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(303 Ill. 282, 135 N. E. 497.)

that the question is not involved. There were circumstances affecting the question of what would be a reasonable time, which is ordinarily a question of fact, and to adopt an arbitrary rule that time for demand it is a period fixed upon certificate by the Statute of Limitations would be merely to double the statute, which would be unwarranted.

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of deposit.

Counsel say that the delay in presenting the instrument and commencing the action, coupled with other circumstances, warranted the inference of payment and justified the judgment, but the trial court found that issue of fact against the defendant, and that there had been no payment. There is also a suggestion that the judgment is right, because the plaintiff did not testify so

that the defendant would have an opportunity to cross-examine him. There is no ground for the insinuation that his failure to testify justified an inference that he never deposited any money, or that there was any valid defense to his suit. The certificate was a negotiable receipt for the money deposited, to be repaid on the return of the certificate, properly indorsed. The facts, as found by the trial court, did not justify the judgment as a matter of law, nor the affirmance by the Appellate Court.

The judgments of the Appellate Court and Municipal Court are reversed, and the cause is remanded to the Municipal Court.

Petition for rehearing denied June 8, 1922.

ANNOTATION.

Statute of limitations as applied to certificate of deposit.

b. Rule that statute runs from date:

I. Ordinary certificate payable on de- I. continued.
mand or on return of the cer-
tificate:

a. Rule that statute runs from de

mand:

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1. In general, 11.

2. Theory, 11.

II. Certificates in form payable a stated

time after date:

a. Rule that statute runs from de

mand, 12.

b. Rule that it runs from expiration of time stated, 14.

Iowa.-Elliott v. Capital City State Bank (1905) 128 Iowa, 275, 1 L.R.A. (N.S.) 1130, 111 Am. St. Rep. 198, 103 N. W. 777 (the certificate was "payable to the order of herself [depositor], on the return of this certificate properly indorsed, with 4 per cent interest per annum." This case overrules Mereness v. First Nat. Bank (1900) 112 Iowa, 11, 51 L.R.A. 410, 84 Am. St. Rep. 318, 83 N. W. 711.

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New Mexico. Bank of Commerce v. Harrison (1901) 11 N. M. 50, 66 Pac. 460 (the certificate made the deposit "payable on the return of the certificate properly indorsed, six months after date with interest at the rate of 6 per centum per annum").

New York. Howell V. Adams (1877) 68 N. Y. 314. See Smiley v. Fry (1885) 100 N. Y. 262, 3 N. E. 186, infra, a case dealing with a certificate of deposit issued by a firm the business of which is not stated. It is stated in Re Cook (1903) 86 App. Div. 586, 83 N. Y. Supp. 1009, that a certificate of deposit in which the bank agreed to pay the money due the depositor, with interest, if left six months, does not become due, nor does the Statute of Limitations begin to run, until presentation and demand.

Pennsylvania. McGough v. Jamison (1884) 107 Pa. 336 (the certificate was "payable to the order of himself [depositor], on return of the certificate"); Gardner's Estate (1910) 228 Pa. 282, 29 L.R.A. (N.S.) 685, 77 Atl. 509 (certificate was "payable to his [depositor's] order on return of this certificate, six months after date, with interest at 4 per cent per annum").

South Dakota. - Tobin v. McKinney (1900) 14 S. D. 52, 91 Am. St. Rep. 688, 84 N. W. 228, affirmed on rehearing (1901) 15 S. D. 257, 91 Am. St. Rep. 694, 88 N. W. 572 (the certificate was "payable to order of herself [depositor] in current funds, on return of this certificate properly indorsed, with interest at 6 per cent per annum if left six months").

See Pierce v. State Nat. Bank (1913) 215 Mass. 18, 46 L.R.A. (N.S.) 693, 101 N. E. 1060, infra, I. a, 3.

