We will now direct our attention more especially to that kind of lien which is called bankers' lien.

Bankers, by the law merchant, have a general lien on all securities deposited with them as bankers by a customer, unless there be an express contract or circumstances from which a contract will be inferred inconsistent with lien.* This general lien of bankers is a usage of trade which is part of the law merchant, and therefore does not require proof in any Court of justice, for Courts are bound to take judicial notice of it.†

This is a lien, as we have seen, which is implied by the common law from the relation of banker and customer without any agreement between them either express or inferred from their conduct or previous dealings, and is a possessory lien.

It is a general lien because it can be claimed not merely in respect of a particular debt or transaction, but in respect of the customer's general balance of account.

In order to ascertain in any particular case whether the general lien attaches, it is necessary to inquire whether there was any agreement or contract between the parties at or before the time when the banker received the security; and, if so, what that agreement was; did it of itself confer a general lien; or, if not, was it consistent or not with the bankers' general lien arising under the law merchant? For a special agreement made by the parties themselves must be intended to regulate their rights, and therefore, although it does not necessarily, it often will exclude the application of a right conferred by law.

Thus, where a customer deposited a policy on his life for £5,000 with his bankers, Messrs. Jonathan Backhouse & Co., accompanied by a memorandum which expressed that it was to secure overdrafts not exceeding £4,000 with interest, and at his death his account was overdrawn to an amount exceeding £5,000, it was held that the charge was limited to the amount of £4,000 and interest, and that the bankers' general lien was displaced, it being inconsistent with the special contract, and therefore they were not entitled to hold the security for the surplus over the £4,000 and interest.‡

* Brandao v. Barnett (1846), 12 Clark and Finnelly's Rep. 787, at 806, H.L.; approved by Privy Council in London Chartered Bank of Australia v. White (1879), 4 A.C. 413.

† See per Lord Campbell, in Brandao v. Barnett (1846), 12 Clark and Finnelly's Rep. at 805.

In re Bowes. Lord Strathmore v. Vane (1886), 33 Ch. D. 586; see also Vanderzee v. Willis (1789), 3 Brown's Chancery Rep. 21; London Chartered

To what Class of Securities General Lien attaches.

In the case of Wylde v. Radford,* an important point was discussed, though it did not become necessary to give a direct decision on it, namely: to what class of securities does the general lien of bankers attach? Having referred to cases establishing the general lien of bankers by custom on securities deposited with them as bankers, Kindersley, V.C., said: "The cases refer to a deposit of documents which are in their nature securities; but "there is some ambiguity in the term 'securities.' Anything may, of course, be deposited, and deeds or plate after they have been deposited may be said to be a security, but what is intended is such securities as promissory notes, bills of exchange, exchequer bills, coupons, bonds of foreign governments, etc.; "and the Courts have held, that if such securities are deposited by a customer with his banker and there is nothing to show the "intention of such deposit one way or the other, the banker has, "by custom, a lien thereon for the balance due from the customer. 66 In any case if A. is indebted to B. and deposits in his hands a security and nothing is said about it, the Court will assume that the purpose of the deposit is to give a security, but even with respect to the custom of bankers the same cases which "establish that rule also establish the rule that, notwithstanding the general law as to the deposit of a security, if such deposit "takes place for a special purpose, then there is no general lien."

Negotiable Securities of a Third Party.

The general lien attaches to securities, if they are negotiable, which a banker acting in good faith has received from his customer, although it turns out that they do not belong to the customer but to a third party; for the holder of negotiable securities is assumed to be the owner.t

Bank of Australia v. White (1879), 4 A. C. 413, P. C.; Wolstenholm v. Sheffield Union Bank (1886), 54 Law Times Rep. 746, C. A.; and cf. Jones v. Peppercorne (1858), 28 Law Journal Rep. Chancery, 158, in which Wood, V.C., held that where bonds payable to bearer were deposited with a broker to "raise £25,000," and realized more, they were entitled to retain the proceeds to repay themselves not merely the advance of £25,000, but their general balance. The ground of the decision does not clearly appear, but the ViceChancellor on the facts of the case seems to have considered that the purpose of the deposit was not limited to raising the amount named.

* (1863), 33 Law Journal Rep., Chancery 51, at 53.

+ Per Lord Campbell in Brandao v. Barnett (1846), 12 Clark and Finnelly's Rep. at 805-6.

Deposit for a Special Purpose.

Securities deposited for a Special Purpose.

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The subject of bankers' lien was very fully considered in the important case of Brandao v. Barnett (1846).* In that case, Burn, a London merchant, who acted as agent for Brandao, the plaintiff, a Portuguese merchant, and for other foreign principals, had an account at the defendant's bank, where he kept several tin boxes, of which he retained the keys, and in which he locked up Exchequer bills, payable to bearer and transferable by delivery, which he had bought for his principals. From time to time it was his practice to take some of these bills out of one of the boxes and deliver them to the bankers, requesting them to receive the interest, and, whenever it became necessary, to exchange the bills for new ones. The new bills would be handed to him on his next visit to the bank, and he would then lock them up in the box, and the interest would be carried to his account. On 1st December, 1836, he took Exchequer bills for £10,000, belonging to Brandao out of a tin box and delivered them to the bankers to be exchanged. This they did, and Burn having become ill they retained the new bills, and during his prolonged absence from the bank acceptances of his were presented there and paid, and in January, when his account was overdrawn, he became bankrupt. The bankers claimed a lien on the bills still in their hands for the balance due.

