A fuller quotation, repeated in at least two sources, is:
I was surprised to find that the butler had returned, and was standing before me.
“Mr. Musgrave, sir,” he cried, in a voice which was hoarse with emotion, “I can’t bear disgrace, sir. I’ve always been proud above my station in life, and disgrace would kill me. My blood will be on your head, sir—it will, indeed—if you drive me to despair. If you cannot keep me after what has passed, then for God’s sake let me give you notice and leave in a month, as if of my own free will. I could stand that, Mr. Musgrave, but not to be cast out before all the folk that I know so well.”
At that time (late 1800s) it was common for people to refer to their "station in life". The notion was based on the proposition that people had a position relative to others determined by any or all of their role, wealth, background, employment, qualifications, nature and family connections.
One of the concise definitions is:
station = Standing, Rank: "a woman of high station"
Hence the butler would have been aware of, and would have valued, his status in life as a butler. It would probably have been a position reached with some pride after a progression through the roles of servant, footman, under-butler. In this quotation he says that he is proud above his station, implying that his self-respect extends above the status of a butler and that he believes he might reasonably occupy an even higher station were he to have opportunity.
We find similar positional prepositional usage in idioms such as "living beyond our means" or having "ideas above our station".
The term is still in contemporary use with the same meaning. For example:
"If Prince Charles is implying that we are all born to a particular station in life then his comment seems to reveal a profound ignorance of English social history."
"People should get above their stations. I absolutely welcome as much social mobility and aspiration as possible. We have to create more room for people to express their genuine talents. The world is not just a plaything for a few people."