Allen v. Fourth National Bank

• Decision Date: 19 May 1916
• Citation: 224 Mass. 239
• Parties: CHARLES E. ALLEN, administrator de bonis non, v. FOURTH NATIONAL BANK.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

224 Mass. 239

CHARLES E. ALLEN, administrator de bonis non, v. FOURTH NATIONAL BANK.

Supreme Judicial Court of Massachusetts, Suffolk.

May 19, 1916

March 21 1916.

Present: RUGG, C.

J., LORING, BRALEY DE COURCY, & PIERCE, JJ.

Bank. Trust Constructive.

Executor and Administrator, Fraud. Equity Jurisdiction, For an accounting. Equity Pleading and Practice, Appeal, Master's report.

In a suit in equity, by the administrator de bonis non of an estate against a bank in which a former administrator of the estate had kept funds of the estate, for an accounting as to certain of the funds which, it was alleged, the former administrator misappropriated under such circumstances that the defendant was chargeable as a constructive trustee, it appeared that the bank had notice of the fact that the money in the account belonged to the estate, that the administrator also had a personal account in the same bank, that the personal account was overdrawn on certain occasions and that in each instance on the bank day next succeeding that of the overdraft the administrator deposited with the defendant a check on the account of the estate and also checks drawn upon other sources more than sufficient in amount to take up the overdraft. A master to whom the suit was referred found that the defendant had no actual knowledge or suspicion that the administrator was misappropriating funds of the estate and that, by reason of the fact that the deposits of checks drawn on sources other than the funds of the estate were more than sufficient in amount to take up the overdrafts, the plaintiff had not shown that the administrator had used funds of the estate to pay his debts to the bank created by the overdrafts. The evidence was not reported. Held, that the findings of the master could not be reversed, and that the defendant therefore was not bound to account for the amount of the checks on the account of the estate deposited to the administrator's personal account on the days following the overdrafts.

In the same suit it appeared that on five occasions checks of the administrator on his personal account were certified by the defendant when such certification would not have been possible if the administrator had not made a deposit on the same day in his personal account of a check improperly drawn by him on the account of the estate.

The master found that on and after a date about a month previous to the last but one of the certifications, the defendant, judged from the standpoint of a reasonably prudent banker, had knowledge of such facts as reasonably would lead it to suspect the misappropriation by the administrator of the funds of the estate, but that at no time did it have actual knowledge or suspicion as to such misappropriations. Held, that the defendant was not bound to account to the plaintiff for the amount of the checks on the account of the estate which made possible certification of the checks on the administrator's personal account.

The defendant also was held not to be bound to account for the amount of a check drawn by the administrator upon the account of the estate and deposited in his personal account to make good a check on his personal account which he had delivered to the defendant to take up a personal draft upon him sent to the defendant by a bank in another State for collection.

BILL IN EQUITY filed in the Supreme Judicial Court on September 8, 1908, by the administrator de bonis non of the estate of Albert H. Bird, to recover the amount of certain checks drawn on the defendant and on the Eliot National Bank, the American National Bank, the Commercial National Bank and the City Trust Company, by one William L. Baker, as administrator of the estate of the plaintiff's intestate, to the personal order of Baker, indorsed by him and deposited in his personal account with the defendant. The prayers of the bill were that the defendant might be adjudged a trustee of the proceeds of such checks, and might be compelled to account for such proceeds.

The case was referred to a master, who found the following facts among others:

Between January 8, 1904, and March 17, 1906, Baker deposited with the defendant in an account in his name as administrator of the estate of Albert H. Bird by eleven deposits $24,792.96. All of these deposits were of money belonging to that estate for which he was accountable as administrator. The defendant had notice of this by the opening and carrying of the account as "Wm. L. Baker Adm. Est. of Albert H. Bird."

On April 18 and December 29, 1905, Baker's personal account with the defendant was overdrawn. On the next succeeding bank day after each overdraft occurred, he made deposits to that account consisting of checks drawn on his administrator's account and checks drawn on other sources. In each instance the checks drawn on other sources were more than sufficient to take up the overdraft. The master found that, by reason of the fact that the deposits of checks drawn on sources other than the funds of the administrator's account were sufficient in amount to repay the overdraft, the plaintiff had not shown that such overdrafts were repaid by deposits of checks drawn on the administrator's account.

At times Baker had checks upon his personal account certified. Sometimes on the same day as and sometimes on the day before the certification, he deposited with the defendant checks, drawn by him upon his administrator's account with the defendant or checks drawn by him upon his...