be criminal. Moreover, in the event of his bankruptcy, the property in such things would, manifestly, not pass to his assignees. The temptation to a banker to use, for his own benefit, the valuable securities entrusted to his care, is so great in times of commercial pressure, that it has been enacted, by the Larceny Act, 24 & 25 Vict. (1861), c. 96, s. 75-" As to Frauds by Agents, Bankers, or Factors.-75. "Whosoever having been entrusted either solely or jointly with any other person, as a Banker, Merchant, Broker, Attorney, or other Agent, with any Money, or Security for the payment of Money, with any direction in writing to apply, pay, or deliver, such Money or Security, or any Part thereof respectively, or the Proceeds, or any part of the proceeds of such Security, for any purpose, or to any person specified in such direction, shall in violation of good faith, and contrary to the terms of such direction in any wise convert to his own use or benefit, or the use or benefit of any person other than the person by whom he shall have been so entrusted, such Money, Security, or Proceeds, or any part thereof respectively and whosoever having been entrusted either solely or jointly with any other person as a Banker, Merchant, Broker, Attorney, or other Agent, with 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 the United Kingdom, or any Part thereof, or of any Foreign State, or in any Stock or Fund of any Body Corporate, Company, or Society, for safe custody, or for any special purpose without any authority to sell, negotiate, transfer, or pledge, shall in violation of good faith, and contrary to the object or purpose for which such Chattel, Security, or Power of Attorney, shall have been entrusted to him, sell, negotiate, transfer, pledge, or in any manner convert to his own use or benefit, or the use or benefit of any person other than the person by whom he shall have been so entrusted, 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, shall be guilty of a misdemeanour, and being convicted thereof shall be liable at the discretion of the Court to be kept in penal servitude for any term not exceeding seven years, and not less than three years, or to be imprisoned for any term not exceeding two years, with or without hard labour, and with or without solitary confinement." On the Relation of the Banker to his Customer as PAWNEE of Banking Securities. 6. In the first of the relations between the banker and his customer above described, the banker was the absolute purchaser of the Money and Securities of his customer, so that he might do what he pleased with them; in the second he was merely his customer's agent, and it is highly penal for him to appropriate to his own use any of his customer's securities. A relation intermediate between these two frequently exists, in which securities are deposited by a customer with his banker; the absolute property in them remains with the customer: but he obtains a loan or advance of money from his banker on their security, which, when he pays off, the full property and possession of his securities reverts to himself. The banker thus becomes the PAWNEE of his customer's securities, and while he is so, he acquires certain Rights over them, though not exactly a Property in them, and it is out of such cases as these that the most difficult and abstruse questions between bankers and their customers arise. It has always been the custom that if a banker makes an advance, or a loan, to a customer, on the security of bills, &c., deposited with him, he has the right to re-pledge, or sell so much of these securities as is necessary to satisfy his own claim. And this custom is expressly sanctioned in the last recited clause, which says that nothing in the clause shall restrain any banker "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." This principle has always been held to apply when a banker makes a loan on the pledge of these securities. It is also held to apply where a customer having an ordinary account with his banker, has overdrawn it and become indebted to him: the banker has the right to retain all banking securities deposited with him by his customers. 7. Questions of great nicety frequently occur between bankers and their customers, and in the event of the bankruptcy of either or both of them, their assignees, respecting the property in bills placed by customers in the hands of their bankers for various purposes. It is a very common practice for customers to place in the hands of their bankers the bills they receive for the purpose of collection. This is very convenient for the customer. By placing these bills in the hands of his banker he frees himself from all anxiety and trouble regarding their safe custody or presentation for payment. The banker is bound, as his customer's agent, to present them for payment, and carry the amount to his customer's credit as soon as they are paid. And if he fails to do so, and any loss occurs through his neglect of the usages of trade, he is liable to his customer. For the sake of convenience, it is usual to note down the amount of such bills on the proper day, in the customer's account, in a column "short of" or before the column for cash. Hence, these bills are said to be "entered short," and the banker is said to hold such bills "short." This entry is a mere memorandum to remind the banker that he has such bills to collect