§ 1681. Usual course of business. The bill-holder, in order to enjoy the full privileges of a bona fide holder for value, must have acquired the bills in the usual course of business; and if they have been pledged to him as collateral security by the bank, with the understanding that they are not to be put in circulation, they are not currency, and the holder stands merely in the position of an ordinary creditor.55

The holders of bank notes have no preferred claim to the assets. of the bank over other creditors, unless it be accorded them by statute; but this is sometimes done in order to stimulate their credit as a circulating medium.57 But, in other cases, statutes specially provide that all creditors not having specific liens shall stand on the same footing and share the assets ratably.58

§ 1682. Amount of recovery. The holder is entitled to recover of the bank the full amount of the bank note, or to receive a proportionate share of its assets, without regard to the amount which he gave for it.59 Such seems to be the accepted doctrine and true principle of the question, in the absence of any statutory provision. But the view has been taken, in allotting the assets of an insolvent bank, that the bill-holders should receive amounts proportioned to the sums actually paid for the bills.60

The holder may also be entitled to recover interest. But interest does not run upon bank notes from their date,61 which we have already seen is not a true index of the time at which they were issued; but only from the time at which demand of payment was made at the banking-house, or other place, if it were specified. For then alone did the bank become in default.62 Such is the current of authority, and it matters not that the note is not expressed to be payable "with interest;" 63 but it has been held that

55. Davenport v. City Bank, 9 Paige, 12.

56. Cochituate Bank v. Colt, 1 Gray, 382.

57. Morse on Banking, 418.

58. Robinson v. Gardiner, 18 Gratt. 509; Exchange Bank v. Knox, 19 Gratt. 739.

59. Robinson v. Beall, 26 Ga. 17; Morse on Banking, 398.

60. Griffin v. Central Bank, 3 Kelly, 371; Collins v. Central Bank, 1 Kelly, 435.

61. Ringo v. Trustees, 8 Eng. 583.

62. Bank of Kentucky v. Thornsberry, 3 B. Mon. 519; Bank Commissioners v. Lafayette Bank, 4 Edw. Ch. 287.

63. Estate Bank of Pennsylvania, 60 Pa. St. 471.

VOL. II-45

interest runs from the date of suspense of specie payments when a bank has failed. Incidental damages are not allowed.

64

§ 1683. Bank notes do not become overdue.— Bank notes do not grow stale by mere lapse of time, as do other species of negotiable instruments. Indeed, it is generally to the interest of the bank that they should remain in circulation, and they are designed for the very purpose of being a continuing circulating medium. Therefore, they do not become overdue or liable to any equities between the bank and subsequent holders, but the bank is absolutely bound to pay them on presentment by the bearer at any distance of time. They are not barred (in general) like ordinary promissory notes, by Statutes of Limitation. And they are not functi officio when once redeemed by the bank, but, unlike ordinary promissory notes, are designed to be reissued again and again.68 These seem to us correct doctrines, and are sustained by the authorities cited. But it has been held that bank notes may be protested for nonpayment, and that a party acquiring them after dishonor, whether he knows of the dishonor or not, is subject to equities.69

§ 1684. How far Statutes of Limitation are applicable to bank notes. While the general rule is that Statutes of Limitation do not apply to bank bills, because they are by the consent of mankind and course of business considered as money, and that their date is no evidence of the time when they were issued, as they are being continually returned to and reissued by the bank; yet if the bills have ceased to circulate as currency, and have ceased to be taken in and reissued by the banks, they no longer have that distinctive character from other contracts, which excepts them from the operation of the Statutes of Limitation."

§ 1685. Presentment and demand.-Ordinarily the debtor must seek his creditor, and pay the debt; and if he does not, the latter may sue without any previous demand, the suit being deemed in itself a demand. The same principle (as has been held) prevails

64. Atwood v. Bank of Chillicothe, 10 Ohio, 526. 65. Bank of St. Mary's v. St. John, 25 Ala. 566.

66. Bullard v. Bell, 1 Mason, 243; Solomons v. Bank of England, 13 East,

135.

67. 2 Parsons on Notes and Bills, 95; Morse on Banking, 402.

