The relation of the bank to its special depositor is that of bailee.1 Whether it is a gratuitous bailment or one for hire depends upon circumstances. Since, by the very definition of the word "special" deposit, the bank can obtain no advantage by using the deposit, if it is not paid for the work which it does, it is a gratuitous bailee, the consideration being simply the delivery of the thing.2 If the bank has any claim upon the thing deposited, such as a claim upon it as collateral security, the bank is pledgee and not gratuitous bailee. The degree of care required from a gratuitous bailee has been variously defined by courts. It is a liability for gross negligence only,3 for ordinary care under the circumstances,4 or for the care it bestows upon its own goods.5 The two first descriptions do not differ in any rational sense.6 The liability of the bank for its agents' and officers' acts has been defined to be absolute,7 or simply ordinary care in employing an apparently reliable agent, where the loss does not arise from a delivery to the wrong person or from an act of the agent in the due course of his employment.8 But where the bank was benefited by the agent's act, its liability remains, whatever the care shown in his employment.9 But whatever the rule as to liability may be, if the bank through any of its proper officers has notice of the particular officer's unreliability, where the loss is caused by such an officer, the bank will be liable for the special deposit.10 Certain facts are considered absolute evidence of gross negligence, such as to leave the special deposit in a place to which others than the agents of the bank have access.11 But where the bank is a bailee for hire or is a mandatary, the bank will be held liable for ordinary care and diligence;12 but the bailment cannot be assumed to be for hire.13 Since the bank is a bailee it is liable for no loss that occurred through a burglary 14 or theft,15 unless its negligence contributed to the loss. A fraudulent release obtained by the bank will be no defense.16 The bank is at all events liable for a delivery to the wrong person;17 but a delivery to one authorized to receive the deposit will be good,18 even though the bank did not know of the authority at the time of the delivery.19 The bank, if the deposit is lost, has the burden of showing that the loss was not due to its fault,20 although one case holds that the burden of proof is on the depositor to showT gross negligence on the part of the bank.21 The depositor may sue both the bank and the officer whose negligence caused the loss.22 The statute of limitations begins to run from the date of the demand for the return of the deposit,23 but it is also said that it begins to run from the date of the discovery of the fraud.24 If a bank converts a special deposit depositor that it will not pay the deposit,5 or claims the deposit as its own,6 or for a third person,7 or where the bank has stated an account,8 or where an overpayment was allowed to the bank by a mistake,9 - in either case no demand is needed. On certificates of deposit the right of action does not accrue until a demand has been made,10 unless a demand is excused by circumstances. The right of action against the bank will not be taken away by the fact that the depositor has elected to sue one who fraudulently received the deposit,11 nor by the fact that the depositor has proven his claim before the receiver, where no payment was made on the claim.12 But if it appears that the deposit has been attached in favor of a third party, the bank is entitled to a stay until that matter is determined.13 The remedy on a general deposit is at law, as a general rule,14 and so it is upon a certificate of deposit, even though the person in whose name the certificate of deposit was issued refuses to indorse it.15

10 Bennett v. Knapp, 9 N. Y. Supp. 766.

11 See Sec. 133, ante. And see also Sec. 343, post. The same rule applies to savings deposits, where savings banks are debtors to their depositors. Wethereli v. O'Brien, 140 IIl 146. This last case, however, gives the extreme rule against the priority of a special depositor. The decision is not sound upon that point, although in accordance with the rule in "Illinois. The better rule is that stated in Sec. 342, post, where the right of priority is considered.

12 Dougherty v. Vanderpool, 35 Miss. 165.

1 McLain v. Wallace, 103 Ind. 562; Kinsela v. Cataract City Bank, 18 N. J. Eq. 158. It is the bank which is the bailee, not the officers. Foster v. Essex Bank, 17 Mass. 479. This decision is in its result wholly and completely erroneous. The bank is also called agent. In re Johnson, 103 Mich. 109; L'Herbette v. Pittsfield Nat. Bank, 162 Mass. 137.

2 Robinson v. Threadgill, 13 Ired. 39. A statute sometimes makes a gratuitous bailment one for hire. Merchants' Nat. Bank v. Guilmar-tin, 93 Ga. 50&

3 Foster v. Essex Bank, 17 Mass. 479; White v. Commonwealth Nat.

4 Maury v. Cole, 34 Md. 235; First Nat. Bank v. Zent, 39 Ohio St 105;

Lancaster Co. Bank v. Smith, 62 Pa. 47.

