E. Deposit Receipts and Passbooks

• Author: M.H. Ogilvie
• Profession: LSM, B.A., LL.B., M.A., D.Phil., D.D., F.R.S.C. Of the Bars of Ontario and Nova Scotia Chancellor's Professor and Professor of Law, Carleton University
• Pages: 233-235

Page 233

Even in this age of computerization, banks continue to issue passbooks and deposit receipts as evidence of the receipt of funds by a bank and of the current state of a customer’s account. Many customers still regard the passbook as a valuable way to know the state of an account. The common law has long implied a duty into the bank and customer relationship that the bank must render statements of account to the customer on a regular basis and this has been codified in many account agreements today. The evidentiary value of the content of these statements and other related legal matters will be discussed later,⁴⁷but issues relating to their status as legal documents per se will be discussed here. The ambiguous legal status of passbooks and deposit receipts appears to result from attempts by customers to treat them as negotiable instruments and to use their transfer from one person to another as a means of informally assigning balances in an account. Newer formats for rendering account by banks such as computer-produced monthly statements, ABM receipts, and online banking account statements have not been assimilated with the concept of negotiability, so that only traditional passbooks and deposit receipts have been the subject of litigation and therefore of this discussion.

In England, a deposit receipt has been clearly held not to be a negotiable instrument because it does not contain an express promise by the bank to pay the amount involved. Rather, its sole purpose is to be a record of the transaction with which it is concerned.⁴⁸

For this same reason, a passbook has also been found not to be a negotiable instru-

Page 234

ment.⁴⁹

This means that the delivery and transfer of a deposit receipt or passbook does not confer rights on the transferee, who must show a valid assignment in some other document of the funds before a bank would be legally obliged to release those funds to a person other than the customer. Nor could passbooks or deposit receipts be considered as good security documents because their mere possession confers no legal rights on the person with possession.⁵⁰

While possession of a passbook is sometimes made a precondition by contract for a bank to repay funds in an account and enforceable by the courts,⁵¹a bank is not released from its legal duty to repay a customer who has lost a passbook or deposit receipt and who can prove good legal title even where the deposit has earlier been paid to an imposter.⁵²

The legal position about passbooks and deposit receipts appears to be different in Australia and Canada. In Australia, where a bank issues deposit...