posited, until demand of payment. Presumptively, the money on deposit in bank belongs to the depositor; and the bank is justified in paying over the money on the checks of the depositor, until notice of the claims of a third person upon the fund deposited.8 If a deposit is made in the name of a firm, and the bank pays it out on the individual check of one of the firm in his own name only, it can only justify by showing that the money thus drawn was applied to the use of the firm. If a trustee deposits trust moneys in his own name with his individual money, the former remains, in view of equity, the property of the cestui que trust, and if it can be traced into the bank while it remains there, the owner can reclaim it.10 If a bank, holding a trust fund, colludes with the trustee in a misapplication of it, the bank is liable to the cestui que trust for any loss thereby incurred." A deposit in a savingsbank, made by a person in his or her name as trustee for another, is a complete and valid transfer of the title to the fund 12 the title to it vests immediately in the donee, and the personal representative of the donor cannot collect it from the bank. 18 A banker is not bound to pay money held for one on deposit, upon an oral order; 14 by the usages of the banking business, he is entitled to some written evidence of the order for money upon payment thereof.15 Nor has the depositor a right to the particular money deposited, as in the case of a special deposit.16 But if he deposits funds which are current at the time, he may insist on payment in current funds, although the funds deposited have, in the meantime depreciated; on the other hand, if he deposits bank-bills as depreciated paper, he cannot draw for par funds.18

17

1 Boyden v. Bank of Cape Fear, 65 No. Car. 13; Foster v. Essex Bank, 17 Mass. 479; Bank of Ky. v. Wister, 2 Peters, 318.

2 Mechanics' Bank v. Bank of Columbia, 5 Wheat. 326.

3 Adams v. Orange County Bank, 17 Wend. 514; Johnson v. Farm ers' Bank, 1 Har. (Del.) 117, 450; Brahim v. Adkins, 77 Ill. 263; Bank of Mo. v. Benoist, 10 Mo. 519.

4 See Farmers' Bank v. Planters' Bank, 10 Gill. & J. 422: Watson v. Phoenix Bank, 8 Metc. 217; Brahm v. Adkins, 77 Ill. 263.

5 Girard Bank v. Bank of Penn. Township, 39 Pa. St. 92; Adams v. Orange County Bank, 17 Wend. 514.

6 Parkersburg Nat. Bank v. Als, 5 W. Va. 50.

7 Arnold v. Macungie Savings Bank, 71 Pa. St. 213.

8 McEwen v. Davis, 29 Md. 109; Swartwout v. Mechanics' Bank, 5 Denio, 554; School District v. First Nat. Bank, 102 Mass. 174; First Nat. Bauk v. Bache, 71 Pa. St. 213; Farmers' etc. Nat. Bank v. King, 57 id. 202; Dary v. N. Y. Chem. Manuf. Co. 2 Hall, 550; Commercial Bank v. Jones, 18 Tex. 811.

9 Coote v. Bank of U. S. 3 Cranch C. C. 50.

10 Van Alen v. American Bank, 52 N. Y. 1; Disbrow v. Mills, 2 Hun, 132; 4 Thomp. & C. 682.

11 Bank of Greensboro v. Clapp, 76 No. Car. 482; and see Bodenham v. Hoskyns, 2 De Gex M. & G. 503; Lowry v. Com. etc. Bank, Taney, 312.

12 Martin v. Funk, 75 N. Y. 134. Compare Minor v. Rogers, 40 Com. 512; Clark v. Clark, 108 Mass. 522; Brabrook v. Sav. Bank, 104 id. 228; Morgan v. Malleson, Law R. 10 Eq. 475.

12 Boone v. Citizens' Sav. Bank, 21 Hun, 235.

14 McEwen v. Davis, 39 Ind, 109.

15 McEwen v. Davis, 39 Ind. 109.

16 Ruffin v. Comm'rs, 69 No. Car. 498; Lilly v. Comm'rs, 69 id. 300; and see Planters' Bank v. Union Bank, 16 Wall. 483; Beatty v. McCleod, 11 La. An. 76.

