This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 602.— A customer's account has been overdrawn for some days, an advance by way of overdraft having been granted without having a written promise to give security.
If a note is subsequently discounted, with a warehouse receipt attached for the purpose of covering the overdraft, is the bank's title to the warehouse receipt good?
Answer.—On the bare statement of facts here submitted we would think that the warehouse receipt has not been validly acquired. It was not acquired when the loan was made, and there was no " written promise" to validate a transfer after the loan had been made.