Honold v. Meyer

*593 On Application eoe Rehearing. Fenner, J. Further argument and consideration have only served to confirm our conviction of the correctness of our original opinion. The transfer of the stock on the hooks of the corporation, upon surrender of the old certificate, by an agent of plaintiff fully authorized to transfer the stock, and the issuance of the new certificate by the company to the transferee, who had no notice, express or implied, of any fraud or irregularity, and who in good faith incurred liability upon the strength of the title to the stock thus evidenced, operate together as an impregnable protection to defendants against any claim on the part of the plaintiff. The transfer of this stock by an agent of plaintiff expressly authorized to transfer, was, under the elementary principles of the law of mandate, the entire equivalent of a transfer by the plaintiff herself, and she has no more right to question the title of the transferee than if she had personally executed the transfer. It was the corporation which was charged with the duty of determining whether the transfer was authorized or not. If it permitted an unauthorized transfer, it remained liable to the plaintiff for her stock or its value, and would have been equally bound to hold harmless the innocent holder for value of the new certificate. If the transfer was authorized, then the corporation and the holder of the new certificate are alike protected. It does seem superfluous to point out the difference.between this case and that of Stern Bros. vs. Germania Bank, 34 A. 1119 , since they have no conceivable resemblance. The agent in that case was absolutely without authority to transfer or divest in any manner the title of his principal to the property which he assumed to pledge for his own debt. Another case relied on is that of Moores vs. Citizens’ Bank, recently decided by the Supreme Court of the United States, but it has no application here. That was a case where the cashier and transfer agent of 'a bank had fraudulently issued a certificate of stock to his sister, falsely-representing to her that it was a transfer of stock held by himself in the bank, and upon the faith of the certificate had borrowed money from her. He held no stock, transferred none on the books of the bank and surrendered no certificate, which under the by laws of the bank and under the very terms of the certificate issued to the party, were conditions precedent to valid transfer and to the issuance of the new certificate. *594 The Court said: “She relied on his personal representations, as the party with whom she was dealing, that ho had such stock; and she trusted him as her agent to see the proper transfer thereof made on the books of the bank. Having distinct notice that the surrender and transfer of a former certificate were pre-requisites to the lawful issue of a new one, and having accepted a certificate that she owned stock without taking any steps to assure herself that the legal pre-requisites to the validity of her certificate, which were to be fulfilled by the former owner and not by the bank, had been complied with, she does not, as against the bank, stand in the position of one who receives a certificate of stock from the proper officers without notice of any facts impairing its validity.” To deprive the case of any application to the one in hand, it is sufficient to say that “all the pre-requisites to the validity of the certificate” had here been complied with. The stock did exist; it had been transferred on the books of the bank; the old certificate had been surrendered; and, therefore, the defendant here did “ stand in the position of one who receives a certificate of stock from the proper officers without notice of any facts impairing its validity.” What that position is, the opinion of the Court in the case referred to sufficiently indicates, and is there formulated in the following general proposition: “A certificate of stock in a corporation, under the corporate se'al and signed by the officers authorized to issue certificates, estops the corporation to deny its validity, as against one who takes it for value and with no knowledge or notice of any fact tending to show that it has been irregularly issued.” As it thus estops the corporation, so it estops the former holder of the stock, under whose authority the corporation acted in issuing the certificate. It is, therefore, ordered that our former decree herein remain undisturbed.