86 F. 742 | 8th Cir. | 1898
after stating the case as above, delivered tbe opinion of the court.
Unless the hotel company is estopped from contesting the validity of the note in suit, this judgment must stand or fall by the transaction of February 28, 1891. The only consideration for this note is a discount by the bank of the note of that date. If the discount of that note did not charge the hotel company with any liability to the hank, then, unless it is estopped from making this defense, it never became liable upon any of the renewals of that note, because they were without consideration, and the hank knew that
“ISut certa in],v lie is not presumed to have power, by reason of Ills official position, to bind his bank as an accommodation indorser of Ids own promissory note. Such a transaction would not la: within Hie scope ol! Ids general powers, and one who accepts an indorsement oC that character, if a contest arises, must prove actual authority before he, can recover. There are no presumptions in favor of such a delega lion of power. The very form of the paper itself carries notice to a purchaser oí a possible want of power to make Ihe indorsement, and is sufficient to put him on his guard. If he fails to avail himself of the notice, and obtain the information which is thus suggested to him, It is his own fault, and, as against an innocent party, he must bear the loss.”
In Smith v. Association, 78 Cal. 289, 293, 20 Pac. 677, and Bank v. Wagner (Ky.) 20 S. W. 535, 537, the agents made the notes of their corporations, payable to their own order, and then indorsed
“Now the notes bear upon their face the conclusive evidence of the fact that they were issued by Mr. Mathews, as agent, to himself, as principal, which was notice of itself to the appellants that the notes were void at the instance of the company, which destroyed their immunity as innocent purchasers. Consequently they could not recover thereon unless they could show that the company, by its superior officer, authorized so to do, or by its board of directors, with like authority, authorized Mr. Mathews to thus issue the notes because, the appellants being, prima facie, not innocent purchasers, — the notes being void upon their face, — they, in order to recover from the company, must show that they were issued rightfully and properly by the company’s agent, which they have failed to do.”
If, therefore, we concede that Hogaboom had general power to make and discount the promissory notes of the hotel company, yet the note of February 28, 1891, was not binding upon that corporation, under its denial of its execution in its answer, because his general authority gave him no power to make a note of the corporation payable to his own order, and the bank failed to prove that he had any special authority so to do.
- There is another reason why the note of February 28, 1891, was not binding upon the hotel company. It is that it was an accommodation note, that the bank had notice of that fact when it discounted the paper, and that it was beyond the powers of the corporation to make a note of that character. The form of the note, as we have seen, deprived the bank of the immunity of an innocent purchaser, and gave it noticé that Hogaboom had no power to make it under his general authority, and that, if the corporation contested it, it must discover and prove special power in him to do so. It gave the bank notice of every fact that a reasonably diligent inquiry to find and prove Hogaboom’s special authority to make the note would have discovered, and such an inquiry would certainly have brought to its knowledge the fact that the corporation had given no such authority, but that Hogaboom had made the note for his own accommodation. Moreover, the bank knew from the transaction itself that the hotel company received no consideration for the note, and that it had actually discounted' the accommodation note of that corporation for the benefit of Ed. Hoga-boom. The fact that Hogaboom told the president of the bank, when he applied for the loan, that he was borrowing the proceeds of the note for the hotel company, and the fact that the president understood that the bank was loaning to the hotel company, are not forgotten. But this contract was not made by what these parties said or understood, but by what they did. Hogaboom presented to the bank the note of the corporation, signed by himself as its president, payable to his own order, and indorsed by himself. He informed the bank that he wanted to borrow money on it for the hotel company. That statement was notice to the bank that this note was not one which the corporation had given to Hoga-boom for value, and that it was one which he had made without paying any consideration to the corporation for it, in order to enable him to borrow money. With this knowledge, the bank dis