The duty of the bank to its depositor is in some way to make payment. "We have indicated certain methods by which this is done, as, for instance, by payment to the true owner, by payment to the assignee, by payment to the depositor's creditor under legal process, by payment to the personal representative, by payment to itself in discharge of its own claims, and by payment upon other claims payable at the bank. But there are other methods of paying, such as by remittances, and finally by payments upon checks. A remittance to a distance is said to be at the risk of the depositor.1 Generally the depositor gives his own check to the bank, and the bank remits the amount, or he simply deposits a sum to be transferred, getting a draft. In either case, at whose risk is the transfer? is a vexed question. But it would seem that if the bank itself undertakes to remit it must bear the loss,2 but if the remitter purchases a draft upon the other bank which he himself sends, the draft is not payment until it is paid itself.3 Coming now to the payment by the bank itself through the medium of checks, the engagement of the bank to its depositor is to pay the deposit, if it is not a time deposit, upon demand,4 and there can be no default until a demand is made.5 A check upon the bank duly presented is a demand.6 The bank can only refuse to pay the deposit (1) when it has not sufficient credit to the drawer to pay the whole check;7 (2) when it has notice of the fact that the deposit does not belong to the drawer;8 (3) when it is put upon inquiry as to the fact that funds deposited, but known to the bank to be trust funds, either by the form of the deposit or in some other way, are being misappropriated;9 but a deposit deposited by the trustee to himself as trustee must be paid out on the check of the trustee;10 and if the deposit is to the credit of some one as agent, and the bank knows or ought to know who is principal, it cannot pay on the check of the agent;11 but it is said if nothing appears as to the principal the bank may pay on the check of the agent;12 (4) when it has notice of an assignment or has accepted or certified checks to the amount of the deposit;13 (5) when it has notice of a lien upon the deposit;14 (6) when it has notice of the death of the depositor;15 (7) when it has notice of the insolvency of the depositor;16 (8) when it has itself appropriated or has a valid lien upon the deposit for a claim paid to itself or to some one else.17 The above cases constitute the exceptions to the necessity for payment by the bank when it has funds to the credit of the depositor. Otherwise the bank is estopped to dispute its depositor's title,18 nor can it set up any illegality in the method by which the depositor acquired the moneys deposited.19 Where the bank, however, has notice of an adverse claim, it may exact indemnity as a condition of paying the check.20 If there are separate accounts the bank must regard these separate funds.21 The fact that the original deposit was in notes taken as cash, which have depreciated in value, makes no difference, though there be a custom to the contrary; the bank must bear the loss in the case of a general deposit.22 It must pay the cheek in current funds,23 but if the money has been confiscated by the go .'eminent it has been held that the depositor bears the loss.24 This decision is correct in case of a special deposit, but wholly wrong as to a general deposit, which creates the relation of debtor and creditor. Just as the bank must bear the loss where the deposit was in money which afterwards depreciated, it obtains the benefit if the money deposited taken at its real value increases in value.25 But an agreement to return in kind the deposit makes the deposit special,26 and evidence of usage is admissible to show that a certain entry in the books purported to be such an agreement.27 Whatever payments the bank makes upon checks is payment of the deposit pro tanto.28 Outstanding checks cannot excuse the bank's failure to pay.29

6 Riverside Bank v. First Nat. Bank, supra, and cases therein cited.

7 Nat. Ex. Bank v. National Bank of North America, 132 Mass. 147. But see Sec. 158, post.

1 Jung v. Second Ward Sav. Bank, 55 Wis. 364. This case seems to be the only known instance where a court was so deluded as to hold that payment to a forger upon a forged indorsement was actual payment of the deposit where the depositor was not to blama The court cited as its authority Graves v. Am. Ex, Bank, 17 N. Y. 205, which exactly contradicts the opinion.

