Third National Bank v. Lange

Brent, J., delivered the opinion of the Court. _. The note, about which this case has arisen, is as follows : $1100. Baltimore, Feby. 8th, 1876. Twelve months after date we promise to pay to the order N. W. Watkins, trustee, eleven hundred dollars with interest, value received.

Flynn & Emerich.” ¹⁴³ The names of “N. W. Watkins, trustee,” and “J. Regester & Sons,” are endorsed upon it. This note was given for the purchase of property sold by N. W. Watkins, as trustee under a decree of the Circuit Court of Baltimore City, and is for one of the deferred payments, as authorized by that decree. At the time of its delivery to the trustee, it was endorsed by J. Regester & Sons as securities for the drawers, — the terms of sale requiring the deferred payments to be secured in that form. Subsequently N. W. Watkins wrote above the names of J. Regester & Sons the endorsement “ N W. Watkins, Trustee,” and applied to the Union Banking Company to buy the note, offering to sell it for 12 per cent. off.

The Banking Company not being willing to buy it, its cashier offered to sell it for Watkins, and placed it in the hands of a bill broker for that purpose. After getting into the hands of a second bill broker it was taken by him to The Third National Bank, the appellant, and offered to it for sale. The bank bought it from the broker at nine per cent, off, and the proceeds seem to have been appropriated by Watkins. The appellees claim that the bank acquired no right to the note, while it is contended for the bank that the note is embraced in the class of commercial paper, and was acquired by it in a fisual and proper way.

Without intending to decide upon the right of a national bank to purchase paper, as the question does not necessarily arise in this case, we do not think the note in question is within the class of paper known as commercial paper. Although like it in general form, the fact that it is payable to the order of Watkins, trustee, restricts its free circulation, and excepts it from some of the rules governing commercial paper. No doctrine is better settled, than that a trustee has no power to sell and dispose of trust property for his own use and at his own mere will. One who obtains it from ¹⁴⁴ him or through him with actual or constructive notice of the trust, can acquire no title, and it may be recovered by -suitable proceedings for the benefit of the cestui que trust.

If there are circumstances connected with the purchase which reasonably indicate that trust property is being dealt with, they will fix upon the purchaser notice of the trust, and if he fails to make inquiry about the title he is getting, it is his own fault and he must suffer the consequences of his own neglect. The general doctrine is stated in 1 Story’s Eq. Juris., sec. 400, where it is said: “ for whatever is sufficient to put a party upon inquiry, (that is, whatever has a reasonable certainty as to time, place, circumstances and persons,) is, in equity, held to be good notice to bind him.” A large number of authorities is referred to in the note, and it is unnecessary to allude to them more particularly. In the case of the present note, it cannot be read understanding^ without seeing