This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 203.— A customer has two current accounts (one an ordinary business account, the other entitled " private account"). A cheque on an outside point deposited by him, has been dishonoured, protested, returned and charged back to his account, but there are not sufficient funds to pay it all. Is the bank legally justified in charging his " private account " with the balance of the item, or with as much of it as this account will permit? No promise was made that his " private account" should not be charged back if necessary (as well as the other account), with any returned dishonoured item.
Answer.—If the two accounts are strictly as described, that is, both accounts of the same party, representing money held in the same right—that is, not as trustees, etc., there is no question that the bank would have a right to set off against any balance in either account an overdraft in the other. This is in effect what is proposed.