pay. Anyone who accepts a check with the statement on the check of the purpose to which the payment is to be applied is estopped thereafter from applying the payment to any other obligation or indebtedness. These checks are found in many forms.

The chief difference between an ordinary bill of exchange and a check is that the latter is always drawn on a bank and is always payable on demand. In addition, these points of difference are to be noted:

I.

2.

Grace is not allowed on a check.

The check must be drawn on funds actually in the bank.

3. The death of the drawer of a check revokes it.

§ 219. Signature of Drawer

The signature of the drawer is necessary, but it need not be placed at the bottom of the instrument. The order may be written under the signature, or some form such as "I, Henry Adams, direct you to pay to, etc.," may be used. The bank will have the signature on file and will be able to verify it in whatever form it occurs.

§ 220. Presentment for Payment

§ 186.—A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay.

Thus if the holder keeps the check two weeks, and the bank fails before the check is presented, the liability of the drawer will be reduced in proportion to his total loss. That is, if the bank paid depositors only forty cents on the dollar, the holder of the check would be able to get only 40 per cent of its amount from the drawer. The courts will hold that

the other 60 per cent was lost to the holder by his own unreasonable delay. That is, the drawer is discharged from his liability to the holder only to the extent of the actual loss caused by the delay.

If the check must be sent to another place for collection, it should be started on the day following its receipt, and should go by a reasonably direct route. In some states it has been held that unreasonable delay is caused by sending a check over an indirect route through various correspondent banks.

§ 221. Bank's Relations with Depositor

The depositor in effect lends money to the bank, and the bank promises to repay it on demand. The bank is in no sense a trustee, unless there has been an express agreement to that effect.

The bank may charge against a depositor's account any notes of his which it holds and which are due. If the depositor has made an overdraft, the bank may apply subsequent deposits against it. A bill or note made payable at a bank authorizes the bank to pay it when due out of the depositor's account.

If the funds of a depositor on hand are not enough to pay a check in full, the bank need not pay it in part, but it may legally do so.

If the bank wrongfully refuses payment of a check, the drawer may sue for damages. If he is a business man and can prove that his credit has actually been injured, he may recover a substantial sum.

In general practice, a bank does not, except by special arrangement, take checks of depositors for collection, but accepts them outright for deposit. By this method the depositor is able to draw checks against his deposits without waiting until the bank has made sure that they can be collected. On the other hand, if the depositor does not wait a reasonable time for the collection of the checks he has deposited before

drawing against them, the bank may legally refuse to honor his checks.

If a depositor gives a check dated some days ahead and it is presented to the bank before its date, the bank will pay it or certify it at its own peril.

$222. Bank's Relations with Holder

$189.-A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies the check.

The holder of an uncertified check has ordinarily no rights against the bank. If the bank refuses to pay when it has funds of the drawer on hand, the depositor may sue the bank for damages to his credit, but the holder's recourse is only against the drawer of the check.

Even if the bank knows that the check was given for an illegal consideration, as in payment of a wager, the bank must cash it, and the drawer will have no claim against the bank for so doing. The bank will pay checks in the order of their presentment. If two or more checks are presented at the same time, the bank may pay in whatever order it pleases.

$223. Revocation

The drawer has the right to stop payment on a check, and if the bank pays the check after it has been notified not to do so, it will be liable. The drawer alone has a legal right to order payment stopped, but a subsequent indorser who knows of fraud ought to inform the bank at once if he cannot reach the drawer. In such a case the bank will probably delay payment of the check until the matter has been cleared up.

Even though the drawer is successful in stopping payment

of a check, he will be liable to an innocent holder for value if the indorsements are proper.

After a check has been certified, payment may not ordinarily be stopped.

The death of the drawer will revoke a check, but the bank must have notice, on the general principle that agency ceases only after the agent has received notice. Insolvency, when the bank is notified of it, also acts as a revocation.

$224. Certification

When a bank certifies a check, it assumes the obligation formerly held by the drawer. The bank will not certify unless it accepts the signature of the drawer as correct, and unless it has funds of the drawer on hand with which to pay; and as soon as it certifies it sets aside the proper amount from the drawer's account and holds it for the holder of the check. Under the Negotiable Instruments Law certification must be in writing. There is no legal obligation on a bank to certify any check for anybody. It is a matter of courtesy and convenience.

§ 187.-Where a check is certified by the bank on which it is drawn, the certification is equivalent to an acceptance.

§ 188.-Where the holder of a check procures it to be accepted or certified, the drawer and all indorsers are discharged from liability thereon.

Acceptance or certification of a check discharges the drawer, but if the drawer takes his own check to the bank for certification, he still remains secondarily liable, in case the certification be refused for any reason, or the bank becomes insolvent.

If a bank becomes insolvent, the holder of a certified check simply ranks among the other creditors.

§ 225. Fraud

The bank's agreement with the depositor is that it will pay out money on his account only on his order. If it honors a forged signature, therefore, it must bear the loss. But in New York, if a bank is not notified within one year after the return of a forged or raised check it cannot be held liable. The bank's liability is to the drawer, not to the payee or subsequent indorsers.

The drawer cannot hold the bank for a loss if he has been negligent in drawing the check or has delivered the check to the wrong person, or if he has signed and allowed to go into circulation a check with unfilled blanks, or if he has so negligently filled in a check that insertions might readily be made. The depositor should always examine his pass-book and vouchers carefully, and report promptly any errors he may discover. The bank will not be liable to a drawer whose acts amount to acquiescence in what the bank has done.

If a raised check is paid by a bank, it must bear the loss as against the drawer, unless his negligence in filling in the amounts made possible the forgery. As against the person to whom the money has been paid, the bank must bear the loss unless he was a party to the forgery or unless he can return the money to the bank without making his situation worse than it would have been had the bank refused payment. That is, if the payee has not yet done anything that he would not have done if payment had been refused, the bank may recover. In most cases, however, he will have delivered goods, given up security or otherwise have done something that he would not have done if the bank had refused payment.

If the amount is altered and the bank pays out money in good faith, it will be able to recover from the one who got the money. Even in case of alteration before certification, the bank will be able to recover from the one to whom payment was made. In case a check is raised after certification, if the