Mr. Chief Justice Fuller
delivered the opinion of the court.
This was not the deposit of a check on the Marine Bank itself. In such a case it was held in Oddie v. National City Bank, 45 N. Y. 735, that the check, if received and credited, could not be charged back for want of funds. Nor was it a check on another, bank, as to which Church, C. J., remarks, a different principle would be applied, as the presumption of agency 'might arise. It was a sight draft drawn by the San Francisco Company on .its debtor in Boston, and collected through the Marine Bank's correspondent at that place. Neither it, nor the money collected upon it, passed into the hands of any third person for value. The collection was made after the Marine Bank had closed its doors. It is not claimed that there was any express arrangement or understanding between the San Francisco Company and the bank that the deposits of out-of-town paper.should be treated as cash. Can such an understanding be implied from the mere fact that the San Francisco Company was credited with the draft upon the books of the bank, as if the deposit were of- money, although the deposit ticket .named it under the head of checks, and that the com pany itself added on' the stubs- of its check-book such deposits to the current amount, coupled' with an alleged commercial usage to allow.good customers to draw against , a credit thus created? In.'five years of business between them, the San Francisco Company had never drawn against such paper. The evidence of the bank's clerks leaves no doubt that, as to out-of-town drafts for large amounts, the bank kept track of them and reserved the right to charge exchange and also interest for the average time taken in collection, notwithstanding its agreement to pay interest on the daily balances. This was not consistent with the. theory of an understanding between the bank and the company that the title to ¿his and similar drafts should pass absolutely to the bank. If the draft had not been paid, the bank could have cancelled the credit, as it clearly accepted no risk on the paper. The draft was entered at its full value, which indicated that it was not discounted, Hut credited for convenience and in anticipation' of its payment.
It is settled law in this court that the holder of a bank check cannot sue the bank for refusing payment, in the absenceof proof that it was accepted by the bank or charged against the drawer, (Bank of The Republic v. Millard, 10 Wall. 152; First National Bank v. Whitman, 91 U. S. 343, 344; Laclede Bank v. Schuler, 120 U. S. 511, 514;) but the depositor can sue for the breach- of the contract to honor his checks. If, under the circumstances disclosed in this case, the only balance the San Francisco Company had was made up of the deposit of this draft, and it had drawn against it, and the bank had declined to honor the check, could the San Francisco Company have' sustained an action on the ground of a general commercial usage, when by the course of dealing for five years it had never drawn'against paper so deposited? Because banks often let' good customers overdraw, do the latter thereby get the right to do. so when the bank deems it improper to permit it ? Undoubtedly if the San Francisco Company had overdrawn, and this draft had been credited to cover the over-draft, or if the company had drawn against the draft, the bank could hold the paper until the account was squared. And if the bank had transferred the draft to one occupying the position of a bona fide holder, such transfer would have conferred title' on its transferee by reason of its reputed ownership, so far as the latter Was concerned. Metropolitan National Bank v. Loyd, 90 N. Y. 530.
In that case, as reported in 25 Hun, 101, which was affirmed in 90 N. Y. 530, the Court of Appeals remarking in reference to the opinion that it " so fully reviews the evidence and the, authorities, that we should be content with simply expressing our concurrence, if the case had not been sent here by that court as involving a question of law which ought to be reviewed," the Supreme Court says " that the intention that the check should be received as cash is to be inferred from the fact that the check was due immediately and was drawn on a bank, and for all purposes of the parties was equivalent to so much money, . . . and such intention is confirmed by preceding transactions, admitted by the depositor, in which checks were deposited and entered as cash in his bank book, and that the custom of the bank in its dealings with him was to credit him with all checks as money."
And in Scott v. Ocean Bank, 23 N. Y. 289, it was held that " the property in notes or bills transmitted to a banker by his customer to be credited the latter, vests in the banker only when he has become absolutely responsible for the amount to the depositor," and that " such an obligation, previous to the collection of the bill, can only be established by a contract to be expressly proved or inferred from an unequivocal course of dealing." ' .
' " Every man who pays bills not then due into the hands of his banker," said Lord Ellenborough in Giles v. Perkins, 9 East, 12, 11, " places them there as in the hands of his agent to obtain payment of them when due. If the banker discount the bill, or advance money upon the credit of it, that alters the case; he then acquires the entire property in it, or has a lien on it pro tanto for his advance."
If there be no bargain that the property should be changed, the relation resembles that of principal and agent. Mere liberty to draw does not make out such a bargain, particularly where interest is allowed by the banker upon the bills only <rom the time when their amount is . received. Ex parte Barkworth, 2 De G. & J. 194; Thompson v. Giles, 2 B. & C. 422; Ex parte Sargeant, 1 Rose, 153.
The question was one of fact rather than of law, and we think there should be something more in the evidence tending to establish that the San Francisco Company understood that the bank had become owner of the paper, than these mere credits for convenience, before that can be held to be the fact, notwithstanding it. may be a recognized usage to allow a customer to draw. - So far from there being shown an unequivocal course of dealing tending to support that conclusion, it seems to us the tendency of the evidence is otherwise.
