§ 1612b. Gifts of deposit. One may so deposit funds in bank as to constitute a gift inter vivos; and within the last decade quite a number of decisions has been rendered illustrative of that fact. The test always is whether or not the depositor intended the funds deposited to be a gift to take effect immediately. In the case of McElroy v. Albany Savings Bank, it was held that an entry in a savings bank's pass-book representing moneys deposited by the husband, which read: "Albany Savings Bank in account with Mrs. Alida P. Bell, or James C. Bell, her husband, or survivor of them," constituted the parties named joint owners of the sum deposited, and entitled the wife, if she survive her husband, to take the fund; and it was further held, in the case referred to, that it was not necessary to the validity of such a gift that the pass-book should be delivered to, or remain in, the possession of the wife during her lifetime. The more recent case of Martin v. Martin sustains the principle announced in the McElroy case. In the Martin case, an account in the bank was opened: "Wm. Martin, James Martin may draw." This deposit was made by James Martin, and at the time of opening the account, he stated to the officers of the bank that it was understood and intended that, at his death, the money should belong to Wm. Martin. The bank officers explained to James Martin that the money would belong to Wm. Martin and be subject to his check. Wm. Martin was ignorant of the transaction. James Martin kept the pass-book in his possession until a few days before his death, when he delivered it, with others, to the person whom he had nominated as executor, requesting him to take charge of them and see that what was right was done, and stating at the same time that Wm. Martin was worthy of being helped. The court held that the transaction constituted a trust in favor of Wm. Martin, and that the money. in bank was his property. The court said: "And the fact that there was no delivery of the pass-book, or that James Martin reserved the right in himself to revoke this trust, or the want of knowledge of William, are not potential to prevent impressing the deposit with the attributes of a trust." 83

83. McElroy v. Albany Sav. Bank, 8 App. Div. 46, 192, 616, 40 N. Y. Supp. 340, 422, 1145; Board of Missions v. The Mechanics' Sav. Bank, 40 App. Div. 120, 54 N. Y. Supp. 28, 57 N. Y. Supp. 582; Martin v. Martin, 46 App. Div. 445, 61 N. Y. Supp. 813; Cunningham v. Davenport, 147 N. Y. 43, 41 N. E. 412, 49 Am. St. Rep. 641; Hatch v. Fourth Nat. Bank, 147 N. Y. 184, 41 N. E. 403; Matter of Bolin, 136 N. Y. 177, 32 N. E. 626; Bishop v. Corning, 37 App.

name. nature.

§ 1613. In the case of a partnership deposit it should, as a rule, be paid out only upon a check signed in the copartnership But any one of the firm is empowered to make such sigIf there are dormant partners, the bank is not bound to pay a check signed by one of them in the partnership name, unless it knew or should have known the fact that the signer was a member of the copartnership; for otherwise its refusal to pay would be legal and proper. Whether or not a copartner could bind the firm by signing the names of the several partners has been questioned. It would seem that he could.85 And where a check was signed by one partner " for A. B. C. and D. C.," 86 and another "A. & Co., per procuration of A.," 87 they were each held sufficient as copartnership checks.

84

§ 1614. It is lawful for a bank to show that a deposit standing in the name of an individual partner was really a partnership deposit; but it would be necessary to go further and show that it was really paid in on partnership account, and was designed to constitute, or at least ought rightfully to have been designed to constitute, a fund for partnership purposes, in order to warrant the bank to pay out to partnership checks.88 If two distinct firms unite in their capacities as such to form a third, payment upon the check of either firm would be valid.89

§ 1615. As to personal representatives and trustees. Where a deposit is made to the credit of several executors or administrators, the check of any one may be honored, for the reason that each one

Div. 345, 57 N. Y. Supp. 697; Proseus v. Porter, 20 App. Div. 44, 46 N. Y. Supp. 656; Beaver v. Beaver, 137 N. Y. 59, 32 N. E. 998; Bishop v. Seaman's Bank for Savings, 33 App. Div. 181, 53 N. Y. Supp. 363.

