The complaint alleges that the plaintiff is a foreign corporation and the defendant s trust company organized under the laws of the State of Hew York and doing "business in the city of Hew York ; that prior to February, 1906, one Van Voorhis was the treasurer of the plaintiff corporation; that prior to the 23cl of February, 1906, an account was opened by the plaintiff corporation with the Central Trust Company of Hew York under an arrangement by which the checks drawn upon such account were to be signed by Van Voorhis as treasurer of the plaintiff corporation ; that between the 21st of April, 1906, and the 15th of June, 1906, Van Voorhis drew three checks upon the deposit account of the plaintiff corporation with the Central Trust Company, payable to the order of “ W. M. Greenwood or C. W. Van Voorhis,” signed “ Havana Central Bail-road Company, C. W. Van Voorhis, Treasurer,” aggregating over $59,000 ; that at the same time Van Voorhis, the treashrer of the plaintiff corporation, had an individual deposit account with the defendant upon which he drew "checks signed by himself individually; that Van Voorhis indorsed these three checks in blank and deposited them with the defendant trust company to the credit of his individual account and the checks were presented to the Central Trust Company by the defendant and duly paid and the. proceeds thereof received by the defendant; that the Central Trust Company charged these checks against the plaintiff’s deposit account; that subsequently the defendant permitted the said Van Voorhis to. draw upon his said account to which these checks were credited until the 7th of July, 1906, rvhen the account was closed by the presentation to and payment by the defendant to the said Van Voorhis of cheeks to the full amount appearing to his credit, which included the amount that the defendant had received from the Central Trust Company on account of these checks. The complaint then alleges that the said Van Voorhis deposited the said checks and each of them in his, bank account with the defendant and used the said checks and the proceeds thereof for his own uses and purposes without any right or authority so to do, and that the said checks and each of them were without any consideration whatever moving from said Van Voorhis to the plaintiff herein ;. that said Van Voorhis had no right or authority to draw upon the said *315account of the plaintiff or to use its funds except for the purposes of plaintiff’s business, and that plaintiff was not at any of the times mentioned indebted to Van Voorhis in any sum whatever; that notice or inquiry by the defendant to and of the plaintiff would have revealed and disclosed these facts, and would have further revealed that said Van Voorhis, by drawing the said checks and each of them and depositing them in his individual account with the defendant, was wrongfully misappropriating and converting the money of the plaintiff to’ his own use, and that he was guilty of such misappropriation and conversion, both in offering said checks for deposit with the defendant and in thereafter drawing from his aforesaid account the proceeds of the said checks and appropriating the proceeds to his own use ; that the defendant did hot at any time make any inquiry of the plaintiff or any one else concerning the said checks or the transactions had therewith, and did not at any time give notice to the plaintiff concerning the said cheeks or their offer for deposit with the defendant by Van Voorhis, or any of the transactions relating in any wise thereto or had therewith.
Defendant by the demurrer concedes that Van Voorhis, the plaintiff’s treasurer, having power to sign checks upon plaintiff’s deposit account with its bank, signed checks in the name of the plaintiff to his own order without authority; deposited these checks with the defendant to his own individual account; that the defendant received these checks for the defaulting treasurer’s individual account; collected the proceeds thereof and placed the same to the defaulting treasurer’s individual credit, .and subsequently paid out on Van Voorhis’ checks the amount of such deposits. It has been for many years established in this State that if a person holding money or property in a fiduciary capacity pays or transfers such money or property to a third party with notice of his relation to it for a purpose foreign to the trust, such third party cannot hold such money or property as against the true owner; and that in the case of money an action for money had and received will lie in favor of the true owner against the person who has received it with notice of its real ownership. If the defendant had knowledge that by drawing these checks Van Voorhis was misappropriating the corporation’s money" without its consent, and that the use to which Van