Societe de Bienfaisance St. Jean Baptiste de Millbury v. Worcester County Institution for Savings

Braley, J. The rights of the parties apart from the equitable defence depend on the terms of the contracts that were made, as shown by the record, when the accounts were opened. Wall v. Provident Institution for Savings, 6 Allen, 320. Wallace v. Lowell Institution for Savings, 7 Gray, 134, 137. White v. Franklin Bank, 22 Pick. 181. Heath v. New Bedford Safe Deposit & Trust Co. 184 Mass. 481, 483. In the first case it is unnecessary to decide whether the bank would have been exonerated if article one of the by-laws had been inserted in the contract, that, “When any money is withdrawn, the book given to the depositor must be brought to the Bank to have the amount entered therein. If the book has been lost or destroyed, written notice must be given to the Treasurer, and if the loss shall be proved to the satisfaction of the Board of Investment, they may direct the account to be paid without the book; but the Institution will not be responsible for loss sustained if payment is made on [560] presentation of the book with a spurious order, if such notice has not been given and received,” for the by-law as printed in the deposit book reads, “When a book is lost, the owner thereof must give immediate notice to the treasurer, otherwise the institution will not be responsible if the money should be paid upon a forged order accompanied by the book.” Goldrick v. Bristol County Savings Bank, 123 Mass. 320. Donlan v. Provident Institution for Savings, 127 Mass. 183, 185. Nor did the plaintiff’s written assent by its treasurer at the time of deposit, "to all the regulations of the Institution,” read into the contract the by-law subsequently enacted, of which the plaintiff had no knowledge, that “When a deposit book has been lost or destroyed, immediate written notice should be given to the Treasurer. As the officers of the Institution may be unable to identify every depositor, the Corporation will not be responsible for loss sustained, when a depositor has not given notice in writing of his book having been stolen or lost, if payment be made in whole or in part on account of such book on presentation. In all cases, a payment upon presentation of a deposit book shall be a full and complete discharge to the Corpora-. tian for the amount so paid.” Kimins v. Boston Five Cents Savings Bank, 141 Mass. 33. Hudson v. Roxbury Institution for Savings, 176 Mass. 522. It is plain that, independently of the finding that the defendant had been negligent, the bank is responsible for the payments made on the forged orders of the plaintiff’s treasurer, even if when the payments were made the deposit book was presented. Jochumsen v. Suffolk Savings Bank, 3 Allen, 87. Kingsley v. Whitman Savings Bank, 182 Mass. 252, 254. What has been said also disposes of the defence urged in the second case, where the contract and deposit were made on July 6, 1898, and the by-law that, "Any payment made to any person who presents a deposit book of this Bank, or who shall present an order for the payment of money accompanied with such deposit book purporting to have been signed by the person to whom such book belongs, shall be deemed to be for the Bank as good and effectual a payment as that made to the owner of such deposit book,” was passed on February 4, 1903, by which the plaintiff, who had no knowledge of it was not bound, and the original contract remained unaffected. It is further contended, that the plaintiff is estopped by its neg [561] ligent failure to discover the treasurer’s peculations. Doubtless the plaintiff is charged with knowledge of the entries in its books of account. Allen v. Puritan Trust Co. 211 Mass. 409, 420. The plaintiff’s auditors, however, who either'semiannually or quarterly examined the treasurer’s accounts, did not discover that the treasurer was misappropriating the funds or obtaining money from the defendants on forged orders until after July 15, 1914, although, if they “had made a reasonably careful examination of the treasurer’s accounts, and had made an investigation to determine the amount on deposit in the defendant bank, they would have discovered at each examination after November 6, 1912, that the treasurer was withdrawing money without authority.” But the judge found generally for the plaintiff. The remissness of the auditors is not evidence of the plaintiff’s participation in the treasurer’s fraud, and as matter of law it furnishes no justification to the defendants to deprive the plaintiff of its property through honoring forged orders. Atlantic Cotton Mills v. Indian Orchard Mills, 147 Mass. 268, 281. But, if the defence of payment and of estoppel fall away, the defendants also severally answered, that it would be inequitable to permit the plaintiff to recover, and that they should be absolutely and unconditionally relieved from the respective claims. R. L. c. 173, § 28. And, no question having been raised as to whether an equitable defence had been pleaded properly, the presiding judge ruled that the plaintiff’s demands should be reduced proportionally, to which rulings the plaintiff excepted. The forged orders on both banks aggregated $3,345, of which the defaulting treasurer used or appropriated $250, the remaining $3,095 was deposited by him in the plaintiff’s name and to its credit in the Millbury National Bank. The judge found and ruled that of the total amount the plaintiff could recover only $250. The method by which the embezzlement was accomplished is described as follows: “Bazinet embezzled from the plaintiff money which he collected from members and other income of the society to an amount at least equal to the sums which he withdrew from the defendant bank. The sums thus collected and embezzled were not deposited to the credit of the society. By using the money withdrawn from the defendant bank to pay the obligations of the plaintiff, Bazinet was enabled to postpone the time when his embezzlements would be [562] discovered.” It was decided in Barton v. Radclyffe, 149 Mass. 275, that to maintain an equitable defence under the statute, “such defence must be one within the rules and principles of equity jurisprudence.” While in the beginning the treasurer alone knew of the transactions, the defendants upon discovery of the fraud could have maintained an action to recover back the money from the plaintiff, who constructively, if not actually, came into possession when the deposits were made in the national bank in its name from which from time to time sick benefits and other legal obligations of the plaintiff were satisfied. Atlantic Cotton Mills v. Indian Orchard Mills, 147 Mass. 268, 272-274. Foote v. Cotting, 195 Mass. 55, 61, 62. Accordingly the money of the defendants to the extent shown by the record not only has gone in satisfaction of the plaintiff’s legitimate pecuniary obligations, but, upon its discovery of the source from which the funds had been obtained, no offer of restitution ever was made. Or, if otherwise put, the defendants under the contracts owe the amount of the deposits with interest. But the plaintiff already has received and appropriated to its own use moneys of the defendants nearly equal to the deposits. It is unnecessary to determine whether the defendants could have pleaded in set-off for money had and received. See Foote v. Cotting, 195 Mass. 55, 63. The plaintiff did not demur to the equitable defence, that the remedy at law was plain and adequate, and it is plain that the defendants could have maintained a bill for an accounting in which relief could have been given by a money decree. Newell v. Hadley, 206 Mass. 335. Bremer v. Williams, 210 Mass. 256. The defendants therefore can avail themselves of this defence, under which a double amercement is averted, with full satisfaction of the plaintiff’s contractual demands. We have examined all of the alleged errors, and, finding no grounds for reversal, the exceptions of each party should be overruled. So ordered.