State Nat. Bank v. Newton Nat. Bank
| Decision Date | 23 February 1895 |
| Docket Number | 502. |
| Citation | 66 F. 691 |
| Parties | STATE NAT. BANK OF ST. JOSEPH, MO., v. NEWTON NAT. BANK. |
| Court | U.S. Court of Appeals — Eighth Circuit |
M. A Reed and J. G. Slonecker filed brief for plaintiff in error.
C. S Bowman and Charles Bucher filed brief for defendant in error.
Before CALDWELL, SANBORN, and THAYER, Circuit Judges.
The sole question presented by this record is whether an answer filed by the Newton National Bank, the defendant in error, to a suit brought against it by the State National Bank of St Joseph, Mo., the plaintiff in error, stated a good defense to the action. The question arises in the following manner The State National Bank of St. Joseph, Mo., hereafter termed the 'St. Joseph Bank,' sued the Newton National Bank, hereafter termed the 'Newton Bank,' in the circuit court of the United States for the district of Kansas, to recover the amount due on two promissory notes, each for the sum of $10,000, which were executed on July 21, 1890, and were afterwards sold to the plaintiff bank. Both notes were payable to the order of the McLain Live-Stock & Investment Company. One of them was executed by A. H. McLain, Horace McLain, C. R. McLain, and A. O. McLain. The other was executed by A. H. McLain, E. S. McLain, C. R. McLain, and A. O. McLain. The makers of these notes owned all the stock of the McLain Live-Stock & Investment Company, and constituted the board of directors of that company. C. R. McLain, one of the makers of said notes, was also cashier of the Newton Bank, while A. H. McLain and A. O. McLain were, respectively, vice president and assistant cashier of said bank. The St. Joseph Bank alleged in its complaint, in substance, that it had discounted these notes at the request of the Newton Bank, and for its benefit; that the proceeds of the discount had been received by the Newton Bank, and had been used by it in the ordinary course of its business; that, although the Newton Bank did not indorse the notes at the time they were discounted, yet that the notes were in fact executed by the makers thereof, and were indorsed to the St. Joseph Bank by the payee, solely for the accommodation of the Newton Bank,--the latter bank agreeing, by means of a letter written by C. R. McLain, its cashier, that at the maturity of said notes they might be charged to the Newton Bank, if arrangements were not made in the meantime for the renewal of the paper. The plaintiff bank also alleged that no arrangement for a renewal of the paper was in fact made before maturity, that the notes were overdue, and that the payment thereof had been demanded from the defendant bank, wherefore it prayed judgment against it for the amount due on said notes. The answer of the defendant bank to said complaint admitted the execution and sale of the notes to the St. Joseph Bank, but it alleged the fact to be that said notes were executed for the accommodation of the payee therein named, to wit, the McLain Live-Stock & Investment Company, in pursuance of an arrangement between said payee and the St. Joseph Bank whereby the latter was to discount, and did in fact discount, the notes for the sole benefit of the payee, and not for the benefit of the Newton Bank. The answer further averred, in substance, that the letter written by C. R. McLain, the cashier of the defendant bank, authorizing the notes to be charged to it at maturity, was written wholly without the knowledge or sanction of the Newton Bank, or of its board of directors; that neither said bank nor its board of directors had authorized the writing of such letter by its cashier, or had ratified his action in so doing; and that the bank had received no consideration for the promise therein contained, that the notes might be charged to its account at maturity. The answer also contained the following averments: 'That if plaintiff did discount said notes upon the strength of the said Charles R. McLain's direction to it to charge the same to defendant at their maturity, which this defendant denies, plaintiff well knew at the...
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