(144 N.E.) the directors propose to make a charge to general conclusion, will be presumed to have members who use such facilities, in addition been so drawn by him, and, if they are suffito the annual dues paid, which will be sufficient to sustain his final conclusion, judgment cient in the aggregate to cover the cost to will be rendered accordingly, under G. L. c. the corporation of their maintenance. This 231, § 56, where his report is the only evidence action, the plaintiff's contend, would be in violation of their rights. The agreed facts show that the annual cost to the corporation for the past four years for the maintenance of these facilities has averaged over $17,000, and that the average number of members using them is not over 350 each year. The power given to the directors under article V, § 4, to "adopt or amend rules and regulations for the government and proper business conduct of the chamber" makes it plain that they may regulate the terms and conditions upon which the trading facilities may be used by members and may fix a reasonable charge therefor. St. Louis v. Western Union Telegraph Co., 149 U. S. 465, 469, 13 Sup. Ct. 990, 37 L. Ed. 810. The payment of such a charge by the users to cover the cost of maintenance, instead of being unjust to any member would seem to be fair and equitable. As the agreed facts fail to disclose any ground for equitable relief, the entry must be: Bill dismissed with costs. GROW v. PRUDENTIAL TRUST CO. (Supreme Judicial Court of Massachusetts. Suffolk. May 26, 1924.) 1. Banks and banking 315(3)-Trust company bound to know signature of depositors, and liable for money paid on forged check. A trust company is bound to know signature of depositors, and payment of forged check over counter or through clearing house cannot be charged against depositor, if he is wholly free from neglect which contributed to fraud. 2. Banks and banking 315(3)-Burden on trust company to show negligence of depositor, charged with money paid on forged check. In action by depositor to recover money withdrawn by forged check and improperly charged to plaintiff, burden of proof was on defendant to show plaintiff was guilty of such negligence as to preclude recovery. 3. Reference 99(6)-Auditor's report prima facie evidence, warranting judgment. Auditor's report that defendant trust company paid plaintiff's money on forged check was prima facie evidence of liability to plaintiff, on which judgment could be entered in accordance with his conclusion, under G. L. c. 231, § 56. 4. Reference 99(2)—Inferences of fact, reasonably drawn from evidence, presumed to have been drawn by auditor. offered. 5. Banks and banking 315(3)-Inference that charges against plaintiff's account were forged checks held warranted. Facts found by auditor held to warrant inference that charges by trust company against depositor's account were checks to which depositor's name was forged by an employé, though checks had disappeared. 6. Principal and agent 181-Knowledge of employee of his own forgery not imputed to depositor. Knowledge of depositor's employee of his own forgery of checks cannot be imputed to depositor. 7. Banks and banking 315(3)-Whether depositor negligent in not sooner discovering forgeries held question of fact. Whether depositor was negligent in not sooner discovering forgery of checks by bookkeeper held question of fact. Report from Superior Court, Suffolk County; Marcus Morton, Judge. Action of contract by Louis Grow, doing business under the name of United Motors of New England, against the Prudential Trust Company, to recover deposits withdrawn by forged checks. Verdict for plaintiff on report. Judgment for plaintiff on verdict. J. C. Johnston, of Boston, for plaintiff. J. E. Hannigan, of Boston, for defendant. BRALEY, J. The only evidence before the jury was an auditor's report, in which he finds that the defendant, which held funds of the plaintiff on deposit, paid out of those funds $13,410 on checks to which the plaintiff's signature had been forged by one Joseph F. Minon. The judge, subject to the exceptions of the defendant, ordered a verdict for the plaintiff, and at the request of the parties "reported the case to the full court for determination." [1, 2] It is well settled that the defendant was bound to know the signature of its depositors, and payment of a forged check, either over the counter or through a clearing house, could not be charged against the plaintiff, if he was wholly free from neglect or default in connection with the management or supervision of his business, which contributed to the fraud practiced upon the defendant. Greenfield Savings Bank v. Stowell, 123 Mass. 196, 25 Am. Rep. 67; Mackintosh v. Eliot National Bank, 123 Mass. 393; Murphy v. Metropolitan National Bank, Inferences of fact, which could reasonably 191 Mass. 159, 162, 163, 77 N. E. 693, 114 be drawn from evidence in favor of auditor's Am. St. Rep. 595; Jordan, Marsh Co. v. