of cases which present "more liberal views as to the liabilities of bailees without reward," and it declares that: "when securities are deposited with banks accustomed to receive such deposits, they are liable for any loss thereof occurring through the want of that degree of care, which good business men should exercise in keeping property of such value."1

Thus it is seen that, though banks were not in the business of exacting compensation for safe-keeping for customers of special deposits, yet they were not deemed gratuitous bailees on the old common law theory of the duties and liabilities of such bailees. Liability on another theory seems to have attached to them, because of the reputation they enjoyed and necessary to be sustained as a business asset.

§ 95. Property Held as Collateral by a Bank. It was held in a Georgia case that to prevent a special deposit being a gratuitous bailment with a bank there must be something directly connected with the bailment in the way of compensation, direct or indirect, accruing to the bailee. "The fact that the special depositor is also a general depositor in the bank is hardly sufficient, unless the retention of the general deposit account was stipulated for. So an incidental earning of fees for exchange or collection would not be a consideration, unless the depositor was obliged to allow it. Such benefits as are wholly contingent and dependent on the pleasure of the depositor cannot affect the character of the bailment." And "the custom of the bank to accept special deposits does not absolutely demonstrate a general, still less a universal receipt of consideration."2

31. See also First Nat. Bank v. Zent (1883), 39 Ohio St. 105. 32. Merchants' Nat. Bk. v. Guilmartin (1892), 88 Ga. 797, 15 S. E. 831, 17 L. R. A. 322. See also Merchants' Nat. Bank v. Carhart (1895), 95 Ga. 394, 22 S. E. 628, 32 L. R. A. 775, 51 Am. St. Rep. 95.

This case shows that benefit to bailee may arise out of very slight circumstances to change a deposit of this kind to one for mutual benefit of bailor and bailee, or for exclusive benefit of bailee. I may say, however, that even were a bailment that of a strictly gratuitous nature, yet in the latter Georgia case, it was ruled that the mere employment of trusted agents, who made way with the deposit, was not sufficient to exonerate the bailee. It must go further and show it exercised proper supervision over such agents.

A deposit is not gratuitous where a bank is paid for collecting dividends, and if they are converted by a bank manager, the bank will be responsible."3

Where bonds and securities are deposited with a bank as collateral security upon a loan made by it, this does not make a bank an insurer of the safety of the deposit, but does bind it to take the same care of it as of its own property, and this would be true as to such collateral remaining in a bank after the loan has been paid, if it is left in anticipation of an application for a further loan.35

34

It was said as to this that: "The bonds came into its (bank's) hands in the usual course of business as collateral security for loans to a customer, and it had never relieved itself of the liability thereby incurred by returning, or offering to return them to their owner. On the contrary, it agreed, through its proper financial agent, to continue as their custodian for the purposes for which they had theretofore been employed. * ** The extension of lines of discount and credit to persons

33.

Re United Service Co., L. R. 6, Ch. 212.

34. Jenkins v. Nat'l. Village Bank (1870), 58 Me. 275.

35. Ouderkirk v. Central Nat. Bank (1890), 119 N. Y. 263, 23 N. E.

engaged in business upon stipulated securities is one of the most common features of banking, and it must often happen that such loans are from time to time wholly or partially paid and satisfied. Intervals of days, weeks and months may frequently elapse between discounts, and it would be quite absurd to hold that during these periods the bank occupied any other relation to its customer than that of custodian of his bonds for purposes, deemed mutually beneficial to both parties." The same rule applies to securities forwarded with an application for a loan.36 What is the rule to be applied to safe deposit companies and to trust companies renting safety deposit boxes will be now considered, and afterwards there will be noticed cases where in agreements by way of reorganization or otherwise special deposits in the nature of escrow are made.

§ 96. Liability of Safe Deposit Companies. The relation a company, which holds itself out among other things, to care for property placed with it for safekeeping, for a compensation to be paid to it for such safe-keeping, is that of a depositary for hire. It has been said, that storage paid for by the owner of goods "is a species of bailment like that existing in the case of the depositor in a safe-deposit company, who hires a box for his valuables and keeps the key." It was said. in this case that it was immaterial, that in conversations between the parties the price charged was called rent, as it was "unnecessary to define the precise nature of the contract or to give it a name. The defendant assumed the obligation of ordinary care and prudence in

36. Bank of Montreal v. White (1880), 154 U. S. 660, 26 L. Ed. 307. See also Third Nat. Bank v. Boyd (1875), 44 Md. 47, 22 Am. Rep. 35; Cutting v. Morlor (1879), 78 N. Y. 454.

37. Jones v. Morgan (1882), 90 N. Y. 479.

38

keeping the goods." And a later New York case referred to the charter powers of defendant as authorizing it "to receive on deposit as bailee for safe-keeping and storage, jewelry, plate, money, securities and other valuable things, upon such terms and for such compensation as might be agreed upon by said corporation and the owners of the property or the bailors."

In speaking of the arrangement whereby a depositor was furnished with a key to a safety box rented, the Court said that the company was no doubt "a bailee for reward." The Court then proceeded to say that: "When property, in the custody of a bailee for hire, is demanded by third persons, under color of process, it becomes their duty to ascertain whether the process is such as requires him to surrender the property, and if it is not, then it is his right and duty to refuse and to offer such resistance to the taking and to adopt such measures for reclaiming it, if taken, as a prudent and intelligent man would if it had been demanded and taken under a claim of right to the property by another without legal process. The defendant did not discharge the duty that it owed to a bailor and owner of the property by merely making a formal protest against entering the vaults where the property was. A person who would allow his own property to be taken from him under like circumstances, and without doing more to prevent such a result or to repossess himself of it, when taken, could scarcely be called a prudent man.'

39

Another New York case, 30 which refers to the Roberts case, supra, as authority, speaks of safe deposit

38. Roberts v. Stuyvesant Safe Deposit Co. (1890), 123 N. Y. 57, 25 N. E. 294, 9 L. R .A. 438, 1 Am. Neg. Cas. 535.

39. Lockwood v. Manhattan S. & W. Co. (1898), 28 N. Y. App. Div. 68, 50 N. Y. Supp. 974.

vaults and of a customer having the right of access to separate boxes rented therein only with knowledge and participation of the company's employes. The court said of a contention by defendant: "It is urged upon the part of the defendant that it was not the bailee, because it was not in possession of the plaintiff's property. If it was not, it is difficult to know who was. Certainly the plaintiff was not, because she could not obtain access to the property without the consent and active participation of the defendant. She could not go into her safe unless the defendant used its key first and then allowed her to open the box with her own key, thus absolutely controlling the access of the plaintiff to that which she had deposited within the safe. The vault was the defendant's and was in its custody, and its contents were under the same conditions. As well might it be said that a warehouseman was not in possession of silks in boxes deposited with him as warehouseman, because the boxes were nailed up and he had no access to them. It is perfectly clear that under the ordinary principles governing bailments, the relation of the defendant to the plaintiff was that of a depositary for hire, and that when the plaintiff gave evidence tending to show that she had placed property within that safe which was owned by and in the custody of the defendant, and that it had been abstracted therefrom, she had made out a prima facie case calling upon defendant for explanation."

There are many other cases which hold, in effect, that the arrangements usually made as to keys by depositor and company in no way affect the duty of the company to "exercise that ordinary care and vigilance which men ordinarily exercise and ought to exercise