collect whole amount of interest. Kelley v. Phoenix Natl. Bank, 17 App. Div. 496, 45 N. Y. Supp. 533.

41. A bank president owed bank an amount more than one fifth of capital stock, and gave a mortgage as security; although loan was improper, the mortgage held valid. Dunn v. O'Connor, 25 App. Div. 73, 49 N. Y. Supp. 270.

42. A bank has lien on depositor's note deposited for collection, to offset all claims due and payable to bank by depositor before appointment of receiver of his property as insolvent. Smith v. 8th Ward Bank, 31 App. Div. 6, 52 N. Y. Supp. 290. As to application by bank of individual partner's deposit on firm debt, see editorial note to Adams v. First Nat. Bank, 23 L. R. A. 111; as to right of set-off by or against insolvent bank, see editorial note to Fera v. Wickham, 17 L. R. A. 456.

43. A bank is guilty of fraud in receiving deposits when it knows of it insolvency; and such deposits may be recovered, if not passed into hands of bona fide holder. Stapleton v. Odell, 21 Misc. 94, 47 N. Y. Supp. 13. As to creation of trust by receiving deposit when insolvent, see full presentation of authorities in editorial note to Bruner v. First Nat. Bank, 34 L. R. A. 532; as to criminal responsibility for so doing, see editorial note to Commonwealth v. Jurkin, 31 L. R. A. 124.

44. A bank must use ordinary care in paying stopped check, although its rules excuse it from liability for such payment. Elder v. Franklin Natl. Bank, 25 Misc. 716, 55 N. Y. Supp. 576. As to right to stop payment of check, see editorial note to Canterbury v. Bank of Sparta, 30 L. R. A. 845, which presents the authorities on that question.

45. A bank is liable for loss of check given for collection. Walton v. Riverside Bank, 29 Misc. 304, 60 N. Y. Supp. 519.

46. Ordinary care only by depositor in examining returned vouchers is required. Leaving such duty to trusted clerk sufficient even if he proves dishonest. Clark v. Natl. Shoe & Leather Bk., 32 App. Div. 316, 52 N. Y. Supp. 1064. As to duty of depositor with respect to forged checks charged to him by bank, see editorial note to First Nat. Bank v. Allen, 27 L. R. A. 426, collating the authorities on that question.

47. Cashier acting in dual capacity, for bank and for customer; peculiar facts as to payment of check. Wiggins v. Stevens, 33 App. Div. 83, 53 N. Y. Supp. 90. 48. A lunatic's funds were deposited by his committee in the latter's bank in the latter's name, and subsequently the bank applied the funds to pay a personal loan to the committee. Held, that the representative of the lunatic could not recover the money from the bank. Meyers v. N. Y. Co. Natl. Bank, 36 App. Div. 482, 55 N. Y. Supp. 504. As to liability of bank or other depositary for taking deposit of agent, fiduciary, or other representative to pay his own debt, see full presentation of authorities in editorial note to Rochester & Charlotte Turnp. Road Co. v. Paviour, 52 L. R. A. 790.

49. Depositor deposited a certain amount to meet a certain note coming due, the bank failed. Held, that such special deposit when identified was preferred as against general creditors of bank. Bergstrasser v. Lodewick, 37 App. Div. 629, 59 N. Y. Supp. 630. As trust in proceeds of collection made by insolvent bank, see editorial note to Saylis v. Cox, Rec'r, 32 L. R. A. 715.

50. Special circumstances excusing bank officer for omission to examine col

lateral offered for loan. Clinton Natl. Bk. v. Natl. Park Bank, 37 App. Div. 601, 56 N. Y. Supp. 244.

51. A bank has a lien on a customer's deposit for any indebtedness actually due by customer; and this superior to rights of attaching creditor. People v. St. Nicholas Bank, 44 App. Div. 313, 60 N. Y. Supp. 719. See editorial note to Armstrong v. Chemical Natl. Bank, 6 L. R. A. 226, as to right of bank to lien on deposits.

52. Plaintiff had note on which he was indorser discounted at bank, and he was credited with the proceeds. Subsequently on default of note, and without notice of protest, the bank charged amount against his deposit, and refused to pay checks drawn on it. Held, that bank was liable on contract and in tort to the depositor plaintiff; also, that malice was inferable from repeated refusal to pay checks. Dairs v. Standard Natl. Bank, 50 App. Div. 210, 63 N. Y. Supp. 764. 53. A bank officer is liable to his bank for loss by his negligence in determining value of collateral for loan to one customer for one-fifth of capital and surplus of bank, when collateral is not worth more than 10 per cent. more than loan. That no ratification by directors concludes the bank. 17th Ward Bank v. Smith, 51 App. Div. 259, 64 N. Y. Supp. 888. As to care required of bank directors as regards the bank, its stockholders, and third persons, see note to Swentzel v. Penn, Bank, 15 L. R. A. 305.