17 Willets v. Paine, 43 Ill. 432.

18 Willets v. Paine, 43 ill. 432. Compare Corbit v. Bank of Smyrna, 2 Har. (Del.) 235; Thompson v. Riggs, 5 Wall. 663; Cushman v. Carver, 51 Ill. 509; Greves v. La. State Bank, 22 La. An. 228.

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§ 221. Liens.-Bankers, who are strictly such, and who are dealers in money, have a general lien on all moneys and funds1 and paper securities 2 of a depositor, which are in their possession, for the amount of the general balance; provided there be no circumstances in any case inconsistent therewith,4 or unless such securities were delivered to the banker under a particular agreement.5 Generally, the bank may apply a general deposit to the payment of any demand it has against the depositor. But if funds are deposited in a bank for a special purpose, known to the bank, it cannot refuse to apply them to such purpose, on the ground that a debt is due to it by the depositor. A banker has no lien on securities left with him by mistake; nor upon property subject to a trust, and improperly left with him by the trustee, without notice of the trust, provided the cestui que trust has been guilty of no misconduct or negligence depriving him of his counter

rights. 10 And no lien will attach on funds standing to the credit of a depositor, unless there is an indebtedness actually existing and matured; 11 thus, if a bank holds a note of the depositor, which it discounted for him, the bank will have no lien until the note matures. 12 And where a valid lien has been established, the bank will lose it by taking security for the debt, payable at some distant day.18

1 Commercial Bank v. Hughes, 17 Wend. 94; State Bank v. Arm strong, 4 Dev. 519; Scott v. Franklin, 15 East, 428; In re Williamas, 3 Ired. Eq. 346.

2 Bank of Metropolis v. New Eng. Bank, 1 How. 234; 17 Peters, 174; and see Re European Bank, Law R. 8 Ch. 41; Re General Prov. Assu. Co. Law R. 14 Eq. 507; Ex parte Wakefield Bank, 19 Ves. 25.

3 Davis v. Bowsher, 5 Term Rep. 488; McDowell v. Bank of Wil mington, 1 Harr. 36; Brandao v. Barnett, 3 Man. Gr. & S. 519; 12 Clark & F. 805; and see O'Connor v. Marjoribanks, 4 Man. & G. 435.

4 Grant v. Taylor, 3 Jones & S. 338; 52 N. Y. 627.

5 Bank of Metrop. v. New Eng. Bank, 1 How. 234; 17 Peters, 174.

6 Commercial Bank v. Hughes, 17 Wend. 94; and see Graves v. Dudley, 20 N. Y. 74.

7 Bank of U. S. v. McAlester, 9 Pa. St. 475.

8 Lucas v. Dorrien, 7 Taunt. 279; and see Petrie v. Myers, 54 How. Pr. 513.

9 Locke v. Prescott, 32 Beav. 261; Manningford v. Toleman, 1 Call, 670.

10 Manningford v. Toleman, 1 Call, 670; Murray v. Pinkett, 12 Clark & F. 764.

11 Beckwith v. Union Bank, 4 Sand. 604; 9 N. Y. 211; Jordon v. Shoe & Leather Nat. Bank, 12 Hun, 512; 6 W. Dig. 11; aff'd, 7 W. Dig. 204; 74 N. Y. 467.

12 Giles v. Perkins, 9 East 12. Compare Re Farnsworth, 5 Biss. 233. 13 Hewison v. Guthrie, 2 Bing. (N. C.) 755.

§ 222. Loans and discounts.-The power to carry on the business of banking by discounting bills, notes, and other evidences of debt, is not a power to traffic in such securities as a species of personal property,1 but a power to loan money thereon, with the right to take lawful interest in advance.2 And power to "lend money upon such terms and rates of interest as may be agreed upon" does not authorize the bank to charge more than the legal rate fixed by the general laws of the state; but in discounting drafts at the highest rate allowed by law, the bank may in addition charge the current rate of exchange, as a

compensation for collecting the drafts.

