## Facts

- A corporation drew three checks totaling $64,755.44 on its account at a Boston bank, payable to a supplier, to satisfy a debt for goods and services.
- Before the checks were delivered to the supplier, the drawer’s employee, while in possession of the checks, forged the supplier’s endorsement.
- The employee presented the checks to a different bank (the collecting bank), which cashed them and paid the proceeds to the employee.
- The collecting bank forwarded the checks through banking channels; the drawee/payor bank charged the drawer’s account for the full amounts and refused to recredit it.
- The checks bore restrictive endorsement language and the collecting bank’s stamp guaranteeing prior endorsements.
- The payee never received delivery of the checks.

## Issues

1. Whether the drawer may recover from the collecting bank in money had and received for proceeds paid out on forged payee endorsements where the checks were never delivered to the payee.
2. Whether the drawer may recover from the collecting bank on an account-annexed/contract theory for the same proceeds.
3. Whether the drawer may sue the collecting bank for conversion of checks negotiated on forged payee endorsements when the checks were never delivered to the payee.
4. Whether the drawer stated a negligence claim against the collecting bank for cashing checks on forged endorsements absent allegations of a duty owed to the drawer.

## Decision

- The Supreme Judicial Court of Massachusetts affirmed the order sustaining the collecting bank’s demurrer on all counts.
- The money-had-and-received count failed because the collecting bank did not hold money that, in equity and good conscience, belonged to the drawer.
- The account-annexed/contract count failed because no contract or debt was alleged running from the collecting bank to the drawer for the proceeds.
- The conversion count failed because the drawer did not establish a cognizable property interest supporting conversion against the collecting bank under the pleaded circumstances.
- The negligence count failed for lack of pleaded facts showing the collecting bank owed the drawer a duty of care in cashing the checks.

## Legal Principles

- An action for money had and received requires that the defendant possess money that, in equity and good conscience, should be paid to the plaintiff.
- A check payable to order is incomplete as to the payee until delivery; without delivery, the payee acquires no title or possessory rights in the instrument.
- A collecting bank’s warranties regarding prior endorsements ordinarily run to subsequent holders and the drawee/payor bank, not to the drawer absent special facts establishing a direct duty or undertaking.
- Each count in a declaration is evaluated independently on demurrer; allegations are not imported from one count into another unless expressly incorporated.

## Conclusion

The court held that the drawer could not proceed directly against the collecting bank for restitution, contract, conversion, or negligence based solely on the bank’s cashing of checks bearing forged payee endorsements where the checks were never delivered to the payee and the pleadings did not establish money belonging to the drawer, a contract debt, a conversion interest, or a duty of care owed to the drawer.


Stone & Webster Eng'g Corp. v. First Nat'l Bank & Tr. Co., 345 Mass. 1, 184 N.E.2d 358 (Mass. 1962)