prosecuted for the benefit of an independent third party, the set-off of bank-bills would be allowed.1

If the bank is insolvent, the bill-holder can set off the amount of bills held by him for their full nominal or face value, provided he had come into possession of them prior to the insolvency.2 It has been said that if any legislation exists providing for equality in the payment of bill-holders, this right of set-off is in derogation of it. But nevertheless the right is not taken away or diminished by reason of this clashing or inconsistency, which only furnishes an additional reason for the stringent enforcement of the rule requiring the possession to have been acquired prior to the insolvency.3

Some questions may arise as to when the taker or purchaser of the bills is to be affected by knowledge of the bank's insolvency. No precise and definite rule has been laid down concerning this matter. The relationship existing between the individual and the bank might not unreasonably have some bearing and effect in the determination of the point in any particular case. Thus a director obtaining bills of the bank at a discount, at a time when he himself is indebted to the bank, and also when by reason of his office he knows or ought to know that the bank is thoroughly insolvent, might well be refused the privilege of using these bills in set-off against such indebtedness; though an outsider having no such knowledge, and obtaining bills at the same time, also at a discount, but in due course of business, might be allowed to do so. The director could hardly be fairly deemed a bona fide holder, for this purpose. In an early case in New York it was declared that the mere refusal of the bank to pay specie, and the consequent stoppage of its bills, were not alone sufficient proof of insolvency to deprive a subsequent bona fide holder of its bills of his right to set them off. The court based their decision upon

1 Hallowell and Augusta Bank v. Howard, 13 Mass. 235.

2 Bruyn v. Receiver, 9 Cow. 413, n.; Haxtun v. Bishop, 3 Wend. 13; Diven

v. Phelps, 34 Barb. 224.

8 Clarke v. Hawkins, 5 R. I. 219.

4 Ibid.

the view that these facts did not alone indicate a suspension of the banking business and an absolute deficiency of assets to meet the liabilities of the corporation, but might very probably be the result of mere temporary embarrassment and want of available funds growing out of the financial condition of the country.1 In a later case in the same State, where it appeared that the bank had closed its doors, and had for all practical purposes suspended business altogether, it was held that the taker of its bills after these occurrences could not use them in set-off.2 There seems to be that degree of sound argument in both of these cases that it is hard to say that either of them is wrongly decided. At the same time they are open to the objection that it is difficult to draw from them any general principle which shall be of universal and satisfactory operation. Many instances must arise in which it will be very hard to say whether or not the suspension of the bank is sufficiently complete to amount to notice of insolvency in fact. Farther, the person who takes the bills may not know precisely what is the extent, or what are the circumstances, of the suspension. In short, the test which, if any, can alone be drawn from these rulings, is one which is open to many practical objections. We shall therefore take the liberty to suggest what seems to us a better one. Though it has not been supported by judicial adoption, yet it has never been passed upon by way of rejection in any cause, so far as we have discovered. It is therefore to be fairly considered as open in the future either to acceptance or rejection. It is simply this, that so long as the bills continue to be taken and paid away by the community in general, like the bills of other banks, that is to say, so long as they continue in actual circulation as money, so long any person taking them as money should retain the right to set them off against the bank. When they no longer circulate as money, having a fixed value, but can only be passed by way of barter or exchange, becoming the sub

