since the death should be applied in reduction of the debt or balance owing to that customer at the time of the death, and this equally (1) where the customer had since made no deposit, but simply drawn checks; (2) where the customer had continued to deal with the firm, depositing and checking, but on the whole increasing his balance; and (3) where, dealing in like manner, he had decreased his balance. The principle was stated to be unalterable that cach payment to the customer should be referred back and set against the earliest indebtedness to him; that the rule of law, sometimes laid down, that, if at the time of the payment the debtor neglects to appropriate it, the creditor may afterwards appropriate it to suit his own wishes, cannot be allowed to govern in cases of banking; but that in this business, in the absence of express contemporary arrangement or understanding, it will be considered that the appropriation of each payment to the discharge of the earliest then subsisting indebtedness is in fact made by the very act of setting down the two items in their order in the account. To the same purport also was Clayton's case,' where, however, the intention of the depositor was considered to be more clearly established, because, after the death of a partner in the banking firm, the depositor continued to draw checks against the sum to his credit at the time of the death.

But though the items constitute a running account, yet it is not of such a nature that a bill in equity for an accounting will lie. At any time the simple striking of a balance between the two columns of debits and credits will show a sum which is a simple debt; so that there is in fact no ground on which an accounting can be demanded in equity. An ordinary action of debt will lie on behalf of the depositor, and if the bank answer payment or discharge, it is matter of common law, where the remedy for either party is perfect. Neither, as has been stated, is there a fiduciary relation of any nature whatsoever between the parties which could justify recourse to equity. Suit will lie on the common money counts. This has been conclusively settled by the sound decision given by the House of Lords in the case of Foley v. Hill.2

11 Mer. 608.

2 2 H. L. Cas. 39.

Appropriation of Deposits as between Different Accounts.

[See post, title "Lien of Bank on Funds of Depositor,” p. 42.]

If the customer has more than one account with his bank, it is his privilege, upon making any deposit, to declare to the credit of which account it shall be carried, and the banker cannot alter this appropriation. But if, at the time of depositing, the depositor neglects to appropriate, then the bankers may, within any reasonable time thereafter, appropriate the amount to either of the customer's accounts that they see fit.1 The importance of this privilege to the bank is easily seen to be great when it happens that, at the time of making the deposit, the customer has overdrawn any one of his several accounts, for then the bank may apply upon this account the amount of any unappropriated deposit. But, except for this privilege, the bank must preserve the distinction between the accounts, and could not transfer from one to supply a deficiency in another,2 nor appropriate a deposit expressed to be made to the one to any other; unless, indeed, the accounts, though in form distinct, are yet both in fact kept by the depositor in the same right, in which case it seems that the bank may protect itself by such process of transferring of credits and debits between the two as may be necessary.

An entry in the customer's books has been held not to be evidence of an appropriation by him.5

It has been held that a banker may appropriate a deposit, not appropriated by the depositor, to the credit of an account or indebtedness owing by this depositor to this banker and a former partner of his; although, at the same time, the depositor is also indebted upon a further account to the banker himself, as successor to the old firm.6

But if a stipulation of suretyship in terms expressly appears

1 Simson v. Ingham, 2 Barn. & Cr. 72; State Bank v. Armstrong, 4 Dev. 519. 2 Ex parte Kingston, in re Gross, 6 L. R. Ch. 632.

8 Farley v. Turner, 26 L. J. Ch. 710.

4 Pedder v. Preston, 9 Jur. N. s. 496; 11 C. B. N. s. 535; and see in re European Bank, 8 L. R. 41, post, p. 45.

5 Manning v. Westerne, 2 Vern. 606.

6 Snead v. Williams, 9 L. T. n. s. 115.

to provide for and cover a series of future advances, to be constantly paid off and renewed, it is obvious that the surety is not discharged when the amount named in the bond has been once met by deposits.1

Where a running account contains legal and illegal items. mingled together, payments will be considered as appropriated to discharge the legal items, in their own order, in preference to the illegal items.2

An unappropriated deposit may be appropriated by the banker to the discharge of an indebtedness of the depositor barred by the Statute of Limitations.3

Bank Balance as "Cash" or "Money."

A bank balance, although a simple contract debt, is nevertheless, practically, nearly or quite equivalent to cash in hand; and this characteristic has been recognized by the courts in various decisions. For example, a bequest of the testator's "money," or "money in hand," or " ready money," or other like phrase, has been held to carry his balance at his banker's.*

Obligation of the Bank to honor Checks.

The bank is under the obligation of honoring the customer's drafts and checks whenever the same are presented for payment, provided that at the time of such presentment the balance of the account, if then struck, would show a credit in favor of the customer of funds, on which the bank has no lien, sufficient to meet the sum called for by the check or draft. The contract so to honor the depositor's orders is implied from the

1 Henniker v. Wigg, 4 Q. B. 792.

Ex parte Randleson, 2 Deac. & C. 534; Wright v. Laing, 3 Barn. & Cr. 165. 3 Williams v. Griffith, 5 Mee. & W. 300.

