for the amount to a depositor, thereby in effect promising to pay out the money on his checks, is, so far as concerns the giving of value, a purchaser for value, or holder in due course. Such, indeed, appears to be the English rule.88 In this country, however, it is held that the mere giving of credit to the depositor's account does not make the bank a holder for value,89 but that to have that effect the credit must be drawn upon, in which case the bank is a holder for value to that extent; or else the credit must be absorbed by the depositor's antecedent indebtedness, as where his account is overdrawn when the credit is made, in which case the bank is

88 See Royal Bank v. Tottenham, [1894] 2 Q. B. 715, 717, 718; Capital & Counties Bank v. Gordon, [1903] A. C. 240, 245. See "Banks and Banking," Dec. Dig. (Key No.) § 126; Cent. Dig. §§ 305, 309; "Bills and Notes," Dcc. Dig. (Key No.) § 356; Cent. Dig. § 908.

89 Alabama Grocery Co. v. First Nat. Bank of Ensley, 158 Ala. 143, 48 South. 340, 132 Am. St. Rep. 18; Union Nat. Bank of Columbus v. Winsor, 101 Minn. 470, 112 N. W. 999, 118 Am. St. Rep. 641; Citizens' State Bank v. Cowles, 180 N. Y. 346, 73 N. E. 33, 105 Am. St. Rep. 765; Elgin City Banking Co. v. Hall, 119 Tenn. 548, 108 S. W. 1068; Manufacturers' Nat. Bank v. Newell, 71 Wis. 309, 37 N. W. 420; Thompson v. Sioux Falls Nat. Bank, 150 U. S. 231, 14 Sup. Ct. 94, 37 L. Ed. 1063; Queen City Savings Bank & Trust Co. v. Reyburn (C. C.) 163 Fed. 597. It is otherwise where the bank assumes an obligation to another on the faith of the credit. Montrose Sav. Bank v. Claussen, 137 Iowa, 73, 114 N. W. 547. See "Banks and Banking," Dec. Dig. (Key No.) § 126; Cent. Dig. §§ 305, 309; “Bills and Notes," Dec. Dig. (Key No.) § 356; Cent. Dig. § 908.

90 City Deposit Bank of Columbus v. Green, 130 Iowa, 384, 103 N. W. 942; Dreilling v. First Nat. Bank, 43 Kan. 197, 23 Pac. 94, 19 Am. St. Rep. 126; Shawmut Nat. Bank v. Manson, 168 Mass. 425, 47 N. E. 196; Security Bank of Minnesota v. Petruschke, 101 Minn. 478, 112 N. W. 1000, 118 Am. St. Rep. 644; Benson v. Keller, 37 Or. 120, 60 Pac. 918; Northfield Nat. Bank v. Arndt, 132 Wis. 383, 112 N. W. 451, 12 L. R. A. (N. S.) 82. See "Banks and Banking," Dec. Dig. (Key No.) § 126; Cent. Dig. §§ 305, 309; “Bills and Notes," Dec. Dig. (Key No.) § 356; Cent. Dig. § 908.

a holder for value to that extent."1 This rule has become fixed in most states by the Negotiable Instruments Law, which provides: "Where the transferee receives notice of any infirmity in the instrument or defect in the title of the person negotiating the same before he has paid the full amount agreed to be paid therefor, he will be deemed to be a holder in due course only to the extent of the amount theretofore paid by him."

TITLE TO AND DISPOSITION OF GENERAL DEPOSITS

12. IN GENERAL-Where a general deposit is made by a person in his own name, a contract is entered into by the bank with the depositor to pay the amount of the deposit to him or to his order, and he has a right to demand such payment. The depositor may, however, hold such right as trustee or agent for a third person, who consequently will have an equitable right to enforce such payment. In the absence of an adverse claim, the bank must make payment upon demand of the depositor.

13. DEPOSIT BY TRUSTEE-Where a deposit is made by a trustee, the relation of debtor and creditor is created between the bank and the trustee, and the bank must make payment to the trustee, unless it has notice that by such payment it would actually participate in a breach of trust.

91 McNight v. Parsons, 136 Iowa, 390, 113 N. W. 858, 22 L. R. A. (N. S.) 718, 125 Am. St. Rep. 265; Wallabout Bank v. Peyton, 123 App. Div. 727, 108 N. Y. Supp. 42. See "Banks and Banking," Dec. Dig. (Key No.) § 126; Cent. Dig. §§ 305, 309; "Bills and Notes," Dec. Dig. (Key No.) §§ 354-356; Cent. Dig. §§ 904-908.

92 Section 54. See Hodge v. Smith, 130 Wis. 326, 110 N. W. 193; Albany County Bank v. People's Co-operative Ice Co., 92 App. Div. 47, 86 N. Y. Supp. 773. See "Bills and Notes," Dec. Dig. (Key No.) $8 354-356; Cent. Dig. §§ 904-908.

EXCEPTION-If the bank knows that a deposit of trust moneys is a breach of trust, it will hold the moneys as a constructive trustee.

14. DEPOSIT BY AGENT-Where a deposit is made by an agent in the name of his principal, the principal alone has a right to demand payment from the bank. If the deposit is made by the agent in his own name, although the bank has notice of the agency, the agent may demand payment, in the absence of an adverse claim by the principal.

15. DEPOSIT IN NAME OF THIRD PERSON-Where a deposit is made in the name of a third person, the bank must make payment to such person, in the absence of an adverse claim by the actual depositor or another. The actual depositor has a right to demand payment from the bank, if the money deposited was his own and he did not intend to transfer the beneficial ownership of the deposit to the person in whose name it was made.

16. ASSIGNMENT, ATTACHMENT, ETC.-The right to a deposit may be assigned by the depositor, and is subject to attachment or garnishment at the suit of his creditor, subject to the rights of those who may be equitably entitled to the deposit.

