may always be enforced if enough of them remains to be identified. 13 § 1696. To guard against the loss of bank notes sent by mail, the sender often cuts them in halves, and transmits the halves by different mails. This plan is practiced both in England and the United States, and, according to the principles of the text, is one which secures the true owner against loss.14 He is entitled to recover when he shows himself entitled to both halves; and the bank cannot escape its responsibility by publishing notice that it will not be liable upon severed notes. It has been said of such a notice: "It is as extraordinary as it is novel, and is probably the first instance of a debtor's undertaking to prescribe terms to his creditors." 15 But courts of equity, notwithstanding the plaintiff may have an action at law, still entertain jurisdiction of suits on half bank § 1697. The owner in these cases, it has been said, "does not recover in consequence of holding the half merely; but he must also satisfy the bank of the verity of the facts necessary to his case, that is, of the severance, the transmission by mail, and the loss, or else he must establish them by a judgment of the court. And, furthermore, the half notes sued on must be specifically and satisfactorily identified as the counterpart of the halves transmitted, or no recovery will be had." 17 ground that the lost half of a bank bill was negotiable, and would enable a bona fide holder to recover of the bank; which, with all due deference to an illustrious judge, I am bound to say, is not law. As well might a vignette, or any other fragment torn from a bill, be considered negotiable. The only apology I can make for his lordship is, that he was on the circuit, where business is done in haste, without time and means for investigation and consideration, and where the greatest judges frequently err. Quandoque bonus dormitat Homerus." 13. Note Holders v. Bank of Tennessee, 16 Lea, 46. 14. Chitty on Bills [*259], 294; Morse on Banking, 415; 2 Parsons on Notes and Bills, 314; Williams v. Smith, 2 B. & Ald. 496; Commercial Bank v. Benedict, 18 B. Mon. 307; Redmayne v. Burton, 9 C. B. (N. S.), quoted in 2 Parsons on Notes and Bills, 313, note k. 15. United States Bank v. Sill, 5 Conn. 106; Martin v. Bank of the United States, 4 Wash. C. C. 253; 2 Parsons on Notes and Bills, 314. 16. Allen v. State Bank, 1 Dev. & Bat. Eq. 3 (1734), Gaston, J. See ante, $ 1479. 17. 2 Parsons on Notes and Bills, 313; Bank of Virginia v. Ward, 6 Munf. CHAPTER LI. CERTIFICATES OF DEPOSIT. SECTION I. DEFINITION, ORIGIN, AND NATURE OF CERTIFICATES OF DEPOSIT. § 1698. Definition. A certificate of deposit is a receipt of a bank or banker for a certain sum of money received upon deposit, and it is generally framed in such a form as to constitute a promissory note, payable to the depositor, or to the depositor or order, or to bearer. § 1698a. Origin and nature. It appears to have been at an early day the practice of the goldsmiths in England, who generally engaged in the business of banking, to give receipts to their customers for moneys deposited with them, in the form of promissory notes payable to the bearer on demand, or to the depositor or order. And the Statute of Anne placed them, as other promissory notes, on the same footing as bills of exchange.2 Thus originated the instrument now so commonly used, and called a certificate of deposit, which is, in short, generally a promissory note for the payment of an amount which it certifies to be deposited in bank. Such at least is our idea of its origin. Certainly it closely resembles the receipt given by the goldsmiths to their customers, and which was called a banker's cash note. Mr. Chitty says of such receipts: "They appear originally to have been given by bankers to their customers, as acknowledgments for having received money for their use," and that "in point of form they are similar to common promissory notes, and are stated in pleading as such." Also he says, "At present cash notes are seldom made except by country bankers, their use having been superseded by the introduction of checks." 1. Nicholson v. Sedgwick, 1 Ld. Raym. 180, 3 Salk. 67 (1698); Thompson on Bills (Wilson's ed.), 124; Chitty on Bills (13th Am. ed.) [*522], 591; Byles on Bills [*10], 81. 2. 3 & 4 Anne, chap. IX. Now, when the depositor desires to have his funds ready to check on at any moment, he takes no certificate of deposit, but uses his own check as the mode of transfer. But when he wishes his funds to be running on interest, and to remain for any extended period in bank, he usually takes a certificate of deposit, which is the bank's receipt payable at a future day, or on demand, or upon ten days' notice, as the case may be. The very nature of the instrument and the ordinary modes of business show that a certificate of deposit, like a deposit credited in a pass-book, is intended to represent moneys actually left with the bank for safekeeping, which are to be retained until the depositor actually demands them. And it is not dishonored until presented.3 § 1699. Power of banks to issue certificates of deposit. As to the power of banks to issue certificates of deposit, it is observed. by Mr. Morse that "if a bank cannot issue its negotiable promissory note, neither can it issue a negotiable certificate of deposit of this description"— that is, payable otherwise than on demand. "If the note would be void, so likewise is the certificate. If, however, the bank is empowered to issue promissory notes, subject only to the restriction that it shall issue none which are designed to pass into circulation as currency, but only such as become necessary in the ordinary course and conduct of its affairs, and are strictly business paper, then it may issue certificates of deposit, whether payable on demand or otherwise, subject only to the same restrictions." 