Holm v. Atlas Nat. Bank

• Decision Date: 06 January 1898
• Docket Number: 425.
• Parties: HOLM et al. v. ATLAS NAT. BANK.
• Court: U.S. Court of Appeals — Seventh Circuit

84 F. 119

HOLM et al. v. ATLAS NAT. BANK.

No. 425.

United States Court of Appeals, Seventh Circuit.

January 6, 1898

James Wickham and R. M. Bashford, for plaintiffs in error.

H. M Lewis, for defendant in error.

Before WOODS, JENKINS, and SHOWALTER, Circuit Judges.

JENKINS Circuit Judge, .

We held when this case was previously before us that the note in suit was invalid, except in the hands of an innocent purchaser. It was therefore incumbent upon the Atlas National Bank to establish that it was a bona fide holder of the note for value, before maturity. We are of opinion that this is shown beyond peradventure. The note was one of 40 or 50 pieces of commercial paper, amounting in the aggregate to over $50,000 which were discounted by the bank for the John V. Farwell Company, on April 7, 1893, in the usual course of its business, and without notice of its illegality. The amount of the discount was passed to the credit of the John V. Farwell Company in account, and was checked out within three or four days thereafter. The transactions between the bank and the John V. Farwell Company were large, amounting to several hundred thousand dollars per annum, and at times running up to a million dollars a year. The evidence wholly failed to impeach the good faith of the bank with regard to the purchase of the paper, or to suggest notice of any infirmity in its origin. There was nothing to cast a shadow on the transaction or to put the bank on inquiry. The fact that John V. Farwell, the president of the John V. Farwell Company was also the vice president of the bank, and a stockholder therein, and that J. T. Chumasero, the secretary of the John V. Farwell Company, was a director and stockholder of the bank, and that others not named were holders of stock in both corporations, does not militate against the bona fide character of the holding of this paper by the bank. In the discounting of this paper, the bank was represented by its president, C. D. Grannis, and the John V. Farwell Company by its secretary, J. T. Chumasero. Assuming that the latter was chargeable with notice of the infirmity in the consideration of this note, neither because Chumasero was a stockholder and a director of the bank, nor because the president of the John V. Farwell Company was also a stockholder and the vice president of the bank, was the Atlas National Bank so chargeable, neither acting for the bank. In the discounting of this paper the officers of the John V Farwell Company stood as strangers to the bank. The interest of the company was opposed to the interest of the bank, and the presumption is that the officers of the John V. Farwell Company would not communicate to, but would conceal from the bank any knowledge they might have of the secret infirmity in the consideration of this note. 'Where an officer of a corporation is thus dealing with them in his own interest opposed to theirs, he must not be held to represent them in the transaction, so as to charge them with the knowledge he might possess but which is not communicated to them, and which they do not otherwise possess, of facts derogatory to the title he conveys. ' Barnes v. Gas Light Co., 27 N.J.Eq. 33; Bank...