(dissenting).
I do not take issue with any proposition of law cited by the majority governing the Uniform Commercial Code. The narrow question is one of fact, namely, does the evidence support the trial court’s finding that the Greeley profit-sharing trust received a cashier’s check from Roger Pownell for $77,875 with knowledge of facts which imposed on the trust a duty to make further inquiry which would have disclosed that the check was fraudulently obtained by Pownell, giving rise to a constructive trust in Wohlrabe’s favor.
In my opinion, this is simply a matter of according the trial court appropriate deference in resolving conflicts in the testimony and in drawing inferences from circumstantial evidence. I would affirm.
Minn.Stat. 336.3-302(1) (1980) provides as follows:
(1) A holder in due course is a holder who takes the instrument
(a) for value; and
(b) in good faith; and
(c) without notice * * * 0f * * * claim to it on the part of any person.
I have no quarrel with the majority’s view that the antecedent debt of Pownell to the Greeley Trust satisfied the requirements of “value.” Our cases so hold. Nor is there any issue in this case concerning the establishment of “good faith” as that word is used in the UCC. The trial court did not mention or rely on either of these statutory criteria as grounds for imposing the constructive trust. Succinctly stated it held “The cashier’s check was received with knowledge that something was wrong and with notice that it must have been obtained by fraud.” In my opinion, there was ample evidence to support that finding.
“Notice” is defined in Minn.Stat. § 336.1-201(25)(c) (1980) as follows: “A person has ‘notice’ of a fact when * * * (c) from all the facts and circumstances known to him at the time in question he has reason to know that it exists.”
The Minnesota Code Comments discussing “noticé” as set forth in Minn.Stat. § 336.1-201(25)(c) (1980) state that notice consists among other things of “knowledge of facts from which the fact in question is inferable * * Kinyon, Minnesota Code Comments, in Minn.Stat.Ann. § 336.1-201(25), at 76 (West 1966). In discussing Minn.Stat. § 336.3-304 (1980) the Comments state:
In this and other sections in the UCC the term ‘notice’ means either that a party has actual knowledge of a fact * * * or ‘has reason to know’ of it — i. e. has actual knowledge of facts from which he can infer the probable existence of the fact in question. * * * [WJhere a pur*487chaser has knowledge of facts indicating that something is probably wrong, he can be held to have notice even though he does not investigate and determine the exact nature of the irregularity.
Kinyon, Minnesota Code Comments, in Minn.Stat.Ann. § 336-3-304, at 232 (West 1966) (emphasis in original).
This is such a case, and in my opinion, meets all the requirements for imposing a constructive trust. It should be borne in mind that the section 336.3-305 insulates a negotiable instrument from the claims of third persons only when taken by a holder in due course, that is to say, one who takes without notice.
Whether the Greeley Trust had notice within the meaning of the statute, and if so, what remedy is appropriate, depend largely on the same set of circumstances and inferences. The facts here are unlike those in Eldon’s Super Fresh Stores v. Merrill Lynch, 296 Minn. 130, 207 N.W.2d 282 (1973), where Drexler, a lawyer, converted a check drawn by a third party, payable to a brokerage firm, by purchasing stock in his own name. There the brokers had no previous knowledge which suggested in any way the possibility of wrongdoing by the attorney, and we held that the mere fact the check was drawn by a third party did not put the brokers on notice of that party’s rights.
That there is ample precedent for the trial court to exercise its equitable powers in these circumstances is clear from our prior decisions. In Fortier v. McRae, 190 Minn. 571, 252 N.W. 833 (1934) one Simons purchased a note, knowing that the assignor McRae had embezzled money from a bank and was trying to make restitution, but not knowing that the note was held in trust. The trial court found that “this together with all other facts and circumstances as disclosed by the evidence in this case were sufficient to constitute red lights ahead and to cast upon the defendant Edwin J. Simons the duty to make inquiries * * Id. at 573, 252 N.W. at 834. With respect to those findings we said:
These circumstances should have put Si-mons upon inquiry, and inquiry would have revealed the trust. The neglect to make inquiry under the circumstances was more than mere negligence. It was a lack of commercial good faith. The knowledge which he had was sufficient to prevent the acquisition of the paper by commercially honest men without further inquiry.
Id.
In support of our conclusion that the purchaser was on notice, we quoted from King Cattle Co. v. Joseph, 158 Minn. 481, 488, 198 N.W. 798, 800 (1924), where we had observed: “Men of business experience know that hard-pressed debtors turn sharp corners and are not scrupulous to distinguish between their own and the property of others entrusted to their keeping.”
In Fortier we approved a rule that it was not necessary to show that the person under investigation knew the exact fraud that was practiced “it being sufficient to show that he had notice that there was something wrong about his assignor’s acquisition of title, although he did not have notice of the particular wrong that was committed.” Fortier v. McRae, 190 Minn. 571, 252 N.W. 833, 834 (1934). Finally, we noted that knowledge of the exact truth is not necessary “but knowledge of some truth that would prevent action by those commercially honest men for whom law is made.” Id. The Fortier case turned on a finding of bad faith but the principles we there enunciated apply with equal force to the issue of notice.1
In the summer of 1974 Roger Pownell, an accountant for the Greeley Clinic and Greeley Trust, diverted to his own use $64,000 of trust funds received by him for the purchase of a note from the First National Bank of St. Paul. In September 1974, he embezzled $6,000 which was intended for the payment of Clinic taxes.
