Question 410. - A customer, keeping a current account has a demand note to the bank upon which two payments have been made. When he is in funds, have we authority to charge balance of note to a current account without cheque?

Answer. - If payment of the note has been demanded, and is overdue, the bank would be entitled to set-off the amount against a balance due to the customer, though it is usual to give a customer notice before exercising the right of set-off.

Dishonoured Draft - Right of a banker to Charge a Portion of tin: Amount to the Drawer's "Private Account," Where There Are not Sufficient Funds in His Business Account Question 411. - A customer has two current accounts (one an ordinary business account, the other entitled "private account"). A cheque on an outside point deposited by him has been dishonoured, protested, returned and charged back to his account, but there are not sufficient funds to pay it all. Is the bank legally justified in charging his "private account" with the balance of the item, or with as much of it as this account will permit? No promise was made that his "private account" should not be charged back if necessary (as well as the other account), with any returned dishonoured item.

Answer. - If the two accounts are strictly as described, that is, both accounts of the same party, representing money held in the same right - that is, not as trustee, etc., there is no question that the bank would have a right to set off against any balance in either account an overdraft in the other. This is in effect what is proposed.

Note. - But if the course of dealing was such that a customer having two separate accounts was allowed to draw upon one of them irrespective of the state of the other, the bank could not combine them against him without a reasonable notice that the former course of dealing would be discontinued. (See Buckingham v. London and Midland Bank, (1895), 12 T. L. R. 70, and Kirkwood v. Clydesdale Bank (1907), 15 Sc. L. T. R. 413).