This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 248.— (1) Is there any objection to opening an account in the following form: " Mary Brown, administratrix, John Jones, attorney," the power of attorney from Mary Brown to John Jones being duly lodged with the bank?
(2) If John Jones should draw a cheque for the balance of the above account, and deposit it to a new account as follows: "John Jones, in trust for Mary Brown, administratrix," would the bank he under any responsibility for permitting such a transfer?
(3) If Mary Brown should revoke the power of attorney referred to in Question 1, would that affect John Jones' right to draw against his trust account?
(4) Would the bank be justified in refusing to pay the amount at credit of the trust account to John Jones, if so instructed by Mary Brown?
Answer.— (1) The account in this form, although irregular, has nothing in it to which objection need be taken. We think it must be regarded as the account of Mary Brown, administratrix, with a statement that John Jones holds a power of attorney to draw cheques upon it.
(2) The transfer of the balance to the account of " John Jones, in trust," is one of those things for which the bank might or might not be liable. He had certainly full power to withdraw the money, and he also had power, without implicating the bank, in any way, to deposit money to a trust account; but we should think there is a danger in this case of the bank being held to be a party to any breach of trust that may be involved.
(3) The revocation of the power of attorney would not affect John Jones' right to draw cheques on his trust account.
(4) We think that where a bank has been made aware for whose benefit the trust fund is held, they could not without risk pay it out to the trustee against the instructions of the cestui que trust. But she could not demand payment from the bank. She must take legal proceedings in the usual way. The legal title to the money is in the trustee, and the bank could not, except at its own risk, act without his authority. Under Ontario practice it can relieve itself from any difficulty by paying the amount into court.