of the cashier. It is his duty to receive all the funds which come into the bank and to enter them upon its books. The authority to receive implies and carries with it authority to give certificates of deposit and other proper vouchers. When the money is in the bank he has the same authority to certify a check to be good, charge the amount to the drawer, appropriate it to the payment of the check, and make the proper entry on the books of the bank. This he is authorized to do virtute officii. The power is inherent in the office.” 68 And the exercise of such power is rather a mere transfer of credit from the drawer of the check to the holder of it than a pledge of the credit of the bank. He cannot issue a certificate of deposit to himself, because to do so would be to perfect a contract through one consenting mind, an act inconsistent with his position of trust and confidence.70

69

§ 1610a. Teller has implied power to certify checks. The teller of the bank also undoubtedly has an inherent implied power to certify checks, for, though a subordinate of the cashier, he is simply an arm with which certain portions of his work are performed;" and it has been thought that he is the more proper officer to discharge this particular duty.72 But the fact that the teller may certify checks by no means implies that when he may, the cashier may not. The authority of an assistant teller to certify checks may be implied from a course of dealing acquiesced in by the bank.73

§ 1610b. Assistant cashier has no implied power to certify checks. -The assistant cashier of a bank has no implied power to accept or certify a check, and where such an officer wrote on the check presented to the bank, "Accepted, A. J. Chester, A. Cash.," it was held that even a bona fide holder for value was chargeable with an infirmity in the transaction, the style of the acceptance putting him on guard as to the authority of the officer.74

68. Merchants' Bank v. State Bank, 10 Wall. 648; Muth v. Trust Co., 88 Mo. App. 598.

69. Morse on Banking, 192. 70. Lee v. Smith, 84 Mo. 304; post, § 1611. 71. Farmers, etc., Bank v. Butchers, etc., Bank, 14 N. Y. 624, 16 N. Y. 133; Mead v. Merchants' Bank, 25 N. Y. 146; Irving Bank v. Wetherald, 36 N. Y. 335; Hill v. Trust Co., 108 Pa. St. 1. Contra, Mussey v. Eagle Bank, 9 Metc. (Mass.) 313; Muth v. Trust Co., 88 Mo. App. 598.

72. Farmers, etc., Bank v. Butchers, etc., Bank, 14 N. Y. 624, 16 N. Y. 133. 73. Hill v. Trust Co., 108 Pa. St. 1.

74. Pope v. Bank of Albion, 57 N. Y. 127.

§ 1611. Bank officer cannot certify his own check. There is this limitation upon the implied power of the president or other officer of a bank to certify checks: he cannot certify his own check, and any party taking a check drawn by a party, and then certified by him for a bank as its officer, takes it with notice of the double relation he is acting in, and cannot be placed upon the footing of a bona fide holder without notice. This doctrine rests on the principle that no person can act as agent of both parties to a contract, although he may himself have no interest on either side; nor can he act as agent in regard to a contract in which he has any interest, or in which he is a party on the side opposite to his principal.75

§ 1611a. Deposits, general and special. Deposits made with bankers may be either general or special. A deposit is special when the thing deposited has been placed in the charge or custody of the bank or banker, and to be specifically returned according to the terms of the special deposit. When a deposit is made, it is presumed to be general and not special. A general deposit, ordinarily speaking, consists of a deposit of money in bank — in such case the depositor parts with the title to the money deposited, and thereby loans it to the bank. The bank, in consideration of the loan and the right to use the money for its own profit, agrees to refund the same, or any part thereof upon check or checks. general deposit creates the relationship of debtor and creditor between the bank and the depositor, and in no sense is the relationship of trustee and cestui que trust created; but it is otherwise with a special deposit.76

A

75. Claflin v. Farmers, etc., Bank, 25 N. Y. 294, overruling 36 Barb. 540. See also N. Y. & N. H. R. Co. v. Schuyler, 34 N. Y. 30, 64; Titus v. Great Western Turnpike Co., 5 Lans. 253; ante, § 1607; Lee v. Smith, 84 Mo. 304. 76. Commercial Bank of Albany v. Hughes, 17 Wend. 94; Etna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 82, 7 Am. Rep. 314; Bullard v. Randall, 1 Gray, 605, 61 Am. Dec. 433; Am. & Eng. Encyc. of Law (1st ed.), vol. II, p. 94, and authorities there cited. See also Matter of Mueller, 15 App. Div. 67, 44 N. Y. Supp. 280; Decker v. Union Dime Sav. Inst., 15 App. Div. 55, 44 N. Y. Supp. 521; Gray v. Merriam, 148 Ill. 179, 35 N. E. 810, 39 Am. St. Rep. 172; Anderson v. Bank, 112 Cal. 598, 44 Pac. 1063, 53 Am. St. Rep. 228: Nichols v. State, 46 Nebr. 717, 65 N. W. 774; First Nat. Bank of Farmersville v. Greenville Nat. Bank, 84 Tex. 40, 19 S. W. 334: Paul v. Draper, 158 Mo. 197; Leaphart v. Commercial Bank, 45 S. C. 563, 23 S. E. 939, 55 Am. St. Rep. 800; Thomasson v. Commercial Bank, 45 S. C. 570, 23 S. E. 942; Union Sav. Bank & Trust Co. v. Indiana Lounge Co., 20 Ind. App. 325, 47 N. E. 846.