Parker v. Marchant, 1 Y. & Coll. C. C. 290, affirmed 1 Phil. C. C. 356; In re Powell's Trusts, Johns. 49; 5 Jur. N. s. 331; Manning v. Purcell, 1 Sm. & G. 284 ; Vaisey v. Reynolds, 5 Russ. 12; Beck v. Gillis, 9 Barb. 35; Mann v. Mann, 1 Johns. Ch. 231; s. c. 14 Johns. 9; Fryer v. Ranken, 11 Sim. 55; Smith v. Butler, 1 Jones & Lat. 692; Stein v. Richardson, 37 L. J. Ch. 369; and see Cook v. Wagster, 1 Sm. & G. 296; Johns. 49; Langdale v. Whitfield, 4 K. & J. 426; 27 L. J Ch. 795.

usual course of business. The deposit is made with the tacit understanding that the bank shall respond to the depositor's orders, so long as there is sufficient balance to his credit.1 Such an order is almost always expressed in writing, by check or otherwise. But there is no absolute necessity for this. A verbal direction from the customer to the bank to pay a sum or to transfer a credit, would fully justify the bank in so doing. If the bank itself is willing to act upon a verbal order, this would be a perfect defence to a suit by the depositor for the amount transferred under it. But though the bank may, if it choose, act upon such directions, it is under no obligation to do so; by the usages of the banking business it is entitled to demand some written evidence of the order.2 So too the customer may draw out his funds in such parcels as he may see fit, both as regards number and amount. The rule of law forbidding a creditor to split up his demand does not affect this principle, which is based upon a custom of the banking business that has been well said to be so ancient, unquestioned, and well known that courts will take judicial notice of it, without proof. But in the case cited of Chicago Ins. Co. v. Stanford, the court said that if there should be a dispute between the bank and the customer, and the latter should draw a multitude of checks, not in the ordinary course of bona fide business, but for the purpose of vexation and of bringing a proportionate number of suits against the bank, then the court would apply itself to find some remedy. In England it was, until lately, contrary to law to draw a check for less than 20s.; but by a recent statute a check for any sum may be legally drawn, if it be bona fide against funds of the drawer actually in the hands of the banker. In our own country the law sets no limit whatsoever, and annexes no conditions; though it has been said that a check drawn for more than the depositor's balance,

1 Downes v. Phoenix Bank, 6 Hill, 297; Marzetti v. Williams, 1 Barn. & Ad. 415; Watson v. Phoenix Bank, 8 Met. 217.

2 Watts v. Christie, 11 Beav. 546; Coffin v. Henshaw, 10 Ind. 277; Walker v. Rostron, 9 M. & W. 421.

3 Munn v. Burch, 25 Ill. 35; Chicago Ins. Co. v. Stanford, 28 id. 168; Byles on Bills,*21, Sharswood's note (Sharswood's ed.).

or against a bank wherein the drawer neither has, nor has reasonable grounds to expect forthwith to have, funds, is, if unexplained, a fraud.1 Probably it would be more accurate to say that the fraud lies in delivering or putting in circulation such a check, than in drawing it.

The banker cannot excuse his disobedience of his customer's orders, in the due course of business, by setting up that he knew, or had reason to believe, that the customer's order was given in promotion of an unlawful purpose. For example, the banker is not justified in refusing to honor the depositor's check because he knows or believes that the check is an appropriation of funds to a person or for a purpose to whom or for which the depositor is not lawfully authorized to appropriate these funds. For, if the banker should look into this matter, he would make himself, improperly, a party to an inquiry between his customer and a third party. But if the depositor seeks to pay his own debt to the banker by an appropriation of funds to his credit in a fiduciary capacity with the banker, then the banker is affected with knowledge of the unlawful character of the appropriation, and would be compelled to refund.2

Duty to pay Customer's Notes, payable at Bank.

As it is the duty of the bank to pay its customer's checks, when in funds, so at least it has authority, if it is not actually under obligation to pay his bills, notes, and acceptances, drawn on, or made payable or negotiable at, the bank. For it is a presumption of law that if a customer does so draw upon, or make payable or negotiable at, his bank any of his paper, it is his intent to have the same discharged from his deposit. It is his order to pay, equally with his check; and if the bank pay, without express orders to the contrary, it shall be protected in so doing, and it shall be a good defence to a suit by the depositor. Nay,

1 True v. Thomas, 16 Me. 36; Merchants' Bank v. State Bank, 10 Wall. 604, at p. 647.

2 Gray v. Johnston, 3 L. R. H. L. Cas. 14, per Lord Westbury.

Kymer v. Laurie, 18 L. J. Q. B. 218; and see Woods v. Thiedeman, 1 H. & C. 478.