In December 1974 and again in early January 1975 Edward Lechner, acting as attorney for the Greeley account, asked Pownell *488for the $64,000 note. Pownell stalled for time and gave only evasive answers. This was the first “red light.” At that time Pownell referred to a Thorp Credit Note not a First National Bank Note, a second “red light.”
Terry Rawstern, in charge of accounting for the Greeley Clinic, discovered that the Clinic credit manager, on January 14, 1975, had found the trust safety deposit box empty, a third “red light.”
Some days before January 24, Lechner suspected embezzlement by Pownell and discussed it with a friend in the FBI office, a fourth “red light.”
On the morning of January 24, one of Rawstern’s employers, Allen Anderson, whose partner had told Rawstern the doctors were “being screwed,” told Lechner he was not satisfied with Pownell’s answers and advised Lechner to take immediate action, a fifth “red light.”
On January 24, Lechner told Pownell he had talked to an FBI friend and if Pownell did not produce the note by noon he would advise the doctors that, in his opinion, there had been an embezzlement, a sixth “red light.”
At 2:30 p. m. on January 24, Lechner received from Pownell, not the missing $64,000 note but a check for $77,785, without any explanation for the discrepancies in the kind of security or the amount of payment, the seventh and eighth'“red lights.”
So clear were these signals that Lechner, the Clinic’s attorney, was not convinced that Pownell had diverted the $70,000 and Rawstern was prompted to take the extraordinary precaution of insisting that Lech-ner immediately deliver the check to the Clinic by hand rather than by mail. On presenting the check to a doctor at the Clinic, Lechner stated “the whole thing stinks and we have to find out what really happened.”
Although appellants argue that the Clinic had a right to assume Pownell obtained the $77,875 from legitimate sources, Rawstern, their accountant, and Lechner, their lawyer, were too sophisticated and knowledgeable to rely on that assumption.
If Pownell had had assets of his own or sources of credit sufficient to cover the $70,000 embezzlement, it is hardly conceivable that he would have delayed making restitution until threatened with prosecution. Indeed had he resources of his own, it is unlikely that a professional person in his position would have misappropriated $70,-000 in the first place.
Justice Matson summarized two elements of a constructive trust in a scholarly opinion which needs little explication or expansion, Knox v. Knox, 222 Minn. 477, 481, 25 N.W.2d 225, 228 (1946):
It is an unjust-enrichment, rectifying remedy and has nothing in common with an express trust except a confusing similarity in surname or label. In order to arise, fraud, in its true sense, need not even be present. Certain courts and text writers have added to the confusion by using the word “fraud” in such an unjustifiably broad and ambiguous manner as to include all conduct which equity treats as unfair, unconscionable, and unjust. 3 Bogert, Trusts and Trustees, Part 1 (1946 Ed.) § 471. It should be noted that it is not even necessary that a fiduciary relation should exist. 25 Minn.L.Rev. 667, 689. It is not the product of the intent of the parties. The nature of a constructive trust can best be comprehended by keeping clearly in mind that it is not, in its true sense, a trust at all, but purely a creation of equity designed to provide a remedy for the prevention of unjust enrichment where a person holding property is under a duty to convey it to another to whom it justly belongs. 23 Minn.L. Rev. 706, 708; 54 Am.Jur., Trusts, §§ 218, 219; 1 Perry, Trusts and Trustees, 7 Ed. § 166. A court of equity, in decreeing a constructive trust, is bound by no unyielding formula, but is free to effect justice according to the equities peculiar to each transaction wherever a failure to perform a duty to convey would result in unjust enrichment. 3 Bogert, Trusts and Trustees, Part 1 (1946 Ed.) § 471.
*489For the reasons stated, the trial court as the trier of the facts was fully justified in finding that the cashiers check was received “with notice that it must have been obtained by fraud.” Consequently, respondent’s right to a constructive trust is not barred by section 336.3-305(1). To be a holder in due course, entitled to invoke the statute, the recipient must take “without notice * * of * * * any claim to it on the part of any person.” Minn.Stat. § 336.3-302(l)(c) (1980).
The equities weigh heavily in favor of Wohlrabe. It was the Greeley Clinic which set in motion the chain of events resulting in Pownell’s embezzlement and fraud. They gave him carte blanche authority to invest their money without any effective accounting or supervision. It was not Wohlrabe, but Greeley’s accountant and attorney who were convinced that Pownell had embezzled the $70,000 prior to the delivery of the cashiers check. More important the question was not which of two innocent victims should suffer the loss by the acceptance of the check. Greeley had already been victimized, and parted with nothing in return for receiving the check. For Greeley to retain Wohlrabe’s $77,875 without having changed its position or suffered any prejudice in reliance on it is, in my opinion, a classic case of unjust enrichment. As in Fortier, the failure to make inquiry was a “lack of commercial good faith.”
In short, it was Wohlrabe’s fraudulently obtained $77,875 which Greeley was given; that sum was directly traceable to Wohl-rabe; Greeley’s attorney and accountant knew Pownell was an embezzler by his inability to produce the two notes; and those who were acting for Greeley had only to demand that Pownell disclose the source of the restitution to determine that it was fraudulently obtained.
By reversing the trial court I respectfully suggest we unwittingly encourage standards of integrity which are unworthy of both the legal and medical professions. I would affirm.
. See also Shaffer v. Brooklyn Park Garden Apts., 311 Minn. 452, 250 N.W.2d 172 (1977).