Voorhis was putting the money was not the corporate use, an *316action would lie. We, therefore, come down to the question as to whether this defendant received- this money with notice of the fact that it was being misapplied Or misappropriated by Van Voorhis to liis own use. Van Voorhis took to the defendant for deposit to his individual credit checks drawn in the name of the. plaintiff by Van Voorhis as its treasurer to Van Voorhis’ own order and offered these checks to the defendant for deposit to his, Van Voorhis’, individual account. On -its face this is clearly a transaction by which Van Voorhis was abstracting money from the treasury of the company to be credited to his individual account with the defendant. Certainly any bank officer.looking at this .check would see that Van Voorhis had drawn or was attempting to .draw from the plaintiff’s deposit account the snm of money there named to he paid to his own order. A person with a claim against the plaintiff corporation receiving such si cheek would necessarily have notice that the corporation was paying its debt with its own check. A person having an individual claim against Van Voorhis and receiving" in payment such a cheek to pay Van Voorhis’ individual debt would clearly have notice that Van Voorhis was using the funds of the plaintiff to pay an individual debt for which the plaintiff was not responsible. -In this case Van Voorhis went to the bank, presented three cheeks drawn by the plaintiff, acting through himself as treasurer, payable to his own order, and indorsing them deposited them with the defendant, which defendant accepted and received the proceeds. By that transaction the defendant became the owner of the check and" its proceeds and became personally indebted to Van Voorhis individually for the amount of the checks. The effect of this transaction, of which the defendant must be chargeable with notice, was that the plaintiff’s money had been taken from its possession and control and transferred to the defendant corporation, who in return for the .payment of that money to it had become indebted to Van Voorhis individually for the amount that it received. This, it. seems to me placed'the defendant in the same condition as if Van Voorhis had" actually used the check or its proceeds to pay all.individual indebtedness. to the defendant with notice to the defendant of the actual ownership of the money or check used for that purpose. ■ When this defendant received from Van Voorhis these checks and gave Van Voorhis credit for them it became the owner of the checks or *317their proceéds. When or under what circumstances it discharged its indebtedness to Yan Yoorhis which arose upon the receipt of these checks on deposit to Yan Yoorhis’ personal account would seem to be immaterial. What the defendant did was to accept the checks on deposit and thereby became indebted to Yan Yoorhis in their amount. Clearly if the bank had actual notice of the fact that Yan Yoorhis was misappropriating, the plaintiff’s money and that the transaction was thus fraudulent and unauthorized as to plaintiff, the defendant would have been liable to the plaintiff for the amount of money that it had received. ' And we get back, therefore, to the question as to whether the transaction, as it stood, was notice to the defendant that Yan Yoorhis was misappropriating the plaintiff’s money when he drew in the name of the. plaintiff the checks upon the plaintiff’s deposit account payable to his own order. The delivery of these checks to the defendant gave it notice of the fact that the checks were the checks of the plaintiff corporation; that they were drawn by Yan Yoorhis as its treasurer; that they were drawn to the order of Yan Yoorhis individually; and that Yan Yoorhis requested the bank to collect those checks and to become indebted to him individually for their amount. It is quite clear that the defendant could not shut its eyes to the transaction and because of the great number of checks presented or the great mass of its business or the number of its depositors refuse to see what any one receiving a check and noticing its form must see. A bank or an individual is charged with notice of any fact which appears upon the face of a transaction and which a person exercising ordinary intelligence and having ordinary knowledge of financial affairs would appreciate and understand. It is the conceded law of this State that’ a check drawn upon a trust fund by a trustee or á check drawn to the order of a trustee is notice to a person taking it of the fact that the fund upon which the check is drawn or the check itself is the property of the trust and not the personal property of the individual trustee. (Robinson v. Chemical Nat. Bank, 86 N. Y. 404; Gerard v. McCormick, 130 id. 261; Ward v. City Trust Co., .192 id. 61.)
