Safe deposit box

“ ROHMAN, CHARLES. How safe are safe deposit vaults? An analysis by Haynes Hamilton, pseud. Rev. ed. © 26Feb36; AA197178. Charles Rohman (A) ; 25Feb64; R332445.
A message to safe deposit box renters: The agony of litigation and loss, how to avoid it; Risks to which contents of safe deposit boxes are subject, a few important questions. By Haynes Hamilton, pseud. © 23Jul36; AA211466. Charles Rohman (A) ”

“ If the court or jury is convinced that the goods have been lost from the box, the burden of explanation as to how it happened would be upon the safe deposit company. The safe deposit company is liable for the acts of its servants and agents. ”

“ The Illinois inheritance tax law operates to seal safe deposit boxes for at least ten days after the death of the renter. In view of the uncertainty as to who might own the contents of boxes standing in the joint name of the deceased and others, the statute sealed their boxes also for a like period. The act further provided that in neither case could the securities be removed except after notice to officers designated by the state, and even then the company was required to retain possession of enough of the assets to pay the state's tax. ”

“ And such banks would meet an incipient panic freely and generously; they would advance out of their reserve boldly and largely, for each individual bank would fear suspicion, and know that at such periods it must "show strength," if at such times it wishes to be thought to have strength. Such a system reduces to a minimum the risk that is caused by the deposit. If the national money can safely be deposited in banks in any way, this is the way to make it safe. ”

“ There can be no doubt that the state of the law is still most anomalous, and that the great majority of the people of this country are under the impression that there is Government security for each deposit in every savings' bank. Year by year, changes have been proposed in the Legislature for giving more security to depositors, but the body of managers have hitherto been successful in their opposition. ”

“ The modern deposit grew out of the older form of deposit in which the fund was held separate and intact, and the sole purpose of the deposit was safe-keeping. Safe-keeping is still a very important function of deposit banking; and from the point of view of most depositors the chief one. [15] Borrowing by a bank (as distinguished from a rediscount) is commonly regarded as evidence ofweakness. [16] Often the loan is made in the hope of averting insolvency. Loans made by one bank to another commonly involve a pledge of assets, since only upon such a condition is the transaction possible. ”

“ It is eminently right and proper that the State, through its bank commissioners or otherwise, should so far supervise the operations of savings banks as to see that they perform their part of their contract with depositors.
Safety, at best, is relative only; there is no absolute safety for the twenty-dollar piece a man has in his pocket, whether he is on the street, at his office, or by his own fireside. We are reminded that 'riches take to themselves wings' and that 'thieves break through and steal.' No savings bank can keep money on hand or deposit it or loan it with absolute safety. ”

“ No bank is bound to take notice of memoranda and figures upon the margin of a check, which a depositor places there merely for his own convenience, to preserve information for his own benefit; and in such case, the memoranda and figures are not a notice to the bank that the particular check is to be paid only from a particular fund. So, too, a mark on a deposit ticket, if intended to require a particular deposit to be kept separate from all other deposits placed to the credit of the same depositor, must be in the shape of a plain direction, if such a duty is to be imposed on the bank. ”

“ The bank also receives jewelry, plate, diamonds, and other not bulky valuables on deposit for safe keeping, the owner being required to make only a nominal loan of one dollar upon them, in order to bring it into the books of the institution. It also takes on deposit, in trust, from the courts, all moneys in dispute, and the proceeds of unsettled estates, and receives one or two per cent, per annum for ensuring its safety. It is contemplated also to found a savings-bank feature of the institution, and by putting the money at interest, aid the depositors to increase their funds without risk. ”

“ After you get your clothing and things and have discarded your uniform, go rent a hotel room, then go to the Inter-Stellar bank and rent a safety deposit box. That's one of the first things you do in each city on any planet to which you may be sent on assignment. Now, here are two keys that fit box number 1044 in all the I-S banks. They are special master keys of our own designing. Box 1044 is used because of its nearness to those private booths, in the universal set-up all I-S banks use. That box is our means of confidential communication. ”

“ Every officer of a bank which is not an authorized depositary, and which has not, therefore, given the required security, who knowingly receives any public money on deposit, is liable for embezzlement. ”

“ The bank cannot discharge its liability to account with the depositor to the extent of the deposit, except by payment to him, or to the holder of a written order from him, usually in the form of a check. If the bank pays out money to the holder of a check upon which the name of the depositor, or of a payee or indorsee, is forged, it is simply no payment as between the bank and the depositor ”

“ But nothing is farther from the truth. The Federal Government does NOT guarantee one cent of anybody's deposit in ANY bank— National, State or Private, anywhere, anytime—whether a member of F D.I.C. or not. But it does require ALL Banks belonging to F.D.I.C. to guarantee one another's depositors' deposits up to $5,000 for each depositor—A SORT OF MUTUAL INSURANCE. We are a small Bank, but mighty for our inches in a financial way. And we want to put all the force of all of our resources solely back of the deposits of our own depositors. ”

“ By the motion to dismiss the bill filed in this suit it is admitted: that the defendant Lincoln Safe Deposit Company is a corporation, organized under the laws of the state of New York, and authorized to engage in the warehousing business ”

“ In the order of advantages which post-office savings' banks offer the depositor, we would rank next to their unquestionable security their peculiar convenience for deposit and withdrawal. Twelve months ago, a person might be the length of an English county distant from a bank for savings. Under the present arrangement, few persons will be a dozen miles distant from a money-order office, whilst nine-tenths of the entire community will find the necessary accommodation at their very doors. ”

