in good faith and for his benefit, and why should an ordinary donee of a deposit be required to know of the act in order to give it validity? If the object of putting the deposit in the name of another is to serve an ulterior purpose of the actor, to escape taxation or gain some other advantage, whatever quality may thereby attach to his act, the person in whose name the deposit stands acquires no interest therein.25

Wherever such action is considered a bogus performance, a letter written by the bank to the assignee of the person in whose name the deposit is made is no evidence that he has accepted it.26 Nor is a deposit by a debtor to his creditor's account, without his knowledge and consent, payment. In such a case the bank is merely the debtor's agent to pay the money to his creditor.27

Notwithstanding the several applications of this rule, the opposite rule has been more frequently declared and applied,28 especially to deposits in savings institutions.29 These have been sustained as gifts to the persons in whose name, and for whose benefit they were made, although the donees knew not, perhaps until long afterward, of their good fortune. It is true if it could be shown that a deposit thus standing in the name of another was entered through mistake, or to perpetrate a fraud, or that the depositor-of-record would be injured, he could neither claim it, nor could it be forced on him.30 Pre

Littig v. Mt. Calvary Church, 61 At. (Md.) 635. "It is the donor's act which originates the trust, and it is the intention with which he does the act that is material. The entry unexplained is a sufficient declaration of trust because it indicates an intention to establish a trust; but this may be rebutted." Milholland v. Whalen, 89 Md. 212.

25 Beaver v. Beaver, 117 N. Y. 421, 423. See Ch. XXII. §5.

26 Leech v. First Nat. Bank, 99 Mo. App. 681.

27 Hill v. Arnold, 116 Ga. 45.

28 Exchange Bank v. Gulick, 24 Kan. 359. See Greenleaf v. Mumford, 50 Barb. (N. Y.) 543.

29 Chap. XXII. §§20, 21.

30 A party to a gambling contract who has put money in another's possession, which he has deposited in a bank, is not entitled to the aid of a court of equity for its recovery. Baxter v. Deneen, 98 Md. 181.

sumptively, a deposit thus made is for his benefit, and therefore will be sustained, until the presumption is overthrown.31

5. Ownership of Checks Drawn on Depository.

(a.) Passing from the ownership of deposits to checks, the ownership of those drawn on the depository will first be considered.

What is the effect of depositing them on the title and money they represent? As between the depositor and a solvent depository on which his check is drawn, a deposit by and credit to the depositor operates as a transfer of ownership.32 By these two acts he has become the owner of the money thus represented, and the bank has no right to change its action on the discovery of an insufficient deposit to pay the check. The drawer's liability to the holder of the check is discharged, and likewise the debt, and the bank has become the debtor.33 Should

31 Sparks v. Hurley, 208 Pa. 166. Chap. XXII. §20.

32 Peters Shoe Co. v. Murray, 31 Tex. Civ. App. 259; Corporation Commission v. Bank, 137 N. C. 697; City Nat. Bank v. Burns, 68 Ala. 267; Sayles v. Cox, 95 Tenn. 579; Howard v. Walker, 92 Tenn. 452; Bryan v. First Nat. Bank, 205 Pa. 7; First Nat. Bank v. Mason, 95 Pa. 113; American Ex. Nat. Bank v. Gregg, 138 Ill. 596; Billingley v. Pollock, 69 Miss. 759, 761; First Nat. Bank v. Devenish, 15 Colo. 229; Oddie v. National City Bank, 45 N. Y. 735; Kirkham v. Bank of America, 165 N. Y. 132; Market v. Hartshorne, 3 Keyes (N. Y.) 137; Pratt v. Foote, 9 N. Y. 463; People v. Merchants' & Mech. Bank, 78 N. Y. 269; Whiting v. City Bank, 77 N. Y. 363; People v. St. Nicholas Bank, 77 Hun (N. Y.) 159; People v. Sheppard, 37 N. Y. App. Div. 119; Titus v. Mechanics' Nat. Bank, 35 N. J. Law 588, 592; Hoffman v. First Nat. Bank, 46 N. J. Law 604; Terhune v. Bank, 34 N. J. Eq. 367; Bank v. Farmers & Mechanics' Bank, 10 Vt. 141; National Bank v. Burkhardt, 100 U. S. 686; Levy v. U. S. Bank, 1 Binn. (U. S.) 27; Chambers v. Miller, 13 C. B. (N. S.) 125; Bolton v. Richard, 6 Term (Eng.) 139; Boyd v. Emmerson, 2 Ad. & E. (Eng.) 184; Kilsby v. Williams, 5 Barn. & Ald. (Eng.) 815. See Chap. XVIII. §16.

33 A depositor gave a check on his bank having a sufficient deposit to pay it. The payee deposited the check in another bank for collection, which forwarded the check to the drawee for payment. It was charged on the book to the drawer. The drawee after that held the money as agent for the payee and the drawer was discharged from his check and original debt. Smith Roofing Co. v. Mitchell, 117 Ga. 772; Bailie v. Augusta Sav. Bank, 95 Ga. 277. See also Comer v. Dufour, 95 Ga. 376.

such a bank fail afterward, though not apprehending this at the time of making the record, the depositor to whom credit is given has no preference over other creditors.34

Suppose the payee was a non-depositor and presented a check for payment, which was paid, would the bank have any right to demand repayment after discovering the inadequacy of the drawer's deposit? Again, suppose the maker was a man of repute and the overdrawing was clearly a mere accident, would the bank hesitate to let the transaction stand? Furthermore, there is no reason for regarding such a payment as a mistake, because the bank has complete evidence of the drawer's condition in its own possession, and need make no payment against its will with closed eyes.35

