Prestige Imports, Inc. v. South Weymouth Savings Bank

Prestige Imports, Inc. (plaintiff), an automobile dealer, had a financing arrangement with South Shore Bank (SSB) pursuant to which SSB would advance funds for the purchase of automobiles. Prestige paid SSB the balance due once an automobile was sold, plus interest. Wajahat Malick worked for Prestige as its comptroller, which duties included depositing checks at SSB pursuant to the financing arrangement. On nine separate occasions, however, Malick exchanged Prestige checks for SSB cashier’s checks, which Malick then presented to South Weymouth Savings Bank (defendant) with instructions to deposit them into his personal account. Each Prestige check that Malick used in his scheme was signed by Prestige’s owner and made out to SSB. The remitter line on the face of each SSB cashier’s check stated that the check had been “purchased by” Prestige. Prestige brought suit against South Weymouth, alleging that it was negligent in accepting the SSB cashier’s checks and in failing to investigate Malick’s transactions. Prestige asserted that the appearance of its name on the remitter line put South Weymouth on notice of Prestige’s claims to the SSB cashier’s checks or, at least, imposed on South Weymouth an obligation to inquire of Prestige before following Malick’s instructions regarding disposition of the proceeds. The lower court dismissed Prestige’s claims, and Prestige appealed.