1 Jefferson County Bank v. Chapman, 19 Johns. 322.

2 Diven v. Phelps, 34 Barb. 224.

ject in each case of a special bargain as concerns the valuation at which they shall be received, then it is time to say that the taker can no longer set them off for their full face value. The manner in which they are treated by people generally, and the manner in which any individual actually comes by them, are the two elements of determination. As a matter of fact, in cases which apparently resemble that in 19 Johnson (supra), we continually see bills circulating actively at a moderate discount, the taker always having a claim upon them against the bank for the full amount, and the bank doing a business as large and as brisk as usual. Such bills are always recognized by the courts as money to their nominal value. If taken on deposit, the bank customarily gives credit for so many dollars, and the debt is for so many dollars. The case is precisely that of the first of the two New York cases. The bank is so situated that it cannot conveniently, or perhaps safely, redeem at once upon presentment in specie or legal tender; but its substantial and ultimate solvency is by no means therefore despaired of. Even its present positive insolvency is by no means proved. The public all take its promises to pay with only a slight discount to represent the value of the delay, and of course also of the possible doubt attendant upon any delay, which must precede payment by the promisor. Any person taking one of these promises under these circumstances ought to be able to use it in set-off, as well as to sue upon it, in both cases for the full nominal value. But when the bank has come to that degree of embarrassment that it has to suspend business; or when the public become aware of what they deem a hopeless degree of insufficiency in its assets and desperation in its affairs, whether indicated by the actual shutting of doors or by other facts and symptoms which the people at large consider equally conclusive; then the bills will naturally fall out of circulation as money, at any fixed value, and will be taken as a matter of bargain, and more or less of speculation. They lose their traits as money; usage no longer makes it unusual or apparently dis

courteous in any man to refuse to accept them as such. At this stage, and not before, it would seem to be time to deprive the subsequent taker of the privilege of securing to himself a considerable advantage over other debtors through the medium of a right of set-off.

Note payable in Bank-bills.

Where the bank is the holder of a note, which is, in terms, made payable in its own bills, if it sues thereon it shall recover for the full face value of the note, without regard to the merchantable value. For even after the issue of execution the debtor can discharge the debt by a payment or tender of the bills of the bank. Though it would seem that the judgment must in such a case express the fact that such a payment or tender shall operate to discharge the defendant; inasmuch as otherwise a simple judgment, given for so much money, could not legally be thus satisfied, even as towards the bank itself, much less as towards any assignee of the bank, except of course by common consent.

Statute of Limitations.

A bank-note is not subject to the running of the Statute of Limitations, as any other simple indebtedness, or promise to pay would be, although the bill is not distinguishable in form from such a promise. Its purpose of circulation necessarily involves this result. Every time that it is reissued by the bank the promise is renewed, and it must usually be impossible in the case of any particular bill to say how often it has passed into, and again has been paid out by, the bank, or when it was last so paid out. But even if in any individual case it could be shown that the last issue was at a time so long past that the period of the statute has since elapsed, yet another objection, which goes to the root of the matter, still remains behind. For

1 Abbott v. Agricultural Bank, 11 Sm. & Mar. 405.

lapse of time, in the case of these instruments, affords no presumption of their having been paid. On the contrary, their existence in other hands than those of the bank, is at least prima facie evidence of non-payment, since they are never paid, and generally speaking payment can never be enforced upon them at law, unless they are surrendered to the promisor.1 Further, as already shown, a new contract and a new cause of action is created by each transfer, so that the statute could begin to run only from the time when the last holder came into possession.

Presentment and Demand.

If a bank-note is made payable generally, suit may be brought upon it without prior demand. Where bills are made payable at any particular place, as at the banking-house of the corporation, the rule is still somewhat doubtful. It has been held in Georgia that demand at that place must be averred and proved.2 In other decisions it has been asserted that the suit may still be sustained, even though no demand has been made; but that if the bank brings the money into court and shows its ability and willingness to have paid, had presentment been made at the place named, then it shall lose neither interest nor costs.3

If demand be necessary at all, it must be made at the place designated upon the face of the instrument. Even if that

place be other than the corporate banking-house, the rule is unaffected by this fact, and demand at the banking-house cannot be substituted for demand at the place named.*

1 Hinsdale v. Larned, 16 Mass. 70; Rev. Stat. c. 120, § 4.

2 Dougherty v. Western Bank, 13 Geo. 287.

3 State Bank v. Van Horn, 1 South. 382; Haxtun v. Bishop, 3 Wend. 13; Bryant v. Damariscotta Bank, 18 Me. 240; Bank of Niagara v. McCracken, 18 Johns. 495; where the individual opinion of the judge (Woodworth) was thus stated, but no decision by the court was either needed or given. See Jefferson County Bank v. Chapman, 19 id. 324; Bank of Kentucky v. Hickey, 4 Litt. 225 4 King v. Dedham Bank, 15 Mass. 447; Ware v. Street, 2 Head, 609.