Court Opinion

ID: 5218016
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:27:30.721447+00
Date Added: 2024-06-11T08:27:28.142557
License: Public Domain

McLaughlin, J.
(concurring):
If the hank, when it credited the amount of the checks in question to the account of Horowitz, and when it permitted him to' withdraw the proceeds of the same, knew that they belonged to the *270plaintiff and that he was wrongfully and unlawfully converting the same to his own use, I take it no one would seriously contend, under such circumstances, that the bank would not be liable.
The real question, therefore, in this case, as it is in all cases of this character, as it seems to me, is whether the defendant knew that the checks were being wrongfully diverted, or was in possession of such facts as should have aroused its suspicion and.caused it.to-make an inquiry. The defendant did not have actual knowledge, but facts were presented which ought to have aroused its suspicion and caused it to make an investigation as to -whether Horowitz had a right to thus use the property of. the plaintiff, and had that "been done the real situation would have been disclosed. Being in possession of certain information, - it was .chargeable with a knowledge of all facts which an inquiry suggested by such.information would have disclosed. (Williamson v. Brown, 15 N. Y. 354.) The language of Judge Vann in Rochester & C. T. R. Co. v. Paviour (164 N. Y. 281) is quite applicable to the facts here proved. “ By accepting them [it] did an act which [it] had reason to believe would affect the rights of a third party, and [it] could hot, in justice to that party, ignore the suspicion which the facts should have aroused. One who suspects, or ought to suspect, is bound to inquire, and the law presumes that he knows whatever proper inquiry would disclose. While the courts are careful to guard the interests of commerce by protecting the negotiation of commercial paper, they are also careful to guard against fraud by defeating titles taken in bad faith, or with- knowledge, actual or imputed, which amounts to bad faith, when regarded from a commercial standpoint.” (See, also, Cohnfeld v. Tanenbaum, 176 N. Y. 126; 52 L. R. A. 790, note.)
Here were some ninety odd checks, all payable to the plaintiff’s order, and prima facie-they belonged to it. (Salen v. Bank of State of New York, 110 App. Div. 636.). They were indorsed in blank by Horowitz, the president of the plaintiff. The defendant had a right to assume that he, as president, had authority to indorse-them or to authorize another person to do it for him, but it had no right ■ to assume, when so large a number of checks, which prima facie belonged to the corporation, was presented, in so short a time, that he had a right to divert the same from the corporation to his *271own personal use. It may well be that the presentation of a few checks, under the same circurpstances, would not, in and of itself, have been enough to put the defendant upon notice, and it was for this reason I was unable to agree with a majority of the court in Havana Central R. R. Co. v. Knickerbocker Trust Co. (135 App. Div. 313; revd., 198 N. Y. 422), where only a few checks were involved. There is no difference in principle whether the bank knew Horowitz was applying the plaintiff’s property to pay his own indebtedness to it or to others, because the liability must be predicated in either case upon the fact that the bank knew, or had it made the inquiry which it ought to have made would have known, that the plaintiff was being wrongfully deprived of its property, and as I read the opinion in Havana Central R. R. Co. v. Knickerbocker Trust Co. (supra), a different rule has not been laid down.
I, therefore, concur in the conclusion reached by Presiding Justice Ingraham that the judgment appealed from should be affirmed.