This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 428.— A and B are liable jointly and severally on a note which has been discounted by the bank, B being, in effect, a surety only. The note is unpaid, and some time after maturity the bank charges it to B's account, who has had a balance with them at all times exceeding the amount of the note. Can they charge him with the full rate of interest, or only such a rate as they allowed on his deposit?
Answer.—The bank is entitled to collect the full amount of the note and interest until it is paid by the parties, or either of them, or until the bank chooses to charge it against B's account. In the Province of Ontario the bank has a right of set off, but is not bound to exercise it, and pending its exercise the deposit on the one hand and the note on the other, remain as two separate liabilities, each carrying its own results as to interest, etc. The law in Quebec as to set off differs somewhat from that in Ontario, and what we have said above might not apply there.