Page:Federal Reporter, 1st Series, Volume 10.djvu/265

 THIRD NAT. BANK V. HARBISON. 253 �of Us direetors on ordinary business principles. The opinion of Judge Thayer states the legal aspect of this question very clearly. �It is further contended that inasmuch as Alexander had frequently on deposit, both before and after this suit brought, a Buf&cient sum of money to pay his demand note, it was the legal duty of the bank to demand payment thereof, and apply his deposits accordingly, thus leaving the collateral discharged of all interest therein by the bank. On this point the court bas no difficulty, so far as the legal right of the bank to pursue the collaterals is concerned ; yet it would seem that a failure by the bank to take pay for the demand note, and then sue Alexander as indorser of the collaterals, and Harrison, the maker, indicated other than a purpose to collect its demand against Alexan- der, who was its principal debtor. It had a prompt recourse against him ; indeed, had f unds in its own hands sufficient to discharge the indebtedness. Why, then, sue him and Harrison, unless its object was, under the formai position of an innocent indorsee for value, to enable Alexander thus to cause a contract to be enforced in his favor which the law would not permit him to enforce in his own name ? �It would be easy for the Missouri legislature to destroy, by statute, the negotiability of sqch paper, but until it bas done so the courts must apply the law merchant to its transfer. To what exteut in- quiry is permissible into the position of parties, as in the case at bar, may be doubtful. The bank can elect its own course by pro- ceeding against Alexander alone on his demand notes, or by enforc- ing its rights against the collaterals, or possibly by appropriating his deposits to the payment of his indebtedness. While courts should lend no encouragement to betting contracts, yet, so far as the law requires the protection of innocent indorsees of commercial paper, the rules pertaining thereto must be observed. It is obvions that the law may be evaded by giving negotiable notes and having them in- dorsed to innocent parties ; but the remedy is with the legislature. It is said the contract indorsing the collaterals to the bank gave it only the power to sell the same, and not to collect them by ordinary process of law. As indorsee, the right to sue was complete, and the power to sell was an additional advantage which it might or might not exercise. But the question still remains, viz., should not the court have permitted the exact relationship of the parties to these notes to have been developed, to the end that no merely technical screen should be interposed to prevent the defeat of • illegal transac- tions ? �The testimony produced, and uncontradicted, proved that the ��� �