Bankruptcy: Bank Which in Good Faith and Without Notice Honors Client’s Check After He Is Adjudicated Bankrupt Not Liable to Trustee for Depletion of the Bankrupt’s Estate

Abstract

Relying on contractual and equitable principles to overcome fairly explicit statutory language, the United States Supreme Court in Bank of Marin v. England refused to hold the bank liable for funds of a depositor which had been dispersed without notice of the latter\u27s voluntary filing of a petition in bankruptcy. While the decision promotes the security of commercial transactions in which checks are chosen as the form of payment, the Court\u27s analysis is not without deficiencies. This note, in addition to attempting a more palatable justification for the holding with reliance in part upon countervailing provisions of the Bankruptcy Act, also presents suggestions for legislative reformation which would achieve, without complication, the result promoted by the Marin majority