the bank he of by-laws. adopts its regulations existing at the time; but if these are altered afterward notice of the change must be given the depositor in order to affect him, even as to his deposits made after the amendment is passed, for all his deposits are deemed to be made under the original contract. And it makes no difference though one of the by-laws at the time of opening the deposit account gave the trustees authority to amend the by-laws; such a rule cannot give power to change materially the contract of the depositor without his knowledge.*

of book.

(b) One of the commonest rules is, that the bank-book must be produced in order to draw the deposit, and that production of the book shall be authority to the bank to pay Production the person producing it. This is regarded as a reasonable and binding regulation, and if the bank pay to one having the book, there being no circumstances to excite suspicion and base an imputation of negligence on the part of the bank, the payment is good. And even where the book was stolen, and the depositor was dead and his executor had published the usual notice to the heirs to appear and show cause against probate of his will, and the bank in ignorance of all this paid upon production of the book, it was found by the jury that the bank had not seen the notice, and had not been negligent, and the payment was upheld.

(c) But the bank must exercise reasonable care. A stip

Kimins v. Boston Five Cents Savings Bank, 141 Mass. 33.

Schoenwald v. Metropolitan Savings Bank, 57 N. Y. 418; Levy v. Franklin Savings Bank, 117 Mass. 448; Hayden v. Brooklyn Savings Bank, 15 Abb. Pr. N. s. 297; Goldrick v. Bristol County Savings Bank, 123 Mass. 320; Burrill v. Dollar Savings Bank, 92 Pa. St. 134; book stolen and deposit paid before notice had been given to bank of the loss of the book. • Donlon v. Provident Institution, 127 Mass. 183.

Appleby v. Erie County Savings Bank, 62 N. Y. 12; Sullivan v. Lewiston Institution, 56 Me. 507; Hayden v. Brooklyn Savings Bank, 15 Abb. Pr. N. s. 297; Eaves v. People's Savings Bank, 27 Conn. 229; Kim

ulation between a savings bank and a depositor, that his deposit may be paid to any one presenting his book, does not relieve the bank from the duty of exercising good faith and reasonable care. The bank must not knowingly or recklessly pay to a wrongful possessor of the book; and if there are circumstances calculated to excite the suspicions of a person of ordinary prudence and foresight, as if the presenter of the book is of a different sex from the depositor,9 or if the signature of the presenter is so different from that of the depositor possessed by the bank that the discrepancy would be easily discovered by one competent for the position of cashier or teller,10 the bank would be put upon inquiry; otherwise if the discrepancy would require a critical examination to detect it, especially if it is one about which experts might honestly differ.10 If a bank agree to use its "best efforts" to make proper payments, it will not be excused by mere good faith and reasonable ordinary care in paying on production of the book.11

"Best efforts."

Lost book.

(d) If a depositor lose his book, the regulation that a deposit can be drawn only on production of the book is not to be construed as a forfeiture, but to have a reasonable interpretation in reference to its object, which is to protect both parties. A depositor in such case must show that the book is lost or destroyed, and may then draw his money.12 The bank must be properly secured against loss by a second payment on a possible production of the book, and this may be done by a bond of indemnity, 18 which must be tendered by the depositor or his administrator before demanding payment.

(e) A by-law provided that deposits could be withdrawn ball v. Norton, 59 N. H. 1; Levy v. Franklin Savings Bank, 117 Mass. 448; Heath v. Portsmouth Savings Bank, 46 N. H. 78.

8 Kimball v. Norton, 59 N. H. 1 (1879).

• Allen v. Williamsburgh Savings Bank, 69 N. Y. 314.

10 Appleby v. Erie County Savings Bank, 62 N. Y. 12; Israel v. Bowery Savings Bank, 9 Daly, 507.

11 See note 9.

12 Warhus v. Bowery Savings Bank, 21 N. Y. 546.

18 Wall v. Provident Institution, 3 Allen, 96.

Payment

upon check properly witnessed. The bank was held liable for paying on forged checks, not thus witnessed, to the son of the old lady depositor, who had possession contrary to of the pass-book. It was not a question of neg-ligence, and any contributory neglect of the depositor did not affect the matter; it was a payment contrary to rules, and the bank was held.14

by-law.

14 People's Savings Bank v. Cupps, 91 Pa. St. 315 (1879).

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