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Rights and Duties of the Bank or Banker

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RIGHTS AND DUTIES OF THE BANK OR BANKER. A banker is bound to honor his depositor's checks (quere, as to his bills), properly presented, to the extent of the funds of the depositor in his hands, and for refusing so to do he becomes liable to such depositor for damages to his credit. (Marzetti v. Williams, i B. & Ad., 415.) The bank is entitled to have the funds paid in a reasonable time before they are drawn against, and also to a reasonable time to ascertain what is the state of the account between itself and the depositor. It being allowed the bank to return a check within twenty-four hours after pre sentment in case a deficiency in the deposit is discovered. (Overman v. Bank, 31 N. J. L., 563.) But this right is denied if the check has been accepted and the money paid out or credited to the checkholder. (Oddie v. Natl. City Bank, 45 N. Y., 735•) A check of a third person presented by a depositor and credited on his bank-book by the bank, is deemed received for collection, and if not paid may be returned, and the credit cancelled. (Natl. Gold Bank v. McDonald, 51 Cal., 65.) The bank is responsible to the drawer or holder if the check is paid on a forged indorsement, or paid to one not an indorsee or a bona fide assignee of the check. (Dodge v. Natl. Exch. B., 3o 0. St., 1; Freund v. Imp. & Trad. N. B., 76 N. Y , 352.) The bank or banker is under no obligation, except by agreement, to allow a depositor to over draw his account. And in general, if the funds are not sufficient to pay a check in full, part payment need not be made. (Daniel, Sec. 1620.) The bank must pay checks in the order of their presentment so long as the deposit lasts, and should not attempt to pro rate an insufficient fund, or give preference to a holder of a check presented at a later hour than others. (Tiedeman, Corn. Pap., Sec. 45o.) The bank may recover the money paid on an altered check from the person to whom it has been paid, since the holder guarantees the genuineness of the contents of the check, and this applies to certified checks. The bank only warranting the genuineness of the signature. (Espy v. Bank of Cinn., 18 Wall., 614; Parker v. Roser, 67 Ind., 500.) As regards forged signatures of drawer or indoiser, the bank is usually held strictly to the obligation to know the signature of its depositor, and money paid out upon a forged signature of a depositor cannot be recovered back. Others hold that the bank may recover money so paid out where the signature was so cleverly forged as to free the bank from the suspicion of negligence, and the dis covery is made and the money demanded back in time to allow the holder to have recourse against other parties. (Daniel, 1655a.) Money paid out on the forged signature of an indorsee or payee may be recovered from the person to whom it is paid, but the bank is liable to the real payee or indorsee. (Seventh Natl. B. V. Cook, 73 Pa. St., 483.) The holder of the check is quite generally held to have no right of action against the bank for a refusal to pay the check, and for the same reason that the holder of an unaccepted bill of exchange cannot sue the drawee for refusing to accept, that is, because there is no privity between the holder and drawee unless the bill would constitute an assignment pro tanto of the fund drawn against, and this is not feasible by another rule of law which denies the right of a creditor to split up a single indebtedness into a number of obligations or rights of actions. A few authorities do hold that a check does operate pro tanto as an assignment of the fund, and Professor Tiedernan makes a strong argument that in the case of checks this would be no burden on the banker, since he impliedly agrees to pay out the fund in parts as the depositor elects. (Corn. Pap., Sec. 452.) But the weight of authority is against the right of the checkholder to sue the bank. (Brown v. Leckie, 43 III., 500; Roberts V. Austin, 26 Ia., 316.) The holder of a check on a bank is entitled to receive payment free from any offset by the bank for a debt which such holder may owe the bank. (Brown v. Leckie, supra.)

check, paid, holder, depositor and money