OPINION OP THE COURT.
McMILLAN, J.
1 The transaction of Harrison with the bank, upon which the certificate in question was issued, was a deposit, and not a loan. The certificate so stated on its face: “This certifies that Dr. Q-. W. Harrison has deposited, etc.,” and it was so recognized by the parties to the transaction; this cause must therefore be considered and disposed of on this basis. The rule Avhich applies to negotiable instruments should not be invoked with reference, to a certificate of deposit, until the certificate has been indorsed and transferred by the original holder; then a new relation arises between all the parties, which must be tested by the rules and customs of the law merchant other than those applicable to the case at bar.
With the exception of its negotiable character, there is no distinction between a certificate of deposit and an ordinary deposit written on a bank book. Daniels on Negotiable Instruments, section 1698a, says: “The very nature of the instrument and the ordinary modes of business, show that a certificate-of deposit, like a deposit credited in a pass book, is intended to represent moneys actually left with the bank for safe-keeping, which are to be retained until the depositor actually demands them, and it is not dishonored until presented.”
A deposit draws no interest, is payable on demand, and the statute does not run against it. These are the inherent characteristics of a bank deposit, unless modified by some written condition. The ordinary deposit-may be and often is modified by an entry in the bank book to the effect that interest will be allowed on all sums remaining on deposit for a term specified, or on monthly or quarterly balances. So, too, the terms of a certificate of deposit may be and often are modified by conditions written into it.
The trend of authorities is, however, that the statute of limitations does not begin to run on a certificate of deposit until it bas been presented for payment and demand made. In Daniels on Negotiable Instruments, section 1707a, it is stated: “If tbe statute of limitations begins to run at once, suit must of course be maintainable at once, and therefore no prior demand would be necessary. But sucb is not tbe usual contemplation of either tbe depositor or tbe bank. . . . Tbe better opinion seems to us to be that tbe statute of limitations only begins to run when there is an actual demand of payment in due form, and that sucb demand must precede a suit. Tbe bank may, indeed we think bas, tbe right to pay tbe demand certificate, at any time, for tbe ■ reason that tbe policy of tbe law interdicts a perpetual loan; and while tbe creditor bolding tbe certificate may not regard tbe bank as in default, and is not himself in default until a demand bas been made, yet these circumstances should not prevent tbe operation upon their certificates of deposit of tbe ordinary principle that a debtor owing a demand loan bas tbe right to pay at any time.”
In the case of Pardee v. Pish, 60 N. Y. 265, the court says: “It is recognized that there is no right of action upon the certificate of deposit in ordinary form, issued by a bank, until demand of payment bas been made.”
In Payne v. Gardner, 29 N. Y. 146-169, it is said: “Tbe reason assigned by tbe learned judge why a special demand should be made in sucb a case, is ‘that no one could desire to receive money in deposit for an indefinite period, with tbe right in tbe depository to sue tbe next moment, and without any prior intimation that be wished to recall tbe loan.’ This presents tbe whole argument; tbe injustice of tbe opposite rule is so apparent that it needs but to be stated in order to be rejected. . . . I entertain no doubt but that tbe transaction in question was a deposit, and that tbe rights and liabilities of tbe parties are precisely tbe same as if tbe money bad been in tbe bank; and hence there was no right of action against tbe depositaries until actual demand made, and the statute of limitations began to run from the same time.”
In Howell v. Adams, 68 N. Y. 314, it is said: “The defendant insists that the cause of action on the certificate, issued in 1863, was barred by the statute of limitations. The action was commenced in 1871, and it is claimed that the right of action accrued immediately on the issuing of the certificate, without previous demand. . . .
“We think it is in accordance with the general understanding of the commercial community that a bank is not liable to depositors except after demand of payment. The fact that a certificate is given on a deposit being made, payable on the return of the certificate, instead of leaving the deposit subject generally to check or draft, does not change the reason of the rule that the banker must first be called upon for payment before an action can be maintained.”
