A bank note is an engagement by the bank to pay bearer a certain amount of specie upon demand.1 Being negotiable it passes by deliver7; hence if it be lost the holder loses his cause of action, if the note passes to a bona fide holder.2 But if a bank-note is lost all national bank notes. From the destruction of national bank notes of the national banks that have failed, the government has made a handsome profit.

Codd, 25 N. Y. 163; Thomas v. Richmond, 12 WalL 349, and cases therein cited.

1 Deposit Sav. Ass'n v. Mayer, Fed. Cas. No. 3813.

2 In re Aldrich, 16 Fed. R 369.

3 United States v. White, 19 Fed. R 723. Due-bills to railroad employees for wages, though used as money, are not taxable under this tax. Phila. R. R Co. v. Pollock, 19 Fed. R. 401. And see United States v. Wilson, 106 U. S. 620.

4 A clearing-house being a voluntary association of banks, whether national or state, is a private institution. It issues certificates which are used as money. In fact in 1893 in New York city the banks would use nothing else for large sums.

These certificates are as a matter of law taxable under the state bank tax, but it is not likely that the law will be enforced. See Sec. Sec. 366 and 367, post, for contrary decisions apparently.

5Hurrisburg Bank v. Commonwealth, 26 Pa. 451; Bank of Cham-bersburg v. Commonwealth, 2 Grant Cas. 384

6 Bank of Kentucky v. Thorn-berry, 3 B. Mon. 519; Bryant v. Damariscotta Bank, 18 Me. 240; Brown v. Penobscot Bank, 8 Mass. 445; Wendell V.Washington Bank, 5 Cow. 161; State v. Banks, 12 Rich. Law, 609.

1 Suffolk Bank v. Lincoln Bank, 3 Mason, 1.

2 City Bank v. Farmers' Bank, or stolen, the holder, like the holder of any negotiable paper, may recover from the bank, if the bank has not paid the note, upon giving indemnity.3 If the notes are destroyed, they may be sued for at law and a recovery had,4 without proof of a preliminary affidavit of loss,5 although such proof would have a bearing upon the question of interest.6 But a demand is necessary,7 at least to the recovery of interest.8 It was once a common practice to cut notes in two for safety in sending through the mail. If half of the note should be lost the holder was entitled to recover, certainly in equity, upon proof of loss and his ownership.9 Whether he was required to give security or not is questionable. Some courts held that half of a bank-note was not negotiable and hence no security was needed.10 Other courts held that in-

Fed. Cas. No. 2738. This has been the settled law ever since Miller v. Race, 1 Burr. 452.

3 Waters v. Bank of Georgia, R. M. Charlt. 193. But see Hinsdale v. Orange Bank, 6 Wend. 379. But where bank-notes are passing fr.om hand to hand in the manner of national bank-notes, which are never presented for redemption, no recovery should be permitted. Mobile Bank v. Meagher, 33 Ala. 622. No such suit could be brought on account of the difficulties in the proof.

4 Bank of Louisville v. Summers, 14 B. Mon. 247; Wade v. New Orleans Banking Co., 8 Rob. (La.) 140; Hagerstown Bank v. Adams Exp. Co., 45 Pa. 419; Ross v. Bank of Burlington, 1 Aiken, 43. If it were proved that the notes were destroyed no indemnity was required. Mobile Bank v. Meagher, 33 Ala. 622; Hagerstown Bank v. Adams Exp. Co., 45 Pa. 419. But if the proof were doubtful it was required. Wade v. New Orleans Banking Co., 8 Rob. (La.) 140.

5 Bank of Mobile v. Williams, 13 Ala. 544 Contra, Ross v. Bank of Burlington, 1 Aiken, 43.

6 No liability to pay would arise until proof of loss to the bank. Farmers'Bank v. Reynolds, 4Rand. 186.

7Streater v. Bank of Cape Fear, 55 N. C. 31; Ross v. Bank of Burlington, 1 Aiken, 43. See Sec. 310, post.

8 There is no default and hence no liability for interest.

9 Allen v. State Bank, 21 N. C. 1; Bank of Virginia v. Ward, 6 Munf. 166; Armat v. Union Bank, 2 Cranch, C. C. 180; State Bank v. Aersten, 4 111. 135; Hinsdale v. Bank of Orange, 6 Wend. 378; Patton v. State Bank, 2 Nott & McC. 461; Union Bank v. Warren, 4 Sneed, 167.

