Overdraft

“ If we did not put our money out we might close the bank to-morrow. That much of the money cannot be got in at a minute’s notice is a thing we cannot avoid.”
The perspiration stood on Rodd’s forehead, but he persisted. “If it were all on bills, sir, I would not say a word. But there is a lot on overdraft.”
“Well secured.”
“While things are up. But if things went down, sir? There’s Wolley’s account. I suspect that the last bills we discounted for him were accommodation. Indeed, I am sure of it. And his overdraft is heavy.”
“We hold the lease of his mill.” ”

“ To begin with, you certainly want money, or at least an overdraft and plenty of credit. Intending bankrupts generally wear very good clothes; especially are they particular about the shine of their silk hat. Bankers and intelligent business men have, in all ages, given credit to top hats, white waistcoats, and gold watch chains. The poor man has none of these, and therefore cannot obtain that overdraft which is one of the first essentials of bankruptcy.
The bankrupt has a curious affection for jewellery. ”

“ Again, on the 17th of the same month, following the allowance of the overdraft, the New York bank wrote: 'As your account showed overdrawn to-day over $3,000, we have made you a temporary loan of $3,500 against collateral in our hands.' And the belief of the vice president, that the Hanover bank was entitled to hold the four notes as collateral, which led to the allowance of the overdraft, is clearly shown by the record to have been induced by the terms of the collateral agreement, which he at the time inspected. ”

“ If you have a wealthy friend who is willing to sign a promissory note with you, or to guarantee your banker against loss up to a certain sum, an overdraft can soon be arranged; but such a request puts friendship to the severest test, and it may be extremely difficult to find your friend at home should he as much as suspect the reason of your visit. ”

“ Once they were cold cheerless places. A suspicion of an overdraft always swept through them. Now I love to go to the bank and see the beautiful blonde and brown and auburn heads bent over the ledgers. If I could be quite certain that they were not looking up the details of my account I should be perfectly happy.
Somebody told me that I could buy War Loan at 51⁄4 per cent. by borrowing money from my bank at five per cent. This seemed to be the kind of investment I had been looking for. I found that if I took a million on those terms I should draw a net income of £2,500 a year. ”

“ We have seen that the client who possesses tangible securities can, broadly speaking, make his own terms but it is otherwise with the man who wants an overdraft for business purposes against the deeds of a house he owns; and he it is who is compelled to pay 5 or 51⁄2 per cent. per annum interest, be the Bank rate what it may, and 1⁄8 per cent. ”

“ Laverick went on. “Three days ago I was in a situation which might have been called desperate. I could quite understand that you needed security to go on making the necessary payments on my behalf. To-day, things are entirely different. I am twenty thousand pounds better off, and if necessary I could realize sufficient to pay off the whole of my overdraft within half-an-hour. That I do not do so is simply a matter of policy and prices.”
“I quite understand that, my dear Mr. Laverick,” the bank manager declared. ”

“ Second, the payment of $6,000.00 to ABL on November 30, 1977 was a sham transaction. [8] The following factors point to this conclusion: (1) plaintiff did not know where the deposit which covered the overdraft caused by the payment to ABL came from, FF 25; (2) the deposit came from an overseas entity beyond the subpoena power of this court, FF 25, leading to the inference that this entity was used in order to evade taxation; (3) the payments and the deposit which covered the overdraft occurred in the space of two days in an account which was dormant for long periods of time, FF 16, 24, 25 ”

“ The person who obtains an overdraft without security must, as a rule, give thanks, and pay up with a light heart, for should he apply elsewhere he would be received with open-mouthed astonishment. A good name in the banking world implies that its owner is worth some few thousands of pounds; and though, in the moral sense, its value is considered beyond price, directors, while appreciating it in the abstract, regret their inability to safely ensconce it [84] within their safes, and therefore, as practical men, their powerlessness to advance against it unless backed by collateral securities. ”

