West St Louis Savings Bank v. Shawnee County Bank

• Decision Date: 01 October 1877
• Parties: WEST ST. LOUIS SAVINGS BANK v. SHAWNEE COUNTY BANK
• Court: U.S. Supreme Court

95 U.S. 557

24 L.Ed. 490

WEST ST. LOUIS SAVINGS BANK v. SHAWNEE COUNTY BANK.

October Term, 1877

APPEAL from the Circuit Court of the United States for the District of Kansas.

Parmelee, cashier of the Shawnee County Bank, made his individual note for $3,000, payable to the order of the West St. Louis Savings Bank, indorsed it 'G. F. Parmelee, cashier,' and gave as collateral security a certificate of stock in the Shawnee County Bank, issued to and owned by him. The consideration of the note was money lent to him by the payee, who was advised that he intended to use it to pay for his stock in the Shawnee County Bank. He failed to pay the note; whereupon this suit was commenced by the payee against him as maker, and the Shawnee County Bank as indorser, of the note.

The court passed a decree against Parmelee, but dismissed the bill so far as it asked relief against the Shawnee County Bank.

The complainant then brought the case here.

The remaining facts in the case are stated in the opinion of the court.

Mr Henry Hitchcock for the appellant.

No counsel appeared for the appellee.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

The testimony in this case satisfies us beyond all doubt that the liability of the Shawnee County Bank, if any liability exists, is that of an accommodation indorser or surety for Parmelee, its cashier, and that this was known to the St. Louis Bank when it made the discount. The note itself bears upon its face the most unmistakable evidence of this fact. It is made payable directly to the St. Louis Bank, and the Shawnee Bank appears only as an indorser in blank of a promissory note before indorsement by the payee and while the note is in the hands of the maker. Such an indorsement by a bank is, to say the least, unusual, and sufficient to put a discounting bank upon inquiry as to the authority for making it.

But we are not left in this case to inquiry or presumption. Both the correspondence and the testimony of the cashier of the St. Louis Bank show conclusively that this was the understanding of the parties. Parmelee, in transmitting the note for dis ount, wrote for himself, and not as cashier. He spoke of his own note, and authorized a draft upon himself personally for the interest. He pledged his own stock for the payment of the note. Wernse, the St. Louis cashier, says the negotiations opened with an application by Parmelee for a loan to enable him to pay for his stock in the Shawnee Bank, upon the pledge...