In General

93

The primary duty which a bank owes to its depositor is to pay to him the amount standing to his credit upon a proper demand. The right of the depositor to receive payment may, however, be held by him as trustee or agent for a third person, who consequently may have an equitable right to demand payment from the bank; and this may be so, although there be nothing on the face of the transaction to indicate that a third person has an interest in the deposit. Again, 93 Post, p. 56.

a person may make a deposit in the name of a third person, and yet himself have a right to receive payment from the bank. Various considerations, therefore, may have to be taken into account in answering the question as to who is entitled to demand payment of a deposit, or, as it is often put, who has the "title to a deposit." It is, of course, not strictly accurate to use the term "title to a deposit" in this sense, since the title to and ownership of moneys deposited is in the bank, which is merely a debtor for the amount, and the question under consideration is: What person has the right to enforce the obligation? If it be borne in mind, however, that by "title to a deposit" nothing more is meant than the right to demand payment, the term is not misleading.

Deposit by Apparent Owner

Where a bank receives a deposit and credits the depositor with the amount, it thereby impliedly enters into a contract with him to pay the money to him or to his order. Unless the bank has notice of an adverse claim to the fund, it becomes its duty, therefore, to make payment upon receiving such an order, and it is, of course, fully protected in making such payment."5 If the bank pays out money without a proper order, the rights of the depositor are not thereby affected.96

94

94 Merchants' & Planters' Bank v. Meyer, 56 Ark. 499, 20 S. W. 406; First Nat. Bank of Lock Haven v. Mason, 95 Pa. 113, 40 Am. Rep. 632; Citizens' Nat. Bank v. Alexander, 120 Pa. 476, 14 Atl. 402; In re Plankinton Bank, 87 Wis. 378, 58 N. W. 784. See "Banks and Banking," Dec. Dig. (Key No.) § 129; Cent. Dig. §§ 312–326.

95 Greene v. Bank of Camas Prairie, 7 Idaho, 576, 64 Pac. 888; McEwen v. Davis, 39 Ind. 109; Martin v. Kansas Nat. Bank, 66 Kan. 655, 72 Pac. 218; Fulton Bank v. New York & S. Canal Co., 4 Paige (N. Y.) 127; Woodbridge v. First Nat. Bank, 45 App. Div. 166, 61 N. Y. Supp. 258; Davis v. Panhandle Nat. Bank (Tex. Civ. App.) 29 S. W. 926. See "Banks and Banking," Dec. Dig. (Key No.) 129; Cent. Dig. §§ 312-326.

96 Post, p. 160.

Deposit by Trustee

Where a deposit is made by an executor, administrator, public officer, or other trustee, the relation of debtor and creditor is created between the bank and the depositor as in other cases.97 The rule is subject to the exception that if the deposit is made in violation of the trust, and this is known to the bank, so that it has no right to receive the deposit, as in the case of a deposit made by a public officer in violation of law, the relation of debtor and creditor is not created, but the bank holds the money as a constructive trustee, with the result that if the bank becomes insolvent the beneficiary has a preferred claim as against the general creditors, if he can trace and identify the fund.98

97 Hawkins v. Cleveland, C., C. & St. L. Ry. Co., 89 Fed. 266, 32 C. C. A. 198; McNulta v. West Chicago Park Com'rs, 99 Fed. 900, 40 C. C. A. 155; Glynn County v. Brunswick Terminal Co., 101 Ga. 244, 28 S. E. 604; Otis v. Gross, 96 Ill. 612, 36 Am. Rep. 157; Fletcher v. Sharpe, 108 Ind. 276, 9 N. E. 142; Officer v. Officer, 120 Iowa, 389, 94 N. W. 947, 98 Am. St. Rep. 365; State v. Corning State Savings Bank, 128 Iowa, 597, 105 N. W. 159 (receiver); Hanson v. Roush, 139 Iowa, 58, 116 N. W. 1061; McAfee v. Bland (Ky.) 11 S. W. 439; Paul v. Draper, 158 Mo. 197, 59 S. W. 77, 81 Am. St. Rep. 296; Henry v. Martin, 88 Wis. 367, 60 N. W. 263.

So where an officer wrongfully deposits public funds in his own name, where the character of the funds is unknown to the bank. Long v. Emsley, 57 Iowa, 11, 10 N. W. 280. See, also, Rhinehart v. New Madrid Banking Co., 99 Mo. App. 381, 73 S. W. 315.

The addition of the word "clerk" to the name of a general depositor did not make a deposit by the clerk of a county court a special one. McLain v. Wallace, 103 Ind. 562, 5 N. E. 911. See "Banks and Banking," Dec. Dig. (Key No.) § 130; Cent. Dig. §§ 319-327.

98 State v. Thum, 6 Idaho, 323, 55 Pac. 858; Independent Dist. of Boyer v. King, 80 Iowa, 497, 45 N. W. 908; Page County v. Rose, 130 Iowa, 296, 106 N. W. 744, 5 L. R. A. (N. S.) 886; Brown v. Sheldon State Bank, 139 Iowa, 83, 117 N. W. 289; Myers v. Board of Education, 51 Kan. 87, 32 Pac. 658, 37 Am. St. Rep. 263; Board of Fire & Water Com'rs of City of Marquette v. Wilkinson, 119 Mich. 655, 78 N. W. S93, 44 L. R. A. 493; State v. Midland State Bank, 52 Neb. 1, 71 N. W. 1011, 66 Am. St. Rep. 484; Watts v. Board of Com'rs (Okl.) 95 Pac. 771; State v. Foster, 5 Wyo. 199, 38 Pac. 926, 29 L. R. A.