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes plaintiff. National Shawmut Bank, 201 Mass. 397, 405, | next few months. The Tileston-Livermore 87 N. E. 740, 22 L. R. A. (N. S.) 250; Welsh Company carried an account with the Nav. German-American Bank, 73 N. Y. 424, 29 tional Grand Bank of Marblehead, which Am. Rep. 175; Seaboard National Bank v. cleared its checks through the Merchants' Bank of America, 193 N. Y. 26, 85 N. E. 829, National Bank of Boston. The Tileston-Liv22 L. R. A. (N. S.) 499; Armstrong v. Pom-ermore Company had no dealings with the eroy National Bank, 46 Ohio St. 512, 22 N. E. 866, L. R. A. 625, 15 Am. St. Rep. 655. See Dedham National Bank v. Everett National Bank, 177 Mass. 392, 395, 59 N. E. 62, 83 Am. St. Rep. 286. And the burden of proof was on the defendant who offered no evidence, to show that the plaintiff was guilty of such negligence as to preclude recovery. Murphy v. Metropolitan National Bank, supra. The reorganization of the bookkeeping system and the opening of a new set of books by Minon did not require all his time. While conducting this work he had access to, and necessarily used not only the account books, but the check books, pass books, and checks of the plaintiff showing his financial dealings with the defendant. Minon as the plaintiff's authorized agent, with the plaintiff's full knowledge and consent, received from the defendant the monthly statements of its account with the plaintiff and the checks returned by it to the plaintiff. [3, 4] The auditor's report was prima facie evidence, on which judgment could be entered in accordance with his conclusion. G. L. c. 231, § 56. It is true that where subordinate facts and findings are reported, a On one occasion a woman, bookkeeper of jury may draw inferences of fact different the plaintiff, observed Minon tearing a from the inferences drawn by the auditor. sheet of three checks from the back of the and return a verdict different from the result plaintiff's current check book, whereupreached by him. But the case at bar is on Minon volunteered the information that submitted to us at the request of the parties he was taking them to use as samples in on the question whether the auditor's report ordering a new check book. The plaintiff alone requested a verdict for the plaintiff. had constant knowledge of all the details of Inferences of fact which could reasonably his business, went to the store every day, be drawn from the evidence in favor of his and hired all the employees, but knew nothgeneral conclusion will be presumed to have ing about bookkeeping, and did not personalbeen so drawn by him, and, if they are suf-ly compare the bank statements. returned ficient to sustain his final conclusion, judg- checks, or check stubs with each other or ment will be rendered accordingly. The with the account books. He intrusted this court under such circumstances will not work to Minon, in whom he believed and reverse his findings, unless the facts found had explicit confidence and on whom he reby him require it as matter of law. Peru lied. The plaintiff's only employee other Steel & Iron Co. v. Whipple File & Steel than Minon during the time in question, who Manuf. Co., 109 Mass. 464, 466. had access to the check books and account The facts found and stated in the report books was a bookkeeper, who had charge are substantially as follows: The plaintiff for many years had been engaged in the business of buying and selling second hand automobiles under the name of the United Motors of New England, with a place of business in Boston. He was a man of little education, but with much executive and business ability, and his business increased rapidly. In 1919 he desired to reorganize his bookkeeping system upon a scientific basis and decided to employ an accountant. He made inquiry of a reputable automobile house in Boston, long established and of high standing, who recommended and introduced one Joseph F. Minon, and the plaintiff employed him to make his income tax report in 1919, to audit his books, and to devise and inaugurate a bookkeeping system, and "look after the plaintiff's books every week or two for one year." Minon at that time was treasurer, manager and holder of all but 2 shares of the capital stock of the Tileston-Livermore Company, dealing in paper, the capital stock of which he had recently purchased under an agreement requiring substantial payments of cash by him to Livermore within the of and kept the plaintiff's books under Minon's supervision. Minon undertook such comparison between the check stubs and the checks with the assistance of the bookkeeper. He read the checks and the figures, and she checked them upon the stubs. The plaintiff endeavored to keep in close touch with his daily balance by taking the figures Minon gave him as the balance at the end of each month and carrying them forward. On or about February 12, 