84 F. 119 | 7th Cir. | 1898
delivered the opinion of the court.
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 Y. 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 Y. 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 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 Y. 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
Being, then, bona fide holders of this note for value, before maturity, we proceed to inquire whether the bank, by its subsequent conduct, forfeited its right as such holder, and whether the note can be deemed to have been paid by the John V. Farwell Company. The bank was accustomed to clear for the John V. Farwell Company at the Chicago clearing house, and, on the evening of each day, made up a list of the paper which it had paid for the John Y. Farwell Company, sent the list with the paper represented therein lo and received from the latter company a check for the amount. Nearly all the commercial paper discounted by the bank for the John V. Farwell Company was made payable at the office of the latter company, and the makers of such papen, being largely merchants residing without the city of Chicago, remitted directly to that company; and the bank was accustomed to send the notes discounted for the Farwell Company to its office a day or two before maturity, when, if the makers had remitted or otherwise arranged for the paper, the Farwell Company would check for the amount. The note in question, with two other notes of the same parties made at the same time, were payable at the Bank of Eau Claire, in Wisconsin. The other notes, which matured May 21, 1893, had also been discounted by the bank for the John Y. Farwell Company before the discounting of the note in suit, and were forwarded by the bank to Eau Claire for collection, one of them being paid, and the other protested. When the note in suit was about maturing, the note teller of the bank, remembering that the other note had been sent to Eau Claire, and protested for nonpayment, and had been subsequently paid by the application of the dividends from the assigned estate of Holm and Thompson, sent the note in suit to the John Y. Far-well-Company with, and marked upon, the clearing statement of August 17th. The note teller stamped the note with the clearing house conditional stamp, and made his debit and credit entries with respect to it on his book, as though it would be or had been paid by the John V. Farwell Company. He credited bills receivable for the note, and charged the clearing house work for the amount. The John V. Farwell Company struck out from the clearing-house statement the amount of this note, and returned a check for the balance,