Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/692

 § 673.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XI. while the depositor is under no duty to the bank to examine his pass book and vouchers for the purpose of detecting for- geries. 1 In defending the interests of a depositor against a third person claiming the deposit, the bank will not be liable for neglect of its duty, if it takes reasonable legal measures in defence, and notifies the depositor of the suit. Under such circumstances it is not incumbent on the bank to make a stren- uous defence or try to put the case off. 2 § 673. The facts of a carefully considered case decided not Lien of long ago in the Federal Supreme Court were as bank. follows: 3 A bank account was opened in the name of a depositor known to the bank to be the general agent of an insurance company, and whose chief business, as the bank also knew, was to conduct the insurance agency. The words " gen'l ag't " were attached to the depositor's name in the account. The bank further knew that the account was opened to facilitate the business of the agency, and was used by the depositor as a means of accumulating premiums col- lected by him for the company, and making payments to it by checks. It was held that the bank was chargeable with notice of the equitable rights of the insurance company, although the depositor had deposited other moneys in the same account, and had drawn checks against it for his private use ; and that the company might enforce in equity its beneficial ownership against the bank, which on its side set up a lieu on the fund for a debt due from the depositor individually to it. Justice clerk of the depositor is no defence, if the latter has himself done noth- ing to lead the bank to suppose the check authentic. Frank v. Chemical Nat. B'k, 84 N. Y. 209; Hardy v. Chesapeake Bank, 51 Md. 562. Com- pare U. S. Bank v. Bank of Georgia, 10 Wheat. 333; Dedham Nat. B'k r. Everett Nat. B'k, 177 Mass. 392. A bank is liable for money paid on altered checks. Crawford ». West Side B'k, 100 N. Y. 50. 1 Welsh v. German American Bank, 73 N. Y. 424; see Frank v. Chemical Nat. Bank, 84 N. Y. 209; 672 contra, Myers v. Bank, 193 Pa. St. 1. As to the liability of savings banks for moneys paid out on forged checks or orders, see §§ 199, 245. The statute of limitations does not run against the claim of a depositor until demand and refusal. Branch v. Dawson, 33 Minn. 399. See Viets v. Union National Bank, 101 N. Y. 563. 2 Detroit Savings Bank v. Burrows, 34 Mich. 153. 3 National Bauk v. Insurance Co., 104 U. S. 54.