1920, the defendant notified the plaintiff's bookkeeper that plaintiff's account was overdrawn. The bookkeeper notified the plaintiff, and he went personally to the defendant, demanded and received his checks which had been paid during the portion of that month which had then expired. Among these checks were two checks aggregating to $2,625, on which the plaintiff's name had been forged, which had been deposited to the credit of TilestonLivermore Company in the National Grand Bank and collected from the defendant through the Merchants' National Bank of Boston. The defendant gave the plaintiff credit for these checks. It returned them through the Merchants' National Bank to (144 N.E.) the National Grand Bank, and in return re- | stance a red ink entry of an overdraft blackceived credit therefor, and the National ened so as to indicate an apparent balance." Grand Bank delivered them to Minon, and the next morning the amount was repaid by the Tileston-Livermore Company. The treasurer of the defendant, who qualified as an expert, testified that in his opinion the body of each check and the indorsement of the payee "were in Minon's handwriting, and [the auditor stated] I so find." $13,410 00 The plaintiff did not call the defendant's attention to any of these charges or to the absence of vouchers therefor until the accountant's examination in February, 1920. He had no personal knowledge thereof until that time, although a detailed statement of the account between the plaintiff and defendant, showing checks, deposits and daily balance during each month in question, was delivered by the defendant to Minon as plaintiff's agent early the following month, and each statement bore at the end of each sheet the following words: "Please examine this account at once and report any errors thereon. If not reported on within ten days we will take it for granted that our accounts agree." The defendant having contended that the amount for which the plaintiff sought recovery might have been checks signed in blank, or otherwise, and misused by an employee, and that in the absence of the checks themselves it was mere speculation whether the charges were for forged checks, the auditor made this additional finding: "The larger part of plaintiff's checks were drawn upon a business check book in the usual form, each page whereof contained three checks and their stubs. "The plaintiff also carried a pocket check book with one check on each leaf, and among his emwhom he sometimes employed to buy cars on ployees was a sales manager, Alfred Adolf, the road, and to whom for that purpose he gave another small check book containing checks signed by plaintiff but not filled in. Plaintiff never took a receipt for any such checks, but both plaintiff and Adolf testified that in each such instance Adolf accounted for all used checks, and returned all unused checks, and that they were destroyed. Plaintiff also testified, that he made a record of cars purchased, and of checks given Adolf in a pocket ledger book more than one of which books he might have had during the period in question, but was unable to produce any of the pocket check books, or pocket ledger books, for which, however, he testified he had searched thoroughly. A "The plaintiff introduced twenty returned checks from the small check book which he testified was all he could find therefrom. memorandum of each of these was inserted on the stub of a larger book." [5] The auditor could draw inferences of fact shown by his findings, that the charges by the defendant against the plaintiff's account in question, were checks to which the plaintiff's name was forged by Joseph F. Minon, and that Minon received the checks which he had forged after they had been paid and returned by the defendant to Minon as the plaintiff's agent, and destroyed them and concealed the fact of the drawing, paying, return and destruction from the plaintiff, and that the plaintiff was not guilty of negligence in not discovering the forgeries before he did. [6] The knowledge of Minon of his forgeries cannot be imputed to the plaintiff. Indian Head National Bank v. Clark, 166 Mass. 27, 31, 43 N. E. 912; Shepard & Morse Lumber Co. v. Eldridge, 171 Mass. 516, 530, 531, 51 N. E. 9, 41 L. R. A. 617, 68 Am. St. Rep. 446. Before Minon's employment, the plaintiff personally received from the defendant the monthly statements of account. After Minon's employment ceased, such statements were received, sometimes by the plaintiff in person, and sometimes by one of his employees. The plaintiff had vouchers for all other charges during that period. and there were no entries on the plaintiff's check books, or account books, relating to the nine charges; and, except as to these nine charges, [7] It was a question of fact whether the the plaintiff's and the defendant's books mistake on the return of the plaintiff's debalanced with each other. Nine blank checks posit book