Kinstlinger v. Manufacturers Trust Co.

This is an appeal from an order denying defendant Public Bank’s motion to dismiss plaintiffs’ fourth cause of action for legal insufficiency. The question in the case is the scope of liability of a collecting bank to the creditors of a corporation for diverted corporate checks. The checks were drawn on another bank but deposited for collection with Public Bank by a partnership, the several partners of which were the officers and directors of the payee corporation.

Plaintiffs purchased certain sales accounts from the All State Sales Co., Inc. Fraud, which we shall accept as such from the…