10Mobile Bank v. Meagher, 33 Ala. 622: United States Bank v. Sill, 5 Conn. 106; Murdock v. Union Bank, 2 Rob. (La.) 112; Hinsdale v. Orange Bank, 6 Wend. 379. So held where the part of a note torn off demnity was necessary and the remedy therefore in equity.11 The fact that the bank had given notice that it would not pay the notes unless the whole note was produced would have no effect,12 nor, it is conceived, would a law forbidding the mutilation of a note.13 But if the mutilation was fraudulently made, or for a fraudulent purpose, the bank could not be compelled to pay upon the production of part of a note.14 "Worn-out notes are governed by the same rules.15 Forged notes upon a bank are adopted by the bank when it receives them without objection,16 but it cannot be made liable upon them when it merely receives them for examination,17 nor by the fact that it was negligent in the manner in which it kept its blank notes.18 Notes of a bank issued contrary to law bind it in the hands of bona fide holders.19 A bank in paying its own notes must pay specie. It cannot pay another bank presenting the notes and demanding specie in bills of the latter bank.20 If it gives a draft for the notes the draft is not payment, unless it is made so by express agreement, and such an agreement is vitiated by fraud.21 But the bank may set off a debt of the holder to the bank.22 It must pay the face value of the notes to one who took the notes below par.23 But the bank may pay the notes in legal was not negotiable. Martin v. Bly-denburgh, 1 Daly, 314. 11 Allen v. State Bank, 1 Dev. &

B. Eq. 3; State Bank v. Ward, 6 Munf. 166; Commercial Bank v. Benedict, 18 B. Mon. 307; and see note 9.

12 Martin v. Bank of U. S., 4 Wash.

C. C. 253; United States Bank v. Sill, 5 Conn. 106.

13 This would be so unless the statute made the note void.

14 Northern Bank v. Farmers' Bank, 18 B. Mon. 506.

15 Miner v. Bank of Louisiana, 1 Mart. (O. S.) 20; Note Holders v. Funding Board, 84 Tenn. 46.

16 Bank of U. S. v. Bank of Georgia,

10 Wheat. 333; Third Nat. Bank v. Allen, 59 Mo. 310.

17 Salem Bank v. Gloucester Bank, 17 Mass. 1.

18 See last case. 19 McDougald v. Bellamy, 18 Ga, 411.

20 Suffolk Bank v. Lincoln Bank, 3 Mason, 1. The rule would be different where a statute compelled the bank to take its own notes as a tender.

21 Bank of St. Mary's v. St. John, 25 Ala. 566.

22 Long v. Farmers' Bank, 1 Clark, 284.

23 Robinson v. Beall, 26 Ga. 17; Taylor v. Cook, 14 Iowa, 500; Dabtender where they are not made payable in a particular medium of payment.24 If foreign coin is tendered it may be taken by weight at its intrinsic value.25 Silver coin of this country would not be a valid tender unless the silver were a legal tender;26 but each note may be considered a separate debt as to payment in silver, where silver is a legal tender for a debt up to a certain amount.27 Interest must be paid upon the notes from the date of a demand and a refusal of payment,28 but, as to mutilated paper, proof of ownership must first be made.29 A refusal to redeem may be inferred from an evasive and dilatory method resorted to by-the bank for the purpose of delaying or harassing the holder.30 Sometimes the state took upon itself the redemption of state bank notes out of deposited securities.31 In one ney v. State Bank, 3 Rich. 124; Olmstead v. Winstead Bank, 32 Conn. 278. But see Collins v. Central Bank, 1 Kelly, 435.

24 Treasury notes good payment. Reynolds v. State Bank, 18 Ind. 467; Metropolitan Bank v. Van Dyck, 27 N. Y. 400. These state decisions were in accord with the judgment that prevailed. Knox v. Lee, 12 Wall. 457, overruling Hepburn v. Griswold, 8 Wall. 603. The power to pass the legal tender act was originally justified as a war measure. But it is constitutional even in time of peace. Juilliard v. Greenman, 110 U. S. 421. But the best opinion on the subject, singularly enough, is found in a magazine article. See 1 Harv. Law Rev. 73, by Prof. Jas. B. Thayer.

25 Suffolk Bank v. Lincoln Bank, 3 Mason, 1.

26 Silver prior to 1853 was a legal tender. It is now. After 1873, for a time, it was a limited tender. Silver notes are not made legal tender by law; but treasury certificates for silver purchases are.

27 Boatman's Sav. Inst. v. State Bank, 33 Mo. 497. The allegation of a tender of silver must allege it to be legal tender silver, where some coins are legal tender and others are not. State Bank v. Lock-wood, 16 Ind. 306. And see Strong v. Farmers' Bank, 4 Mich. 350.

28 Crawford v. Bank of Wilmington, 61 N. C. 136; Ringo v. Biscoe, 13 Ark. 563. But a suspension was held not to start interest. Bank of Louisiana v. Fowler, 10 Rob. (La.) 196. See also, contra, Attwood v. Bank of Chillicothe, 10 Ohio, 526, which states a better rule.

29 Farmers' Bank v. Reynolds, 4 Rand. 186. The same rule as to preliminary proof would apply to lost or destroyed paper.

30 People v. Whittemore, 4 Mich. 27; Reapers' Bank v. Millard, 24 111. 433. These two cases illustrate the state bank system in all its vicious-ness.

31 Willard v. Dubois, 29 111. 48; People v. Whittemore, 4 Mich. 27; People v. Holmes, 3 Mich. 544. The national government now redeems instance the bank made a valid agreement with a third person to redeem its notes.32