84. Cook v. Seeley, 2 Exch. 749.

85. Norton v. Seymour, 3 C. B. 792; Grant on Banking, 32; Morse on Banking, 274. A partner acting as general agent for his firm in the transaction of its business may empower the firm's employees or other persons to draw checks upon the firm's bank account, and if the checks so drawn are within the apparent scope of the firm's business, the bank will be protected in honoring the same. Evans v. Evans, 82 Iowa, 493, 48 N. W. 929.

86. Ex parte Buckley, 14 M. & W. 469, overruling Hall v. Smith, 1 B. & C. 407.

87. Williamson v. Johnson, 1 B. & C. 149.

88. Sims v. Bond, 5 B. & Ad. 389.

89. Duff v. East India Co., 15 Ves. Jr. 198.

91

is competent in law to control the estate in hand.90 But the rule respecting trustees is different. They act under a joint power, and the signature of all is, generally speaking, necessary to the validity of the check. But in an English case, where there were five trustees of a small trust fund, and they were widely apart from each other, the Court of Chancery ordered that payment might be made" to them, or any of them," to save expense.2 In the event of the death of an executor, to whose credit a deposit stands, the bank should pay thereafter to the check of the administrator de bonis non of the estate of the prior deceased, and not that of his own personal representative.93

94

§ 1616. In the case of deposits by corporations, the bank should ascertain, by examination of the corporate charter and by-laws, what officers are competent to draw checks. If the corporation should furnish to the bank the name of the party authorized to draw checks, it would undoubtedly be justified in paying, and should pay, checks drawn by such party. But otherwise, the check should purport on its face to be the corporate act. And in England, where three railroad directors were empowered to draw checks, and the three persons who were in fact directors signed their individual names to a check without styling themselves directors, it was held that the check did not sufficiently purport to be the check of the company, although it bore the impression of a stamp of the corporate name, and would not bind it even in the hands of a bona fide holder for value.95 But in cases where the

90. Pond v. Underwood, 2 Ld. Raym. 1210; Gaunt v. Taylor, 2 Hare, 413; Ex parte Rigby, 19 Ves. 462; Allen v. Dundas, 3 T. R. 125; Can v. Read, 3 Atk. 695.

91. Morse on Banking, 267; Neiman v. Beacon Trust Co., 170 Mass. 452, 49 N. E. 748, 64 Am. St. Rep. 315. In the last case it was held, that where a deposit is made in bank in the name of two persons jointly, with a provision that no payment shall be made from same, except upon their joint checks and with no mention of amounts of their respective shares or interest, if bank wrongfully pays out the whole deposit to one of the depositors, it is liable to the other for the amount of his actual interest therein at the time of such payment, although such interest is greater than it was when the deposit was made.

92. Shortbridge's Case, 12 Ves. Jr. 28.

93. Alleghany Bank's Appeal, 48 Pa. St. 328; Farmers, etc., Bank v. King, 57 Pa. St. 364.

94. Fulton Bank v. New York & Sharon Canal Co., 4 Paige, 127. 95. Serrell v. Derbyshire R. Co., 9 C. B. 811, 19 L. J. C. P. 377.

money has been paid out by the bank on such checks, if it can be traced to the corporation and proved to have been actually received by it, the bank will be entitled to charge the amount in account against the corporation.96

§ 1616a. The usage of a corporation in drawing its checks, and customary manner of conducting its business, may justify the payment of checks drawn according to such course of business even when the proper officers do not sign the checks. And it has been recently held by the United States Supreme Court that where checks had been drawn by the president and secretary of a corporation on a bank which acted as its treasurer during a long period, and without objection, the bank had a right to assume their authority to draw checks, or over-checks, and to assume also that the money was obtained and used by the corporation; and that the fact that such officers were illegally elected would not affect the validity of their transactions in the premises.97

SECTION VI.

WHAT CHECKS SHOULD BE PAID BY THE BANK.

