When undue bills are bought or discounted.

Deposit of

securities for

safe keeping.

Converting of securities by

the banker for his own use a misdemeanor.

entered such bills or securities as cash, unless the customer has assented to their being so considered (a). Where, however, the banker has bought the bills or discounted them, then as the price of them becomes the property of the customer, so the instruments themselves become the banker's (b).

Bills received from a customer and simply noted by the banker in the customer's account as received, and not carried to his credit as "cash," are termed "short bills," and, except by special agreement, the property in them is not changed by depositing them with the bank (c).

A special statute (d) exists making it criminal on bankers to misapply securities deposited with them for safe custody, or for any special purpose, as follows:

If any money, or security for the payment of money, shall be entrusted to any banker, merchant, broker, attorney, or other agent, with any direction in writing to apply such money, or any part thereof, or the proceeds or any part of the proceeds of such security, for any purpose specified in such direction, and he shall in violation of good faith, and contrary to the purpose so specified, in anywise convert to his own use or benefit such money, security, or proceeds, or any part thereof respectively, every such offender shall be guilty of a misdemeanor, and, being convicted thereof, shall be liable, at the discretion of the Court, to be transported beyond the seas for any term not exceeding fourteen years, nor less that seven years, or to suffer such other punishment, by fine or imprisonment, or by both, as the Court shall award. And if any chattel, or valuable security, or any power of attorney, for the sale or transfer of any share or interest in any public stock or fund, whether of this kingdom or of Great Britain, or of Ireland, or of any foreign state, or in any fund of any body corporate, company, or society, shall be entrusted to any banker, merchant, broker, attorney, or other agent, for safe custody, or for any special purpose, without any authority to sell, negotiate, transfer, or pledge, and he shall, in violation of good faith, and contrary to the object and purpose for which such chattel, security, or power of attorney shall

(a) Giles v. Perkins, 9 East, 12;

Ex parte Sargeant, 1 Rose, 153.

(b) Thompson v. Giles, 2 B. & C.

(c) Giles v. Perkins, 9 East, 72; Ex parte Pease, 1 Rose, 232.

(d) 7 & 8 Geo. 4, c. 29, ss. 49, 50.

have been entrusted to him, sell, negotiate, transfer, pledge, or in any manner convert to his own use or benefit, such chattel or security, or the proceeds of the same, or any part thereof, or the share or interest in the stock or fund to which such power of attorney shall relate, or any part thereof, every such offender shall be guilty of a misdemeanor, and, being convicted thereof, shall be liable, at the discretion of the Court, to any of the punishments which the Court may award as hereinbefore last mentioned (a). Provided that nothing, however, hereinbefore mentioned relating to agents shall affect any trustee in or under any instrument whatever, or any mortgage of any property, real or personal, in respect of any act done by such trustee or mortgagee in relation to the property comprised in or affected by any such trust or mortgage; nor shall restrain any banker, merchant, broker, attorney, or other agent, from receiving any money which shall be or become actually due or payable upon or by virtue of any valuable security, according to the tenor and effect thereof, in such manner as he might have done if this Act had not been passed; nor from selling, transferring, or otherwise disposing of any securities or effects in his possession upon which he shall have any lien, claim, or demand entitling him by law so to do, unless such sale, transfer, or other disposal shall extend to a greater number or part of such securities or effects than shall be requisite for satisfying such lien, claim, or demand.

Provided that nothing in this Act contained, nor any proceeding, conviction, or judgment to be had or taken thereupon against any banker, merchant, broker, factor, attorney, or other agent as aforesaid, shall prevent, lessen, or impeach any remedy at law or in equity which any party, aggrieved by any such offence, might or would have had if this Act had not been passed; but, nevertheless, the conviction of any such offender shall not be received in evidence in any action at law or suit in equity, against him; and no banker, merchant, broker, factor, or other agent as aforesaid, shall be liable to be convicted by any evidence whatever as an offender against this Act, in respect of any act done by him, if he shall, at any time previously to his being indicted for such offence, have disclosed such act on

(a) 7 & 8 Vict. c. 29, s. 50.

Reasonable
diligence only
expected as to
the keeping
of such se-
curities.

oath, in consequence of any compulsory process of any Court of law or equity, in any action, suit, or proceeding, which shall have been bona fide instituted by any party aggrieved, or if he shall have disclosed the same in any examination or deposition before any commissioners of bankrupt (a).

