You lose control as you deposit money

REGARDING the letter from Bill Symons (“I’ve lost control of my own money”, Western Mail, November 27), he may be surprised to learn that he lost control of his own money the moment he deposited it in his bank account.

His legal status as a bank depositor is that of an unsecured creditor.

This was established by the judicial decision of the Law Lords in 1848 (Foley v Hill) which defined the basic nature of a bank account.

Here is an extract from Lord Cottenham’s remarks in passing judgement: Money, when paid

into a bank, ceases altogether to be the money of the principal; it is by then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it.

The money paid into a banker is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains to himself, paying back only the principal, according to the custom of bankers in some places, or the principal and a small rate of interest, according to the custom of bankers in other places.

The money placed in custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.

That has been the subject of discussion in various cases, and that has been established to be the relative situation of banker and customer.

That being established to be the

relative situations of banker and customer, the banker is not an agent or factor, but he is a debtor. Stephen Day Caerffili