“ The customer applies for a loan of money, and offers as security a bill of lading or other collateral, and the money is paid to him. Instead of a note the Comptoir takes the check of the customer, which is regarded as an overdraft, upon which the customer can make payment from time to time and upon which he is charged interest, and, upon the nonpayment of the check, the collateral is subject to sale. ”

“ You will find upon looking at the report made to the comptroller that it contains a heading called 'Overdrafts.' This heading is 'Overdrafts,' plainly and simply, and without more,-'Overdrafts.' This is the form the comptroller has prescribed, and which it was the duty of the defendant to follow, and to enter correctly and truthfully whenever he made an entry in said report with regard to the condition of the bank as to overdrafts. ”

“ This was an action by the Rocky Mountain National Bank against the Union Gold-Mining Company of Colorado, to recover a balance of overdraft, due upon the account kept at the bank, in the name of the company. The balance of over-draft, exceeding $20,000, was created by drafts or checks drawn by one Sabin, who, claiming to be the authorized agent of the company, acted in its name, and made deposits from time to time to its credit. ”

“ The testimony offered tended to show an agreement on the part of the officers of the bank to treat this overdraft as a loan, drawing interest and secured by collateral, and that such agreement was carried into effect by the deposit of the collateral and the casting up of interest. ”

“ If defendant rightly did this,-that is, if, in so doing, he made a report to the comptroller of the true condition of the bank,-he did not then make a false entry in these particulars. But if the entry in reporting the overdraft that day as $2,948.38, instead of $23,413.38, was not a truthful entry, then it would naturally follow that the entry in the loans and discounts of said $20,465 of overdrafts was also not a truthful entry, for this sum of $20,465 of overdrafts could not have been truthfully entered in both overdrafts and loans and discounts. ”

“ She surrendered four of her shillings, and disconsolately regarded the miserable one that remained. The position had grown even more preposterous. She actually needed money. She had not even the amount of a cab-fare to Friary Grove. She would not have it for three weeks.
Preposterous or not, the fact was plain, and demanded serious consideration. She would have to borrow. The repayment of the loan and the overdraft would reduce the half-yearly dividend. ”

“ It must have rest, or it will wear out. To deprive ourselves of proper sleep and rest is to make serious inroads on our reserve strength. It may be years before our account is overdrawn, but sooner or later we must pay the overdraft. ”

“ There is an opinion which is very prevalent to the effect that, provided one’s account be an overdrawn one, it does not matter where it is kept; and, of course, if it were possible to find a nice, philanthropic banker who would allow one a big overdraft without even hinting at security, there would be much truth in the assertion; but in view of the existing relations between banker and client, the idea is both unfortunate and fallacious. ”

“ Damerel, and keep them distinct—after all, you know, women rather mix things up. Give Robertson and Harcourt instructions to pay your royalties into your own account here, and pay your household expenses and bills out of it. Mrs. Damerel’s account won’t be a serious matter—mere pinmoney, you know—and we can balance it out of yours at periodic intervals. That’s a much more convenient and far simpler thing than giving the other people a guarantee for an overdraft.’
‘It seems to be so, certainly,’ said Lucian. ”

“ But I am a patriot. It seemed to me that £2,500 a year was rather more than I was worth to the nation. Was I better value than six M.P.'s? Of course I might be worth six RAMSAY MACDONALDS. However I resolved to avoid greed and ask for a simple hundred thousand.
So I went to my bank and said to a blue-eyed, Watteau type of beauty, "I want to see the manager, please. Concerning an important investment in War Loan," I added hastily, fearing lest the damsel should conclude that I wanted an ordinary overdraft. ”

“ Inasmuch as it only provides for the return of the dishonoured bill or cheque to the drawer or an endorser it appears to miss the case of a cheque to bearer or become payable to bearer by blank endorsement prior to the customer’s.
Where a bank or a banker takes a mortgage, legal or equitable, or a guarantee as cover for advances or overdraft, there is nothing necessarily differentiating the position from that of any other mortgagee or guaranteed party. It has, however, fallen to banks to evoke some leading decisions with respect to the former class of security. ”