68. 2 Parsons on Notes and Bills, 95.

69. Burroughs v. Bank of Charlotte, 70 N. C. 284.

70. Kimbro v. Bank of Fulton, 49 Ga. 419.

72

as to bank notes, which are generally made payable at the counter of the bank, or some one of its branches, at specified places; but if the bank tenders the amount in court, and shows that it was ready and willing to have paid at the place named, then it is not liable for interest or costs.71 There is authority, however, for the doctrine that demand at the place named must be averred and proved to sustain a suit on a bank note. And this doctrine is certainly reasonable and well founded, as is shown in a recent work on Bills and Notes.73 When no place of payment is specified in the bank note, the demand should be made at the bank, where it is to be presumed that provision has been made for its payment; but if another place be specified, demand should be made there, and not at the bank.74

Demand should be made during the usual hours of business, according to the custom of banks; for at their termination the bank has a right to close its doors. But if bills were presented just before the end of business hours for redemption, the bank could not excuse itself by showing that there were so many that the transaction could not have been completed before the closing hour arrived.75

§ 1686. Each bank note being a separate debt, the bank may treat it as such in determining in what description and denomina

71. Haxtun v. Bishop, 3 Wend. 13; Bank of Niagara v. McCracken, 18 Johns. 495 (qualified in Jefferson Bank v. Chapman, 19 Johns. 322); Bryant v. Damariscotta Bank, 18 Me. 240; Caldwell v. Cassidy, 8 Cow. 271; State Bank v. Van Horn, 1 South. 382; Greer v. Perkins, 5 Humphr. 588.

72. Doughty v. Western Bank, 13 Ga. 287; Hinsdale v. Larned, 16 Mass. 68 (semble); Tower v. Appleton Bank, 3 Allen, 387 (semble); Bank of Memphis v. White, 2 Sneed, 482; Thurston v. Wolfborough Bank, 18 N. H. 391; Wilks v. Robinson, 3 Rich. 182. In Kentucky it must be made, but need not be averred. Bank of Kentucky v. Hickey, 4 Litt. 225.

73. In 2 Ames on Bills and Notes, 61, it is said: "It is a noteworthy fact that the notion that negotiable paper, payable on demand, is payable without a demand, is traceable to the decisions in Capp v. Lancaster, Cro. Eliz. 548; Rumball v. Ball, 10 Mod. 38; Collins v. Denning, 3 Salk. 227, in which cases, however, the instruments declared on were not negotiable, and where, accordingly, the rule that the debtor must seek the creditor was properly applied. The absurdity of applying this rule to any negotiable paper is sufficiently obvious, and in the case of bank notes is so glaring that the courts have felt obliged to make an exception to the rule, and to hold that a bank note is not payable without a demand."

74. King v. Dedham Bank, 15 Mass. 447; Ware v. Street, 2 Head, 609. 75. Suffolk Bank v. Lincoln Bank, 3 Mason, 1; People v. State Treasurer, 24 Ill. 433.

tions of coin payment may be legally tendered;76 but the notes may be presented in packages by the holder, it not being necessary that he should make separate presentment of each note." The demand being made, it is the duty of the bank to respond to it with reasonable promptness, without employing devices, such as the slow and minute inspection of each bill, or other unnecessary formalities, to secure delay; and if it be evident that such means are used to delay or evade payment, the bank will be regarded as having refused payment.'

78

§ 1687. Remedies against finder.- Trover will lie against the finder of bank notes by the owner.79 But assumpsit will not lie against the finder for money had and received, unless the bank notes found have been turned into money. 80 In England it has been held that assumpsit will lie for country bank notes, and checks even, which have been treated like money.81 And when money may be presumed to have been actually received upon negotiable notes, or other securities, the action of assumpsit may in general be maintained.82 The identity of the note must be clearly made out.83 If the finder has passed the note to a bona fide transferee for value, the owner cannot recover against such transferee.84

§ 1688. Bank receiving its own counterfeit notes. If a bank receive in payment or on deposit counterfeit bank notes purporting to be of its own issue, the person who innocently pays or deposits them is not liable.85 "The true rule is that the party re

