Granite Sav. Bank, 662 N.E.2d 238, 240 (Mass. App. Ct. 1996) (quoting Wang Lab'ys, Inc. v. Bus. Incentives, Inc., 501 N.E.2d 1163, 1166 (Mass. 1986)

As discussed below, the contours of the plaintiffs' negligence claims are less clear, but it seems certain that they also require the plaintiffs to prove that the bank knew of Bleidt's fraud. See Schlichte v. Granite Sav. Bank, 40 Mass.App.Ct. 179, 181, 662 N.E.2d 238 (1996) (discussing bank's duties in negligence to depositors, and requiring actual knowledge of the breach); Lerner v. Fleet Bank, N.A., 459 F.3d 273, 287-90 (2d Cir. 2006) (discussing bank's duties in negligence to third-party non-customers under New York law, and requiring notice of the breach). Third, the plaintiffs claim that Sovereign committed conversion by taking financial instruments with notice of Bleidt's breaches of fiduciary duty.

rticipation or acquiescence in the misappropriation. See Boston Note Brokerage Co. v. Pilgrim Trust Co., supra at 227, 61 N.E.2d 113 (“A bank that is merely the drawee of a check ought not to be made liable to the payee for anything short of participation or assistance in a known or apparent misappropriation of funds”); Eastern Mut. Ins. Co. v. Atlantic Nat'l Bank, 260 Mass. 485, 488, 157 N.E. 520 (1927), quoting Newburyport v. First Nat'l Bank, 216 Mass. 304, 304–305, 103 N.E. 782 (1914) (“The law is settled that ‘[a] banker having no interest in the matter, who pays out money on deposit on the fraudulent order of the person who by the terms of the deposit had the right to draw on the account, is liable only when he is privy to the depositor's fraud’ ”); Kendall v. Fidelity Trust Co., supra at 242, 119 N.E. 861 (“there is no evidence that the defendant knew [the assistant treasurer of the trust] intended to misappropriate the funds and the defendant therefore cannot be held liable”); Schlichte v. Granite Sav. Bank, 40 Mass.App.Ct. 179, 181, 662 N.E.2d 238 (1996) (“bank's liability turns on its actual knowledge of a misappropriation of the depositor's funds”). Go–Best contends that Citizens Bank should have recognized that Goldings was engaged in the misappropriation of client funds based on his unauthorized transfer of $200,000 of his law firm's IOLTA funds in late 1999 or early 2000, many months before Go–Best wired the $5 million to Goldings's client account.

The plaintiff maintains that Go-Best Assets Ltd. allows his negligence claim to go forward, pointing out that the cases cited by the court all involve plaintiff-customers. However, those cases either involved circumstances that were not governed by the UCC, see Schlichte v. Granite Sav. Bank, 40 Mass.App.Ct. 179, 179-180, 662 N.E.2d 238 (1996) (claim that the defendant bank was negligent in supervising its employee who, after being added to a relative's joint accounts, misappropriated the funds), or were decided prior to Massachusetts adopting the UCC in 1957. See Newburyport v. First Natl. Bank of Boston, 216 Mass. 304, 103 N.E. 782 (1914) ; Eastern Mut. Ins. Co. v. Atlantic Natl. Bank of Boston, 260 Mass. 485, 157 N.E. 520 (1927).

"Massachusetts law is clear, moreover, that banks do not have a duty to depositors to make inquiry as to withdrawals by an authorized person that do not contravene an express limitation on his authority to draw on the account." Schlichte v. Granite Sav. Bank, 40 Mass. App. Ct. 179, 181 (1996). Accord Spinner v. Nutt, 417 Mass. at 556.