In the case of Munger v. The Albany City National Bank, 85 N. Y. 580, the court says: “As the certificate of deposit was a negotiable instrument, and was by its terms payable only on the return of it to the bank that had issued it, it never accrued due and payable, never matured, until a return of it, and demand of payment made of it. This is of importance, and we think did not have full weight in the formation of the judgment of the court below. In the opinion at special term which we have mentioned, a distinction is made between a debt which by the terms of the instrument is due and payable not at a certain day, but at a time to be determined by an act of the holder and at his option. But the authorities in this State are that no right of action exists against a depositary of money until an actual demand of it, and that such is the case although it is in the power of the owner of the deposit to make it due and payable at any time by his own act of making the demand.”
In Smiley v. Fray, 100 N. Y. 262, it is said: “Being a deposit, a demand of the money was essential to a right of action, unless there was a wrongful conversion or loss by some gross negligence- on the part of the depositary. The distinction between a deposit and a loan is considered in Payne v. Gardner, supra, and within the rule there laid down the instrument in question was a certificate of deposit, and in such a case no indebtedness arose by reason of such deposit until a demand was made for the amount deposited. . . .
2 “As the instrument in question was not a promissory note, but a certificate of deposit, the defense of the statute of limitations interposed by the defendants was not available, for the reason that the demand of the money deposited was not made prior to six years before the commencement of the action.
It, therefore, seems clear, from the authorities quoted, and the application of general legal principles, that a certificate of deposit in the ordinary form is not due until presentation and demand of payment made.
In the case at bar, a condition Avas written into the certificate and the main question presented on this appeal is the legal construction to be given this condition. The certificate recites that a deposit of five thousand dollars had been made by Harrison, which was payable on the return of the certificate properly indorsed.
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OPINION OP THE COURT.
McMILLAN, J.
1 The transaction of Harrison with the bank, upon which the certificate in question was issued, was a deposit, and not a loan. The certificate so stated on its face: “This certifies that Dr. Q-. W. Harrison has deposited, etc.,” and it was so recognized by the parties to the transaction; this cause must therefore be considered and disposed of on this basis. The rule Avhich applies to negotiable instruments should not be invoked with reference, to a certificate of deposit, until the certificate has been indorsed and transferred by the original holder; then a new relation arises between all the parties, which must be tested by the rules and customs of the law merchant other than those applicable to the case at bar.
With the exception of its negotiable character, there is no distinction between a certificate of deposit and an ordinary deposit written on a bank book. Daniels on Negotiable Instruments, section 1698a, says: “The very nature of the instrument and the ordinary modes of business, show that a certificate-of deposit, like a deposit credited in a pass book, is intended to represent moneys actually left with the bank for safe-keeping, which are to be retained until the depositor actually demands them, and it is not dishonored until presented.”
A deposit draws no interest, is payable on demand, and the statute does not run against it. These are the inherent characteristics of a bank deposit, unless modified by some written condition. The ordinary deposit-may be and often is modified by an entry in the bank book to the effect that interest will be allowed on all sums remaining on deposit for a term specified, or on monthly or quarterly balances. So, too, the terms of a certificate of deposit may be and often are modified by conditions written into it.
The trend of authorities is, however, that the statute of limitations does not begin to run on a certificate of deposit until it bas been presented for payment and demand made. In Daniels on Negotiable Instruments, section 1707a, it is stated: “If tbe statute of limitations begins to run at once, suit must of course be maintainable at once, and therefore no prior demand would be necessary. But sucb is not tbe usual contemplation of either tbe depositor or tbe bank. . . . Tbe better opinion seems to us to be that tbe statute of limitations only begins to run when there is an actual demand of payment in due form, and that sucb demand must precede a suit. Tbe bank may, indeed we think bas, tbe right to pay tbe demand certificate, at any time, for tbe ■ reason that tbe policy of tbe law interdicts a perpetual loan; and while tbe creditor bolding tbe certificate may not regard tbe bank as in default, and is not himself in default until a demand bas been made, yet these circumstances should not prevent tbe operation upon their certificates of deposit of tbe ordinary principle that a debtor owing a demand loan bas tbe right to pay at any time.”
