West St. Louis Sav. Bank v. Shawnee County Bank

29 F. Cas. 831, 3 Dill. 403

• Court: U.S. Circuit Court for the District of Kansas
• Decided: November 15, 1874
• Status: Published

Opinion

DILLON, Circuit Judge.

The form of the note as well as the evidence aliunde shows that the plaintiff made the loan to the defendant, Parmelee, who gave his own note for the amount and pledged his own stock as security. The note was indorsed by him thus; ”G. F. Parmelee, Cashier.” It is established by the proofs that the directors of the defendant bank did not know of this indorsement and never ratified it.

The defendant bank did not receive the proceeds of the discount of the note of Parmelee except in payment of his stock. Under these circumstances we are clear in the opinion that Mr. Parmelee’s indorsement of the note as cashier of the defendant bank did not bind it. The plaintiff had notice of the presumptive want of authority of Parmelee, both by the form of the instrument (Lemoine v. Bank of North America [Case No. 8,240], and cases there cited), and the facts of the transaction of the loan to him. The cashier of a bank has no implied authority to indorse officially his individual note, thus by his own act making the bank an accommodation indorser for his own benefit. As this was done in this instance, the plaintiff bank had notice of it, and to hold the defendant bank on such indorsement the onus to show authority, express or implied, from the directors of the defendant bank, is upon the plaintiff. It has failed to establish such authority. On the other hand, the defendant bank has affirmatively established that the cashier had no such authority. The suit must be dismissed as to the defendant bank. The plaintiff is entitled to a decree against the defendant, Parmelee, for the amount of the note and for a sale of the collateral. Decree accordingly.

When notice to the president is notice to the bank, see Porter v. Bank of Rutland. 19 Vt. 410. “Corporations having common officials are not,” says Mr. Brice in his treatise on Ultra Vires (Eng. Ed.) 350, “necessarily affected through these with a knowledge of each other’s transactions.” He cites In re Marseilles Ry. Co., 7 Ch. App. 101; In re EuroDean Bank, 5 Ch. App. 358. Compare In re Contract Corp., L. R. 8 Eq. 14; Gray v. Lewis. Id. 520.