Amos Madden Thayer

“ There is an obvious difference between a transaction where a bank goes into the market as a borrower, giving its own notes, bills, or other obligations for the money borrowed, and a transaction where it disposes of the notes and bills of third parties which it has previously discounted. ”

“ It is a mistake to suppose that a defense which was clearly abandoned at the trial can be invoked in an appellate court to sustain a judgment that was rendered in pursuance of an erroneous view as to the merits of some other defense. ”

“ Under these circumstances, the plaintiff in error has done all that the law requires him to do to obtain a review of the proceedings of the trial court, and its rights should not be sacrificed because the clerk has failed, inadvertently, to note the filing of the writ of error by an indorsement made on the writ itself. It is very likely that the filing of the writ of error is shown by the journal of the proceedings of the trial court on the day the writ was lodged with the clerk, and under the circumstances we may well presume that the fact does thus appear. ”

“ We are not aware of any authority which maintains that a bank cannot discount paper for its officers or directors, especially if it is paper executed by a third party, and, as a matter of practice, we believe that it frequently happens that such discounts are sought and obtained. ”

“ We turn at this point to consider one of the most important questions in the case, and that is whether the transaction in controversy, to wit, the rediscounting of the notes in suit, was an act so far outside the sphere of ordinary banking as to impose upon the New York Bank the duty of ascertaining that the president and cashier of the Little Rock Bank had been duly authorized by its board of directors to rediscount the paper in question. That the power to rediscount its bills receivable was vested in the defendant bank admits of no controversy. ”

“ The public interest requires that the same presumptions should attend an indorsement made by the president of a bank which exist in favor of an indorsement made by a cashier, and that banks should be held bound by acts of that nature when done by either of such officers in the ordinary course of business. ”

“ As the trial court, in giving the foregoing instruction, did not lay stress on any fact other than the mere form of the notes, and as it is not pretended that the plaintiff had any information that they were accommodation notes, or any knowledge with reference to Allis' relation to the paper, except such as was conveyed by the notes themselves, the substantial question presented by the record is whether the notes were, in fact, in such form that the plaintiff ought to have known that they were the property of Allis, and that the defendant bank was merely an accommodation indorser. ”

“ The latter transaction has more, if not all, of the characteristics of a sale, and it is generally regarded as a sale whereby assets of a certain kind are converted into cash. It may be said that a bank or an individual borrows money when they execute their own notes or bills, and receive the money thereon from a third party, even though the interest to accrue is deducted in advance, in the form of a discount. ”

“ He ought not to assume, and he cannot lawfully assume, the dual role of seller and purchaser; in the nature of things, there must be some disinterested person to represent [p990] the bank in such a transaction, as, under the law of agency, a person while acting as agent for a cannot enter into a contract with himself. ”

“ Bank, 25 N.Y. 293; Mercantile Mut. Ins. Co. v. Hope Ins. Co., 8 Mo. App. 408. But, conceding the foregoing doctrine to be sound, it does not follow that the plaintiff was bound to assume, when it purchased the notes in controversy, that they had been unlawfully sold and indorsed to the defendant bank, and that the transaction between it and Allis, its president, was perhaps voidable. ”

“ It can hardly be expected that the cashier of a bank will be in attendance on all occasions when it becomes necessary for the bank to indorse notes and bills, draw drafts and checks, certify checks, or issue certificates of deposit. ”

“ The laws of trade are generally uniform in their operation, and the same causes which at certain seasons of the year occasion a greater demand for money and a dearth of currency in one section of the country, doubt- [p301] less produce the same results, at certain seasons, in other sections. ”

“ The plaintiff bank offered to prove by the official report of the comptroller of the currency that the amount of rediscounted paper held by national banks at various times between March 1, 1892, and January 1, 1893, ranged from $8,500,000 to $17,132,497, the largest amount being held in September, 1892, but the trial court rejected such proof. ”