company a trustee, or liable as such, it may be termed a depositary, and when a governmental agency, and not a trustee, nor liable as such, it is a depository. Frequently, however, statute uses the word depositary not in a distinguishing sense at all as, for example, see cases cited." As to funds placed with a depository the relation arising is that of a debtor and creditor.12 When an institution is the repository of public or private funds, under court orders or decrees, claimants thereof cannot hold the public liable for their loss.13

§ 92 Liability of Officer for Loss of Funds in Depositary. It appears to be true, that, unless a banking institution is designated as a depositary for public funds," an officer exercising his own discretion in the selection of a depositary will be liable for their loss, and this though the public authorities have provided no safe place for their keeping, and the officer was merely following a long prevailing custom." The

15

16

11. Brown v. Wyandotte Co. (1897), 58 Kan. 672, 674, 50 Pac. 888; Board of Commrs. of St. Louis County v. Security Bank (1899), 75 Minn. 174, 180, 77 N. W. 815; Colquitt v. Simpson, supra.

12. Marx v. Parker (1894), 9 Wash. 473, 37 Pac. 675, 43 Am. St. Rep. 849; U. S. v. Thomas (1873), 15 Wall. 337, 21 L. Ed. 89; Contra State v. Foster (1895), 5 Wyo. 199, 213, 38 Pac. 926, 63 Am. St. Rep. 47, 29 L. R. A. 226.

13. Condert v. U. S. (1899), 175 U. S. 178, 44 L. Ed. 122 affirming 73 Fed. 305, 19 C. C. A. 543; Branch v. U. S. (1880), 100 U. S. 673, 25 L. Ed. 759.

14. Holt County v. Cronin (1907), 79 Neb. 424, 112 N. W. 561.

15. Wilson v. Wichita County (1887), 67 Tex. 647, 4 S. W. 67; Fairchild v. Hedges (1896), 14 Wash. 117, 44 Pac. 125, 31 L. R. A. 851; Com. v. Bailey (1887), 129 Pa. St. 480, 10 Atl. 764.

16. Lowry v. Polk County (1879) 51 Iowa 50, 49 N. W. 1049, 33 Am. Rep. 114; Griffin v. Mississippi Levee Commrs. (1894), 71 Miss. 767, 15 So. 107.

17. County of Mecklenburg v. Beales (1911), 111 Va. 691, 69 S. E. 1032, 36 L. R. A. (N. S.), 285.

good faith of the officer is held to constitute no defense, because the terms of his bond make him in effect an insurer for the safe keeping of public funds,18 but bonds may be so conditioned under statute, as to make this liability less stringent, and constitute the officer as little more than a bailee, bound to the exercise only of reasonable prudence in selecting a depositary. If an officer, however, instead of making a deposit as such, places it to his account on general deposit, this has been. held, even where he would not be held as an insurer, to make him liable for a bank's failure, notwithstanding his prudence and good faith."

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§ 93. Liability of Officer Depositing Private Funds. Various officers of court receive money virtute officii and if the court or some other tribunal or official is duly authorized to select depositories and do so and the statute not only authorizes but directs its deposit therein, it must be thought that such officers. come under the same rule as those officers who deposit public funds in such depositories. And this would seem to be true especially under a rule which holds such court officers to a less stringent rule than that applied in the deposit of public funds. There is no rule, I believe, that holds them to a more stringent liability.

18. U. S. v. Prescott (1845), 3 How. 578, 11 L. Ed. 734; Tillinghast v. Merrill (1896), 151 N. Y. 135, 45 N. E. 375, 34 L. R. A. 678, 56 Am. St. Rep. 612; Cicero (1902), 63 Neb. 777, 89 N. W. 389, 57 L. R. A. 303; Cameron v. Hicks (1909), 65 W. Va. 484, 64 S. E. 832, 17 Ann. Cas. 926.

19. Livingston v. Woods (1897), 20 Mont. 91, 49 Pac. 437; Overton County v. Copeland (1896), 96 Tenn. 296, 34 S. W. 427, 31 L. R. A. 844, 54 Am. St. Rep. 840; Fentress County v. Reed (1906), 116 Tenn. 110, 95 S. W. 809, 7 L. R. A. (N. S.) 1084.

20. Alston v. State (1891), 92 Ala. 124, 9 So. 732, 13 L. R. A. 659; Montgomery County v. Cochran (1903), 121 Fed. 17, 57 C. C. A. 266.

