This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 586.— A grain dealer gives the bank a promise in writing to the following effect: " In consideration of the bank making advances to me from time to time in connection with my grain business, I hereby engage to hand the bank as security therefor, bills of lading, warehouse receipts, or pledges under sections 73, 74 and 75 of the Bank Act."
Would this agreement give the bank a preferred claim in the event of the customer's failure?
Answer.—A written promise of this kind, unless followed up by the actual delivery of the security, would have no effect in the event of the customer's failure. We also have some doubts whether a promise in this form is sufficient to support the subsequent transfer to the bank of the securities mentioned. We think something more specific, both as to the loans and as to the security, is necessary.