260 Mass. 485 | Mass. | 1927
The plaintiff, a mutual insurance company, seeks to compel the defendant, a national bank, to account for and pay over to it the amount of twenty checks drawn on the Boston Safe Deposit and Trust Company by one Jackson, the then treasurer of the plaintiff, payable to his order as an individual and deposited by him in his personal account in the bank. It is agreed that “Throughout the year 1924
The checks were deposited at various times: two in each of the months January, February, April, June, and July;
The law is settled that “A banker having no interest in the matter, who pays out money on deposit on the fraudulent order of the person who by the terms of the deposit had the right to draw on the account, is liable only when he is privy to the depositor’s fraud.” Newburyport v. First National Bank of Boston, 216 Mass. 304, citing Allen v. Puritan Trust Co. 211 Mass. 409, and Gray v. Johnston, L. R. 3 H. L. 1.
The burden of proving the banker privy to the fraud is on the party who asserts it. Allen v. Fourth National Bank, 224 Mass. 239, 244. There is here no evidence to establish privity unless it be that the checks drawn by Jackson as treasurer and payable to his order in his individual capacity, the word “Securities,” in the account on the face of the checks, or the reverse numbering of the several checks and the state of the account, require inferences of knowledge or of reason for inquiry which would have led to knowledge.
There is nothing to cause suspicion in the account. Nor do the numbers on the checks justify an inference of wrongdoing. A bank cannot be expected, when a check is presented for deposit or payment, to compare the number which it bears with that on all other checks, drawn by the
It is argued that the word “Securities” should have occasioned inquiry because of G. L. c. 175, § 64, which forbids an officer in a corporation like the plaintiff to be interested pecuniarily in any purchase, sale, or loan of its funds. The law presumes that persons are acting honestly, and there are many ways in which the treasurer of such a company could rightfully be paid money in transactions with securities. Moreover, it has been held that a bank paying or receiving a check with such a memorandum upon it is not bound to take notice of the memorandum. State National Bank v. Dodge, 124 U. S. 333, 346. State National Bank v. Reilly, 124 Ill. 464, 473.
The memorandum was matter of accounting placed upon the paper for the convenience of the drawer, and did not form part of the order to make payment addressed to the bank. State National Bank v. Dodge, supra. It is not like writing which enters into and forms part of the contract evidenced by the paper or embodied in it, such as was dealt with in Costelo v. Crowell, 127 Mass. 293, Smith v. Burgess, 133 Mass. 511, Shaw v. Methodist Episcopal Society in Lowell, 8 Met. 223, Wheelock v. Freeman, 13 Pick. 165, 168, and similar cases cited by the plaintiff.
Decisions have been in conflict with regard to the effect, as notice of wrongdoing, that a check, signed by an officer of a corporation or by one in a fiduciary capacity, is payable to the officer or trustee personally from a deposit of the funds of the corporation or trust estate. The consistent decisions of this court and the weight of authority establish that the form of such a check is not in itself notice of improper conduct sufficient to put the holder upon inquiry. Kendall v. Fidelity Trust Co. 230 Mass. 238, and cases cited at page 242. Johnson & Kettell Co. v. Longley Luncheon Co.
The only infirmity in these checks was Jackson’s intent to use the proceeds for his own and not for the purposes of the company. Their form is not sufficient evidence of that infirmity to show that the bank had knowledge of facts such that its action in dealing with them amounted to bad faith. G. L. c. 107, § 79. Nor is there, apart from this or taken with it, sufficient evidence that the defendant was other than a bona fide holder in due course. Shawmut National Bank v. Manson, 168 Mass. 425.
It follows that, upon the report and the case stated, the plaintiff has failed to establish bad faith on the defendant’s part; and that a decree must enter dismissing the bill with costs.
So ordered.