“ The deposits, at whatever office they may be made, can be withdrawn from any other office which transacts a savings bank business. The accounts are kept in London and all moneys are remitted to the headquarters, where it is handed over to the Commissioners for the Reduction of the National Debt, who invest the funds in public securities.
Deposits may be made as low as one shilling or multiples thereof, and the limit of deposits for an individual is $150 during one year or $650 in all. Charitable societies may deposit without limit. ”

“ Although the section in question forbids loans or discounts by a bank on the security of its own shares of stock, it is argued that this inhibition does not extend to the case of deposits made by one bank with another. But a deposit is nothing but a loan of money, and is within both the letter and spirit of the provision. It is well known that country banks keep on deposit in New York, with bankers and merchants, a considerable amount of money for their own convenience, for which they receive more or less of interest. ”

“ Receiving as they do deposits from their clients, banks may be spoken of as borrowers. If, as they sometimes do, they pay interest upon deposits, this offsets in part the profits arising from loans. But in many cases they pay no interest upon deposits, the clients of the bank being contented with the greater security in the custody of their funds which the bank offers, and other advantages which arise from the possession of bank accounts. At times these advantages have been so considerable that depositors have been willing to pay the bank for the safe-keeping of their funds. ”

“ Second, some Americans are concerned about whether their money is safe. So the Federal Deposit Insurance Corporation and the National Credit Union Administration have significantly expanded the amount of money insured in savings accounts and checking accounts and certificates of deposit. ”

“ The contention that the company could not be arbitrarily charged with the duty of supervising the delivery and determining to whom the securities belonged is answered by the fact that in law and by contract it had such control as to make it liable for allowing unauthorized persons to take possession. Both by the nature of its business and the terms of its contract it had assumed the obligation cast upon those having possession of property claimed by different persons. ”

“ If such a result should follow the giving of checks, it is easy to see that bankers would be compelled to abandon altogether the business of keeping deposit accounts for their customers. If, then, the bank did not contract with the holder of the check to pay it at the time it was given, how can it be said that it owes any duty to the holder until the check is presented and accepted? The right of the depositor, as was said by an eminent judge, [4] is a chose in action, and his check does not transfer the debt, or give a lien upon it to a third person without the assent of the depositary. ”

“ Whereas commercial banks under the law on commercial banks, as well as finance companies under the law on the practice of financing business, security business, and crédit foncier business, now accept deposits by means of issuing certificates of deposit, and the said certificates of deposit are negotiable instruments, it is appropriate to designate measures for prevention of forgery of the described instruments in order to protect common interest which may injured by the use of forged certificates of deposit. ”

“ The Federal Deposit Insurance Corporation insures all depositors for deposits up to twenty thousand dollars now. A bank is hedged in by so many legal fences that it is almost impossible for one to fail in the same way that they failed all over the country in the early Thirties. Even if one does fail, through the gross mismanagement or illegal activities of its governing board, the depositors don't get excited; they know they're covered. There hasn't been a really disastrous run on a bank for more than thirty years.
"But banks don't just keep their money in vaults; they invest it. ”

“ If the amount realized from such emergency assessments shall be insufficient to pay off the depositors of all failed banks having valid claims against said depositors' guaranty fund, the state banking board shall issue and deliver to each depositor, having such unpaid deposit, a certificate of indebtedness for his unpaid deposit, bearing 6 per centum interest. ”

“ The New York statute does not profess, however, to change the legal relation which results from a deposit made in a bank. The deposit of money by a customer with his banker is one of loan, with a superadded obligation that the money is to be paid when demanded by a check. ”

“ Even the primary object of the required assessment is not a private benefit, as it was in the cases above cited of a ditch for irrigation or a railway to a mine, but it is to make the currency of checks secure, and by the same stroke to make safe the almost compulsory resort of depositors to banks as the only available means for keeping money on hand. The priority of claim given to depositors is incidental to the same object, and is justified in the same way. The power to restrict liberty by fixing a minimum of capital required of those who would engage in banking is not denied. ”

“ Apart from questions which may arise under the national banking laws in the case of national banks, it is no longer open to doubt that a state, by a procedure satisfying constitutional requirements, may compel surrender to it of deposit balances, when there is substantial ground for belief that they have been abandoned or forgotten, Security Sav. Bank v. People of State of California, supra, certainly when the state acquires them subject to all lawful demands of the depositors. ”

“ And therefore paper issue is the natural prelude to deposit banking.
The way in which the issue of notes by a banker prepares the way for the deposit of money with him is very plain. When a private person begins to possess a great heap of bank notes, it will soon strike him that he is trusting the banker very much, and that in return he is getting nothing. He runs the risk of loss and robbery just as if he were hoarding coin. He would run no more risk by the failure of the bank if he made a deposit there, and he would be free from the risk of keeping the cash. ”

“ A deposit in one of these banks is hardly less safe than an investment in Government bonds. The savings banks are the primary schools467 of economy and thrift, and I believe that an extension of the mutual savings bank system throughout the country, under proper legal safeguards, would be of the greatest benefit to the people of the United States.
The deposits in banks of this kind are usually limited by law to amounts not exceeding $3000 to one depositor, as they are not intended to be used by the wealthier class of people. The following statistics will be found interesting. ”

“ As we have seen, a deposit of money to one's credit in a bank does not operate to diminish the estate of the depositor, for when he parts with the money he creates at the same time, on the part of the bank, an obligation to pay the amount of the deposit as soon as the depositor may see fit to draw a check against it. ”