Me. Justice G-been
delivered the opinion of the Court.
This suit was brought to set up a lost certificate of deposit issued by the defendant hank and to recover the amount of the same. From, a decree in favor of the complainant below, defendant has appealed to this court.
[371]*371On September 10, 1910, A. Easley, deceased, deposit- - ed in the East Tennessee National Bank $4,950, for ■which he took a certificate in words and figures as follows : ■
“Certificate of Deposit.
“East Tennessee National Bank of
“Knoxville, Tennessee.
“No. 13841.
“September 10, 1910. $4950.
“A. Easley, Agt., has deposited in this Bank forty-nine hundred and fifty dollars, payable to the order of self, on the return of this certificate properly indorsed.
“Interest at 3 per cent, if left 3 months.
“No interest after 12 months.
“No interest for fractional parts of a month.
“Safe deposit boxes for rent.
“S. V. CaeteR, Cashier.”
Easley died August 25, 1913, and by will appointed his wife, the complainant, his executrix and devised and bequeathed to her all his estate.
While this deposit was made in the name of A. Easley, agent, the proof shows that the funds were his own, and this is not seriously controverted by the hank.
Prior to the death of Easley and something more than a year after the date of the deposit, this certificate was lost. Deceased was in the habit of collecting his interest semiannually and-after collecting the installment of interest due September 10-, 1911, the said certificate of deposit was mislaid and has not yet been found. It is obvious from the testimony of the com[372]*372plainant that tlie certificate of deposit was in the possession of her husband nntil after September 10, 1911, and that be bad not transferred it to any one prior to that time. Some time subsequent to the death of her husband, the complainant made demand on the bank for the payment to her of the sum so deposited by the deceased. The bank declined to make this payment until the complainant executed to it an indemnity bond to cover any loss it might sustain by reason of said certificate of deposit having come into the hands of an innocent holder. Complainant was not able financially to make a bond in the amount required by the bank.
It is the contention of the bank that a certificate of deposit is a negotiable instrument; .that it is not due until presented and demand made for its payment; and that, if the Easley certificate were now outstanding in the hands of an innocent holder, no demand having been made, the bank would be liable therefor.
On the other hand, the complainant insists that a certificate, of deposit, like a demand note, is due from the date of its issuance, and that this certificate, even if now outstanding, is barred by the statute of limitations. Complainant further insists that said certificate of deposit was in the possession of her husband unin-dorsed for more than a year after it was issued, and that no person who later acquired it could be a holder in due course, since any negotiation occurred an unreasonable length of time after the issuance of the paper.
We do not find it necessary to pass on the question of the application of the statute of limitations.
[373]*373We think a certificate of deposit such as the one in suit is a negotiable instrument. The authorities generally so hold. 3 R. C. L., p. 573; 7 0. J., p. 648.
This court has treated such instruments as negotiable, although without any discussion. Ford v. Brown, 114 Tenn., 467, 88 S. W., 1036, 1 L. R. A. (N. S.), 188.
This certificate of deposit is undoubtedly payable on domand. It is payable ‘ ‘ on the return of this certificate properly indorsed;” that is to say, upon presentation.
“An instrument is payable on demand: (1) Where it is expressed to be payable on demand, or at sight, or on presentation.” Acts 1899, chapter 94, sec. 7, Thompson’s Shannon’s Code, sec. 3616a-6.
The negotiable instrument statute further provides:
“Where an instrument payable on demand is negotiated an unreasonable length of time after its issue, the holder is not deemed a holder in due course. ’ ’ Acts 1899, chapter 94, section 53; Thompson’s Shannon’s Code, section -3516a52.
“In determining what is a ‘reasonable time’ or an ‘unreasonable time,’ regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case.” Acts 1899, chapter 94, prefix; Thompson’s Shannon’s Code, section 516al91.
It will be observed that the certificate of deposit in suit provides on its face that it shall bear no interest after twelve months. The purpose of making time deposits, evidenced by certificates, ordinarily is to procure interest on the money deposited. Usually such eer-[374]*374tifieates of deposit are renewed at the end of twelve months from the date of issuance, or at such other period as may he stipulated for the cessation of interest. Accordingly, we think that a demand certificate of deposit such as the one before us, stipulating “no interest after twelve months,” negotiated more than a year after its date, is negotiated an unreasonable length of time after its issue, and one who takes it is not a holder in due course.
