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November 15, 1985


The opinion of the court was delivered by: SPRIZZO



 The following Opinion constitutes the Court's findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52.


 Plaintiff, Bradford Trust Company of Boston ("Bradford"), is a corporation organized and existing pursuant to the banking laws of Massachusetts, with its principal place of business in Boston. In its regular course of business, Bradford acts as a trust company, custodian, trustee and/or transfer agent for various and sundry mutual funds and money market funds. Defendant, Merrill Lynch, Pierce, Fenner and Smith ("Merrill Lynch"), is a corporation organized under the laws of Delaware, with its principal place of business in New York. It acts as a broker in securities, as a dealer in corporate and municipal securities, and as an investment banking firm.

 In 1979, Stanley E. and Marjorie P. Allen ("the Allens") were the owners of two mutual funds administered by Bradford as shareholder servicing agent for the sponsor of the funds, Massachusetts Financial Services Company. On October 28, 1979, Bradford received a letter from the Allens requesting that, contrary to previous instructions given by them, the dividends accruing in the two mutual funds be reinvested in new shares of the fund. Accompanying the letter was a yellow form which reflected the changed status of the funds. The Allens' address of record on that date was in Spain. See Pre-Trial Order ("PTO") at 4, P8.

 On or about November 8, 1979, Bradford received an undated letter, purportedly from the Allens, instructing Bradford to liquidate the funds and remit the entire proceeds therefrom to the Allens at a new address in Geneva, Switzerland. The signatures on the letter were not guaranteed. See id. at P9. An undated stock power, which purportedly bore the signatures of the Allens and a signature guarantee stamp of Merrill Lynch, and which the plaintiff alleges was endorsed by defendant's employee, David P. Kleber, was processed with that letter by Bradford. Other than the purported signatures and the guarantee stamp, as well as the pre-printed material on the form, the stock power was blank in all respects. See id. at P10; Plaintiff's Exhibit ("PX") 5. The aforementioned two documents were sequentially numbered and microfilmed when processed by Bradford. See PTO at 5, P11. Bradford made no effort to verify the requested change of address and the signatures on both the letter and the stock power, or to compare the signatures with other specimens of the Allens' handwriting which were in its possession. See id. at P12.

 The following day, November 9, 1979, Bradford liquidated the mutual funds, issued two checks, one in respect of each fund, and forwarded the proceeds to the "Allens" at the Swiss address. See id. at 6, P14.

 On or about December 17, 1979, the two checks were presented to Banque Internationale a Luxembourg ("BIL") by Aris Khavessian, a customer of BIL. The checks were transmitted for collection to First National Bank of Boston (: FNBB"), the correspondent bank of BIL, on or about December 18, 1979. FNBB sent the checks to Bradford, as the drawee bank, for collection on December 24, 1979. See id. at P17.

 On January 4, 1980, an employee of FNBB inquired of Bradford as to why the two checks had not yet been paid. Bradford indicated that the original checks had not been received from FNBB. Photocopies of the checks, with prior endorsements guaranteed by FNBB, were requested and sent to Bradford as replacements. The original checks were subsequently located. See id. at 6-7, PP17-18. On January 8, 1980, Bradford paid FNBB the appropriate sums representing the funds and, thereafter, FNBB credited the account of BIL. See id. at 7, P21.

 On January 14, 1980, BIL issued to Khavessian a check, drawn on Chase Manhattan Bank, New York, New York, in the amount of $ 181,692.85. Following the receipt of the check, Khavessian requested and received, in lieu of the check, a cash payment of an equivalent amount in Belgian francs. See id. at P22.

 On or about January 17, 1980, Bradford discovered that an apparent imposture had occurred when the "real" Allens made inquiry as to the status of the funds. Bradford then compared the endorsement of the Allens on the FNBB checks to the signatures which Bradford had on file and determined them to be different. Thereafter, Bradford began correspondence with the Allens to determine whether the original redemption request had been a forgery. See id. at 8, PP23-24. Bradford reimbursed the two funds of the Allens, with interest, in the amount of $ 212,159.01. See id. at 8, P27.

 On June 3, 1981, Bradford initiated the instant action against Merrill Lynch based on breach of warranty in respect of the signature guarantee, and negligence. This case ...

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