Another point to be noticed with regard to the general lien of a banker is, that it is defeated by the existence of a special lien. If securities to the value of £5,000 are lodged with a banker under a written agreement to secure a debt of £3,000, the banker acquires a special or conventional lien to the extent of the latter amount, but he cannot claim a general lien on the remaining £2,000.

A banker enters into another relation to his customer when he consents to take charge of plate, jewellery, or other similar articles. These are almost invariably deposited in a locked or sealed box or plate chest, and the banker takes no cognizance of the contents of such boxes, and makes no charge for thus taking charge of them. He is what is called a "gratuitous bailee" for his customer, and provided he acts in good faith and takes all reasonable precautions, that is such precautions as a business man would usually take in respect of his own property, he is not liable for any loss or damage to the articles. If, however, the banker delivers them to a third party without the consent of the owner, as, for instance, when he acts upon an order purporting to be written by his customer, but which is in reality forged, it has been argued that he is liable to his customer for any loss accruing from his acts. The only case bearing directly upon the subject, that of Langtry v. Union Bank of London in 1896, was settled by a compromise, so that the state of the law upon the point is uncertain.

Apart from these general relations of banker and customer, there are occasions in which a banker incurs special liabilities in his dealings with the latter. In dealing with a bankrupt, for instance, special care is necessary on the part of a banker. Immediately the latter has notice of an act of bankruptcy committed by his customer, he should stop the account and refuse to pay any further cheques. The property in the balance standing to such a customer is vested in the trustee in bankruptcy, and if a banker pays a cheque after the receipt of such notice, or after a receiving order has been made, with or without notice, he is liable to refund such amount to the trustee. It must, however, be borne in mind that the mere calling together of a debtor's creditors and the offer to them of a composition, does not in itself constitute an "act of bankruptcy."

A banker should not open or carry on an account with an undischarged bankrupt, or he may find himself liable to refund all payments made by him on the account; neither should he open an account with the wife of an undischarged bankrupt who is carrying on the business formerly belonging to her husband.

Another special relation is that of a banker to a customer who is a minor. It has in some quarters been held that a minor, being unable to give a valid discharge for a debt, can, when he conies of age repudiate, as against his banker, cheques drawn by himself upon the latter, but the better opinion seems to be against such a strained interpretation of the protection afforded by law to minors. But although a banker can, perhaps, safely open a current account with a minor, he should certainly not allow the account to be overdrawn, as money lent to a minor cannot be recovered in a court of law.

Another case in which a banker should exercise great care is in his dealings with trustees. The English courts always extend the utmost protection to the beneficiaries of a trust, and a banker may, through imprudent action on his part, find himself held to be technically privy to a breach of trust. For instance, suppose a customer keeps two accounts, one a trust account with a credit balance, the other a private account with an overdrawn balance; the banker presses his customer to reduce the overdraft upon his private account, and he thereupon transfers part of the balance standing to his trust account, in satisfaction of the overdraft upon his private account. If the customer proves to have fraudulently misapplied the trust funds to his own use, it is probable that the banker would be held privy to such fraud and would be liable to refund the money so transferred. Again, a banker should be very careful of acting upon the authority of a single trustee, or of the majority. It is best to obtain the signature of all the trustees in every case, and if he is prudent a banker will hesitate to accept an authority signed by all the trustees granting to one of them the power to act for the whole body, as such an authority may be held to be ultra vires.

Lastly, a banker should act with care in his dealings with employees and other agents. Especially is this true as regards the collecting banker. Section 82 of the Bills of Exchange Act, 1882, which we saw to be the chief protection of the collecting banker, stipulates that a banker must act "without negligence," and it has been held that a banker who collects for an agent cheques payable to his principal may be held guilty of negligence. In the case of Bissell v. Fox (1885), 53 L. T. (n.s.) 193, a commercial traveller opened an account with a bank in his own name and paid in to his credit cheques payable to his principal which he had endorsed "per procuration." A "per procuration" signature "operates as notice that the agent has but a limited authority to sign," and it was held that the circumstances were sufficient to put the banker upon enquiry as to the validity of his customer's power to endorse in this way, and that therefore the bank did not act "without negligence." In a similar case, Hannan's Lake View Central v. Armstrong (1900), 15 T. L. B. 236, the secretary of a company endorsed a cheque payable to the company and then fraudulently paid it to his own credit, and the collecting bankers were similarly held not to have acted "without negligence."

It therefore behoves a banker to act with extreme caution in his transactions with a customer who is known to be the agent or employee of another person.