that the funds were insufficient to pay in full, this would be a defense in a suit by a depositor against the bank.33

Insolvency

In insolvency proceedings the expenses of the administration and the debts of the bank are to be first paid in full, and the assets remaining are to be divided among the general depositors. 34

Owing to the peculiar relation between the depositor and the bank, a depositor who is also a debtor to the bank cannot, on its insolvency, unless it is otherwise provided by statute,35 set off the amount of his deposit against his indebtedness; his debt to the bank belonging in fact to all the depositors, so that the demands are not mutual.30

BY-LAWS-CONTRACT OF DEPOSIT

117. The rights of the depositors in respect to payment are usually regulated by the by-laws, which are a part

of the contract between the bank and the depositor.

33 Lewis v. Lynn Inst. for Savings, 148 Mass. 235, 19 N. E. 365, 1 L. R. A. 785, 12 Am. St. Rep. 535. See “Banks and Banking,” Dec. Dig. (Key No.) §§ 133, 305; Cent. Dig. §§ 339–352, 1177-1182.

34 Cogswell v. Rockingham Ten Cents Sav. Bank, 59 N. H. 43; Stockton v. Mechanics' & Laborers' Sav. Bank, 32 N. J. Eq. 163. See, also, Kennedy v. New Orleans Sav. Inst., 36 La. Ann. 1; Lewis v. Lynn Inst. for Savings, 148 Mass. 235, 19 N. E. 365, 1 L. R. A. 785, 12 Am. St. Rep. 535. But see People v. Mechanics' & Traders' Sav. Inst., 92 N. Y. 7. See "Banks and Banking," Dec. Dig. (Key No.) §§ 80, 81, 135, 309; Cent. Dig. §§ 184-197, 375–379, 1201–1214.

35 See North Bridgewater Sav. Bank v. Soule, 129 Mass. 528. See "Banks and Banking," Dec. Dig. (Key No.) §§ 80, 81, 135, 309; Cent. Dig. §§ 184-197, 375–379, 1201–1214.

36 Osborn v. Byrne, 43 Conn. 155, 21 Am. Rep. 641; Hannon v. Williams, 34 N. J. Eq. 255, 38 Am. Rep. 378; Cogswell v. Rockingham Ten Cents Sav. Bank, 59 N. H. 43. See, also, Van Dyck v. McQuade, 20 Hun (N. Y.) 262, affirmed 85 N. Y. 616. See "Banks and Banking," Dec. Dig. (Key No.) §§ 80, 135, 309; Cent. Dig. §§ 184-196, 375-379, 1201-1214.

The duties and rights of the bank and of the depositors in respect to making and receiving payment are usually regulated by the by-laws. The depositors are often required to subscribe to the rules and regulations, and they thereby become a part of the contract of deposit. They are also usually printed in the pass book, so that by accepting the book the depositor agrees to be bound thereby. The contract is also binding upon the bank, which cannot alter its contract with a depositor by a change in the by-laws to which he has not assented. If the depositor has not notice of a change, deposits afterwards made by him must be taken to have been made under the original contract.38

PAYMENT ON PRODUCTION OF PASS BOOK

118. The by-laws usually provide that payment shall be made to the depositor only upon production of his pass book. Generally a payment by the bank, in good faith and in the exercise of ordinary care, to one who produces the book as his own, is binding on the depositor.

87 Ladd v. Androscoggin County Sav. Bank, 96 Me. 520, 52 Atl. 1016; Heath v. Portsmouth Sav. Bank, 46 N. H. 78, 88 Am. Dec. 194; Cosgrove v. Provident Inst. for Savings, 64 N. J. Law, 653, 46 Atl. 617; Warhus v. Bowery Sav. Bank, 5 Duer (N. Y.) 67, affirmed 21 N. Y. 543; Burrill v. Dollar Sav. Bank, 92 Pa. 134, 37 Am. Rep. 669; Gifford v. Rutland Sav. Bank, 63 Vt. 108, 21 Atl. 340, 11 L. R. A. 794, 25 Am. St. Rep. 744.