.The supreme court of North Dakota reviewed the cases on the question of reasonable time and said:
“It is well established that a note payable on demand is due within a reasonable time after its date, and there are practically no authorities which hold that such a reasonable time can be extended beyond a year.” McAdam v. Grand Forks Mercantile Co., 24 N. D., 645, 140 N. W., 725, 47 L. R. A. (N. S.), 246.
For purpose of indorsement, demand paper has been held to be overdue in two months, Camp v. Scott, 14 Vt., 387; ten weeks, Losee v. Dunkin, 7 Johns., 70, 5 Am. Dec., 245; three months, Herrick v. Woolverton, 41 N. Y., 581, 1 Am. Rep., 461; four months, La Due v. Kasson First National Bank, 31 Minn., 33, 16 N. W., 426; six months, Thompson v. Hale, 6 Pick. (Mass.), 259. And see other cases collected in note 93c, 8 C. J., 408.
Looking to the authorities, the nature of this instrument, the usage of business, and the facts of this particular case, we conclude that no one who may have come into possession of the instrument in suit can be a holder in due course. It certainly could not have been [375]*375negotiated until more than a year after the date of its issuance.
The complainant is entitled to recover from the hank the amount of the said certificate of deposit without the execution of an indemnity bond. Our statutes, as contained in Thompson’s Shannon’s Code, are as follows:
“5694. Lost Instruments, How Supplied.
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Me. Justice G-been
delivered the opinion of the Court.
This suit was brought to set up a lost certificate of deposit issued by the defendant hank and to recover the amount of the same. From, a decree in favor of the complainant below, defendant has appealed to this court.
[371]*371On September 10, 1910, A. Easley, deceased, deposit- - ed in the East Tennessee National Bank $4,950, for ■which he took a certificate in words and figures as follows : ■
“Certificate of Deposit.
“East Tennessee National Bank of
“Knoxville, Tennessee.
“No. 13841.
“September 10, 1910. $4950.
“A. Easley, Agt., has deposited in this Bank forty-nine hundred and fifty dollars, payable to the order of self, on the return of this certificate properly indorsed.
“Interest at 3 per cent, if left 3 months.
“No interest after 12 months.
“No interest for fractional parts of a month.
“Safe deposit boxes for rent.
“S. V. CaeteR, Cashier.”
Easley died August 25, 1913, and by will appointed his wife, the complainant, his executrix and devised and bequeathed to her all his estate.
While this deposit was made in the name of A. Easley, agent, the proof shows that the funds were his own, and this is not seriously controverted by the hank.
Prior to the death of Easley and something more than a year after the date of the deposit, this certificate was lost. Deceased was in the habit of collecting his interest semiannually and-after collecting the installment of interest due September 10-, 1911, the said certificate of deposit was mislaid and has not yet been found. It is obvious from the testimony of the com[372]*372plainant that tlie certificate of deposit was in the possession of her husband nntil after September 10, 1911, and that be bad not transferred it to any one prior to that time. Some time subsequent to the death of her husband, the complainant made demand on the bank for the payment to her of the sum so deposited by the deceased. The bank declined to make this payment until the complainant executed to it an indemnity bond to cover any loss it might sustain by reason of said certificate of deposit having come into the hands of an innocent holder. Complainant was not able financially to make a bond in the amount required by the bank.
It is the contention of the bank that a certificate of deposit is a negotiable instrument; .that it is not due until presented and demand made for its payment; and that, if the Easley certificate were now outstanding in the hands of an innocent holder, no demand having been made, the bank would be liable therefor.
On the other hand, the complainant insists that a certificate, of deposit, like a demand note, is due from the date of its issuance, and that this certificate, even if now outstanding, is barred by the statute of limitations. Complainant further insists that said certificate of deposit was in the possession of her husband unin-dorsed for more than a year after it was issued, and that no person who later acquired it could be a holder in due course, since any negotiation occurred an unreasonable length of time after the issuance of the paper.
We do not find it necessary to pass on the question of the application of the statute of limitations.
[373]*373We think a certificate of deposit such as the one in suit is a negotiable instrument. The authorities generally so hold. 3 R. C. L., p. 573; 7 0. J., p. 648.
This court has treated such instruments as negotiable, although without any discussion. Ford v. Brown, 114 Tenn., 467, 88 S. W., 1036, 1 L. R. A. (N. S.), 188.
This certificate of deposit is undoubtedly payable on domand. It is payable ‘ ‘ on the return of this certificate properly indorsed;” that is to say, upon presentation.