54. Negotiable municipal bonds stolen eighteen years ago were pledged by a customer of bank, who was in fact an ex-convict, but not suspected to be such. Held, that pledgee bank acquired good title under the special circumstances. Manhattan Sav'gs Inst. v. N. Y. Natl. Exchange Bank, 53 App. Div. 635, 65 N. Y. Supp. 757.

55. Where the president of corporation depositor had his personal note due at the bank, and paid it by a president's check upon the corporation's account in that bank: Held, that corporation could recover from bank the amount paid and this without demand; it being a misapplication of funds. Jas. Reynolds El. Co. v. Merchants Natl. Bank, 55 App. Div. 1, 67 N. Y. Supp. 397.

56. A confidential employee of depositor firm made out checks in course of business and presented them for signature to firm. He then raised the amounts and altered payee's name to "cash" and drew out the money from the bank in person. He in course of business procured the checks so paid, and altered them to their original form, and corrected the stubs to conform to the bank's footings. The bank's teller noticed some defacement in some checks and required this employee's personal indorsement. This clerk had abstracted these checks from sealed envelopes addressed for mailing. Held, that bank could charge depositor only authentic amount of original checks. Critten v. Chemical Natl. Bank, 60 App. Div. 241, 70 N. Y. Supp. 246, modified 171 N. Y. 219, 57 L. R. A. 529, 63 N. E. 969.

57. By-laws of a bank provided that cashier as well as president should sign its drafts, did not prohibit them from obtaining drafts for personal use, and allowed cashier to overdraw his account, and directors loaned him bank assets. He paid for horses for private use with draft of his bank drawn on correspondent bank, entered it at less than face amount which he paid into bank. Held, payee not liable to drawer for the difference. Campbell v. Upton, 66 App. Div. 434, 73 N. Y. Supp. 1084, aff'd 171 N. Y. 644. As to nature of draft drawn by one bank or another, see editorial note to Exchange Bank v. Sutton Bank, 23 L. R. A. 173.

58. The relation of president to his bank is that of agency, and he is liable for his failure to use reasonable care and diligence in loaning the bank's funds. 17th Ward Bank v. Webster, 67 App. Div. 228, 73 N. Y. Supp. 648.

59. Depositor corporation had two accounts each with different form of signature, one form stating two names, the other but one. Held that form stating two names did not mean either of such names, but both. Shoe Lasting Machine Co. v. Western Natl. Bank, 70 App. Div. 588, 75 N. Y. Supp. 627.

60. A bank holding note of its depositor cannot, before maturity, retain deposit to pay note. Pearsall v. Nassau Natl. Bank of Brooklyn, 74 App. Div. 89, 77 N. Y. Supp. 11. See editorial note to Nashville Trust Co. v. Fourth Natl. Bank, 15 L. R. A. 710, on right to set off unmatured claim against deposit account of insolvent debtor.

61. Cashier of bank acts within scope of his authority in surrendering bond given to secure an account, and taking in lieu thereof a second bond for larger amount but invalid because of conditional delievery with condition unperformed, with somewhat similar names as sureties. German-Amer. Bank of Tonawanda v. Schwinger, 75 App. Div. 393, 78 N. Y. Supp. 38.

62. Deposits; right to follow money paid on forgery under peculiar facts. Nassau Bank v. Natl. Bank of Newburgh, 159 N. Y. 456, 54 N. E. 66.

63. A bank is liable for negligent delay in presenting check deposited with it by customer. Martin v. Home Bank, 160 N. Y. 190, 54 N. E. 717.

64. A certificate of deposit payable to one or "to his order" is not due for purposes of suit until actual demand accompanied by presentation of certificate. Cottle v. Marine Bank of Buffalo, 166 N. Y. 53, 59 N. E. 736.

65. A certificate of deposit is a negotiable instrument; when made by a banking firm, and it bears additional signature of individual held out as partner, the individual and his estate is liable as surety, and individual estate is liable to holder and preferred to firm creditors. Matter of Baldwin, 170 N. Y. 156, 58 L. R. A. 122, 63 N. E. 62, modifying 57 App. Div. 621. As to nature of deposit tickets issued by bank; see editorial note to First Natl. Bank v. Clark, 17 L. R. A. 580.

66. The relation between depositor and the bank, is that of creditor and debtor, and payment can be made by bank only on actual direction of depositor; stating the rule on certain peculiar facts as to raised checks. Critten v. Chemical Natl. Bank, 171 N. Y. 219, 57 L. R. A. 529, 63 N. E. 969, modifying 60 App. Div. 241, 70 N. Y. Supp. 246.

67. A bank clearing exchanges through New York Clearing House may sue a bank which has presented to it, through the Clearing House (neither bank being a member of Clearing House) worthless paper, and which it has refused to repay on demand the same day: Clearing House rules construed. The check was certified but repudiated before payment or loss. Mt. Morris Bank v. 23rd Ward Bank, 172 N. Y. 244, 64 N. E. 810. For an exhaustive presentation of the authorities relating to clearing-house transactions, see editorial note to Yardley v. Philler, 25 L. R. A. 824.

