In the larger corporations the treasurer, either alone or in connection with the president, is usually given much more extensive powers, including the discounting of notes and drafts and the right to make loans and to deposit collateral to secure these loans, and these powers also usually appear in the designating resolution. (See Form 18.)

The bank officials naturally prefer these wider powers. They practically give the corporate officials unrestricted authority as to all matters concerning the bank. The necessity for special authorization of the corporate officials when some bank transaction out of the ordinary is undertaken, is thereby removed and the bank officials are also relieved from all enquiry as to the authority of the corporate officials for contemplated transactions with the bank.

For these reasons the printed resolutions prepared by the banks for the use of corporations opening accounts, generally give wide and unrestricted powers. The banks always prefer and sometimes insist that the corporation shall employ these resolutions, not alone on account of the extended powers conveyed but because they are in the form to which the bank is accustomed.

The directors should employ the resolutions of the bank if they are compatible with the limits of the powers to be conferred upon the corporate officials and if they are acceptable in other respects, but if this is not the case, the unintended or objectionable powers or provisions should be stricken out before the resolutions are adopted. This still leaves the resolutions in the general form preferred by the bank, but as to their subject matter in accordance with the wishes of the directors.

The authorizing resolutions of the directors almost always contain provisions as to signatures to checks, powers of endorsement, etc., which already appear in and are fixed by the by-laws. This repetition is not objectionable, neither strengthening nor detracting from the by-law provisions. Its only

purpose is, as a matter of convenience, to bring together all matters pertaining to the bank account.

When the corporate account is to be opened, the bank will require evidence of the treasurer's authority and a statement of the conditions under which it is opened. To supply this, it is customary for the directors' authorizing resolution, together with the names, official positions and signatures of the officers appointed to sign and countersign the corporate checks, to be certified by the secretary of the corporation under the corporate seal. The bank may also require a copy of any by-law provisions relating to deposits or in some cases a full copy of the by-laws and these must likewise be certified. Occasionally the banks require notarial acknowledgments in addition to the secretary's certificate.

When the treasurer's authority and the conditions under which the corporate account is opened are thus duly certified, and the certified instruments have been filed with the bank, and when any other required formalities are complied with, the treasurer turns over such funds as he may have on hand, for deposit, receives the corporate pass book and the opening of the account is complete.

By agreement between the corporation and the bank, the corporate funds might be deposited on "special deposit," instead of on "general deposit " as is usually the case, and they are then held subject to the agreed terms. Thus the deposit. might not be subject to withdrawal for a certain term, or only after specified notice. Any of the agreements of special deposits modify the law as applied to general deposits and sometimes change entirely the relation of debtor and creditor usually existing between the depositor and the bank.

$211. Corporate Deposit in Treasurer's Name.

Corporate accounts are sometimes opened in the name of the treasurer. The practice, as has been stated, is a bad one, the objection to it being twofold:

See Form 21.

(1) The treasurer has the disbursement of the corporate funds entirely in his own hands. He may withdraw them for proper or improper purposes at his pleasure. Also he can refuse to make duly authorized payments if he is so disposed and the corporation will then have much difficulty in forcing such payments and in securing proper control of its own funds.

(2) In case of the disability, death, resignation or removal of the treasurer, or the expiration of his term of office, the procedure to secure possession of the corporate funds may likewise be difficult.

If the funds are in the name of the corporation, the whole matter in case of a change in the treasurership is settled by the mere delivery to the bank of a duly executed certificate setting forth the appointment of the new treasurer, and containing a copy of his signature as it is to appear on the corporate checks. When, however, the funds are deposited in the treasurer's name and a new treasurer is appointed, a transferring check must be secured from the old treasurer, or else the corporation must formally prove its ownership of the funds and its right to their withdrawal, and in either case a new deposit must then be opened by the new treasurer. In the one case nothing more than a simple matter of routine corporate procedure is necessary to effect the transfer. In the other case formal and somewhat difficult action is always required, and legal proceedings may become necessary.

Also the treasurer himself should, as a matter of business prudence, object to the opening of the corporate account in his own name as he is thereby rendered personally liable for any loss of these deposited funds which may result through the failure of the bank, or from other causes. The rule on this point is very explicit. "In case it becomes the duty of an agent or trustee to deposit money belonging to his principal, he can escape the risk only by making the deposit in his principal's name, or by so distinguishing it on the books of the

bank as to indicate in some way, that it is the principal's money. If he deposit it in his own name he will not, in case of loss, be permitted to throw such loss on his principal."5

§ 212. Deposit of Funds.

Corporate funds coming into the treasurer's hands should be deposited at the first opportunity. If the treasurer delays a deposit unduly, he will be liable for any resulting loss. On the other hand, as soon as the funds have been duly deposited he is relieved of liability therefor and the burden of responsibility is shifted to the bank. It is ordinarily, therefore, not only good business policy but to the direct interest of the treasurer that the corporate funds should be deposited as soon as they are received.

As to what constitutes such reasonable promptness in making deposits as will relieve the treasurer from responsibility, it may be said that when large sums are received, and particularly when in the form of checks, they should be deposited the same day, or, if received after banking hours, on the day following at the latest. In the larger corporations where deposits are made daily, the question will not arise as neither cash nor checks are ordinarily held longer than one day. In the smaller corporations when deposits are not made every day, moneys coming in might properly be held until the time for the regular deposit unless their amount were large or other conditions made an earlier deposit desirable. As to what constitutes due promptness in depositing checks, see § 228 of the present volume.

Deposits of the corporate funds are usually made with the receiving teller. They might, however, be safely made with any other officer of the bank apparently authorized thereto, if made within the bank and during banking hours. They should not, however, be made outside the bank, or outside of banking

Naltner et al v. Dolan et al, 108 Ind. 500 (1886); Williams, Admr. v. Williams, 55 Wis. 300 (1882); Greenfield School Dist. v. Bank, 102 Mass. 174 (1869); Booth v. Dexter, etc. Co., 118 Ala. 369 (1897).

See $203.

hours, unless the depositor knows that the receiving officer has been fully authorized to receive deposits in this irregular way and is acting with the knowledge and concurrence of the bank.

The treasurer's pass book, showing by proper entry that the corporate funds have been deposited, is all sufficient evidence of both the deposit and the bank's liability therefor.

As a rule, when a bank of deposit fails, all funds on general deposit are involved and are tied up until some general settlement is made. An exception may arise as to a deposit made the day of the failure, which may or may not be recovered intact according to the circumstances.

If such deposit were received in good faith by the bank officials who were unaware of the impending insolvency of their institution, the deposit would take its place as part of the general funds of the bank subject to such settlement as the insolvent institution may be able to make. If, however, it can be proved that the officials received the deposit when they knew of the impending insolvency of the bank, and the funds so deposited can be traced into the hands of the receiver or assignee of the bank, they may be recovered intact.

If actual cash were deposited, it is always difficult and generally impossible to meet these requirements. If, however, the deposit consisted in whole or in part of checks, these checks, if not already collected, may usually be traced and recovered."

213. Withdrawal of Deposit.

The withdrawal of the corporate funds when once deposited must be effected by means of written orders, i. e., checks.

When a check properly drawn on funds deposited in the bank is presented, the bank must pay the check, and if it does not do so, the corporation may bring suit not only to enforce payment of its check but for damages as well if damages can

7 Quin v. Earle, 95 Fed. Rep. 728 (1899).