with the canceled checks would were missing from the end of the plaintiff's have been discovered but for the negligence large check book. The plaintiff's monthly of the plaintiff or his agents, or the fraudstatements for October, November. and De- ulent conduct of Minon in regard to acts cember, 1919, and January, 1920, showed within the scope of his employment, and figures written thereon giving a false im- whether the examinations which were made pression as to a balance, "and in one in- by the bookkeeper other than Minon were such as should have led to a discovery of the forgeries, and thus effect the plaintiff with notice of it. Dana v. National Bank of the Republic, 132 Mass. 156, 158; JordanMarsh Co. v. Shawmut National Bank, 201 Mass. 397, 411, 87 N. E. 740, 22 L. R. A. (N. S.) 250. The auditor was not bound as matter of law to find affirmatively that the plaintiff was negligent, and his general finding is "that the plaintiff was not guilty of negligence in not discovering the forgeries be fore he did." We perceive nothing in the report to impeach this conclusion, or which contradicts his special findings, and there was nothing to submit to the jury. Peru Steel & Iron Co. v. Whipple File & Steel Manuf. Co., 109 Mass. 464, 467; Dyer v. Swift, 154 Mass. 159, 162, 28 N. E. 8; Connolly v. Sullivan, 173 Mass. 1, 53 N. E. 143; Symonds v. Riley, 188 Mass. 470, 472, 74 N. E. 926; Bovarnick v. Davis, 235 Mass. 195, 198, 126 N. E. 380. The verdict for the plaintiff was ordered rightly, and the entry must be: Judgment for the plaintiff on the ver dict. by fire because of an agreement between ten- Liability and damages of indemnitee, as G. L. c. 214, § 3 (3), authorizing suit in equity where three or more parties have distinct rights or interests, is designed to meet case where judgment between two parties would leave a controverted claim between one or other of them with third person not bound by judgment. Appeal from Superior Court, Suffolk County; John D. McLaughlin, Judge. Suit in equity by the New York Central Railroad Company to restrain William Culkeen & Sons Company and others from further prosecuting pending action at law against plaintiff. Decree for defendants, and NEW YORK CENT. R. Co. v. WM. CUL- plaintiff appeals. Affirmed. policy. W. L. Parsons, of Boston, for plaintiff. R. Homans, of Boston, and F. Adams, of Cambridge, for defendant National Dock & Storage Warehouse Co. M. L. Brown, of Boston, for defendant Wm. Culkeen & Sons Co. RUGG, C. J. This is a suit in equity wherein the plaintiff seeks to restrain the defendant William Culkeen & Sons Company (hereinafter called Culkeen) from further prosecuting a pending action at law against the plaintiff. It is alleged in the bill that the plaintiff has been sued by Culkeen for causing loss by fire of Culkeen's personal property situated in a building let to Culkeen by the National Dock & Storage Warehouse Company (hereafter called the Warehouse Company), who is joined as a defendant. The declaration in the action of Culkeen against the plaintiff contains two counts, one basing claim for loss under G. L. c. 160, § 234, on fire communicated from the plaintiff's locomotive engine, and the oth er on the negligence of the plaintiff in plac4. Injunction 26(3)—Railroad held not ening a car on fire on a siding adjacent to the titled to restrain suit by tenant of warehouse building where was stored personal propercompany by reason of its contract with ware-ty of Culkeen, and thus causing it to burn. house company and agreement of tenant with latter. A railroad, indemnified by warehouse company against liability for communication of fire on premises while operating trains on private tracks, is not entitled to restrain an action by a tenant of warehouse against it for damage The bill avers that the plaintiff is informed and believes that Culkeen has evidence in support of the allegations of each count in its declaration. The facts alleged in the bill as foundation for equitable relief are that the property thus damaged by fire was in a For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes (144 N.E.) shed occupied by Culkeen under a lease from | plaintiff will bring action against the Warethe Warehouse Company which contained a house Company on the said quoted covenant, covenant "that all merchandise furniture and and that the plaintiff believes that, on its property of every kind which may be on recovery against the Warehouse Company on the premises during the continuance of this said covenant, the Warehouse Company will lease shall be at his [Culkeen's] sole risk and bring action against Culkeen for reimbursehazard and that if the whole or any part ment for such judgment under the covenant thereof shall be destroyed or damaged by in its lease to Culkeen and that the final retire no part of said loss or dam-sult of permitting Culkeen to proceed with age shall be charged to or borne by the Les- its