The rule as to officers of court has been laid down by Justice Story as follows: "In respect to property in the custody of the officers of a court, pending process and proceedings, such officers are undoubtedly responsible for good faith and reasonable diligence. If the property is lost or injured by any negligent or dishonest execution of the trust they are liable in damages. *** The degree of diligence which officers of the court are bound to exert in the custody of the property seems to be such ordinary diligence as belongs to a prudent and honest discharge of their duties, and such as is required of all persons who receive compensation for their services." This principle was applied in a Colorado case," where the clerk of a court deposited funds arising out of a condemnation case in a bank of reputed solvency. It was said the clerk acted as prudent men ordinarily do with their own funds." The deposit. was made by him as clerk and the bank had notice the money was held by him in his official capacity.

And in New York,23 the distinction between an officer holding virtute officii, private moneys and one holding public moneys was alluded to as follows: "It does not follow because public policy requires that public officers who receive public money should be held to a rigid responsibility, that the same rule should be applied to public officers who receive the money of individuals, who are stimulated by private interests to some watchfulness over the conduct of the officials, and to some scrutiny as to the custody of their funds." The

21. Story, Bailm. Sec. 620.

22.

Wilson v. People (1893), 19 Colo. 199, 34 Pac. 944, 22 L. R. A. 449, 41 Am. St. Rep. 243.

23. People ex. rel. v. Faulkner (1887), 107 N. Y. 477, 487, 14 N. F 415. See also Fairchild v. Hedges (1896), 14 Wash. 117, 44 Pac 125

bond in this case was for the faithful performance of his duties and the faithful application and payment of all moneys that may come into his hands. This was said not to enlarge his common law liability. The deposit in this case was with an individual banker in good standing and credit and the officer and his bond were held exonerated.

The distinction ruled in these two cases has been denied in a Minnesota case," where private funds were deposited without a court order. There was a vigorous dissent by one judge, and the prevailing opinion went upon what it said was the established rule in Minnesota.25

§ 94. Depositaries as Gratuitous Bailees. I need not greatly discuss the question of the liability of banks and banking institutions for special deposits received by them where their charters, or the laws under which they are organized, contain no reference to such deposits. In such case, if the deposit is made to a gratuitous bailee and it is lost by its gross negligence, such negligence, especially, if it arises out of customary practice in the doing of business by such bailee, is equivalent to the commission of a tort excluding the right to interpose a plea of ultra vires. This was ruled in a case by our Supreme Court in regard to a national bank receiving for safe-keeping for one of its customers, public securities of the United States," which ruling was adhered to in a later case. The same principle was applied in

27

24. Northern Pacific Ry. v. Owens (1902), 86 Minn. 188, 90 N. W. 371, 57 L. R. A. 634, 91 Am. St. Rep. 336.

25. See also Phillips v. Lawon (1859), 27 Ga. 228, 73 Am. Dec. 731; Hawley v. Lathene (1876), 75 N. C. 505, as in support of the stringent rule.

750.

26. First National Bank v. Graham (1880), 100 U. S. 699, 25 L. Ed.

27. Whitney v. First Nat. Bank (1880), 154 U. S. 664, 26 L. Ed. 212.

the case of a state bank,28 this case quoting from the Graham case, as follows: "If a bank be accustomed to take such deposits as the one here in question and this is known and acquiesced in by the directors, and the property deposited is lost by the gross carelessness of the bailee, a liability ensues in like manner as if the deposit had been authorized by the terms of the charter." There are cited for this principle, cases from Pennsylvania, Iowa, Massachusetts and Georgia.

29

Mr. Justice Field, in a case where there was a deposit with a partnership engaged in business as bankers,' said: "If the bonds were received by the defendants for safe keeping, without compensation to them in any form, but exclusively for the benefit of the plaintiffs, the only obligation resting upon them was to exercise over the bonds such reasonable care as men of common prudence would usually bestow for the protection of their own property of a similar character. No one taking upon himself a duty for another without consideration is bound, either in law or morals, to do more than a man of that character would do generally for himself under like conditions. The exercise of reasonable care is in all such all such cases the dictate of good faith. * * The doctrine of exemption from liability in such cases was at one time carried so far as to shield the bailees from the fraudulent acts of their own employes and officers, though their employment embraced a supervision of the property, such acts not being deemed within the scope of their employment."

An Illinois case30 speaks of the above case as typical

28. Manhattan Bank of Memphis v. Walker (1889), 130 U. S. 267, 32 L. Ed. 959.

29. Preston v. Prather (1891), 137 U. S. 604, 34 L. Ed. 788.

30. Gray v. Merriam (1893), 148 Ill. 179, 35 N. E. 810, 32 L. R. A. 769, 39 A. M. St. Rep. 172.