Authority given

to a bank, in general terms, to deal in bills of exchange, empowers it to purchase foreign bills as well as inland; 5 that is, to purchase bills payable in another state. But privileges given to a bank to discount moneys deposited for safe-keeping does not extend to special deposits. It is no defense to an action by a bank against a person indebted upon a valid bill or note, that the plaintiff acquired the demand by purchase at a discount greater than such corporations are allowed by statute to take.8 Nor can one who has borrowed money from a bank, upon securities which it was prohibited from taking for a loan, avail himself of the prohibition as an answer to the claim of the bank to be repaid. And where authority is given to buy bills of exchange upon banking principles, a purchase of such bills is not to be deemed invalid because the bank bought them from another bank, and paid for them in the depreciated notes of the latter.10 Making a note negotiable at bank is an authority to the bank to advance to the holder, on the credit of the maker, the sum expressed in the note. All offsets against the note are waived, and cannot be again set up after the note has been discounted.12 If property be pledged to a bank as collateral security for a discount or loan, the bank is liable only for good faith and ordinary care; 13 and a receipt for the property given by the cashier is not a contract increasing the common-law liability of the bank as pledgee.14

1 First Nat. Bank v. Pierson, 16 Alb. L. J. 319; Thomp. Nat. Bank Case, 637; Farmers' etc. Bank r. Baldwin, 23 Minn. 198. But compare Pape v. Capital Bank, 20 Kan. 440; 27 Am. R. 183.

2 Niagara County Bank v. Baker, 15 Ohio St. 68: Talmage v. Pell, 7 N. Y. 328; First Nat. Bank v. Ocean Nat. Bank, 60 id. 278; Wyley v. First Nat. Bank, 47 Vt. 546; 19 Am. R. 122; Hoffman v. Mut. Life Ins. Co. 92 U. S. 161. Compare State Bank v. Criswell, 15 Ark. 230; People v. Oakland Co. Bank, 1 Doug. (Mich.) 282.

3 Rimonton v. Danier, 71 No. Car. 408. Compare McLean v. Lafayette Bank, 3 McLean, 587; Farmers' Bank v. Burchard, 33 Vt. 346; Sen. eca Co. Lank v. Lamb, 26 Barb. 5.5.

4

Central Bank v. St. John, 17 Wis. 157.

5 Bank of Augusta v. Earle, 13 Peters, 519; and see City Bank v. Beach, 1 Blatchf. 425.

6 Bank of Augusta v. Earle, 13 Peters, 519.

7 Foster v. Essex Bank, 17 Mass. 479.

8 Oneida Bank v. Ontario Bank, 21 N. Y. 490. Compare Hurd v. Green, 17 Hun, 327; Sistare v. Best, 16 id. 611.

9 Allan v. Freedmen's Sav. etc. Co. 14 Fla. 418.

10 Lafayette Bank v. State Bank, 4 McLean, 208.

11 Mandeville v. Union Bank, 9 Cranch, 9.

12 Mandeville v. Union Bank, 9 Cranch, 9.

13 Dearbourn v. Union Nat. Bank, 58 Me. 273; 61 id. 369. Compare Scott v. Crews, 2 So. Car. 522; Re Haven v. Kensington Nat. Bank, 81 Pa. St. 95; Ray v. Bank of Ky. 10 Bush, 344; Smith v. First Nat. Bank, 99 Mass. 605.

14 Jenkins v. Nat. Village Bank, 58 Me. 275.

§ 223. Collections.-Power to make collections upon business paper is incidental to the banking business, and need not be expressly conferred.1 Banks sometimes charge a commission for collection; 2 but when no direct charge is made, the reasonable expectation that, according to the usual course of business, the bank may enjoy the use of the proceeds for a longer or shorter time, is a sufficient consideration for the undertaking to collect. Generally, when a bank receives paper for collection, and no special agreement is made, the contract to be implied is one of agency merely; and the duties and liabilities of the bank are those of an agent of the holder or depositor.5 But the bank is in no sense the agent of the maker of the paper,6 and is not liable to him for a failure to account to the owner for the proceeds. If a note or other instrument is deposited for collection at the bank named in it as the place of payment, the bank becomes the agent of the payee, and not of the maker; but if the obligation be not presented at the bank for payment on the day of maturity, and the maker deposits money with the bank to meet it, then the bank becomes the agent of the maker, and not of the payee. A bank receiving negotiable paper for collection, is bound to exercise reasonable care and diligence in the discharge of its assumed duties; 10 and whether payable at its counter or elsewhere, is liable for any neglect of duty occurring in its collection, by which any of the parties are discharged. If the paper

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