§ 1617. When a check is presented to the bank, all that the holder can require of the bank is its payment; he cannot require its certification or acceptance, for although the bank may consent to the holder's request to certify it, if it so pleases, it is by no means compellable to do so.98

§ 1617a. Checks are payable according to priority of presentment. -But the holder has a right to demand payment on presentment of the check, and if a number of checks be presented during the day, it is the duty of the bank to pay them according to priority in the time of presentment at its counter, and not according to their priority in date. It has no right to distribute a fund pro rata amongst several checkholders when it has not sufficient funds to pay all; nor has it a right to pay a check subsequently pre

96. In re Norwich Town Co., 22 Beav. 143.

97. Mahoney Mining Co. v. Anglo-California Bank, Morrison's Transcript, vol. III, No. 2, p. 180. See also same case in vol. III, No. 5, p. 785.

98. Bradford v. Fox, 39 Barb. 203; ante, § 1601; Mt. Sterling Nat. Bank v. Green, 99 Ky. 262, 35 S. W. 911.

sented, to the exclusion of one previously presented." The rule for it to follow is, "first come first served," and a departure from it renders it responsible to the first comer.1 When a number of checks are presented at once, and their gross amount is beyond the funds of the drawer, it would seem that the bank is not bound to pay any of them;2 but it has been said that in such a case, "if the bank choose to pay the first in date, it would be difficult to see on what ground either the drawer or the holders of the others could complain." 3 And it seems but right to let priority of date decide when there is no priority in presentment.

§ 1618. Bank may require proof of payee's identity, and may have reasonable time to ascertain genuineness of indorser's signature. The bank should not pay the check drawn. upon it save to the actual payee, or to his order; and if it mistakes the payee's identity when the check is unindorsed, it is responsible. It is also entitled to a reasonable time to ascertain the genuineness of an indorser's signature when the check is payable to order. Yet if the

99. Matter of Brown, 2 Story, 502; 2 Parsons on Notes and Bills, 78; Morse on Banking, 248, 249. Payment by a bank of checks drawn on a special deposit, while neglecting to apply such deposit to the payment of a prior order drawn thereon and placed in cashier's hands by agreement of the parties, will render the bank liable to the owner of the order for the amount due thereon, if sufficient funds had been placed in such special deposit to cover the amount of the order. See Taggart v. First Nat. Bank, 12 Wash. 538, 41 Pac. 892. Drawing of checks upon a general deposit in a bank prior to garnishment of drawer's account does not exempt an amount equal to such checks, when latter are not presented until after service of garnishment. Commercial Bank v. Chilberg, 14 Wash. 247, 44 Pac. 264, 53 Am. St. Rep. 873. 1. Morse on Banking, 248, 249.

2. Dykers v. Leather Mfg. Co., 11 Paige, 611.

3. 2 Parsons on Notes and Bills, 78.

4. Goshen Nat. Bank v. Bingham, 118 N. Y. 349; ante, § 1607.

5. Dodge v. National Exchange Bank, 30 Ohio St. 1; Risley v. Phoenix Bank, 11 Hun, 484; Shipman v. Bank of the State of New York, 126 N. Y. 318, 27 N. E. 371, 22 Am. St. Rep. 821. "A bank which ignorantly pays money to the holder of an instrument upon the faith of a third person's statement that he knows the holder to be the payee, and is afterward compelled to pay the amount to the true payee, may recover the sum from the third person in an action for damages occasioned by the deceit." Lahay v. City Nat. Bank of Denver, 15 Colo. 339, 25 Pac. 704, 22 Am. St. Rep. 407; Chism, Churchill & Co. v. Bank, 96 Tenn. 641, 36 S. W. 381, 54 Am. St. Rep. 863, citing text; Crippen v. National Bank, 51 Mo. App. 508; First Nat. Bank v. Peace, 168 Ill. 40, 48 N. E. 160, citing text.

6. Robarts v. Tucker, 4 Eng. L. & Eq. 236; ante, § 1571; Pickle v. People's Nat. Bank (Tenn.), 12 S. W. 920, citing the text.