Otherwise where the depositor could not read English and the rule was not called to his attention. Siegel v. State Bank (App. Div.) 123 N. Y. Supp. 220. But see Burrell v. Dollar Sav. Bank, 92 Pa. 134, 37 Am. Rep. 669 (holding it immaterial that the depositor could not read). See "Banks and Banking," Dec. Dig. (Key No.) § 300; C'ent. Dig. § 1159–1161.

38 Kimins v. Boston Five Cent Sav. Bank, 141 Mass. 33, 6 N. E. 242, 55 Am. Rep. 441; Hudson v. Roxbury Inst. for Savings, 176 Mass. 522, 57 N. E. 1021. See "Banks and Banking," Dec. Dig. (Key No.) 300; Cent. Dig. §§ 1159-1161.

The by-laws usually provide in effect that payments shall be made only upon production of the depositor's pass book, in which all deposits and withdrawals are entered, and that presentment of the pass book shall be sufficient authority to the bank to make any payment to the bearer. Payments, when the depositor cannot present his book in person, are generally to be made upon the written order of the depositor, accompanied by the pass book. In case of loss of the book, payments are usually to be made upon satisfactory proof of loss and indemnity.39

The by-laws of different banks, of course, differ, and the mutual rights and duties of the depositor and the bank in respect to payments will depend upon the particular bylaws in force. A few examples of the construction placed by the courts upon such by-laws will be given for the sake of illustration.

Where the by-law provides that all payments to persons producing the pass book shall be deemed valid, a payment to one who has stolen the book and who falsely impersonates the depositor will be binding on the depositor.40 But the rules prescribed by the bank for its protection in the payment of deposits do not dispense with the exercise of ordinary care upon its part, and payment to a person producing the book,

39 See Wall v. Provident Inst. for Savings, 3 Allen (Mass.) 96; Id., 6 Allen (Mass.) 320; Heath v. Portsmouth Sav. Bank, 46 N. H. 78, 88 Am. Dec. 194. Cf. Palmer v. Providence Inst. for Sav., 14 R. I. 68, 51 Am. Rep. 341. See "Banks and Banking," Dec. Dig. (Key No.) 301; Cent. Dig. §§ 1162-1176.

40 Goldrick v. Bristol County Sav. Bank, 123 Mass. 320; Donlan v. Provident Inst. for Savings, 127 Mass. 183, 34 Am. Rep. 358; Sullivan v. Lewiston Inst. for Savings, 56 Me. 507, 96 Am. Dec. 500; Cosgrove v. Provident Inst. for Savings, 64 N. J. Law, 653, 46 Atl. 618. Cf. Ackenhausen v. People's Sav. Bank, 110 Mich. 175, 68 N. W. 118, 33 L. R. A. 408, 64 Am. St. Rep. 338. But see Smith v. Brooklyn Sav. Bank, 101 N. Y. 58, 4 N. E. 123, 54 Am. Rep. 653. See "Banks and Banking," Dec. Dig. (Key No.) § 301; Cent. Dig. §§ 1162-1176.

which he has stolen, will not discharge the bank if it has been negligent. And under a by-law providing that, as the bank may not be able to identify every depositor, it will not be responsible for loss where the depositor has not given notice that his book has been lost or stolen, if the deposit shall have been paid in whole or in part on presentation of the book, it has been held that, while payment to one fraudulently impersonating the depositor in presenting the book is authorized, the by-law is no protection to the bank if it pays to one presenting the book with a forged order purporting to be made by the depositor, and that in such case the bank is bound at its peril to ascertain the genuineness of the authority presented. If, to protect the bank against such forgeries, a by-law provides that the bank shall not be responsible to the depositor for frauds practiced upon it, it still owes to the depositor the duty to exercise ordinary care.