994 In New York, where the statute law pronounced a draft or note issued by a bank payable at a certain time after date to be void, it was held that a certificate of deposit payable to the order of a particular person six months after date came within its prohibition and was void. And it would not be valid even in the hands of a bona fide holder. If the president of the bank give to the depositor his personal certificate, instead of that of the bank, parol proof is admissible to show the true state of facts and to bind the bank. And where a certificate was signed by the cash 3. National Bank of Fort Edward v. Washington County Nat. Bank, 5 Hun, 605; Smith v. Steen, 38 S. C. 361, 16 S. E. 1003; Telford v. Patton, 144 Ill. 611, 33 N. E. 1119. 4. Morse on Banking, 53; Hunt's Appeal, 141 Mass. 519. 5. Bank of Orleans v. Merrill, 2 Hill, 295; Edwards on Bills, 348. 6. Bank of Chillicothe v. Dodge, 8 Barb. 233. 7. Coleman v. First Nat. Bank, 53 N. Y. 388. ier in his individual instead of his official capacity, the bank was held bound.8 If a third party signs his name on the back of a certificate of deposit to assure its credit, he is regarded in Vermont as prima facie a maker, nor would the addition of the word "surety" alter that presumption, parties to the instrument being regarded like those of other negotiable instruments." § 1700. A bank is chargeable with knowledge of its depositor's signature, and if it issue a certificate of deposit payable to his order, and his name be forged as indorser, and the bank pays the amount to a bona fide holder, it has been held that it cannot recover back such amount from him.10 The fact that a certificate. is signed by the bank president in his own name does not preclude the depositor from showing that the bank itself is bound."1 § 1701. A certificate of deposit of a bank, if passed for a debt, is presumably conditional payment only; and if refused payment the creditor may resort to the original consideration.12 But if the party receiving the certificate makes use of it for his own purposes, not punctually requiring payment, it might be different. In a Maryland case it appeared that on the 16th of October, 1860, Hoffman of Baltimore, being indebted to Bower of Cincinnati, deposited in a banking-house in Baltimore the amount due ($206.31), and took a certificate of deposit running: "Re 8. Crystal Plate Glass Co. v. National Bank, 6 Mont. St. 304. 11. Coleman v. First Nat. Bank, 53 N. Y. 388. In South Carolina it has been held that where a depositor gives money to the president of a bank in the bank building, intending to deposit it in the bank, and the president so receives it, he is not required to see that it goes on the books of the bank to his credit. See Jumper v. Bank, 48 S. C. 430, 26 S. E. 765. But in the case of Bickley v. Commercial Bank, 39 S. C. 281, 17 S. E. 977, 39 Am. St. Rep. 721, it was held that the president of a bank has not ordinarily the right to receive deposits into his bank - and where a deposit was paid to the president, and the depositor sues the bank for its recovery, it is incumbent upon the plaintiff to show that the president had authority, express or implied, to receive the deposit, or that it was actually received by the bank as the plaintiff's money. Bickley v. Commercial Bank, 43 S. C. 528, 23 S. E. 886. 12. Lindsey v. McClelland, 18 Wis. 481. In Johnson v. Barney, 1 Clarke (Iowa), 531, where A., being indebted to B., inclosed him C. D.'s certificate of deposit for $945, and said in his letter, "Please collect and place amount to my credit," it was held that B. received it only as agent for collection, and, therefore, was not an indorsee, save in that limited sense. ceived on deposit from V. Hoffman, Esq., $206.31, payable to the order of G. Bower, Esq., indorsed herein. (Signed) Josiah Lee & Co." Bower acknowledged receipt of the certificate on 18th of October, 1860, and then transferred it to other parties, who demanded payment on the 20th of November, 1860. Two days previous Josiah Lee & Co. had failed in business, and it was sought to make Hoffman liable for the amount. But the court said: "Though the money deposited by Hoffman was not deposited by the authority of Bower, or with his previous knowledge, yet upon his acknowledgment of receipt of the certificate, he sanctioned the deposit as a payment to himself, especially as he made use of the certificate for his own purposes, and thus made Josiah Lee & Co. his agents to hold the fund subject to his order. Bower thus assuming control of the fund, it must be regarded as a payment of the debt due to him by Hoffman.' SECTION II. " 13 THE TRANSFER AND NEGOTIABILITY OF CERTIFICATES OF DEPOSIT. § 1702. As to the transfer of certificates of deposit, it must be governed by the same rules which control other promissory notes, and which vary according to the instrument's form. If it be payable to bearer it may be transferred by delivery, but if payable to order it should be indorsed. And when payable to order, mere manual delivery without indorsement or proof of a valuable consideration would not be evidence of title.1 The liability of an indorser is the same as upon the indorsement of any other promissory note.15 $1702a. Overdue certificates of deposit; certificate of deposit a continuing security. If the certificate of deposit be transferred when overdue, the transferee takes it subject to equitable defenses.16 But the certificate of deposit is not regarded as over 13. Bower v. Hoffman, 23 Md. 264; Chase v. Brundage, 58 Ohio St. 517, 51 N. E. 31; Paxton v. State, 59 Nebr. 460, 81 N. W. 383. 14. Vastine v. Wilding, 45 Mo. 89. 15. Mills v. Barney, 22 Cal. 240; Coye v. Palmer, 16 Cal. 158; Ford v. Mitchell, 15 Spoon. 304; Cate v. Patterson, 25 Mich. 191; Hazelton v. Union Bank, 32 Wis. 35; Pardee v. Fish, 60 N. Y. 265; First Nat. Bank v. The Security Nat. Bank, 34 Nebr. 71, 51 N. W. 305, 33 Am. St. Rep. 618. 16. Coye v. Palmer, 16 Cal. 158; Tripp v. Curtenius, 36 Mich. 494; First Nat. Bank v. The Security Nat. Bank, 34 Nebr. 71, 51 N. W. 305, 33 Am. St. Rep. 618. |