76. Boatman's Savings Institution v. Bank of Missouri, 33 Mo. 497. 77. Reapers' Bank v. Williard, 24 Ill. 433.

78. Ibid.; People v. State Treasurer, 4 Mich. 27; Suffolk Bank v. Lincoln Bank, 3 Mason, 1.

79. Noyes v. Price, Chitty on Bills [*524], 593; Mason v. Warte, 17 Mass. 560; 2 Parsons on Notes and Bills, 93, note.

80. Ainslie v. Wilson, 7 Cow. 662; Kellogg v. Budlong, 7 How. (Miss.) 340; Houx v. Russell, 10 Mo. 246; Muir v. Rand, 2 Ind. 291; Murray v. Pate, 6 Dana, 335; Mason v. Waite, 17 Mass. 560; Arms v. Ashley, 4 Pick. 71.

81. Spratt v. Hobhouse, 4 Bing. 173, 12 J. B. Moore, 395; Pickard v. Bankes, 13 East, 20. Perhaps the receipt of their value may be presumed. Longchamp v. Denny, 1 Doug. 137.

82. Spratt v. Hobhouse, supra; M'Lachlan v. Evans, Yonge & J. 380; Hatten v. Robinson, 4 Blackf. 479; Tuttle v. Mayo, 7 Johns. 132; Muir v. Rand, 2 Ind. 291.

83. Miller v. Race, 1 Burr. 452.

84. Miller v. Race, 1 Burr. 452; Anon., 1 Salk. 162.

85. United States Bank v. Bank of Georgia, 10 Wheat. 333.

ceiving such notes must examine them as soon as he has opportunity, and return them immediately. If he does not, he is negligent, and negligence will defeat his right of action. This principle will apply to all cases where forged notes have been received, but certainly with more strength when the party receiving them is the one purporting to be bound to pay. For he knows better than any other, whether they are his notes or not; and if he pays them or receives them in payment, and continues silent after he has sufficient opportunity to examine them, he should be considered as having adopted them as his own.86

SECTION V.

PAYMENT IN BANK NOTES, and set-off.

§ 1689. Nothing but money being a positive legal tender, bank notes are not by the common law a valid tender, even in payment of debts due to the bank itself, by their holder.87 But, by statute in many of the States, the banks are required to receive their own. notes in payment.88 But although a statute may require that the bank shall receive its notes in payment of debts due to it, yet if the bank make an assignment to trustees of all its debts and assets for the equal benefit of its creditors, the weight of authority is to the effect that bank notes acquired after and with notice of the assignment, are not a valid tender to the assignee. The statute, as it is said, no longer applies, for the debt is then not due to the bank, but to the assignee.80 But the contrary view has been taken in some cases, and impressed with a force of logic which seems to us unanswerable.90

86. Gloucester Bank v. Salem Bank, 17 Mass. 133.

87. Coxe v. State Bank, 3 Halst. 172; Hallowell, etc., Bank v. Howard, 13 Mass. 235; Suffolk Bank v. Lincoln Bank, 3 Mason, 1; Morse on Banking, 397; 2 Parsons on Notes and Bills, 91.

88. Exchange Bank v. Knox, 19 Gratt. 746; Niagara Bank v. Roosevelt, 9 Cow. 409; Moise v. Chapman, 24 Ga. 249; Dunlap v. Smith, 12 Ill. 399; Union Bank v. Ellicott, 6 Gill & J. 363.

89. Exchange Bank v. Knox, 19 Gratt. 746; Housum v. Rogers, 40 Pa. St. 190; Saunders v. White, 20 Gratt. 327; Farmers' Bank v. Goddin, 19 Gratt. 739. 90. Blount v. Windley, 68 N. C. 2 (1873). In 1866, the assets of the Bank of Washington were placed by order of court in the hands of a commissioner for the benefit of creditors. The commissioner, Blount, obtained judgment against Reddett, and Windley, as his surety, for $1.735.50, and execution issued. Windley, subsequent to issue of execution, obtained bills of the bank, and tendered them in payment. It was held a good tender; that the bank