dissenting.
After reviewing the evidence, the majority notes that they “are inclined to the view *435that the Bank had constructive notice that something was wrong and had not proven by a preponderance of the evidence that it was entitled to the protected status of a bona fide purchaser of the Treasury Bills.” The majority then correctly rules that the district court “wrongfully placed upon Gruss the burden of proving that the Bank was not a bona fide purchaser . . ..” The majority also correctly rules that the district court erred in not measuring Kane’s conduct as an agent for Gray according to the “stricter requirement [of UCC § 8-318] that he observe reasonable commercial standards in taking the Treasury Bills from Gray.”
When the foregoing comment and rulings are considered in juxtaposition, I am at a loss to understand why the majority hesitates to hold that the record required findings that neither the Bank nor Kane acted in good faith. Applying an erroneous burden of proof (by placing the burden on Gruss rather than on the Bank and Kane), the district court concluded that the defendants had acted in good faith. In my opinion, the trial judge was clearly erroneous as to both his findings and conclusions. I believe he unfortunately disregarded a virtually uncontested evidentiary record revealing a transaction that was shockingly irregular.
The facts which relate to the question of good faith on the part of the Bank are as follows. To qualify as a bona fide purchaser, the Bank had to have acted in “good faith” when it redeemed the Treasury Bills and credited a portion of the proceeds of redemption to Gray’s account in satisfaction of an overdue loan made by the Bank. Yet the Bank (1) had actual knowledge that Gray, the purported owner of the Bills, had opened an account at the Bank under an alias, had no residence or business address anywhere near the Bank, was a “big bettor” at the racetrack, was purportedly an FBI “stool pigeon,” had accepted and not repaid an unauthorized loan from an officer of the Bank charged with embezzlement, and had produced no proof of ownership whatever with respect to the Bills; (2) had learned that the FBI suspected that Gray had committed a federal crime; (3) had actual knowledge that Kane had been discharged as an officer of the Bank two months previously for embezzling in excess of $200,000 in bank funds, was under investigation by the FBI for such embezzlement, had personally made an unauthorized bank loan to Gray, and had previously embezzled in excess of $100,000 from the bank account maintained by Gray; (4) knew that the Treasury Bills were a few weeks overdue; and (5) made no inquiry of Gray or Kane regarding proof of ownership of the Bills and did not ask either of them to give any receipt for the Bills. Neither Gray nor Kane offered to give such a receipt.
The facts which relate to the question of good faith on the part of Kane are as follows. To prevail, Kane had to have acted in “good faith” and in accordance with “reasonable commercial standards.” Yet he (1) knew that Gray (a) operated under aliases, (b) was in default to the Bank for money obtained under an unauthorized loan, (c) maintained an account with the Bank under an alias, and (d) had no business or residence address anywhere near the Bank; (2) accepted the Treasury Bills for the express purpose of using a portion of the proceeds of their redemption to satisfy the loan which he had personally made from bank funds to Gray while an officer of the Bank and after his embezzlement of bank funds; (3) made no inquiry whatsoever into Gray’s ownership of the Bills; and (4) neither offered nor was asked to give a receipt for the Bills when they were delivered to him away from the Bank premises at an airport in another city.
These facts admit to but one conclusion: Neither the Bank nor-Kane acted in good faith. The unusual and irregular circumstances surrounding the transaction plainly indicate that the defendants had at least constructive notice that Gray’s purported ownership of the Treasury Bills was “tainted.” Therefore their acts were not done in good faith as required by the Commercial Code.
*436I would reverse and direct the district court to enter judgment for the plaintiff in the appropriate amount.