68. Where a draft is sent to a bank which has a correspondent bank in the distant city on which it is drawn, it implies a duty to collect, in the absence of proof of other purpose: also, that it means a duty to collect and turn over proceeds, or return draft unimpaired; the forwarding of a worthless check not com

pliance. Natl. Revere Bank v. Natl. Bank of Republic, 172 N. Y. 102, 64 N. E. 799; aff'g S. C. 54 App. Div. 342, 66 N. Y. Supp. 662.

69. Although a bank's ordinary liability on certifying a check is as to signature, amount, and availability of funds, yet when it has information, not known to holder, that it is a forgery, and disregards such information and certifies check, its liability is extended. Thus where a draft not corresponding to the list before the teller, is certified and subsequently paid through the clearing house, the certifying bank cannot recover back the amount of the forgery. Continental Natl. Bank v. Tradesmens' Natl. Bank, 173 N. Y. 272, 65 N. E. 1108, aff'g 59 App. Div. 103, 69 N. Y. Supp. 82.

70. A bank is the debtor of the depositor and payments to other than the depositor or on his order are not justified. Fricano v. Columbia Natl. Bank of Buffalo, 118 App. Div. 567.

71. Where a check drawn to the order of the executrix is endorsed by her attorney under authority given him and is deposited by the attorney in his personal account, the bank is not responsible to the executrix for such moneys after the attorney has used them. Mills v. Nassau Bank, 52 Misc. 243.

72. Where the owner of a check indorses it, making it payable to bearer, and gives it to another, the bank is justified in paying it although in fact it was given to be placed to credit of owner's account. Peerrot v. Mt. Morris Bank, 120 App. Div. 247.

73. As to note on liability of bank for refusal to pay checks when bank holds sufficient funds, see 15 L. R. A. 134.

74. As to effect of certification of check on liability of drawer. 16 L. R. A.

510.

75. Delay in suing a bank that pays a forged check until death of the forger will not absolve the bank. The circumstances as to negligence of depositor in discovering the forgery examined. When tender of forged check for reimbursement waived. When checks are returned by the bank as vouchers, the depositor may assume that the indorsements are genuine. Kearny r. Metropolitan Trust Co., 110 App. Div. 236.

76. As to duty of depositor with respect to forged checks, see 27 L. R. A. 426. 77. A bank being merely a debtor to a depositor, it cannot justify a payment unless made on the direction of the depositor. Seaboard Natl. Bank v. Bank of America, 193 N. Y. 26, aff'g 118 App. Div. 907.

78. A bank is presumed to know the signature of the depositor and cannot charge a forged check to his account. Timbel v. Garfield Natl. Bank, 121 App. Div. 870.

79. As to duty of drawee to know of depositor's signature, see 27 L. R. A. 635. 80. Negligence by depositor in making out check so that alterations are easily made will absolve the bank for its payment. Timbel v. Garfield Natl. Bank, 121 App. Div. 870.

81. Certain facts and circumstances concerning the banking methods of a depositor such as may relieve a bank from liability in paying a series of forged checks discussed and examined. Morgan v. U. S. Mtge. & Trust Co., 125 App. Div. 22.

82. Duty of a depositor with respect to forged checks, notes on. 426, 37 L. R. A. 539.

27 L. R. A.

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1

83. As to certain errors in names by depositor in making deposit, see Schwartz v. State Bank, 63 Misc. 265.

84. As to a specific and peculiar conditional deposit, see Republic Life Ins. Co. v. Hudson Trust Co., 130 App. Div. 618.

85. As to unconstitutionality of a statutory method for compulsory payment of lost or destroyed certificates of deposit. Matter of Ellard, 62 Misc. 374.

86. For further discussion of this subject, see Eaton and Gilbert on Commercial Paper.

§ 67. Lawful money reserve. Every bank or individual banker shall at all times have on hand in lawful money of the United States, gold certificates, silver certificates, or notes or bills issued by any lawfully organized national banking association an amount equal to at least twenty-five per centum of the aggregate amount of its deposits, exclusive of deposits which are secured by outstanding unmatured bonds issued by the state of New York, if its principal place of business is located in any borough in any city of the state which borough according to the last preceding state or United States census had a population of one million eight hundred thousand or over; and an amount equal to at least twenty per centum, if its principal place of business is located in any borough, which borough according to the last preceding state or United States census had a population of one million or over, and less than one million eight hundred thou sand; and an amount equal to at least fifteen per centum of the aggregate amount of its deposits, exclusive of deposits which are secured by outstanding unmatured bonds issued by the state of New York, if its principal place of business is located elsewhere in the state. The amount thus to be kept on hand shall be called its lawful money reserve. Two-fifths of such lawful money reserve of any bank or individual banker located in any borough in any city in the state which borough according to the last preceding state or United States census had a population of eighteen hundred thousand or over, onehalf of such lawful money reserve of any bank or individual banker located in any borough in any city of the state which borough according to the last preceding state or United States census had a population of less than eighteen hundred thousand and which bank or individual banker does not maintain a branch office in any borough having a population according to the last preceding state or United States census of eighteen hundred thousand or over, and three-fifths of the lawful money reserve of any bank or individual banker located