“An instrument is payable on demand: (1) Where it is expressed to be payable on demand, or at sight, or on presentation.” Acts 1899, chapter 94, sec. 7, Thompson’s Shannon’s Code, sec. 3616a-6.
The negotiable instrument statute further provides:
“Where an instrument payable on demand is negotiated an unreasonable length of time after its issue, the holder is not deemed a holder in due course. ’ ’ Acts 1899, chapter 94, section 53; Thompson’s Shannon’s Code, section -3516a52.
“In determining what is a ‘reasonable time’ or an ‘unreasonable time,’ regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case.” Acts 1899, chapter 94, prefix; Thompson’s Shannon’s Code, section 516al91.
It will be observed that the certificate of deposit in suit provides on its face that it shall bear no interest after twelve months. The purpose of making time deposits, evidenced by certificates, ordinarily is to procure interest on the money deposited. Usually such eer-[374]*374tifieates of deposit are renewed at the end of twelve months from the date of issuance, or at such other period as may he stipulated for the cessation of interest. Accordingly, we think that a demand certificate of deposit such as the one before us, stipulating “no interest after twelve months,” negotiated more than a year after its date, is negotiated an unreasonable length of time after its issue, and one who takes it is not a holder in due course.
.The supreme court of North Dakota reviewed the cases on the question of reasonable time and said:
“It is well established that a note payable on demand is due within a reasonable time after its date, and there are practically no authorities which hold that such a reasonable time can be extended beyond a year.” McAdam v. Grand Forks Mercantile Co., 24 N. D., 645, 140 N. W., 725, 47 L. R. A. (N. S.), 246.
For purpose of indorsement, demand paper has been held to be overdue in two months, Camp v. Scott, 14 Vt., 387; ten weeks, Losee v. Dunkin, 7 Johns., 70, 5 Am. Dec., 245; three months, Herrick v. Woolverton, 41 N. Y., 581, 1 Am. Rep., 461; four months, La Due v. Kasson First National Bank, 31 Minn., 33, 16 N. W., 426; six months, Thompson v. Hale, 6 Pick. (Mass.), 259. And see other cases collected in note 93c, 8 C. J., 408.
Looking to the authorities, the nature of this instrument, the usage of business, and the facts of this particular case, we conclude that no one who may have come into possession of the instrument in suit can be a holder in due course. It certainly could not have been [375]*375negotiated until more than a year after the date of its issuance.
The complainant is entitled to recover from the hank the amount of the said certificate of deposit without the execution of an indemnity bond. Our statutes, as contained in Thompson’s Shannon’s Code, are as follows:
“5694. Lost Instruments, How Supplied. — Any lost instrument may be supplied by affidavit of any person acquainted with the facts, stating the. contents thereof, as near as may be, and that such instrument has been unintentionally lost or mislaid, and is still the property of the person claiming under it, unpaid and unsatisfied. .
“5697. Indemnity Bond may be Required. — -The court of justice before whom the action is tried, may, in case recovery is had upon a lost instrument, require the party claiming under it to give bond with good security, in double the amount of the claim, payable to the opposite party, and conditioned to indemnify such party against any demand by action on such lost instrument; and execution shall be stayed until such bond is given.
“5698. Unless Two Years Have Elapsed Since Maturity of Instrument.. — The person recovering on such lost instrument may, however, after the .lapse of two years from the maturity of such instrument, enforce his recovery without giving the bond prescribed in the last section, in which case, the person from whom the recovery is had, may plead the judgment in bar of an action by the actual holder of such lost instrument.”
[376]*376Complainant made demand for the payment of the deposit evidenced by this certificate more than two years ago. If a demand was necessary to mature the certificate as between her and the bank, still she eonld not be required to present the certificate. It being lost and its whereabouts unknown, as a matter of course it was impossible for her to present it, and to hold that presentation of the lost instrument must be made would be to destroy the efficacy of the section of the Code last quoted as to such paper.
Section 5698, supra, provides that the “person from whom recovery is had may plead the judgment in bar of an action by the actual holder of such lost instrument.” This fully protects the bank.
Under the circumstances of the case, we think the chancellor properly taxed'the costs of this proceeding to the complainant. The defendant bank has acted in good faith throughout, and only desired to be protected. This litigation has been rendered necessary by the carelessness of the complainant or her husband, the deceased, and the bank should not be put to any expense on account thereof.
The decree of the chancellor is affirmed, with all costs taxed to the compainant.