bank, on the ground that the return was made too late, under the rule, refused to take back the check or to refund its amount. It did not appear, however, that the position or relations of the defendant bank to the drawer had undergone any change in the few minutes that had elapsed since one o'clock. It would have been no worse off if it had consented to receive back the check at five minutes after one than it would have been had it been obliged under the rule to receive it back at five minutes before one. The court took the view that the articles of association were in the nature of a contract between the members. If the plaintiff had not kept the check so long that it would at common law be held to have adopted it and assumed to pay it, the power to refuse to pay it, and to return it, still existed, and could be affected by the rule of the ClearingHouse Association only so far as it should appear that the defendant bank had suffered actual injury by reason of the delay. To the extent of such actual injury it seems that the defendant bank might be entitled to a set-off against the sum due from it on the check. Or it might pay the check, and then sue for damages for the injury caused to it by the failure of the returning bank to observe the terms of the agreement between them, and to return before one o'clock.

Had the rule or agreement gone further and declared positively and in terms, as was the fact in the case previously discussed, that if the returning bank did not return before the hour named, it should altogether forfeit the right to return at all and should be held to pay the amount of the check, the entirely different terms of the contract would have raised an entirely different issue. That an usage, or even a by-law, to this effect would be regarded as in derogation of the common law, in that it would undertake to make a bank pay the check of a drawer who had no funds to his credit, and that therefore the plaintiff would be held to make out his case with great strictness, may be gathered from the language of the New Jersey case, above cited. But from the same case it may also be gathered that if the plaintiff should succeed in sufficiently proving his case the court would not deprive him of a favor

able decision. Certainly there would seem to be no ground on which the courts could reasonably undertake to annul a positive and definite agreement voluntarily entered into between parties of high intelligence, and believed to work to the common advantage of all concerned.

An usage among the banks in the clearing-house at London to return checks at any time before five o'clock P.M., even if they have been cancelled for payment in the usual manner by drawing a line through the drawer's signature, provided the words "cancelled by mistake" are noted upon them, has been recognized by the English courts as good and binding.1

The payment of checks may be affected by the use of the clearing-house in one important particular. Checks, as has been seen, must be paid in the order of presentment. But when the deputy of the bank takes from its drawer in the clearing-house all the checks which it has to pay, he may receive a considerable number of checks of the same depositor. It is clear that there can be no priority among these. They are all received at precisely the same moment. For the order in which they are placed in the drawer has nothing to do with the presentment of them to, or receipt of them by, the bank, indeed is in nearly all cases unknown to the bank. The bank cannot look at their dates, for priority of presentment not of date secures priority of payment. So if the bank cannot pay all the checks of any individual depositor then coming through clearing, it must pay none of them. It has no legal power or right to select or choose from among them certain ones which it will honor, or certain ones which it will dishonor. All or none must be paid. Any other course would render the bank liable to the holders of the dishonored paper. A check presented at the counter for payment must be paid at nce if there are funds enough to the drawer's credit to pay it alone; but if it is sent through clearing it must take its chance, that his funds shall be sufficient to pay not only it but

1 Fernandez v. Glynn, 1 Camp. 426, n.

all his other checks which shall be sent through clearing on the same day; and failing this it must be dishonored.

That the system of presentment through the clearing-house is a legal presentment for payment to the bank on which the check is drawn a matter which it would seem could never be doubted has been specifically ruled in England.1

1 Reynolds v. Chettle, 2 Camp. 596.

CHAPTER VIII.

BANK BILLS OR NOTES.

Form and Characteristics.

THE function of banks which is of the greatest public importance is that of issuing notes or bills designed to circulate in the community as current money. The power thus to issue is not inherent or essential in the banking business, and is not necessarily implied from the conference of a general power to do banking business. On the contrary it must be distinctly and in terms conferred in the incorporating act, or it will not be enjoyed.1

The instruments thus issued for circulation are technically and more accurately designated as bank-notes, and are ordinarily so called in England. The name bank-bills has, however, come to have the like significance, and in the United States is more frequently used in ordinary parlance. The law, even for the purpose of interpretation in criminal causes, recognizes the terms as equivalent and interchangeable.2 A bank note or bill, so far as its language goes, is simply the promissory note of the corporation. It expresses nothing but the corporate engagement to pay a certain sum. That the payment is to be made on demand and without interest may or may not be stated. The presence of the statement is not indispensable, for it would always be deemed to be implied. But a bank-bill though in form a promissory note is yet so different from it in the purpose for which it is put forth, and the legal doctrines applicable to promissory notes are so far qualified in their

1 See the National Banking Act, sects. 8, 21 et seq.

2 Eastman v. Commonwealth, 4 Gray, 416.

application to bank-bills in consideration of this difference of
purpose, that it seems better to regard them as distinct, though
cognate, instruments. The one must be, and the other may
be, negotiable by mere delivery. But the touchstone by which
we can determine to which class any individual paper belongs
is furnished by the question whether or not it was issued for
the purpose of passing current as money for an indefinite
period, in the daily transactions among the people. If it was
so intended it is a bank-bill. Bank-bills are in the United
States ordinarily printed on a peculiar paper, called "bank-
note paper," colored or tinted in part or wholly, ornamented
with vignettes, and having the figure and word designating the
value printed in numerous places and in fanciful patterns upon
each. But none of these features are essential to the character
of the instrument as a bank-note. None of them, except the
peculiar species of paper and a water-mark skilfully inserted
into the texture, appear in the notes of the Bank of England.
Such peculiarities have come by custom to be regarded as suffi-
cient evidence that the document which bears them is a bank-bill.
But intrinsically they have no such force in impressing this
legal character. The presence of them all would not make
a document a bank-bill if it was not such in fact and was not
issued to circulate as such. Neither would the absence of
them all prevent the document from being a bank-bill if its
language and the object of its emission ought to render it such.
A bank would have a perfect right to have all its bills written
by hand on ordinary letter-paper, and to print all its promissory
notes on decorated bank-note paper, if it should choose, and
the legal character of neither document would be affected by
the fact.

A bank note or bill must be payable over the counter immediately upon demand made in business hours at any time after its issue. If it be made payable at any future time certain, or at any stated number of days after sight, though designed to circulate after that time, it is not a bank-bill but a post-note. A post-note is of course closely like a bank-note, and at least after the time of payment has arrived would probably be governed by the same rules rather than by the rules applicable to