In the case of Pardee v. Pish, 60 N. Y. 265, the court says: “It is recognized that there is no right of action upon the certificate of deposit in ordinary form, issued by a bank, until demand of payment bas been made.”
In Payne v. Gardner, 29 N. Y. 146-169, it is said: “Tbe reason assigned by tbe learned judge why a special demand should be made in sucb a case, is ‘that no one could desire to receive money in deposit for an indefinite period, with tbe right in tbe depository to sue tbe next moment, and without any prior intimation that be wished to recall tbe loan.’ This presents tbe whole argument; tbe injustice of tbe opposite rule is so apparent that it needs but to be stated in order to be rejected. . . . I entertain no doubt but that tbe transaction in question was a deposit, and that tbe rights and liabilities of tbe parties are precisely tbe same as if tbe money bad been in tbe bank; and hence there was no right of action against tbe depositaries until actual demand made, and the statute of limitations began to run from the same time.”
In Howell v. Adams, 68 N. Y. 314, it is said: “The defendant insists that the cause of action on the certificate, issued in 1863, was barred by the statute of limitations. The action was commenced in 1871, and it is claimed that the right of action accrued immediately on the issuing of the certificate, without previous demand. . . .
“We think it is in accordance with the general understanding of the commercial community that a bank is not liable to depositors except after demand of payment. The fact that a certificate is given on a deposit being made, payable on the return of the certificate, instead of leaving the deposit subject generally to check or draft, does not change the reason of the rule that the banker must first be called upon for payment before an action can be maintained.”
In the case of Munger v. The Albany City National Bank, 85 N. Y. 580, the court says: “As the certificate of deposit was a negotiable instrument, and was by its terms payable only on the return of it to the bank that had issued it, it never accrued due and payable, never matured, until a return of it, and demand of payment made of it. This is of importance, and we think did not have full weight in the formation of the judgment of the court below. In the opinion at special term which we have mentioned, a distinction is made between a debt which by the terms of the instrument is due and payable not at a certain day, but at a time to be determined by an act of the holder and at his option. But the authorities in this State are that no right of action exists against a depositary of money until an actual demand of it, and that such is the case although it is in the power of the owner of the deposit to make it due and payable at any time by his own act of making the demand.”
In Smiley v. Fray, 100 N. Y. 262, it is said: “Being a deposit, a demand of the money was essential to a right of action, unless there was a wrongful conversion or loss by some gross negligence- on the part of the depositary. The distinction between a deposit and a loan is considered in Payne v. Gardner, supra, and within the rule there laid down the instrument in question was a certificate of deposit, and in such a case no indebtedness arose by reason of such deposit until a demand was made for the amount deposited. . . .
2 “As the instrument in question was not a promissory note, but a certificate of deposit, the defense of the statute of limitations interposed by the defendants was not available, for the reason that the demand of the money deposited was not made prior to six years before the commencement of the action.
It, therefore, seems clear, from the authorities quoted, and the application of general legal principles, that a certificate of deposit in the ordinary form is not due until presentation and demand of payment made.
In the case at bar, a condition Avas written into the certificate and the main question presented on this appeal is the legal construction to be given this condition. The certificate recites that a deposit of five thousand dollars had been made by Harrison, which was payable on the return of the certificate properly indorsed. The condition follows, in these words: “Six months after date, with interest at the rate of six per centum per annum.” It is clear that an agreement had been reached, between Harrison and the bank, that he should have interest at the rate of six per centum per annum, so that the technical question is the consideration of the effect of the words, “six months after date,” written into the certificate.