42

43

41 Ladd v. Androscoggin Sav. Bank, 96 Me. 510, 52 Atl. 1016; Brown v. Merrimack River Sav. Bank, 67 N. H. 549, 39 Atl. 336, 68 Am. St. Rep. 700; Appleby v. Erie County Sav. Bank, 62 N. Y. 12; Kummel v. Germania Sav. Bank, 127 N. Y. 488, 28 N. E. 398, 13 L. R. A. 786; Gearns v. Bowery Sav. Bank, 135 N. Y. 557, 32 N. E. 249; Gifford v. Rutland Sav. Bank, 63 Vt. 108, 21 Atl. 340, 11 L. R. A. 794, 25 Am. St. Rep. 744; Wegner v. Second Ward Sav. Bank, 76 Wis. 242, 44 N. W. 1096. See "Banks and Banking," Dec. Dig. (Key No.) 301; Cent. Dig. §§ 1162-1176.

42 Ladd v. Androscoggin Sav. Bank, 96 Me. 520, 52 Atl. 1016; Jochumson v. Suffolk Sav. Bank, 3 Allen (Mass.) 87; Kimins v. Boston Five Cents Sav. Bank, 141 Mass. 33, 6 N. E. 242, 55 Am. Rep. 441; Kingsley v. Whitman Sav. Bank, 182 Mass. 252, 65 N. E. 161, 94 Am. St. Rep. 650. See, also, Hough Ave. Savings & Banking Co. v. Andersson, 78 Ohio St. 341, 85 N. E. 498, 18 L. R. A. (N. S.) 431, 125 Am. St. Rep. 707. Cf. Campbell v. Schenectady Sav. Bank, 114 App. Div. 337, 99 N. Y. Supp. 927; Winter v. Williamsburgh Sav. Bank, 68 App. Div. 193, 74 N. Y. Supp. 140. But see Langdale v. Citizens' Bank of Savannah, 121 Ga. 105, 48 S. E. 708, 69 L. R. A. 341, 104 Am. St. Rep. 94. See "Banks and Banking," Dec. Dig. (Key No.) 301; Cent. Dig. §§ 1162–1176.

48 Chase v. Waterbury Sav. Bank, 77 Conn. 295, 59 Atl. 37, 69 L. R. A. 329; Kummel v. Germania Sav. Bank, 127 N. Y. 488, 28 N. E.

The by-laws usually provide that on the death of the depositor the deposit shall be paid to his legal representatives.** Under such a rule it has been held that the bank is bound to see that payment is made to the duly appointed legal representative, and that payment to any other person, the bank having knowledge of the depositor's death, is at the peril of the bank; the by-law being made for the protection of the depositor when he can no longer protect himself.45 But it has been held that, if the death be unknown to the bank, it is liable only if it fails to use ordinary care, where the by-laws also provide that payments to persons producing the books shall be valid.46

GIFT OF A DEPOSIT

119. DEPOSIT IN TRUST-Where one person makes a deposit of his own money "as trustee" for another, a trust is thereby created if the depositor so intends; but some courts hold that communication to and acceptance by the beneficiary is essential, while other courts hold that such a deposit creates

398, 13 L. R. A. 786. See, also, Levy v. Franklin Sav. Bank, 117 Mass. 448.

Where a savings bank failed to make a physical comparison of a purported signature to a draft with the signature of the depositor on file in the bank, and the signature was a forgery, the bank is liable for such payment, for failure to exercise due care and ordinary caution. Kelley v. Buffalo Sav. Bank, 180 N. Y. 171, 72 N. E. 995, 69 L. R. A. 317, 105 Am. St. Rep. 720. See "Banks and Banking," Dec. Dig. (Key No.) § 301; Cent. Dig. §§ 1162-1176.

44 See Foss v. Lowell Five Cents Sav. Bank, 111 Mass. 285. See "Banks and Banking," Dec. Dig. (Key No.) § 301; Cent. Dig. §§ 11621176.

45 Mahon v. South Brooklyn Sav. Inst., 175 N. Y. 69, 67 N. E. 118, 96 Am. St. Rep. 603. See "Banks and Banking," Dec. Dig. (Key No.) § 301; Cent. Dig. §§ 1162–1176.

46 Kelley v. Buffalo Sav. Bank, 180 N. Y. 171, 72 N. E. 995, 69 L. R. A. 317, 105 Am. St. Rep. 720. See "Banks and Banking," Dec. Dig. (Key No.) § 301; Cent. Dig. §§ 1162–1176.