The foregoing rule that the Statute of Limitations runs from the time of demand has also been applied in a number of cases involving certificates of deposit issued by individuals. Thus, the statute was held to run from the time of demand in Patterson v. Blanchard (1896) 98 Ga. 518, 25 S. E. 572, in case of a deposit with a partnership, for which the partnership issued a "writing obligatory," acknowledging the receipt from the intestate for her account of a specified

sum, and concluding with the words, "We are to allow you 8 per ct. on the Amt.," but specified no time for payment. The statute was held to run from demand in Campbell v. Whoriskey (1898) 170 Mass. 63, 48 N. E. 1070, where at the time of the deposit, apparently, no writing was given, but sometime subsequently a writing was given reciting the amount of money belonging to the depositor. The statute was held not to run until demand was made, in Gutch v. Fosdick (1891) 48 N. J. Eq. 353, 27 Am. St. Rep. 473, 22 Atl. 590, in case of a certificate issued by an individual, certifying that he held in trust for the depositor a stated sum, for which he agreed to pay interest, and containing a promise "to refund to her the said $4,000 on demand." According to the court, the language of this certificate is evidently selected with care, fully and consistently to express a deposit in trust, in contradistinction to a promised payment of a loan or indebtedness. The declarant does not owe; he holds in trust. The court further states that, considered independently of the words "in trust," the word "holds" implies a defensive possession entirely. consistent with that of a trustee. The court then states that the certificate does not stand upon the footing of a promissory note, which treats of the payment of indebtedness, but upon the footing of a deposit and continuing trust until the cestui que trust shall, by her act in demanding payment, determine the trust. The statute was held to run from the time of demand in Luna v. Montoya (1919) 25 N. M. 430, 184 Pac. 533, in case of a certificate issued by an individual, certifying that the depositor had deposited a certain amount of money in his care, he paying a stated rate of interest per annum, and guaranteeing the money. In Payne v. Gardiner (1864) 29 N. Y. 146, the statute was held not to run until a demand for a deposit made with a business firm, for which the firm gave a writing, acknowledging the receipt from the depositor of the amount, "which is to his credit on our books at 6 per cent interest." The statute was held to run from the de

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mand in Smiley v. Fry (1885) 100 N. Y. 262, 3 N. E. 186, in the case of a certificate of deposit acknowledging that there was "due S. K. Ashton, M. D., trustee, $4,000, returnable on demand," and reciting, "It is understood this sum is especially deposited with us, and is distinct from the other transaction with said Ashton." statute does not begin to run until demand, in case of a paper reciting the receipt of a sum of money, and providing that it is to be returned to the depositor in such amounts as she may want. Finkbone's Appeal (1878) 86 Pa. 368. A writing acknowledging the receipt of a stated sum of money, "to be returned when called for," is a certificate of deposit which requires a demand to mature and start the running of the Statute of Limitations. Smith v. Steen ̧ (1892) 38 S. C. 361, 16 S. E. 1003.

2. Theory.

The cases adhering to the rule now under consideration reject the rule applicable to demand notes. According to the court in Elliott v. Capital City State Bank (1905) 128 Iowa, 275, 1 L.R.A. (N.S.) 1130, 111 Am. St. Rep. 198, 103 N. W. 777, the fundamental error in the cases which hold that the Statute of Limitations runs, from the date of the certificate is in holding that an ordinary deposit of money in a bank is a loan thereof to the bank. The court says: "Deposits are made in a bank in accordance with the universal commercial usage, which becomes a part of the law of the transaction. They are neither loans nor bailments in the strict sense of the term. A deposit is a transaction peculiar to the banking business, and one that the courts should recognize and deal with according to commercial usage and understanding. The primary purpose of a general deposit is to protect the fund, and some of the incidental purposes thereof are the conveniences of checking and transacting large business interests without keeping and handling large sums of money. The transaction is in reality for the benefit and convenience of the depositors, and while the relation of