Bank, Fed. Cas. No. 17,544; Hale v. Rawallie, 8 Kan. 136; Sturges v. Keith, 57 111. 451; Carlisle Bank v. Graham, 100 U. S. 699; First Nat. Bank v. Graham, 79 Pa. 106: Whitney v. Brattleboro Bank, 55 Vt. 154; First Nat. Bank v. Rex, 89 Pa. 308.

5 Scott v. National Bank, 72 Pa. 471. Pennsylvania is on all sides of the question. Levy v. Pike, 25 La. Ann. 630.

6 See Sec. 79, note 20. Gross negligence is said to be equivalent to fraud. Foster v. Essex Bank, supra. But the point where ordinary negligence ends and gross negligence begins is too shadowy to furnish any reasonable guide.

7 United Soc. v. Underwood, 9 Bush, 609; First Nat. Bank v. Graham, 85 Pa. 91; El Paso Nat. Bank v. Fuchs, 84 S. W. R. 203; Carlisle Bank v. Graham, 100 U. S. 699. This is the correct rula The opposing cases are founded upon an obsolete rule as to torts.

8 Scott v. National Bank, 72 Pa. 471; De Haven v. Kensington Nat. Bank, 81 Pa. 95; White v. Commonwealth Nat. Bank, Fed. Cas. No. 17,544; Smith v. First Nat. Bank, 99 Mass. 605; Sturges v. Keith, 57 I11. 451; and see Preston v. Prather, 137 U. S. 604. If a court is unable to understand the fallacy involved in these holdings, no amount of argument upon the question will do any good. The employer is held liable because as bailee he owes a duty, which he does not perform by merely exercising due care in hiring his servants. See 1 Jaggard, Torts, 261 et seq.

9 Monmouth First Nat. Bank v. Dunbar, 118 111. 625.

10 Merchants' Nat. Bank v. Guil-martin, 93 Ga. 503; Preston v. Prather, 137 U. S. 604.

11Gray v. Merriam, 40 I11. App. 337; Pattison v. Syracuse Nat. Bank, 80 N. Y. 82; but see Scott v. National Bank. 72 Pa. 471.

12 Prather v. Kean, 29 Fed. R. 498; Hollister v. Central Nat. Bank, 119 N. Y. 634; Ouderkirk v. Central Nat. Bank, 119 N. Y. 263.

13 Merchants' Nat Bank v. Guil-martin, 88 Ga. 797.

14Wylie v. Northampton Bank, 119 U. S. 361.

15Dearbourn v. Union Nat. Bank, 58 Me. 273.

16 Gould v. Cayuga Co. Bank, 86 N. Y. 75.

17 White v. Commonwealth Nat. Bank, Fed. Cas. No. 17,544; Walker v. Manhattan Bank, 130 U. S. 267; Gauly v. Troy City Bank, 98 N. Y. 487. Care used is immaterial Lancaster County Bank v. Smith, 62 Pa. 47.

18 Walker v. Manhattan Bank, 130

U. S. 267; Fisk v. Germania Nat. Bank, 40 La. Ann. 820.

19Chattahoochie Nat. Bank v. Schley, 58 Ga. 369.

20 White v. Commonwealth Nat. Bank, Fed. Cas. No. 17,544: Merchants' Nat. Bank v. Carhart, 95 Ga. 394; First Nat. Bank v. Zent, 39 Ohio St. 105. The Pennsylvania court, which appears to have an uncontrollable antipathy to special deposits, says the burden is on the plaintiff to show gross negligence. First Nat. Bank v. Rex, 89 Pa. 30a into money and mingles the funds, the depositor could ratify the act and hold the bank liable as debtor and not as bailee.25

21 See last note.

22 Coffin v. Anderson, 4 Blackf. 395. They are joint tort-feasors.

23Gauley v. Troy City Bank, 98 N. Y. 487.

24 Hughes v. First Nat. Bank, 110 Pa. 428.

Sec. 165. Banks Which May Receive Special Deposits

Whether a bank has power to receive special deposits or not, if it is accustomed to do so it will be liable for them;1 yet if the directors of the bank did not know of the cashier's act in receiving the special deposit and were not guilty of negligence, where the bank has no such power the bank will not be liable.2 But if the bank receives a benefit from the deposit, it will not be heard to object that it had not authority to receive it.3 National banks are by necessary implication, if not by express grant, given the power to receive special deposits;4 but such a power is not granted by an authority conferred to carry on the business of receiving money on deposit.5