ing it under an assumed name, with or without the con- CHAP. VII. currence of the banker.' The Act which in New South Wales governs Inter- In N.S. W. pleader matters leaves it to the discretion of Judges to apply or refuse the relief asked for, and the Act in express words includes actions of debt among the cases where the defendant may apply to the Court; but Courts, in granting relief, have been much influenced by a former rule in Equity, under which the application was refused whenever it was apparent that the applicant was under a special obligation to one of the parties-the case of banker and customer being such a special relation. The difficulty lies in this-that there is nothing tan- Generally. gible to hand over; what was deposited has now become the property of the bank, and mixed with its funds, or been exchanged for value. By admitting that a balance exists, the bank inferentially admits a contract of a confidential and special nature with its customer; to be willing to account for that contract to a stranger, or as the Court may order, would indicate a disregard of contractual rights altogether inconsistent with the policy and spirit of the law. It may be observed, too, that, from another point of view, banking may be regarded as a . form of employment: in old Digests banking cases are sometimes indexed as special instances of the relation of master and servant. Now possession by the servant is possession by the master, and the law does not allow, unless in most exceptional cases, a servant to deny his master's property in things entrusted to him. Debtors other than bankers who have asked leave to interplead have been refused. F.D.R. Since a fixed deposit after it has become due is-like In case of a current account credit balance-a debt payable to the depositor's order (though the method of drawing may be different), it would seem on principle that a bank could not set up a Jus tertii against its fixed depositor, nor be CHAP. VII. allowed to interplead if threatened with actions by both the fixed depositor and another claimant. (1880) 1 N.S.W.L.R. 97. In Victoria. In an Irish case, leave was refused to a bank that applied for relief by interpleader in the case of two claims upon deposit receipts arising out of the same transaction. But in New South Wales, in the case of McGuinness v. Bank of New South Wales, Cherry and others claimants, interpleader was allowed; that was a case where the daughter of a South Australian bankrupt lodged money on fixed deposit, £1,250 for six months, in Sydney. The claimants were the official assignees of the bankrupt. The plaintiff herself had been, almost immediately after the deposit, convicted in Adelaide of conspiring with others to obtain and obtaining certain goods by false pretences. She denied that the moneys deposited formed any part of the estate of Abraham McGuinness, her father. The facts are not fully reported, but it may be remarked that this case seems to have afforded stronger justification for the bank than did Zeeb's case (ante, p. 95), for the money lodged with the bank was probably the property of the official assignee at the time of its deposit. It has, however, been doubted. In a Victorian case (McDonald v. Bank of Victoria, A.R., 29 Mar., 1859), where a Judge gave leave to a bank to interplead in respect of two adverse claims to a sum deposited by a deceased customer, the order was rescinded upon appeal. Interpleader In a case recently decided in England, a company allowed in (C) had a current account in credit to the extent of case of an account £166 5s. 3d. with the Commercial Bank of Scotland. C abandoned by the customer was in difficulties, and B sued C for £96 1s. 4d., amount and claimed of salary due as secretary, and got judgment for this by rival creditors amount, with costs £2 2s., amounting in all to £98 3s. 4d. under different To enforce this judgment, he obtained and served a gartitles. nishee order upon the bank in respect of the balance due on current account. The garnishee order was made abso T.L.R. 776. lute; but before the bankers paid the money, another CHAP. VII. creditor, A, interposed. A was a secured creditor holding Cairney v. a debenture, granted by the company some time pre- Back, 22 viously, which created a charge over all the property for the time being of the company by way of floating security. By virtue of this security, A had a receiver appointed, who claimed the bank balance before it had been paid under the garnishee order. The bank was allowed to bring the money into Court, and an interpleader issue directed between A and B, when A was held to have the better claim. In this case it should be noticed there was no denial of its customer's claim by the bank, and both claimants derived their rights from the customer. under Involuntary Alienation of Bank Balances.-It Restitution must not be supposed because a bank's duty is, first, to Crimes Act. legally fulfil its own contracts, there is no legal means of Ante, p. 97. obtaining the balance of an account for the parties justly entitled to it. Thus, in all cases of larceny and similar crime, if when convicted there is a bank balance remaining to the credit of the thief, which can be shown to be built up of the proceeds of the property stolen, then its restitution to the rightful owner can be ordered by the Court, and the bank must pay on such order. And in the case of a bank balance which, though not Declaration of Bankruptcy in the name of the bankrupt, belongs in right to a bank- Court. rupt estate, the official assignee can apply for, and obtain, a declaration that the account belongs to the bankrupt estate, whereon the right to the account would pass to the official assignee. In a case where the assignee of a bank- In re Monrupt husband obtained from a Court a declaration of his tagu, ex p. Ward, 1897, right to an account which stood in the name of the bank- 76 L.T. 203. rupt's wife, the bank was held justified, on the ground Cf. post, p. of contract, in paying cheques of the wife between the (ostensible dates of the receiving order and the declaration of heading). assignee's right. 106 Garnishee Again, since bank balances are debts, they can be order. CHAP. VII. Rogers v. Terry, 1901, Order of Injunction to depositor. taken in execution to satisfy a judgment obtained by any stranger to the bank against its customer. This is effected by means of a garnishee order, which, when served upon the banker, acts to tie up the whole of that customer's credit balance at date of service, and cheques presented while the order remains in force, even though issued before the service of the order, should not thereafter be paid. But the bank may open a new account if desired. In the case of a fraudulent trustee or partner or agent, there is in principle no reason why, in a proper case, the Equity Court should not grant an injunction to the bank to prohibit it from paying any further cheques of the party called to account; a lesser step is, as a rule, sufficient: the injunction is directed to the nominal customer, and the bank informed of its existence. Ultimately the injunction will be removed, when the account may again be operated as usual, or an order of Court will effect the necessary transfer of the balance to its proper owner. If the nominal customer refused to sign a cheque for this purpose, that might, according to the form of decree, be contempt of Court, and severely punishable; moreover, the Court would not allow any such obstinacy to defeat it: if necessary, the Court would appoint someone to sign for the depositor. CHAPTER VIII. DISCLOSING THE ACCOUNT. As has been seen (ante, p. 93) in Tassell v. Cooper, CHAP. VIII. the question was raised whether the customer of a bank had a right to absolute secrecy towards strangers, and the Court, without deciding the point, thought there was no such duty. In this consideration, two points are especially worth. notice : (1) It is customary with banks to bind their (2) In the ordinary law of contracts there is no It is usual for banks to be very discreet with regard to their customer's affairs, but unless it could be proved to be a customary part of the ordinary duty of banks to preserve an absolute secrecy with regard to customers' Absolute accounts, the depositor could not claim complete secrecy yet held to be as a right. secrecy not imposed by law or Up to the present, in no reported case has any such custom. absolute duty been proved. The decisions are as fol lows: |