It is urged, on the part of the appellant, that in the case of a certificate due on demand, it partakes of the characteristics of a promissory note, and no demand is necessary, but that the statute of limitations begins to run immediately after the certificate is issued. If this contention were true, interest would attach at once to the certificate, as overdue paper, and words written into the certificate as to interest would have no application, except as to the rate of interest to he paid. In the case at bar, the legal rate and the rate agreed upon are identical, so that we are led to the conclusion that the parties understood that the certificate would not draw interest from its date, or from the expiration of six months from its date, without demand, but to entitle the holder to any interest the condition as to interest must be written into the certificate.
3 This being a deposit, and not a loan, it is clear the holder of the certificate could withdraw it from the bank at any time, except as limited by the conditions written into the certificate, which, when legally construed, mean nothing more or less than this: If the depositor allowed the deposit to remain with the bank for a period of six months, or more, he would be paid interest at the rate of six per cent for the period of time the deposit remained with the bank; if the deposit were withdrawn before the expiration of six months, all interest would be forfeited. A time limit in the certificate of deposit is part of the agreement, whereby the bank agrees to pay interest. If the deposit is allowed to remain with the bank for the period specified in the time limit, the bank can afford to pay the interest stipulated. The time limit is agreed upon and written into the certificate of deposit, because the bank can illy afford to pay interest if the deposit is left for an indefinite period at the option of the depositor. If the depositor sees fit to waive his interest, he may withdraw his deposit at any time, even when there is a time limit; but he can not have his deposit and interest if the deposit is withdrawn before the expiration of the time limited in the certificate of deposit.
This is the only just and legal construction that can be given the language used in the certificate. It can not be said that the words written into the certificate are clear and specific, and that different constructions may not be contended for with a degree of plausibility, but in Payne v. Clark, 23 Mo. 261-2, the court says: “If bankers wish to obtain tbe advantages sought in this case, there is no hardship in requiring them to express their contract in such terms as will not mislead.” In this last case, the certificate was substantially on all-fours with the certificate in this case, and of which the court says: “Here is an instrument in writing, by which money is due, with interest, sixty days after date, on presentation of the instrument. Will any one say that the money on that instrument is not due sixty days after date? If it be necessary to present the instrument in order to maintain action on it, how does that affect the question of interest under the statute? This is a question to be determined by our statute law, and for its solution we do not look to the laws, usages and customs of other places. Persons not initiated in the mysteries of banking would take it for certain that such certificates would carry interest without interruption until they were paid, and in their simplicity would naturally suppose that the longer they were suffered to run, the more the bankers would be benefited.” This same question was considered in 64 Mo. 600, in which the court says: “The only question presented is whether a certificate of deposit, payable six months after date, with interest from date at six per cent per annum, continues to bear that rate of interest after the arrival of its maturity, although not presented when that period arrives. An affirmative answer to just this question was returned by this court twenty-one years ago in Payne v. Clark, 23 Mo. 259.” In Zane on Banks and Banking, sec. 169, p. 290, it is laid down as a settled principle, that, “the rule ought to be, in reason and common sense, that the statute begins to run, both upon deposits and upon certificates of deposit, whether payable on demand or not, from the demand, or from the refusal to pay the deposit, or something equivalent thereto, such as a notification that the bank will not pay, or its suspension.”
There is no doubt that if the bank desired to stop the payment of interest on the certificate in question, but that it was its privilege to seek out the holder and tender payment thereof. It also has the right to reduce the rate of interest, by notice to that effect, leaving it to the option of the holder of the certificate to return the same and accept his money, or to allow it to remain on deposit under such new conditions as the bank may impose.
The certificate of deposit in the case at bar not having been presented for payment within six months after the making and delivery thereof, it drew interest at the rate of six per centum per annum up to the time of payment, and the statute of limitations would not begin to run against the certificate until after demand of payment had been made of the bank, and payment had been refused;
For the foregoing reasons, the judgment herein is affirmed. And it is so ordered.
Parker and McFie, JJ., concur. Crumpacker, J., having.tried the case below did not participate in this decision, nor did Mills, C. J., who did, not hear the argument on appeal.