But if there could be any question on that branch of the case, we are unable to see that there could be on the other. This bank was hopelessly. insolvent when the deposit was made, made so apparently by the operations of a firm of which the president of the bank was a member. The knowledge of the president was the knowledge of the bank. Martin v. Webb, 110 U. S. 7, 15; Bank v. Walker, 130 U. S. 267; Cragie v. Hadley, 99 N. Y. 131. In the latter case it was held that the acceptance of a deposit by a bank irretrievably insolvent, constituted such a fraud as entitled the depositor to reclaim his drafts or their proceeds. And the Anonymous Case, 67 N. Y. 598, was approved, where a draft was purchased from the defendants, who were bankers, when they were hopelessly" insolvent, to their knowledge, and the court held the' defendants guilty of fraud in contracting the debt, and said their conduct was not like that of a trader " who has become embarrassed and insolvent, and yet has reasonable hopes that by continuing in business he may retrieve his fortunes. In such a case he may buy- goods on credit, making no false representations, without the necessary imputation of dishonesty. Nichols v. Pinner, 18 N. Y. 295; Brown v. Montgomery, 20 N. Y. 287; Johnson v. Morrell, 2 Keyes, 655; Chaffee v. Fort, 2 Lans. 81. But it is believed that no case can be found in the books holding that a trader who was' hopelessly insolvent, knew that he could not pay his debts and that he must fail in business and thus disappoint his creditors, could honestly take advantage of a'credit induced by his apparent prosperity and thus obtain property which he had every reason to believe he could' never pay for. In such a case he does an act, the necessary result of which will be to cheat and defraud another and the intention to cheat will be inferred." , And it was decided that "in the case of bankers, where greater confidence is asked and reposed, and where dishonest dealings may cause widespread disaster, a more rigid responsibility for good faith and honest dealing will be enforced than in the case of merchants agd other traders; " and that " a banker who is, to his own knowledge, hopelessly insolvent, cannot honestly continue his business and receive the money of his customers; and although having no actual intent to cheat and defraud a particular customer, he will be held to have intended the inevitable consequences of his act, i.e. to cheat .and defraud all persons whose money he receives, and whom he fails to pay before he-is compelled to stop business."
The Circuit Court did not, in the- present case, express any different view, but held that the bill was not properly framed to present the question. Certainly there must be sufficient equity apparent on the face of a bill to warrant the court in granting the relief prayed; and the material facts on which the complainant relies must be so distinctly alleged as to put them in issue. Harding v. Handy, 11 Wheat. 103. And. if fraud is relied on, it is not sufficient to make the charge- in general terms. " Mere words, in and of themselves, and even as qualifying adjectives of more specific charges, are not sufficient grounds of equity jurisdiction, unless the transactions to which they refer are such as indheir essential nature .constitute a fraud or a breach of trust, for which a court of chancery can -give relief." • Van Weel v. Winston, 115 U. S. 228, 237; Ambler v. Choteau, 107 U. S. 586, 591. The defendant should not be subjected to being taken by surprise, and enough should be stated to justify the conclusion of law, though without undue minuteness.
The bill alleged that the bank was insolvent on the 5th day of May; that this was well known to its officers; that it wrongfully neglected to disclose its insolvency to complainant, and, by continuing business and otherwise, represented to complainant and all other persons dealing with it, that it was .solvent ; that complainant, on the faith of these representations . believed such to be the fact, without suspicion that the bank was, or was in danger of becoming, insolvent; that, acting ' upon the representations, and relying on the bank's solvency, complainant delivered the draft; that next morning the bank closed its doors, and the draft was collected thereafter; and that, by reason of the premises, the draft or its proceeds did not become the. property of the bank. The receiver in his answer specifically denied these averments. We think the issue thus framed was sufficient to enable the court to proceed to a decree. The fraudulent intention flowed from the guilty knowledge, and the bank must be held to the consequences of a representation which it knew to be contrary to the fact, and upon which the complainant innocently acted. Granted that the mere omission to disclose the insolvency, if there had been ground for the supposition that the bank might continue in business, would not be sufficient, there is nothing for such a belief to rest on here'. As.a matter of pleading, the averment 'Was that the bank wrongfully neglected to make the disclosure; as a matter of .fact, the condition of the bank-was so hopeless that it was its duty to make it.. The omission to specifically state in the pleading the- degree of insolvency which rendered the bank's conduct fraudulent, was not fatal, as the. conclusion asserted showed -the intention of the pleader, and the particular contention could fairly be tested on the hearing.
The decree is reversed, and the cause remanded with directions to enter a decree in f mor of the complainant according to the prayer of the bill and to take further proceedings in conformity with this opinion.
Mr. Justice Brewer was not a member of the court when , this case, was argued, and took no part in its decision.