debtor and creditor exists, and the bank has the use of the money for commercial gain, it assumes no further obligation than to pay the amount received when it shall be demanded at its banking house." It is accordingly. held that demand must be made to mature the certificate. That demand must be made is held further supported by the provision of the certificate that it is payable on presentation, properly indorsed. This express language, according to the court, repels the thought that it is payable otherwise than on actual demand. The court in Fells Point Sav. Inst. v. Weedon (1862) 18 Md. 320, 81 Am. Dec. 603, says that the rule that the Statute of Limitations runs from the date of a note payable on demand does not apply to a certificate of deposit, and the court continues: "Here the certificate of deposit has attached to it a condition that the amount deposited is payable on the return of the certificate; and the appellant is in fact resisting the recovery of the claim upon the ground that this condition is not complied with. The inducement for this deposit was the ассиmulation of interest, and the obligation of the appellant stated on the face of the certificate is to pay the principal when demanded, with interest. Upon such a contract the statute cannot be held to run until the demand has been actually made." The court in McGough v. Jamison (1884) 107 Pa. 336, says: "It is true the Statute of Limitations begins to run against mere duebill payable on demand from the date of the bill, and not from the time of demand for payment.

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That is because suit may be brought at once thereon without previous demand. The instrument, however, on which this suit is brought, is not such a duebill. It is not payable on demand merely. It is payable to the order of the depositor 'on return of this certificate.' That superadded condition changes its character. A suit could not be maintained on this instrument without returning it, or offering to return it. It is in fact an instrument known as a certificate of deposit. It was not due until demand

ed and a return of the certificate. No action can be maintained thereon until that time. It follows that that is the time the statute began to run, for then the right of action accrued." In Tobin v. McKinney (1901) 15 S. D. 257, 91 Am. St. Rep. 694, 88 N. W. 572, the court considers a statutory provision that "a negotiable instrument which does not specify the terms of payment is payable immediately." It is held that this provision is, by a general provision, made "subordinate to the intention of the parties when ascertained in the manner prescribed by the chapter on the interpretation of contracts." After thus referring to the

statute, the court continues: "Now, this transaction being a deposit of money for safe-keeping, neither party contemplated the execution of a contract bearing inceptively the stamp of dishonor, upon which a cause of action accrued instantaneously without first calling upon the banker for payment, and the terms of the instrument will bear no such construction. While its negotiability is not destroyed by the provision, 'payable to the order of herself in current funds, on return of this certificate properly indorsed,' the date of maturity is thereby expressly made to depend on an act to be performed by the holder in reference thereto, and nothing was payable thereon until the happening of such contingency. If no time is to elapse between the issuance of a certificate of deposit and its actual and apparent maturity, § 4570 of the Compiled Laws, providing that 'a transferee of a certificate of deposit, after its apparent maturity or actual dishonor within his knowledge, acquires a title equal to that of a transferee before such event,' is wholly inoperative and meaningless withal. According to the usual practice of commercial communities, this certificate was made payable on its return to a place specified, which in itself is equivalent to an agreement between the parties that the banker must be first called upon for payment before an action can be maintained. Had the deposit been made subject to check, appellant's right to demand the money at any

time would have been no greater than it is at present, and the difference in such transaction in no way encroaches upon the doctrine that a depositor must demand payment before the institution of a suit to recover his money. The rule arises from the reason that it would be grossly unjust to give a depositor for an indefinite period the right to sue the next moment, . . . and there is nothing in our statute to justify the inference that, without a demand, a suit is maintainable on a certificate of deposit in the usual form."

3. When demand made.

It has been held that demand must be made within the time limited for

bringing an action on the certificate. Pierce v. State Nat. Bank (1913) 215 Mass. 18, 46 L.R.A. (N.S.) 693, 101 N. E. 1060. The certificate involved was "payable on the return of this certificate to his [depositor's] order indorsed on the same.”

