Bowes v. First Trust & Deposit Co.

Memorandum; The decision of the referee amounts to a holding *713that, when a bank acquires knowledge that a trustee is misappropriating trust funds, which are on deposit in the bank, from that time forward the bank is charged with the burden oj; proving that all withdrawals of funds by the trustee were for legitimate purposes of the trust. No such burden rests on the bank. Although the depositor is drawing checks which the bank may surmise or suspect are for his personal benefit, it is bound to presume, in the absence of adequate notice to- the contrary, that they are properly and lawfully drawn.” (Bischof v. Yorkville Bank, 218 N. Y. 106.) The trustee in this case was educating two infant children with the trust funds. He might properly draw lump sums to be expended in piecemeal for the needs of the infants, as permitted by the trust, and the bank does not have the burden of proof, which has been cast upon it, of showing that every withdrawal was proper. Furthermore, assuming for the sake of argument, that the bank was charged with that burden, it was error not to permit the bank to bear its burden by showing memoranda of items of expenditure made by the trustee on cheek stubs and vouchers. (Civ. Prac. Act, § 37Aa.) This is especially true, since the trustee was dead, and other proof was practically impossible. In view of the fact that there is, in this record, some evidence from which a finder of the facts could find that the defendant did have knowledge of the improper use, by the trustee of one or two withdrawals, a new trial should be had. All concur. (The judgment is for plaintiffs in an action to recover certain trust funds claimed to have been negligently handled. The order denies defendant’s motion to reopen the case and amend its answer.) Present — Crosby, P. J., Cunningham, Taylor, Dowling and MeCurn, JJ.