SECTION V.

WHOSE CHECKS SHOULD BE PAID BY THE BANK.

§ 1612. Signature of check-drawer should be identical with entry of credit. When a deposit has been made in a bank, its officers should be careful that no portion of it is paid out upon the check of any party but the depositor or depositors. The proper and only safe rule for the bank to adopt is to require the signature to be identical in terms with the credit on its books." Thus if the credit be simply to A. B., let the check be signed simply A. B.; and if it be to "A. B., trustee," or "A. B., trustee for C. D.," let the signature be in totidem verbis.78 So if several persons not partners make a deposit to their joint credit, the signature of each one should be required. But if it be to their joint and several credit, the check of any one may be honored.79 Where one or more of the joint depositors abscond, equity will relieve the others.

80

§ 1612a. Conversion of trust fund.— If a deposit be made in bank to the credit of a certain person as agent or trustee, the use of such terms would charge the bank with notice that the funds were there in a fiduciary relation; it would have no lien upon them for the private debts of the depositor, and if it permitted them to be used for his private purposes in transactions with the bank it would be bound.81 But it has been held that the bank is not bound to in

77. Tryon v. Okley, 3 G. Greene, 289; Bates v. First Nat. Bank, 89 N. Y. 286; Patterson v. Marine Bank, 130 Pa. St. 419; Citizens' Nat. Bank v. Alexander, 120 Pa. St. 476; First Nat. Bank v. First Nat. Bank, 58 Ohio St. 207, 50 N. E. 723, 65 Am. St. Rep. 748.

78. Innes v. Stephenson, 1 Moody & R. 145; Stone v. Marsh, Ryan & M. 364; Sloman v. Bank of England, 14 Sim. 459, 9 Jur. 243; Ihl v. Bank of St. Joseph, 26 Mo. App. 139. As illustrative of the general principle stated in the text, see Clark v. Saugerties Sav. Bank, 62 Hun, 346, 17 N. Y. Supp. 215.

79. Morse on Banking, 266. A special deposit made by H. to be paid to D. & W., upon their joint check, and not otherwise, upon which the conditions have not been complied with for sixteen months, should, upon demand, be paid to the said H. Bank of Le Roy v. Harding, 1 Kan. App. 389, 41 Pac. 680. 80. Ex parte Hunter, 2 Rose, 382; Er parte Collins, 2 Cox, 427. 81. Central Nat. Bank v. Connecticut Mut. Ins. Co., U. S. S. C., Nov., 1881, Morrison's Transcript, vol. III, No. 1, 52; Pannell v. Hurley, 2 Collyer New Cas. 241. See also Duncan v. Jaudon, 15 Wall. 165; Bailey v. Finch, L. R., 7 Q. B. 34; Ex parte Kingston; In re Gross, L. R., 6 Ch. App. 632; Bundy v. Town of Monticello, S. C. Ind., Feb., 1882, Cent. L. J., March 3, 1882, p. 177 (vol. XIV, No. 9); Ihl v. Bank of St. Joseph, 26 Mo. App. 139. A check

quire whether checks drawn in proper form by the trustee in favor of third parties, are conversions of the fund to his own use; the contract between the bank and the depositor being that the former will pay according to the checks of the latter, and when drawn in proper form, the bank is bound to presume that the act of the

signed by a bank cashier on a trust account in his name in the bank, where no money is paid upon it, and it is used only to make good the bank reserve, is not a payment, and the cestui que trust may follow the trust fund. And further, that knowledge of the bank officer of the trust character of the fund, was notice to the bank. Wiggins v. Stevens, 33 App. Div. 83, 53 N. Y. Supp. 90: First Nat. Bank of Central City v. Hummel, 14 Colo. 259, 23 Pac. 986, 20 Am. St. Rep. 259; Meldrum v. Henderson, 7 Colo. 256, 53 Pac. 148. In the case last cited, it was held: If one having trust fund deposits the same in a bank as his own money, has placed it to his individual credit and mingles it with his other funds in such manner that its identity is lost, its true character is by his own act destroyed, and he cannot, after the banker's assignment for the benefit of creditors, follow it into the hands of the assignee and recover it as a trust fund." In this connection, see first report on the case of Hummel v. First Nat. Bank, 2 Colo. App. 571, 32 Pac. 72. It would be otherwise if the trust funds were deposited to the individual credit of the trustee and such funds were commingled with and used as a part of the general funds of the bank in such a case owners of the trust would not be entitled to preference in contest with other creditors over the funds belonging to insolvent bank. See Shute v. Hinman, 34 Oreg. 578, 56 Pac. 412, 58 Pac. 882. In Wisconsin held, that even if the money had been placed on deposit to the credit of a guardian of an infant, trust cannot attach and a preference there for cannot be allowed, if the money thus deposited was commingled with the funds of the bank. The claimant must be able to trace into and satisfactorily identify it in the hands of the assignee, or received on its substitute or substantial equivalent." See Burnham v. Barth, 89 Wis. 362, 62 N. W. 96. See also Thuemmler v. Barth, 89 Wis. 381, 62 N. W. 94; Henry v. Martin, 88 Wis. 367, 60 N. W. 263. And accordingly, it has been held that the principal may establish his ownership of the funds in bank deposited to the credit of his agent. See Boody v. Lincoln Nat. Bank, 70 Hun, 392, 24 N. Y. Supp. 1139. But where one of two trustees indorses upon a note, payable to both, the name of his cotrustee without authority, and deposits the same in bank to his individual account, and misappropriates the fund, the bank is the party to the breach of trust and is responsible for the loss, unless the claim of the first estate therefor is barred by limitations. See Barroll v. Foreman, 88 Md. 188, 40 Atl. 883. See also Duckett v. National Bank of Baltimore, 88 Md. 8, 41 Atl. 161, 1062; Aurora Nat. Bank v. Dils, 18 Ind. App. 319, 48 N. E. 19. And upon the same principle, if a debtor makes a deposit with a creditor bank, with an agreement that it shall be subject to the depositor's order for a specific purpose, it cannot, in violation of such order, be applied by the bank in payment of the depositor's debt. See Carter v. Martin, 22 Ind. App. 445, 53 N. E. 1066. An assignee for creditors who deposits funds in bank which subsequently becomes insolvent, is not entitled

