I-further instruct-you that-the-plaintiffs in-this-case were-not holders of-the-draft for-value. The-law in-regard-to-the title to commercial paper is well settled and-well understood. A-person who takes commercial paper before by-its-terms it becomes-due, without notice of-any-defense existing against-it, paying value for-it at-the-time-he takes-it, holds-it discharged of-all-dcfenses which-can-be set up against-it by-the-maker of-the-paper. These three things are-necessary, however, in-order-that-the holder of-such paper shall thus hold-it independent of-defenses: That-he shall take-it in-good-faith; that-he shall take-it for-value - for-aconsideration parted with for-it; and-that-he shall thus take-it before-it becomes-due. In-this-case, there-was-no parting with-value for-the paper [p. 104], and-no pretense of-it, or, at-least, but-a mere-pretense. When-the-cashier of-the-bank said to-the agent of-the-plaintiffs, "Here-are papers to-the-amount of-your-deposits, and here-is-a-check for-you to sign for-your-balance," did-the-plaintiffs pay anything for-the securities that-were at-that-time delivered to them ? Not-a-dollar. He-was-asked to give-his-check, and-he gave-it to stand over against-this payment; but-the turning out of-those securities was, in-point-of-fact and-in-point-of-law, a-mere payment of-a liability which previously existed on-the part-of-the-bank to-the-plaintiffs - and-the turning out of-commercial paper in-payment of-a preexisting liability is-not a-transfer for-value. Such-is-the law. It does-not pay-it, and-unless-the transfer prove to be-good, the-creditor still has-his claim upon-the-original indebtedness. Suppose a-man comes to-you with a-note of-a hundred-dollars, apparently good, and-offers-it to-you in-payment of-a debt, and-you accept-it - unless-that note is collectible, it does-not pay-the-claim, and-you still have-the-right to proceed against-the-debtor upon-the-original demand. It-is given to-you inpayment of-that existing indebtedness, and-you take-it only upon condition that-it-is good and-collectible. When-you-seek to enforce-it, if-the-maker have-a perfect-defense against-it in-the-hands of-your-debtor, he-has that perfect-defense against-it in-your-hands. There must-be a-parting with-value for commercial paper, in-order-that-there may-be a-holding discharged-of defenses which otherwise would-exist to-the paper. So, I-charge-you, as-matter-of-law, that-the-plaintiffs were-not holders for-value.

This, you-see, brings-us to-the single-question-of-fact whether Palmer acted in-good-faith with-his customers the-defendants, or in-bad-faith and-fraudulently, when-he received-this paper. If-he-did-act in-bad-faith and-fraudulently, that-fraud rendered-his holding of-it invalid, and-no-man could thereafter hold-it in-good-faith unless-he paid value, which neither-the City Bank nor-the-plaintiffs did.

Come-then to-the-question whether Palmer took-this paper in-good-faith or-fraudulently. When a-person proclaims-himself to-the world as-a banker, ready to receive-the-deposits of-his customers, he thereby holds-himself out as-a-man of-sufficient means to meet-the obligations he thus assumes. Whether-his-responsibilty is-large or small, is of-no-consequence; he-represents-himself to be a-man ofmeans large-enough to meet these obligations [105]. You do-not expect a-banker to state-to-you, whenever you-make-a deposit, "I-am still solvent." Such-a representation was-never heard of, and-is-not expected, because, in-doing-a banking business and-taking-the deposits of-his customers, a-banker thereby represents that-he-has sufficient means to meet-a-demand for-the-payment of-such deposits whenever that-demand may-be-made. That-is what he-is-bound to do, and-that-is what he-is-bound to be. It-is-not-necessary that, at-the-time-he received-these deposits, Palmer should-have expected to fail to pay or to refuse to pay that particular paper; if-he received-that paper as-a deposit, knowing himself to be in-such-circumstances that if-he-were called upon to meet-his liabilities he-could-not respond - moreover, knowing-himself to be in-a position in-which he-was-likely to be-rendered incapable-of meeting that-demand when-it-should-be-made in-the-due course-of-business - he-was-bound to dis-close-that-fact before-he received-the deposit. This-relation between a banker and-his customer, is-a highly confidential relation. You-go to-him not to buy-his-goods and-to pay-your-money, but-you-go to give-him your-money to keep for-you. Shall-it-be permitted that-a-man may hold this confidential relation with customers and take-their-money when-he-is likely, before a-demand can-be-made for-a return of-it, to-suspend payment? Certainly-not. The-law does-not tolerate such-an-abuse of-the-relation which-exists between-a depositary and-his-depositor. Mere insolvency does-not reuder-the receipt-of money by a-banker fraudulent, but insolvency which-is hopeless and-irremedible, such insolvency as-is-likely to compel-the closing of-the-doors of-the-bank at-any moment, renders-it improper for-the-banker to continue-the business. Therefore it-is that-the-law requires-of-him that-he shall-not continue to receive-deposits, or-that, if-he does-receive-them, it shall-be with notice to-the-customer of-the-facts as-they exist. Upon-no-other basis could-the business of-the country be conducted. We-are-obliged to-have-banks for-the ordinary exchanges of-trade, but-they must-not-be-made instruments of-fraud.

What-was-the situation of-palmer? Was-he insolvent? Yes, so-he says. Was-he hopelessly insolvent? Yes, so-far-as present means were-concerned. He-was-indebted to-the City Bank alone in-some-thing like 50 thousand-dollars, upon notes which-he-had-given to-a friend for-his personal accommodation, which-he says-he knew had-been used, though-he-did-not-knowthey-had-beenused at-thatbank. But-he-did-know [106] that-they-were outstanding obligations against-him. To-his-customers, he owed over 50 thousand-dollars for deposits received by-him. The-amount of-his assets was very inconsiderable, compared with-this large liability. That-he-was hopelessly insolvent, you-will-probably be compelled to find. Now, what-was-his ground of expectation? He-says-he-had-an arrangement with-the City Bank to furnish-him money as-he wanted-it.