In Gerard v. McCormick (supra) the plaintiffs owned buildings in Wall street known as the “ Glass Buildings.” One Boswell was the agent having authority to receive and deposit the rent for the *318buildings and to draw on that account, sums due for repairs, insurance, taxes, interest on incumbrances, his own commissions, and for the usual expenses of such buildings, and then to divide by checks on the account the remainder-among the plaintiffs according to their respective interests. The checks were signed by “ "William Boswell, Agt. Glass Buildings.” Boswell used a check thus drawn to pay an individual indebtedness due to the defendant. Upon plaintiffs’ discovering this misappropriation an action was commenced to recover the amount of the check from the defendant and a judgment in plaintiffs’ favor was sustained by the Court of Appeals. In deciding that case the court said : “ The evidence was abundant to authorize the jury to find that the amount standing to the credit of ‘ William Boswell, Agt. Glass Buildings,’ in the Corn Exchange Bank belonged to the plaintiffs, and that by means of the check the sum represented by it was, by the fraud of Boswell, withdrawn from the account and paid to ■ and received by the defendant.” The fact that the account upon which the checks in this action were drawn belonged to the plaintiff, that Van Voorliis by drawing the checks and depositing them to his owii credit misappropriated the plaintiff’s money, and that the checks were drawn without authority are alleged in tlife complaint and admitted by the answer. So that we have the same facts presented in both cases., And the court then in the Gerard Case {supra) continued : “ The remaining question is whether the evidence authorized "the court to submit to the jury the question of good faith, or was sufficient to authorize the jury to find that the defendant had notice that the check was drawn against an account not owned by. Boswell.” And after calling attention to the fact that there was nothing in the pase which tends to raise any question about defendant’s personal good faith except that lie received a check from Boswell in payment of his individual debt, signed “ William Boswell, Agt. Glass Buildings” without inquiry as to the right of Boswell to so use the fund, the court said that the question presented was “ whether the form of the check was sufficient to put the defendant upon inquiry as to the authority of Boswell to use the money in payment of his debt.” And after a. re view of the authorities it was held-that the form of the signature to the check was sufficient to put the . payee on inquiry as to the right of the agent to pay his personal debt *319out of the fund and that in case a person having notice that money or property is held by another in a fiduciary capacity receives it without inquiry from the agent in satisfaction of his personal debt the sum or property so received may be recovered by the true owner unless the agent was authorized to so dispose of it. We have in the case at bar all the facts presented in the Gerard case upon which a recovery was sustained, the only difference being. that in one ease the check was received in payment of an individual debt, and in this case was received as the consideration for the defendant assuming a personal obligation to the agent individually. It is upon this latter distinction that the defendant claims that it is relieved from liability. But it seems to me that this distinction has no real bearing upon the question as to the liability of the defendant. The defendant received the check drawn by plaintiff’s treasurer on plaintiff’s bank account, payable to the plaintiff’s treasurer individually, and received the money. The receipt of this check was notice to the defendant of those facts. And thus, when this defendant received the money chargeable with notice of the fact that this money was the plaintiff’s money, concededly this defendant could not apply that money so received to the payment of a debt which Van Voorhis individually owed to the defendant so as' to relieve the defendant from liability to the plaintiff for its money that defendant had received. It must be Conceded that while that money remained on deposit to the account of the treasurer individually with the defendant the plaintiff could have maintained this action to recover the amount. It was money held by the defendant which belonged to tho plaintiff, and of which fact the defendant had notice, Was the defendant discharged from this liability because it had paid Van Voorhis’ individual checks upon it with plaintiff’s money % It would not have been justified in paying the money out to discharge the individual debts of plaintiff’s treasurer although the plaintiff’s treasurer had so ordered. It is not alleged or claimed that the money was paid for the benefit of or for the account of the plaintiff. . The allegation, which is admitted, is that this treasurer having thus placed with the defendant bank a sum of money which belonged to the plaintiff, of which fact the defendant was chargeable with knowledge, ordered the defendant to pay.it out to third persons by his individual check and for his *320own benefit. It seems to me clear that such a payment did not dis-" charge the obligation of the defendant to repay to the plaintiff its money that the defendant had received, and that, therefore, a cause of action is alleged. This wdiole subject has been extensively reviewed by the Court of Appeals in the case of Ward v. City Trust Co. (supra), and further discussion would seem quite unnecessary.
We are met in this case by an appeal to protect the financial institutions of Hew York city from the liability that will be imposed upon them by charging them with notice of the form of all checks received' on deposit. But if an exception is to be made in favor of large institutions because of the impracticability of examining all checks presented to them, it must be made by' either the Legislature or the court of last resort, as this court has merely to administer the law as it finds it.
It follows, therefore, that the judgment appealed from must be affirmed, with costs, with leave to the defendant to withdraw the demurrer within twenty days and answer on payment of costs.
Patterson, P. J., and Laugi-ilin, J., concurred; McLaughlin arid Scott, JJ., dissented.