“ It disposes of the 12 per cent charge on overdrafts by the suggestion that the amount is trifling, and de minimis non curat lex, and that this charge was a penalty because of a failure to pay a debt when due, and therefore not usurious. We are of a different opinion. The rate of interest which an man receives is greater when he is allowed to compound than when he is not, the other elements in the case being the same. ”

“ My own account was overdrawn twenty cents at the time. I knew that if the bank began calling in overdrafts it might be my turn next. Spugg said he supposed he'd have to telephone his secretary in the morning to sell some bonds and cover it. It seemed an awful thing to have to do. Poor people are never driven to this sort of thing. I have known cases of their having to sell a little furniture, perhaps, but imagine having to sell the very bonds out of one's desk. There's a bitterness about it that the poor man can never know. ”

“ CHAPTER X PRINTERS' INK The fewer the voices on the side of truth, the more distinct and strong must be your own.—Channing.
As the farmers saw it, there was no reason in the world why the bank should do what it did. The Company had closed its first year with net profits sufficient to declare a seven per cent. cash dividend and the profits would have been augmented greatly had it not been for the heavy interest payments which accrued on the unusual overdrafts imposed by special conditions. ”

“ On that point, and on the question whether what was done amounted to compounding within the meaning of the Missouri statute, we follow the state court. Union Nat. Bank v. Louisville, N. A. & C. R. Co. 163 U.S. 325, 331, 41 L. ed. 177, 179, 16 Sup. Ct. Rep. 1039. Therefore, since the interest charged and received by the plaintiff was compounded more than once a year, it was at a rate greater than was allowed by U.S. Rev. Stat. § 5197, U.S.C.omp. Stat. 1901, p. 3493, and it was forfeited. The suggestions as to the 12 per cent charge on overdrafts do not seem to us to need answer. ”

“ The point in dispute is in regard to which heading of the returns the items amounting to about $20,000 should have been placed under,-whether they should have been treated as overdrafts, or as loans and discounts. ”

“ We have advice of your draft for one thousand dollars. To protect your credit, we shall pay it; but we beg you will draw no more, till you forward bills of lading.
'You are now overdrawn some five thousand dollars, which, by the maturing of your drafts, has become a cash advance. The death of our senior, Mr. Randall, and the consequent withdrawal of his capital, has left us with an extended business and limited means. Money, also, is very tight, and we therefore earnestly beg you to put us in funds at the earliest possible moment.' ”

“ The simplest way of explaining the operation of raising a draft or check is as follows:
Two men are necessary for success at any given point, and hence they are not so liable to detection as if a number of confederates were engaged. It is the business of one of these men to enter a bank, and purchase a draft on New York City, for a certain amount of money, usually about fifteen hundred dollars, and a short time after this another draft would be procured from the same bank for a small amount, seldom over ten dollars. ”

“ The thing works out the same way every time. I care not how voluminously large and plethoric your cash balance may be, period furniture carried to an excess will convert it into a recent site and then the bank will be sending you one of those little printed notices politely intimating that “your account appears overdrawn.” And any time a banker goes so far as to hint that your account appears overdrawn you may bet the last cent you haven't left that he is correct. He knows darned good and well it is overdrawn and this merely is his kindly way of softening the blow to you. ”

“ In other words, what I want to impress upon you is that if the draft is the economic title to goods, which are moving from the producer to the consumer, the liability of a bank upon an acceptance is reduced to a minimum. Acceptances of drafts growing out of sales and shipments of goods will never be a source of dangerous expansion, because they will liquidate, or pay themselves out, as the goods will be wanted to eat, to wear, to use, or to go into other manufactures, almost immediately. ”

“ A special form of draft is a “banker’s draft,” an instruction by one bank to another bank, or to a branch of the bank making the instruction, to pay a sum of money to the order of a certain specified person. Other meanings of “draft” are an outline, plan or sketch, or a preliminary drawing up of an instrument, measure, document, &c., which, after alteration and amendment, will be embodied in a final or formal shape; an allowance made by merchants or importers to those who sell by retail, to make up a loss incurred in weighing or measuring ”