Statement of the Case. Held, That the First National Bank is not liable on its endorsement at the suit of the Rudolph Bank, the latter being charged with notice that the endorsement of the note in the name of the First National Bank was for the accommodation of the maker, and unauthorized. (No. 16356 Decided May 11, 1920.) ERROR to the Court of Appeals of Wood county. The plaintiff in error is the holder of a promissory note for $4,750, dated March 10, 1915, drawn by the "Anchor Oil & Gas Co., by B. C. Harding, Sec'y," payable 30 days after date to "The First National Bank of Bowling Green, by B. C. Harding, Cashier." The same B. C. Harding was a partner in and secretary of the Anchor Company and also the cashier of the First National Bank. When the note was transferred for the first time it was eleven months overdue, the transferee, the Rudolph Bank, paying value for it in pursuance of the following written request, addressed to Lashuay, cashier of the Rudolph Bank: "DEAR SIR:-The Anchor Oil & Gas Co., a partnership-myself, Rev. Donahey, R. A. Beatty, Dr. Tuller, H. G. Hankey and others have sold our holdings-but are delayed in making transfer because all parties haven't been found yet to sign same. I have paid up all the bills and to carry same here would overloan some the interested parties. I wish you would carry this for a few days not to exceed 30, when same will be paid if you can upon receipt of draft use enclosed check in payment filling in the amount and return to me. I Statement of the Case. can get First Nat'l No. Balto. to carry it but would rather ask you. If you don't use enclosed check, hold it until we call for payment of note then use it. I will be very thankful to you if you can do this. "Yours truly, "B. C. HARDING." Accompanying the note and letter was a draft for $4,750 drawn by the Anchor Company upon the Rudolph Bank, payable to the First National Bank. This was paid by the Rudolph Bank, the proceeds being credited by the First National Bank to the account of the Anchor Company carried in the latter bank. On numerous occasions after it acquired the note the Rudolph Bank through one of its officers made telephone requests upon B. C. Harding for payment. In May, 1916, and again in June, 1916, the Rudolph Bank received from Harding checks to apply on the note, $2,000 and $1,500. These checks were drawn on the First National Bank by Harding over his individual signature. Late in December, 1916, Harding committed suicide, and a receiver was put in charge of the First National Bank. On December 22, 1917, a representative of the Rudolph Bank presented the note for payment at the First National Bank, demand being made upon two individuals who were at once partners in the Anchor Company and president and vice president of the First National Bank. Payment of the note having been refused, action was commenced on it against the Anchor Co., the Opinion, per MERRELL, J. administrator of Harding and the First National Bank. Judgment was entered against the Anchor Company, and at the conclusion of all the evidence a verdict was directed in favor of the First National Bank, and judgment rendered accordingly. This judgment was affirmed by the court of appeals. Mr. Benjamin F. James and Mr. Clyde R. Painter, for plaintiff in error. Messrs. Fries & Hatfield and Mr. Earl D. Bloom, for defendants in error. MERRELL, J. The circumstances under which the Rudolph Bank acquired the note in question were, to say the least, such as to invite inquiry. The letter from Harding to the cashier of the Rudolph Bank, requesting the latter to purchase the note and hold it for thirty days, instantly suggests to the reader that it is the Harding of the Anchor Company, the maker of the note, that is asking an accommodation, and not the Harding, cashier of the First National Bank, seeking a rediscount on behalf of the latter. In point of fact the evidence discloses that the note was never entered or carried on the books of the First National as the property of that bank. This fact, of course, might have been ascertained at any time by a slight investigation on the part of the Rudolph Bank. Without such investigation, however, it may fairly be queried if the truth of the situation was not substantially disclosed by Opinion, per MERRELL, J. Harding's letter forwarding the note, then almost a year past due, to the Rudolph Bank. If by that letter, and in view of the other circumstances, obvious to casual observation, the Rudolph Bank was charged with notice of the real facts, that bank can hardly be said to occupy the position of an innocent holder in due course. It is true that the First National Bank was chargeable with the acts of its cashier, and also with the knowledge possessed by him with reference to matters as to which he dealt for the bank within the scope of his apparent authority. If, however, as the facts appears to have been, Harding's endorsement in the name of his bank was in truth a mere accommodation endorsement, and that fact was one that should have been gathered by the Rudolph Bank from the correspondence in its hands, it cannot be said that Harding's act was one within the apparent scope of his authority. In West St. Louis Savings Bank v. Shawnee County Bank, 95 U. S., 557, it is declared in the syllabus that "The cashier of a bank is not, by reason of his official position, presumed to have the power to bind it as an accommodation endorser on his individual note." In that case the purchasing bank was charged with notice by the form of the note itself. In the case at bar the notice if not express is at least the result of unavoidable inference from the letter with which the note was transmitted. In this letter, Harding, whether he wrote as a member of the Anchor Oil & Gas Company or as cashier of the First National Bank, or in both capacities, declared Opinion, per MERRELL, J. that his bank could not carry the note, since to do so "would overloan some [of] the interested parties." This would seem a clear intimation of the actual fact, namely, that the First National Bank was not "carrying" the note, had not paid value for it, and that the indorsement in the name of that bank was merely for the purpose of transferring title, and at most an endorsement for the accommodation of the maker. In this connection it should be observed that, the draft, by honoring which the Rudolph Bank paid for the note, was one drawn upon it not by the First National Bank but by the maker of the note, The Anchor Oil & Gas Company. A situation in many respects parallel to the present is presented in Harrington v. Baker, 173 Mass., 488. In that case a promissory note signed by A, payable to B, and indorsed by B, individually, and also in the name of a firm of which he was a member, was sent to a bank enclosed in a letter signed by him, stating that "we have good captains in our employ who we frequently assist, and the enclosed I offer you I do not hesitate to say is a strong one for the reason our concern, B & Co., do not have any notes out of any nature." It was held that by this letter the bank discounting the note had notice that the endorsement by B & Co. was for the accommodation of B, and the petition of the bank seeking to prove the note against the estate of B & Co. was dismissed. Another case that throws light upon the present controversy is that of Fort Dearborn Natl. Bank of Chicago v. Seymour, 71 Minn., 81, the out |