action against the plaintiff will be three sor [Warehouse Company] in any case what- actions in which no one of the parties inever"; that the side track adjacent to the volved in the controversy will be benefitted shed thus leased to Culkeen by the Ware- but all will be put to needless trouble and house Company formed a part of a somewhat expense. elaborate system of side tracks belonging to the Warehouse Company and serving premises occupied by it and its tenants, including Culkeen; that the plaintiff operates cars and engines over this system of side tracks under the provisions of a sealed instrument executed by the Warehouse Company under the description "grantor," wherein is a recital that it has requested the plaintiff, therein named "the Railroad Company," to operate the system of side tracks over its land, and wherein among others are these cove nants: Each defendant demurred on the ground that the facts set forth in the bill do not entitle the plaintiff to relief in equity. The demurrers were sustained and a final decree entered dismissing the bill. The plaintiff's appeal requires determination of the questions of law thus raised. [1, 2] The covenant by the Warehouse Company to indemnify the plaintiff is broad enough to include damages which may be recovered under either or both counts in the declaration of Culkeen against the plaintiff. The operation of cars upon the side track system of the Warehouse Company by the plaintiff was no part of its duty as a common carrier. In undertaking that service un "The grantor further covenants that it will indemnify and save harmless the Railroad Company for and from any and all claims, suits, ex-der its contract with the Warehouse Company, penses and losses, which it may suffer or be subject to, arising from injury or damage to any property or injury to or death of any persons, caused wholly or in part by or in any way referable to the movement or operation for the grantor within, upon or across any public or private way or traveled place of any engine, car or train on the said side tracks, or arising from derailments of rolling stock in the operation of said side tracks, excepting only such derailments as are caused solely by the negligence of the Railroad Company, its agents or servants. The grantor further covenants that the grantor will assume all responsiblility for and will save harmless the Railroad Company and the Boston & Albany Railroad Company and its lessors, from any claim or expense arising out of any damage to any property, real or personal, upon said side tracks or said land of said grantor, or upon any adjacent land owned or occupied by said grantor or its lessees or licensees, other than the rolling stock of any railroad company or freight or merchandise therein not destined for or shipped by the grantor or its lessees or licensees, caused by fire, whether communicated directly or indirectly by or from locomotive engines on the road now operated by the Railroad Company or otherwise." it was acting in a private capacity. The covenant of exoneration of liability from fire is absolute and unequivocal in terms. While it does not in express words include communication of fire by negligence of the plaintiff or its servants, by fair and necessary implication that kind of indemnity is within the scope of the covenant. There is no absolute liability on the part of a railroad for the communication of fire except from its locomotives. That liability is created by statute and has no relation to negligence. New England Box Co. v. New York Central & Hudson River Railroad, 210 Mass. 465, 97 N. E. 140; Duggan v. Bay State Street Railway, 230 Mass. 370, 382, 119 N. E. 757, L R. A. 1918, 680. The covenant in the case at bar includes damage by fire directly or indirectly communicated by locomotive engines "or otherwise." No fire communicated otherwise than from locomotives engines, for which the plaintiff would be liable, can readily be conceived except such as might arise from its negligence. Moreover, the express exemption in the preceding covenant of indemnity by the Warehouse Company in the It further is alleged in the bill that the same instrument against damages arising plaintiff has vouched the Warehouse Compa- from the plaintiff's negligence has a strong ny in under its covenant just quoted to de- tendency to show that in the following covfend the Culkeen action against the plain- enants indemnity against damages arising tiff, but that the Warehouse Company has from negligence was included. Bates v. Old refused to do so and denied any obligation | Colony Railroad, 147 Mass. 255, 17 N. E. 633; in that regard. The ground for equitable relief is alleged to be that, if Culkeen in its action against the plaintiff shall recover judgment, the 144 N.E.-7 Hosmer v. Old Colony Railroad, 156 Mass. 506, 31 N. E. 652; Boston & Maine Railroad v. T. Stuart & Son Co., 236 Mass. 98, 104, 127 N. E. 532. |