(a, 1.) What crediting works a transfer? Sometimes the evidence is very narrow. The entry in the depositor's book ordinarily accomplishes this result, even though no entry is made in the book of the bank.36 Is not the proper test the putting of the deposit within the creditor's control? And certainly this would be done by crediting him with the amount, or taking

34 Peters Shoe Co. v. Murray, 31 Tex. Civ. App. 259.

35 Says the court in First Nat. Bank v. Devenish, 15 Colo. 229, 232, "Banks are required, and for their own safety are compelled, to know at all times the balance to the credit of each individual customer, and they accept and pay checks at their own risk and peril. If, from any negligence or inattention to their own affairs, banks improvidently pay when the account of the customer is not in a condition to warrant it, and if by a mistake a check is paid when the drawer has no fund, the bank must look to the customer for rectification, not to the party to whom the check was paid."

36 Cases ante, note 32. "When a check is presented to a bank for deposit, drawn directly upon itself, it is the same as though payment in any other form was demanded. It is the right of the bank to reject it, or to refuse to pay it, or to receive it conditionally, but if it accepts such a check and pays it, either by delivering the currency or giving the party credit for it, the transaction is closed between the bank and the party, provided the paper is genuine." Oddie v. National City Bank, 45 N. Y. 735. Consequently, if a draft is given by a bank to its customer, receiving his check in payment, supposing that his deposit is ample for that purpose, it cannot decline to pay the draft on discovering that the depositor's account was different from what the bank supposed. First Nat. Bank v. Devenish, 15 Colo. 229.

such action as would confer on him the right to draw for the

amount.

(a, 2.) This rule prevails very generally except in California. By the usage existing among the San Francisco banks, a credit given to a depositor on his bank-book may be cancelled by the early discovery of the drawee bank of an insufficient deposit to pay the sum thus credited. 37

(a, 3.) Again, a depositor who knows that the drawer's account is insufficient to pay his check commits a fraud as truly in presenting it for credit as in presenting it for payment, and the bank's action would not preclude recovery.3

38

(b.) The effect of such crediting by an insolvent bank is different.

(b, 1.) The drawer, even though he had to his credit an ample deposit to pay his check, is not released.39 When a bank has no money to pay checks, juggling with the books affects nobody; this principle runs through the entire fabric of the banking law.40

Perhaps there is a qualification to this principle. A bank may not possibly have in actual cash enough to cover a check or series of checks at the moment they are credited, as the amount of a bank's resources, especially in a very active bank, is constantly changing. But if a bank is in a known insolvent condition at the time of crediting a check the act binds no one. 42

(b, 2.) Again, if the amount credited to the depositor is insufficient to pay his check, surely the bank is under no obliga

37 National Gold Bank v. McDonald, 51 Cal. 64; Crocker-Woolworth Nat. Bank v. Nevada Bank, 139 Cal. 564.

38 Peterson v. Union Nat. Bank, 52 Pa. 206.

39 Sherwood v. Milford State Bank, 94 Mich. 78; Exchange Bank v. Sutton Bank, 78 Md. 577; Turner v. Bank of Fox Lake, 3 Keyes (N. Y.) 425; Burkhalter v. Second Nat. Bank, 42 N. Y. 538; Kelty v. Second Nat. Bank, 52 Barb. (N. Y.) 328; McIntosh v. Tyler, 47 Hun (N. Y.) 99; Ryan v. Paine, 66 Miss. 678; Kinney v. Paine, 68 Miss. 258. Contra.-Montgomery Co. v. Cochran, 126 Fed. 456.

40 Ibid. See §10, note 60, for more cases.

41 Montgomery Co. v. Cochran, 126 Fed. 456. 42 Chap. XX. §41.

tion to pay it for him. He is therefore a debtor to the amount of the overdraft.4

43

6. Ownership of Checks Not Drawn on Depository.

The ownership of checks not drawn on the depository depends upon different principles, and will be considered when treating of collections.

7. Kinds of Trust Deposits.

Passing from individual to trust deposits, these may be divided into three kinds: First, those made by an agent, executor, receiver, trustee or other official for the use of some individual, office or estate. The trust relation in these deposits is solely between the depositor and his beneficiary. Thus an attorney who collects money for his client and deposits it in his own name—an ordinary practice-creates simply a debtor and creditor relation between himself and the bank. His trust relation to his client does not pass over to the bank and charge it as trustee for the money. By a proper suit in equity, however, the client can prevent the bank from paying the money to the attorney, and recover it for himself.44

In the way of further illustration a depositor who has two concurrent accounts with a bank of discount and deposit, trust company or banker,45 by adding trustee to his name to one of them thereby imparts to it a trust character. This rests on the weighty reason that the additional word means something, 'and, in the absence of other notice, must be considered his declaration that the fund is a trust fund, as distinguished from his own fund."46

The second kind of trust deposit acquires that peculiar quality by reason of the wrongful action of the depositor or bank, or both, whereby it is entitled to preferential consideration over other deposits. "To have that effect," says the Supreme Court

43 Kinney v. Paine, 68 Miss. 258; Ryan v. Paine, 66 Miss. 678. 44 Rhinehart v. New Madrid Mfg. Co., 99 Mɔ. App. 381.

45 See Chap. XXII. §5.

46 Jeffray v. Towar, 63 N. J. Eq. 530, 544; National Bank v. Insurance Co., 104 U. S. 54.