It is a well-known principle of law that any dealing between the creditor and the principal debtor - and one case holds any concealment of a relation between the creditor and the principal debtor1 - prejudicial to the indorser or guarantor of the contract, without the assent or concurrence of the surety, releases the latter. The bank having a lien upon the deposit for its claims, and having the opportunity to protect the surety, ought in justice to do so. The situation of the surety is certainly altered to his disadvantage, unless he assents. But some courts admit this right in the surety,2 while other deny it.3 The courts of Pennsylvania have become involved in a singular net of conflicting dicta and decisions upon this question.4 The cases will be found in the note. The duty, however, does not exist as regards the acceptor of a bill of exchange, whether the deposit exists at the date of the maturity of the bill5 or is deposited afterwards.8 Wherever there is an agreement taking a particular security out of the course of general dealing between the bank and the depositor, the surety cannot complain that his rights are prejudiced.7 But it will be seen that the same result is achieved where a deposit exists, in a few cases, by

21 Fourth Nat. Bank v. City Bank, 68 111. 898; Merchants' Nat. Bank v. Ritzinger, 20 111. App. 27.

22 Fidelity Trust Co. v. Merchants' Bank (Ky), 9 L. R A. 108; Zeile v. German Sav. Inst., 4 Mo. App. 401, which latter case is no longer an authority. The Illinois cases are express that as against a bona fide check-holder the bank must have applied the deposit before presentation of the check. Niblack v. Park Nat Bank, 169 111. 517. This ruling is of course wrong, because it gives the check-holder a better right than the drawer of the check; it is simply another illustration of the wild result of the rule that says a check is an assignment.

23 Commercial Nat. Bank v. Hen-ninger, 105 Pa. 496.

24 Straus v. Tradesmen's Bank, 36 Hun, 451, 122 N. Y. 379; United-States Bank v. Macalister, 9 Pa. 475; Packing Co. v. First Nat. Bank, 69 Miss. 700.

25 Case last cited.

26McEwen v. Davis, 39 Ind. 109; Allen v. Brown, 39 Iowa, 330; note 3 to this section.

27 Muench v. Valley Bank, 11 Mo. App. 144.

1 Jungk v. Reed, 8 Utah, 49. The author reported this case, and then thought, and still thinks, it wrongly decided upon the whole issue.

2 Dawson v. Real Estate Bank, 5 Ark. 283; German Nat. Bank v. Foreman, 138 Pa. 474; Mechanics' Bank v. Seitz, 150 Pa. 632; McDowell v. Wilmington Bank, 1 Harr. 369; Pursifall v. Pineville Bank, 30 S. W. R, 203; Faulkner v. Cumberland Valley Bank, 14 Ky. Law R. 923; Armstrong v. Warner, 49 Ohio St. 376. This latter case holds that the surety upon a note on the insolvency of the bank is entitled to the principal's deposit as a set-off against the note.

3 Wilson v. Dawson, 52 Ind. 513; Voss v. Germ. Am. Bank, 83 111. 599; Third Nat Bank v. Harrison, 10 Fed. R. 243; Teconic Bank v. Johnson, 21 Me. 426; National Bank v. Smith, 66 N. Y. 271; and see the Pennsylvania cases in the next note.

4 People's Bank v. Legrand, 103 Pa. 309, held if deposit insufficient it need not be applied, but gave in-dorsermaker'8 right of set-off. First Nat Bank v. Shreiner, 110 Pa. 188, held that subsequent deposits, if insufficient, need not be applied; but Commercial Bank v. Henninger, 105 Pa. 496, and Germ. Nat. Bank v. Foreman, 138 Pa 474, held that if the deposit was sufficient at the date of the maturity of the bill, it must be applied. But Mechanics' Bank v. Seitz, 150 Pa. 632, and First Nat. Bank v. Peltz, 176 Pa. 513, decide that the deposit must be sufficient at the maturity of the debt, and must be to the credit of the person primarily liable. It may be possible to induce some other court to accept these distinctiona giving to the surety, where the drawer is insolvent, a set-off based upon his apparent subrogation to the rights of the depositor as they existed, presumably, at the date of the maturity of the claim.8

5 Flournoy v. National Bank, 79 Ga. 810.

6 Citizens' Nat Bank v. Carson, 32 Mo. 191.

7 Mahaiwe Bank v. Peck, 127 Mass. 298; but Germ. Nat. Bank v. Foreman, 138 Pa. 474, denies the rule where the deposit remains a general deposit See Wilson v. Dawson, 52 Ind. 513