This section is from the book "Canadian Banking Practice", by John T. P. Knight.
Question 286. - A bank holds a promissory note of a deceased party. After the promissor's death his wife, having obtained letters of administration to his estate, causes through her agent to be deposited in the bank certain moneys in her name "Trust Account Estate of (promissory Can the bank retain funds so deposited against the note, or are they bound to honour cheques drawn on this account?
Answer. - We think the bank cannot retain the funds deposited by the agent of the administratrix against the indebtedness of the intestate.
To be the subject of set-off debts must be mutual, and in the case put the mutuality of the debts, without which there can be no set-off, does not appear to exist - the intestate and the bank never stood in the relation of mutual debtors to each other. The debt to the bank was contracted by the intestate, but the debt of the bank was never due or owing to the intestate. The administratrix by reason of a contract between her and the bank is the bank's creditor, but there is no contractual relation between her and the bank by which she is made the bank's debtor.
We do not overlook the fact that the intestate's note fell due after his death, but we cannot conclude that this circumstance alters the case. The intestate did and the administra-trix did not contract the debt upon the note; the administratrix did and the intestate did not deposit the money in question with the bank.