Where securities are deposited with a banker for safe keeping it is his duty to take reasonable care of them, proportioned to the value of the article, and the danger of loss, and he is bound to take the same care of the deposited goods as he takes of his own. In case of loss, the depositary will not be chargeable unless he be guilty of gross negligence (b).

Right of lien.

SECTION IV.

RIGHTS OF BANKER.

Bankers have a lien upon all the effects and securities in their hands, as bankers, belonging to their customer for their advances; but the same does not attach on securities placed in their hands for a special purpose (e), or on his plate deposited in his chest with them for safe custody (d); nor can they avail themselves of trust deeds deposited in their hands as security for advances, when the security comprised in them is subject to a trust (e). Bankers have no lien on the deposit of a partner on his separate account for a balance due to the bank from the firm (f).

FOREIGN LAW.

France.-Banking operations consist generally in undertaking the receipt and payment of money, in receiving deposit of money,

(a) 7 & 8 Geo. 4, c. 29, s. 52. It was under this Act that the bankers Strahan, Paul, and Bates, charged with having fraudulently disposed of a number of Danish bonds which had been deposited with them for safe custody, and for the purpose of receiving the dividends upon them, for the use of their customers, were convicted, and sentenced to fourteen years' transporta

(b) Foster v. Essex Bank, 17 Mass. 479.

(c) Brandao v. Barnett, 12 Cl. & F. 787.

(d) Ex parte Eyre, 10 Phill. 235; O'Connor v. Majoribanks, 4 M. & G. 435.

(e) Manningford v. Toleman, 1 Coll. Ch. 670.

(f) Watts v. Christie, 11 Beav. 546.

in opening to depositors, credits, which authorise them to draw up to the amount of the sum deposited, in exchanging mercantile instruments, and in discounting them for cash. The agency of bankers is not deemed gratuitous but for a remuneration, and their responsibility to their customers is regulated by rules of § 1992 of the Civil Code. Bankers must have a license which costs 500 francs (£20). The character of a banker does not depend upon the existence of a "Bourse" in a town, but upon the accumulation of banking business, and not as credits, acceptances, and remittances, accidentally or simply received in furtherance of his own business, but for banking operations. Nor is it sufficient to constitute a banker to speculate in money by drawing or remitting from place to place where the range of his operations is so limited that they do not extend to the principal places of France and to foreign countries. A banker has a right to charge a commission besides the legal interest upon the balance of each account settled at intervals, and a banker who opens a credit to a merchant may, besides legal interest, charge a commission upon his advance. But when the commission has been once charged upon the advance or upon the settlement of the account, bankers cannot charge a commission on the money which they receive or send, or upon the securities which they give instead of money. They can only charge a commission upon those instruments which are sent to them from others, and which impose upon them care, labour, and expense (a).

(a) Nouguier des Lettres de Change, § 22.

K K

CHAPTER XIV.

Definition.

Who may ssue.

Form.

Sum.

ON BANK NOTES.

BRITISH LAW.

THE term bank notes is defined by statute to mean all bills or notes for the payment of money to the bearer on demand, other than bills or notes of the Governor and Company of the Bank of England; and "Bank of England notes mean promissory notes of the Governor and Company of the Bank of England, payable to bearer on demand (a).

The issue of bank notes is limited by the Bank Act of 1844, to the Bank of England, and to those bankers who were lawfully issuing them on the passing of that Act. It was moreover provided that once a banker becomes bankrupt, or ceases to issue his own notes, he is prohibited from recommencing the issue (b). The Bank of England has the exclusive privilege of issuing bank notes unstamped in the city of London, and within three miles thereof. Bank notes issued by other bankers may be re-issued, provided securities be given to the Commissioners of Stamps for the stamp duties on the same (c). The form of a Bank of England note is as follows:

Bank of England.

I promise to pay Mr. Matthew Marshall or bearer, on demand, the sum of Five pounds.

1863, Jan. 20. London, 20th Jan., 1863.

For the Governor and Company of the
Bank of England.

£ Five.

A. B.

In England bank notes cannot be issued for less than £5, but in Scotland and Ireland they may. Such notes, however, cannot Legal tender. be circulated in England or Wales (d). A Bank of England note

(a) 7 & 8 Vict. c. 32, s. 10.

(b) Ibid. s. 12.

(c) Ibid. s. 16.

(d) 17 Geo. 3, c. 30; 7 Geo. 4, c.

6; 9 Geo. 4, c. 65.