This decision seems to have been affected by the purpose which the court assigned to the issuance of certificates of deposit. According to the court; "The purpose and use of certificates of deposit (using that term in the proper sense) is to transmit funds and make payments. In this respect certificates of deposit are like certified checks. An example may be found in

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a case where a person has occasion to make a payment in his own city or town, or to transmit funds to another city, or to another country. He does not want to carry or send gold or notes, which are a legal tender. Again, he cannot expect his own check to be taken in payment. Under these circumstances he deposits in a bank the sum to be paid or transmitted, and procures a certificate of deposit (in the form set forth above), or he draws his check and procures it to be certified by the bank, or he procures a cashier's check on a bank in the place where the payment is to be made. Then, by indorsing the certificate of deposit, the certified check, or the cashier's check to the person to whom he wishes to make the payment or transmit the money, he effects his

object with ease and safety. It is apparent from this that the function performed by a certificate of deposit is one which contemplates a presentation of it for payment within a short time. The bank has the use of the money deposited so long as the certificate is outstanding, while the person who holds the certificate gets no interest on the sum it represents. The general rule, therefore, is applicable, namely, that the time within which the demand must be made is the time limited for bringing an action."

On the contrary, it has been held that demand need not be made on such a certificate within the period of the Statute of Limitations. Elliott v. Capital City State Bank (1905) 128 Iowa, 275, 1 L.R.A. (N.S.) 1130, 111 Am. St. Rep. 198, 103 N. W. 777; McGough v. Jamison (1884) 107 Pa. 336; Gardner's Estate (1910) 228 Pa. 282, 29 L.R.A. (N.S.) 685, 77 Atl. 509.

And see EMERSON V. NORTH AMERICAN TRANSP. & TRADING Co. (reported herewith) ante, 1.

In some of the cases involving certificates issued by individuals, in which it is held that the statute begins to run from demand, it is held that demand must be made in a reasonable time. In Wright v. Paine (1878) 62 Ala. 340, 34 Am. Rep. 24, involving a writing given, acknowledging the deposit with the giver of the writing, "for safe-keeping," of a stated amount in gold, "which I am to return whenever called for," the court held that demand must be made within a reasonable time. See infra, I. b, 1, as to another certificate issued in this case.

A reasonable time is the period fixed by the Statute of Limitations. Campbell v. Whoriskey (1898) 170 Mass. 63, 48 N. E. 1070. It is further held in this case, however, that, while ordinarily a reasonable time is the period fixed by the Statute of Limitations, where the facts surrounding the deposits show an intention of the parties that the arrangement should continue into the future for a considerable time before the owner would be expected to demand his money, the period fixed by the Statute of Limita

tions is not the limit of time for reasonable demand. A demand in this case, nearly twenty years after the first deposit was made, was held to be within a reasonable time.

b. Rule that statute runs from date.

1. In general.

Another line of authorities holds that the Statute of Limitations begins to run on a certificate of deposit, payable on demand or on return of the certificate, from the date thereof. Brummagim v. Tallant (1866) 29 Cal. 503, 89 Am. Dec. 61; Mitchell v. Easton (1887) 37 Minn. 335, 33 N. W. 910; Curran v. Witter (1887) 68 Wis. 16, 60 Am. Rep. 827, 31 N. W. 706. This rule is approved in Tripp v. Curtenius (1877) 36 Mich. 494, 24 Am. Rep. 610.

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A writing given by an individual, acknowledging the receipt of a stated sum in gold on deposit, "to be paid [the depositor] on demand," was held to be in effect a promissory note payable on demand, and the Statute of Limitations was computed from the date. Wright v. Paine (1878) 62 Ala. 340, 34 Am. Rep. 24. See supra, I. a, 3, as to another certificate of deposit issued in this case.

The certificates involved in the cases applying the rule now under consideration have not materially differed from those in the cases applying the opposite rule. In Curran v. Witter (1887) 68 Wis. 16, 60 Am. Rep. 827, 31 N. W. 706, the certificate was payable to depositor's order, "on the return of this certificate properly indorsed." In Mitchell v. Easton (1887) 37 Minn. 335, 33 N. W. 910, the certificate was payable to order of depositor, "on the return of this certificate properly indorsed, with interest at the rate of 10 per cent per annum."

2. Theory.

The following cases assign to certificates of deposit the character of lemand notes, and apply the rule applicable to notes to the certificates of deposit: The court in Mitchell v. Easton (1887) 37 Minn. 335, 33 N. W. 910, recognizes the conflict on this question, and, in holding that the Statute of Limitations begins to run from the

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