and usages, without bringing home to him positive notice of the change. Until he has been sufficiently notified to the contrary he has the right to expect the ordinary course of dealing to be continued. But to enable the customer to take advantage of this doctrine, he must show that the alteration has taken place in an actual rule or bona fide usage, in the legal sense of the latter phrase, of the bank. The usage need not be a general usage of the bank; it may be one which is only good as between himself and the bank. For usages of this limited nature may exist and a bank by its course of dealing with a single customer may assume special obligations towards him individually which do not bind it as towards anybody else.2 But whatever be its extent it must constitute a usage proper. A mere gratuitous habit on the part of the bank to allow its customers privileges or favors, if it be really nothing more than this, may be stopped by the bank at any moment without prior notice, and without placing itself under any liability. It is of course impossible to draw an accurate line of demarcation between the usages which are of the former class and the habits which fall within the latter description. In each instance the appropriate character will be conferred by a combination of all the many minute circumstances which can be adduced to interpret the true nature of the transactions.

Certain Special Instances.

Two or three special cases, in which certain matters have been regarded as proper to be the subject of usage and to be controlled thereby should perhaps be mentioned before leaving this portion of our topic. A custom of common carriers and messengers to leave parcels or notices directed to a particular officer of the bank at some especial desk, or with some officer

1 Barnes v. Ontario Bank, 19 N. Y. 152; Cumming v.Shand, 5 Hurl. & N. 95 ; 29 L. J. Exch. 129.

2 Hotchkiss v. Artisans' Bank, 42 Barb. 517.

other than the one named, may be shown; and delivery made in accordance with such custom will be a sufficient discharge of his duty on the part of the carrier or messenger.1

An established custom that notices intended for the directors shall be left upon the cashier's desk, will bind any director whose own notes may happen to come into the bank.2

Commencement day at Harvard College (situated three miles from Boston) is not a legal holiday, upon which by statute the Boston banks would be authorized to close. But it has long been their usage to do no business upon that day, and to make demand and give notice, &c., upon commercial paper, upon the day preceding, in like manner as in case of Sundays and the like. The courts of Massachusetts have recognized the custom as good.3

A country bank in the State of New York was wont to send paper left with it for collection in New York city, by the captain of a steamboat plying to the city, instead of sending by mail. It was also wont to send only once a week, except in cases of an unusual accumulation of paper. The steamer arrived in the city early in the evening of the same day on which it started.

The court held that the custom was not inoperative as being unreasonable, or as wanting any of the requisites of a good custom; and that at least as towards all persons affected with knowledge of it, it was valid and binding.*

Usage proved by Parol Testimony.

The custom or usage of banks generally, or of an individual bank, may be sufficiently proved by parol testimony.5 It is not

1 Hotchkiss v. Artisans' Bank, 42 Barb. 517.

2 Weld v. Gorham, 10 Mass. 366.

3 City Bank v. Cutter, 3 Pick. 414.

4 Bridgeport Bank v. Dyer, 19 Conn. 136.

5 Renner v. Bank of Columbia, 9 Wheat. 587; Mills v. Bank of United States, 11 id. 431. Indeed in a large proportion of the cases cited in this chapter parol evidence has been admitted without objection.

necessary that the witnesses who are relied upon should be experts in the banking business or in any manner engaged in the same, or connected with any bank whose individual usage is to be shown. If they have had any dealings which have brought the custom or usage within their observation and cognizance so that they actually know it as a matter of fact they are competent to testify to it, and it may be established by their testimony alone.1

Clearing Houses.

In all large cities where the banking business is sufficiently considerable to demand such a convenience" clearing houses" are established. The main purpose of these is to render the daily settlements of the banks with each other simple and expeditious. The substantial characteristics of the plan are these: At a certain hour every morning, usually at ten o'clock, the deputy of each bank attends at the room of the clearing house bringing with him all the checks upon other banks which have been received by his own bank since the same hour of the preceding day. Each bank has its drawer or box in the room, and the messengers of all the other banks distribute all the checks which they have in their possession, placing each of them in the drawer or box of the particular bank upon which it is drawn. Each bank is then credited on the books of the clearing house with the amount of checks upon other banks which it has brought in for collection and is debited with the amount of the checks drawn upon it which all the other banks have brought. If the former amount exceeds the latter the bank is then declared to have "gained" the amount of the excess; but if the latter amount exceeds the former the bank is declared to have "lost" the amount of the difference. It is obvious that the sum total of the losses of the losing banks must be precisely equal to the sum total of the gains of the gaining banks. At a later hour in the same day the losing

1 Griffin v. Rice, 1 Hilt. 184.

banks are obliged to bring into the clearing house the sums which they have respectively lost; and shortly afterward the gaining banks come and receive from the officers of the clearing house, out of the funds thus furnished by the losers, the amounts of their respective gains. In this manner the business of settling the daily balances and exchanges between the several banks is accomplished with extraordinary rapidity, accuracy, and cheapness. The computation of how much each bank has brought in against others and of how much the others have brought in against it, is performed by skilful clerks in a very few minutes. So soon as it is finished an officer of each bank takes from its drawer or box all the checks against it which have been placed therein by the other banks and carries them back to his own bank to be examined, for the purpose of seeing whether or not any of them must be dishonored by reason of want of funds of the drawer. The casting of the balances at the clearing house is not of course, as it would be impossible that it should be, binding upon any bank as to the genuineness or the honoring of the checks which are placed in its drawer and which purport to be honestly drawn upon it by depositors having funds. A time is therefore set within which each bank is expected to examine all such checks and to return such as it refuses to pay. The computation already made at the clearing house is not affected by the repudiation in this manner of checks by any bank. But each check before being placed in the box of the drawee bank is marked, for the purpose of identification, with the name of the bank presenting it through clearing; therefore the bank on which it is drawn and which refuses to pay it is able at once to send it back to the bank which brought it in and to demand a repayment of its amount to be made. If the repayment is refused for any reason the question lies wholly between the two banks, and the one on which the check was drawn has no means of satisfaction afforded by the clearing house, but must bring its suit directly at law.

A clearing house may be legally incorporated; but more commonly it is a mere private association organized among the banks to suit their own requirements and convenience. Of course the authority of such an association must be very limited. In the absence of special legislation it is impotent by its own arbitrary and original power to alter any obligation of the common law. Neither has it any authority to bind banks, which are not parties to the association, by any by-laws, rules, or usages which it may see fit to establish. Some of the regulations of the clearing house are embodied in by-laws, others are simple rules or usages which are adopted and tacitly acquiesced in by the members. There is no legal distinction between these two classes. When once the rule or usage has been established by satisfactory proof it is as binding as the formal by-law. The only practical difference is in the greater difficulty which must be experienced in proving with accuracy the existence and extent of the unexpressed custom.

The by-laws, rules, and usages are binding only upon members of the association. No outside bank is under any degree of obligation to observe them. But on the other hand no outside bank can have any remedy against any member of the association for a breach of them. They are in the nature of a contract to which the outsider is no party. The duty of adhering to them runs from each of the members to each and all the rest, but to no other person or corporation; at least unless any special and peculiar course of dealing between any member and any outside individual has operated to place that member under an express and exceptional obligation to the outsider to adhere in all matters in which he is interested to the regulations of the clearing house. Generally, "those who are not bound by such usages, and have not contracted with reference to them, have no right to avail themselves of them to create an obligation against those who are parties to their adoption and bound by them inter sese only." But if any bank or person not a member of the association can show that, by