— Part
.
Business of Banking.
III.
631
Sect. 17. Power to overdraw being commensurate with power to borrow, Advances the banker's remedy in each case depends on the existence and by Bankers. extent of the authority to borrow, express or impHed e.g., an overdraft could not be recovered against an infant. As against a married Infants and woman, recourse could only be had to her separate estate not subject married
to restraint If
on anticipation
women.
{d).
accounts are opened in the
name
of a fund,
an unincorporated
charitable or scientific institution, or the like, they should never be allowed to be overdrawn without the personal liability of substantial
persons
Unincorporated societies.
{e).
Where
a banker has the security of substantial customers, strong Novation, required to establish, as against the banker, a novation or transfer of the liability for existing or future advances to a
evidence
is
newly formed corporation
(/)
1274. By the
universal custom of bankers, a banker has the right to charge simple interest at a reasonable rate on all overdrafts (g). An unusual rate of interest, interest with periodical rests, or compound interest can only be justified, in the absence of express agreement, where the customer is shown or must be taken to have acquiesced in the account being kept on that basis (li). Whether such acquiescence can be assumed from the return without comment of the pass-book showing interest so charged is doubtful (i). Acquiescence in such charges only justifies them so long as the relation of banker and customer exists with respect to the advance. If the relation is altered into that of mortgagee and mortgagor by the taking of a mortgage {j), interest must be calculated according to the terms of the mortgage, or according to the new relation {k). The taking a mortgage to secure a fluctuating, as opposed to the ascertained, balance of an overdrawn account, is not, however, inconsistent with the relation of banker and customer, so as to displace a previously accrued right to charge compound interest
{I).
(d) See further on this point titles Infants Husband and Wife. As to partnerships, see title Partnership. As to companies, see title Companies. (e) Eaton v. Bell (1821), 5 B. & Aid. 34. If cheques were drawn in a form precluding personal liability, it might be contended that the banker looked merely to funds of the undertaking. The doctrine of Kelner v. Baxter (1866), L. R. 2 C. P. 174, or of TFest London Commercial Bank v. Kitson{l88'k), 13 Q. B. D. 360, as to the personal liability of the person contracting on behalf of a nonexistent principal, is hardly applicable. (/) Coiitts & Go. V. The Irish Exhibition in London (1891), 7 T. L. R. 313. Gioyn v. Godhij {g) Crosskill v. Bower (1863), 32 L. J. (CH.) 540, at p. 544 (1812), 4 Taunt. 346. {h) Fergusson v. Fyffe (1840), 8 CI. & F. 121 Spencer v. JVakefield (1887), 4 T. L. R. 194 ; London Chartered Bank of Australia v. White (1879), 4 App. Cas. 413. (i) See pp. 619, 620, ante. For form of mortgage to secure overdraft, see Encyclopaedia of Forms, ( /) Vol. VIII., p. 608a. (k) Fergusson v. Fyffe, supra; Williamson v. Williamson (1869), L. R. 7 Eq. 542 London Chartered Bank of Australia v. White, supra. (I) National Bank of Australasia v. United Hand in Hand and Band of Hope, Co. (1879), 4 App. Cas. at p. 409.
Interest,
