## Facts

- Prestige Imports, Inc. operated an automobile dealership and financed vehicle purchases through a revolving floor-plan credit arrangement with South Shore Bank (SSB).
- Prestige employed Wajahat Malick as comptroller; his responsibilities included handling deposits and payments related to the floor-plan financing.
- Between February and October 1990, Malick exchanged nine Prestige checks (payable to SSB and properly cosigned) for SSB treasurer’s checks payable to South Weymouth Savings Bank (South Weymouth).
- Each treasurer’s check listed Prestige on a “remitter”/“purchased by” line.
- Malick delivered the treasurer’s checks to South Weymouth and directed that they be deposited into his personal account; proceeds were used at least in part to repay Malick’s personal debts to South Weymouth.
- The nine treasurer’s checks totaled $432,895 and were part of a broader embezzlement by Malick exceeding $1.5 million.
- Prestige and its owners sued, alleging South Weymouth was negligent in accepting the checks for deposit and failing to investigate given Prestige’s appearance as remitter.

## Issues

1. Whether a bank owes a common-law or UCC-based duty to a noncustomer remitter to question or refuse deposit instructions for treasurer’s checks payable to the bank and regular on their face.
2. Whether naming a corporation as “remitter”/“purchased by” on a treasurer’s check gives the remitter enforceable rights against the payee bank sufficient to support liability for accepting the check for deposit to an individual’s account.

## Decision

- The Massachusetts Appeals Court affirmed summary judgment for South Weymouth.
- Prestige’s designation as remitter did not confer an ownership interest or enforceable rights in the treasurer’s checks against South Weymouth.
- South Weymouth owed no duty to investigate, contact Prestige, or disregard Malick’s deposit instructions where the treasurer’s checks were payable to South Weymouth and facially regular.
- Prestige’s negligence-based theory failed as a matter of law absent a duty running from South Weymouth to Prestige under these circumstances.

## Legal Principles

- A treasurer’s (cashier’s) check is a bank draft drawn by the issuing bank on itself; the issuing bank’s obligation runs to the named payee under the instrument’s terms.
- The “remitter”/“purchased by” notation is descriptive of who procured the instrument and, without more, does not make the remitter a payee or create enforceable rights against the payee’s bank.
- A bank generally has no duty to protect or police the interests of a noncustomer remitter when accepting a facially regular treasurer’s check payable to the bank, absent specific indicia of irregularity or notice of wrongdoing.
- Losses from employee embezzlement are not shifted to a bank that processes checks according to their terms in ordinary banking practice without notice of the fraud.

## Conclusion

The court held that a corporation listed only as remitter on a treasurer’s check cannot impose negligence liability on the payee bank for following an individual depositor’s instructions when the check is regular on its face and the bank has no relationship with the remitter; summary judgment for the bank was proper.


Prestige Imports, Inc. v. S. Weymouth Sav. Bank, 75 Mass. App. Ct. 29, 916 N.E.2d 1015 (Mass. App. Ct. 2009)