trustee is in the course of the lawful performance of his duty, and to honor them accordingly.82

to recover the amount deposited from the assignee of the bank as trust funds, where the bank had on hand only a very small amount in cash at the time it failed, the money so deposited being mingled with other money, and used by the bank in the usual and ordinary course of business in the payment of its debts, and no new loans being made by the bank, and no property of any kind or securities on hand being purchased with the money so deposited. Jones v. Chesebrough, 105 Iowa, 303, 75 N. W. 97; State v. Midland State Bank, 52 Nebr. 1, 71 N. W. 1015, 66 Am. St. Rep. 484. As further illustrative of the principle announced in the text, see Kelley v. Chenango Valley Sav. Bank, 22 App. Div. 202, 47 N. Y. Supp. 1041; Exchange Bank v. McDill, 56 S. C. 565, 35 S. E. 260; Pollock v. Carolina Interstate Bldg. & Loan Assn.. 51 S. C. 420, 29 S. E. 77, 64 Am. St. Rep. 683; Hamilton et al., Exrs. v. Toner. 17 Ind. App. 389, 46 N. E. 921; Tiernan, Exr. v. The Security Bldg. & Loan Assn., 152 Mo. 135, 53 S. W. 1072; Pundmann v. Schoenich, 144 Mo. 149, 45 S. W. 1112; McNulta v. West Chicago Park Commission, 40 C. C. A. 155, 99 Fed. 900; Merchants' Nat. Bank v. School District, 36 C. C. A. 432, 94 Fed. 705; Lanterman v. Travous, 174 Ill. 459, 51 N. E. 805.

82. National Bank v. Insurance Co., 104 U. S. 54; State Nat. Bank v. Reilly, 124 Ill. 469; Woodbridge v. First Nat. Bank, 45 App. Div. 166, 61 N. Y. Supp. 258. In New York it has been held that checks drawn on an account in the drawer's name as "executor," not evidence that the money belonged to a particular estate. See Mittnacht v. Bache, 16 App. Div. 426, 45 N. Y. Supp. 81; Heidelbach v. National Park Bank, 87 Hun, 117, 33 N. Y. Supp. 794. In the last case it was held, that where a party seeks to trace the proceeds of property after it has been deposited in bank with the individual money of the depositor, it is sufficient, for the purposes of identification, and to establish the character of the proceeds as trust money, to trace the proceeds into the bank, to show that they were there at the time notice was given of the true owner's rights. But any collusion between the bank and the depositor whereby a breach of trust is committed toward a cestui que trust, would make bank liable. Knobeloch v. Germania Bank, 43 S. C. 233, 21 S. E. 13. But if a bank is explicitly directed to put a certain sum to the credit of a party as trustee, and yet places the same to the personal account of that party who commits a breach of trust by misappropriating it within the bank, it is liable to the trust estate for such participation in the breach of trust after notice; and no subsequent ratification of the wrongful act of the bank by the trustee can bind the beneficiaries of the trust estate. See Duckett v. National Mechanics' Bank, 86 Md. 400, 38 Atl. 983, 63 Am. St. Rep. 513. Whether the bank be liable or not, it is well settled that money received by a person in a fiduciary character and deposited to his individual credit in bank, the money so deposited can be followed and the trust made a charge on the balance in the beneficiaries' hands, and if such depositor has an individual account in bank, and thus mixes the trust funds with his own money and afterward draws out sums by checks in the ordinary manner, the drawer must be taken to have drawn out his note money in preference to the trust money. See Drovers' Bank v. Roller, 85 Md. 495, 37 Atl. 30, 60 Am. St. Rep. 344.