Question 331. - Is a bank responsible for a note deposited with it as collateral if it .(having an endorser) is allowed to run past due without the endorser being notified of dishonour, or allowed to become outlawed by no action being taken for six years?

Answer. - As holder of the collateral security the bank is bound to exercise reasonable care in reference to it, and to the realization of it. Therefore if, by reason of its neglect to notify the endorser, or to get judgment on the note before it became outlawed, the debtor to the bank, or true owner of the note, suffered damage, the bank would be responsible. If the bank were willing to sue on the note before it became outlawed, provided the debtor furnished the money required for costs, and if the debtor refused to do this, the bank would not be bound to sue, but the debtor should be given an opportunity of protecting his interest in the note.