2 Cutler v. Am. Ex. Nat. Bank, 113 N. Y. 593. See Weedsport Bank v. Park Bank, 41 N. Y. 561. The point is as to when the transaction is complete so that the funds are really transmitted and put to the credit either of the transmitter or the person designated by him.

3 But this proposition is denied in Ex parte Jones, 77 Ala. 330, to the extent that the depositor having taken a draft ceases to be a depositor, and if the draft is not paid cannot rescind and claim to be a depositor. But if the bank had been guilty of a fraud, the rule would be different. Compare Hogue v. Edwards, 9 Bradw. 148,

263. This case is a very peculiar one. The holder of a check obtained a draft for his check, which was payable in exchange. A remedy was refused the holder under the Illinois rule because the check was not payable in money. But the court recognizes that the check-holder still has a claim upon the drawer of the check. See note 30, Sec. 147, post.

4 Ward v. Johnson, 95 I11. 215.

5Girard Bank v. Bank of Penn Township, 39 Pa. 92.

6 But it is not the only form of a demand. Citizens' Bank v. Harrison, 12? Ind. 128.

7Coates v. Preston, 105 111. 470; Pabst Brewing Co. v. Reeves, 42 111. App.154. Contra,Bromleyv.Comm. Nat Bank, 9 Phila, 522. But the bank may agree to pay pro tanto.

Dana v. Third Nat. Bank, 95 Mass. 445.

8 See Sec. 134, ante.

9SeeSec. Sec. 135,136, ante.

10 Ihl v. St. Joseph Bank, 26 Ma App. 129. But see Munnerlyn v. Augusta Bank, 88 Ga. 333. But bank is bound if it has agreed to apply trust money to individual debt of the trustee. Sayre v. Weilr 94 Ala. 466. See Sec. 135, ante, note 14.

11 See Sec. 135, ante, notes 8 and 9.

12 Patterson v. Marine Bank, 130 Pa. 419; Citizens' Bank v. Alexander, 120 Pa. 476; Lockhaven Bank v. Mason, 95 Pa. 113; German Bank v. Himstedt, 42 Ark. 62. The language, but not the actual decision, in Honig v. Pacific Bank, 73 Cal. 464, is contra. And see Sec. 135r note 8, ante, which states the better rule.

13See Sec. 146, notes 14 and 15, and Sec. 150. The certification takes so much money from the depositor's account. It is an assignment to the bank.

14See Sec. 137, ante.

15 See Sec. 138, ante.

16 See Sec. 139, ante. 17SeeSec. Sec. 140, 141, ante. 18Citizens' Bank v. Alexander,

120 Pa. 470; Martin v. Minnekahta Bank, 7 S. D. 263.

19Porter v. Sher. Co. B'g Co., 40 Neb. 274

20 Starr v. York Nat Bank, 55 Pa. 364

21Voight v. Lewis, Fed. Cas. No. 16,989.

22 Marine Bank v. Chandler, 27 111. 525. See Chicago Marine Co. v. Carpenter, 28 111. 360; Osgood v. McConnel, 32 I11. 74; Willets v.

Paine, 43 111. 432. But payment in treasury notes is good where the state law requires the deposit to be paid in gold and silver. Reynolds v. Bank of State, 18 Ind. 467. The legal tender cases affirmed this ruling. Custom cannot prescribe a legal tender different from that fixed by law. Thompson v. Riggs, 5 Wall. 663; Marine Bank v. Chandler, 27 111.,525. General deposits are payable in current funds. Gutrfbel v. Abrams, 20 La. Ann. 568; Fort v. Bank of Cape Fear, 61 N. C. 417; Ruffin v. Orange Co. Comm'rs, 69 N. C. 498. Deposit of Confederate notes not a deposit of money. Foster v. Bank of New Orleans, 21 La. Ann. 338. Contra, Dabney v. Bank of State, 3 S. C. 124, as to the value deposited. 23 Marine B'k v. Chandler, 27 I11. 525.