for his customer on a certain day. The sum is in no way placed to his customer's credit: and the bills so "held short are the exclusive property of the customer, which he is entitled to demand back at any time previous to his bankruptcy. But in the case of the customer's bankruptcy, the banker must not deliver up his short bills to him, as all his property has vested in his creditors. As "short bills" are merely intrusted to the banker for the purpose of collection, if he appropriated them to his own use by selling or pledging them, he would be indictable under the Larceny Act, 24 & 25 Vict. (1861), c. 96, s. 76. The course of dealing between bankers and their customers in such cases often creates perplexity. The point to be ascertained is, whether at the time of the bankruptcy the relation between the banker and his customer was that of Principal and Agent, or that of Debtor and Creditor. That is, whether the property in the bills can be ascertained to have passed from the customer to his banker. VOL. II. 2 E In some country banks it is the custom to enter the amount of such bills in the cash column and to permit the customer to draw against the amount. But this is a matter of comity, and does not transfer the property in the bills to the banker. They are only held as collateral security against the advance, and are not discounted. The customer, or his assignees, are entitled to demand back the bills in specie, if the account shews a credit balance without them. Giles v. Perkins, 9 East, 12. Ex parte Dumas, 1 Atk., 233. 2 Ves., sen., 582. Ex parte Oursell, Amb., 298. Thompson v. Giles, 2 B. & C., 422. Ex parte Sargeant, 1 Rose, 153. Jombart v. Woollett, 2 My. & Cr., 389. Ex parte Bond, 1 M. D. & De G., 10. Ex parte Armitstead, 2 Gl. & J., 371. Ex parte Rowton, 17 Ves., 426. Ex parte Smith, Buck., 355. Ex parte Frere, Mont. & Mac., 263. Ex parte Sollers, 18 Ves., 229. Ex parte Pease, 19 Ves., 25. Ex parte Twogood, 19 Ves., 227. Ex parte Edwards, 2 M. D. & De G., 625. Zinck v. Walker, 2 W. Bla., 1154. Parke v. Eliason, 1 East, 544. But if the course of dealing shews that the customer intended the banker to consider and deal with the bills as his own property, they will not be recoverable. Bent v. Puller, 5 T. R., 494. Tooke Bolton v. Puller, 1 B. & P., 544. Ex parte Oursell, Amb., 296. v. Hollingworth, 5 T. R., 219. The bills cannot be held to have become the property of the banker unless the customer has an immediate right of action against him for the full amount, less the discount: and the banker has acquired a right of action against all the parties to the bill. On GOODS taken as Security. If a banker takes GOODS as a security for a loan, he ought to satisfy himself that his customer is entitled to them: because, by Common Law, the real owner will be able to recover them, or their value, from him, if unlawfully pledged. The principle of Common Law regarding the transfer of the Property in goods by a sale in market overt, does not apply to pawns. Marsden v. Panshall, 1 Vern., 407. Paterson v. Tash, Strange, Hoare v. Parker, 2 T. R., 376. Maccombie v. Davis, 7 East, 5. Boyson v. Coles, 6 M. & S., 14. Goods were deposited as a security for a loan. The customer afterwards obtained further advances without referring to the goods. He died without paying off his debt to the banker. His executors claimed the goods on payment of the first loan only. Held that the banker was entitled to have all the debt paid off. But if there had been bond creditors or a bankruptcy the banker could only have held the goods for the sum first advanced, and must have proved under the fiat for the rest. Demainbray v. Metcalfe, Prec. Chanc., 419. Adams v. Claxton, 6 Ves., 229. Vanderzee v. Willis, 3 Bro., C. C. 21. Such transactions ought to be completed by a Bill of Sale and registered under Act 17 & 18 Vict. (1854), c. 36. If the debtor is a trader the banker should also take possession of the goods or premises, as registration under the Bills of Sale Act only, does not defeat the operation of the doctrine of "reputed ownership" in bankruptcy. Badger v. Shaw, 29 L. J., N. S., 73. Ex parte Ashby, re Daniel, 25 L. T., 188. A banker cannot take a Bill of Sale on the whole property of his debtor, as such an instrument is an act of bankruptcy. Lacon v, Liffen, 32 L. J., Chanc., 315. Hassels v. Simpson, 1 Doug., 89. Giebert v. Spooner, 1 M. & W., 714. Smith v. Cannan, 2 E. & B., 35, 45. 22 L. J., Q. B., 290. Woodhouse v. Murray, L. R., 2 Q. B., 638. Ex parte Foxley, in re Nurse, L. R., 3 Ch. Ap., 515. An instrument stating that goods are deposited as a security for a loan, even though containing a power of sale in default of payment, does not require to be stamped as a mortgage deed. Harris v. Birch, 9 M. & W., 591. Attenborough v. Commissioners of Inland Revenue, 11 Exch., 461. See also Franklin v. Neate, 13 M. & W., 481, Policies of LIFE ASSURANCE as Security. A banker sometimes takes a Policy of Life Assurance as security for a Debt. In such case, he should give notice to the office of the assignment, as, in the event of his customer's bankruptcy, the Policy would vest in his Assignees. It is a well-established principle that Choses-in-Action, or Rights, or a Debt due to a trader though assigned by him, is in his "order and disposition" in the event of his bankruptcy, even though the instrument recording the obligation be delivered over, |