The Court of Exchequer Chambert decided that the fact that the bills were not the property of the bankers' customer Burn but of his principal Brandao was immaterial, and did not prevent the lien attaching, as the bills had been delivered to the defendants as bankers, and that it was their duty as bankers to receive the interest and exchange the bills; but the House of Lords, while agreeing that this would be law if the defendants had received the bills as bankers, reversed the decision on the ground that the bills had not been delivered to them in the course of their trade as bankers, nor was there any duty cast upon them as bankers to receive the * 12 Clark and Finnelly's Rep. 787; 3 Common Bench Rep. 519, H. L. † (1843) 6 Manning and Granger's Rep. 630.

The Court of Exchequer Chamber was a very strong Court of Appeal. It was originally constituted as a Court of Error in 1357 by 31 Edward III, c. 12; and before that Court, as remodelled in 1830, the judgments of each of the three superior Courts of Common Law-the Courts of King's Bench, Common Pleas, and Exchequer-were made subject to revision by the Judges of the other two, sitting collectively for that purpose. The composition of the Court thus admitted of three different combinations, consisting of those two Courts below which were not parties to the original judgment. It was abolished on the 1st November, 1875, by the Judicature Acts, which transferred its jurisdiction to the present Court of Appeal. See Judicature Act, 1873, s. 18 (4); Judicature Act, 1874, s. 2.

interest and exchange the bills. The old bills had been delivered to them for a special purpose inconsistent with lien. The fair inference from the transaction was that the new bills were intended to be handed to Burn that he might deposit them in the tin box, and the accidental circumstance that by reason of his illness these particular bills happened to remain in the hands of the bankers for a longer period than usual did not affect the case. The transaction was very similar to the deposit at a bank for safe custody of plate in a locked chest, upon which there clearly is no lien.

Charge on One of Several Properties comprised in Deed.

In the case of Wylde v. Radford,* which came before Kindersley, V.C., in 1863, a customer deposited with his bankers a deed of conveyance, including two distinct properties, giving them a memorandum charging one of the properties only as security for his general balance, and it was held that, as the charge created by the deposit was specifically limited to one of the properties only, the bankers could claim no lien on the other property.

Illustration of General Lien.

An interesting illustration of the effect of the bankers' general lien is afforded by the case of Davis v. Bowsher, decided in 1794,† in which a customer used from time to time to lodge bills with his bankers and obtain advances from them. The bankers charged no interest on the advances, but used to apply such advances to the discount of particular bills which they would select, and debit the customer's account with the amount of the discount. On one occasion the customer, after he had lodged a number of bills generally, applied for an advance, which the bankers allowed up to £1,400, and entered the discount on such of the bills as they selected, which were for a considerably larger amount than the advance. The customer, having been refused a further advance, demanded back the undiscounted bills, but the bankers refused to deliver them, claiming a lien over them to secure the balance in the event of some of the discounted bills not being met. The Court held that there were no special circumstances to deprive the bankers of their general lien, and they were therefore justified in retaining the undiscounted bills. By applying the advance to the discount of particular bills they had not selected these as the sole basis of the credit, nor relinquished their general lien upon the other securities. Bills paid into a Bank generally cannot be

* 33 Law Journal Rep. Chancery, 51.

† 5 Term Rep. 488.

General Lien on Separate Accounts.

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taken away by the customer until he has paid his general balance. In this case, at the time the customer demanded them the balance was not settled, and he therefore could not insist on getting them back.

General Lien on Separate Banking Accounts.

Where a firm kept three accounts with their bankers, called the loan account, the discount account and the general account, the firm from time to time received advances, which were entered in the loan account and to meet which they deposited securities. In the course of the transactions they wrote a letter to the bankers, advising them that they proposed to draw upon the bankers for £10,500, but that as their credit would not afford a margin to that extent, they sent certain bills specified to hold as collateral security, and requesting the bankers to honour the drafts, they engaging to provide funds to meet them before maturity. The firm having become insolvent, the bankers claimed a lien on the bills for the deficiency on the general account, after satisfying the balance due on the loan account. It was admitted that the bills in question were not sent expressly as security for the particular advance of £10,500 and might properly be applied to discharge the balance of the loan account; and it appeared from the bank books that there was no particular reason beyond convenience for keeping the three accounts separate. The Court held that there was nothing in the course of dealing or in the terms of the letter to exclude the banker's general lien. As between banker and customer whatever number of accounts are kept, if it is in effect but one account, it is not open to the customer, in the absence of some special stipulation, to claim that securities which have been deposited are applicable to one account only.*

So, if a customer keeps accounts at several branches of a bank, and there is no special agreement that each account is to be kept separate, the bank is entitled at any time to combine the accounts even without giving notice to the customer; † unless the different accounts are kept for the customer in different characters—e.g., one as a personal and the other as a trust account-in which case they cannot of course be treated as one account.‡

Again, if a firm has an account at a bank and one of the partners has a separate account at the same bank, the bank, in the absence of a special agreement, has no general lien for a balance due from the firm on securities deposited by the one partner for the purpose of securing an overdraft on his separate account. To allow such a

* Re European Bank. Agra Bank Claim (1872), L.R. 8 Ch., Ap. 41.

† Garnett v. McKewan (1872), L.R. 8 Ex. 10.

Prince v. Oriental Bank (1878), 3 A.C. 325, 333, P.C.

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