This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 317.— John Smith, a business man, with a bank account, dies intestate. A relative is appointed administrator by the court in the usual way. He opens an account with the bank, headed " Estate of John Smith, Henry Smith, Administrator." Is Henry Smith authorized to carry on the business temporarily, buy new goods, etc., or must he wind up at once ? If the former, how long can he carry it on? Has the bank any responsibility in handling such an account ?
Answer.—It is the administrator's duty in such a case to liquidate the estate. He cannot safely buy new goods even to carry on the business temporarily. If he bought on credit new goods even to complete and prepare for market goods belonging to the estate, he would become personally responsible to the seller for the price, and if the venture proved a loss to the estate he might have difficulty in freeing himself from personal responsibility for the loss.
We do not think that a bank assumes any responsibility merely by receiving money from the administrator and paying it out again on his order, even if the latter is exceeding his powers.