Statement of Facts.

seventy shares, dated June 11th, 1867, and certificate No. fiftyfour (54) for forty shares, dated June 11th, 1867), became indebted to this bank in the sum of thirty-seven thousand two hundred and forty-seven 29-100 dollars, ($37,247.29), and did, on the 16th day of January, 1868, transfer one hundred and eightyfive shares of said stock, and on the 15th day of May, 1869, did transfer ten shares of said stock, on the books of this bank, to G. Volney Dorsey, in consideration that said G. Volney Dorsey pay to this bank the sum of nineteen thousand five hundred dollars of said indebtedness; and whereas Jason Evans, who became the holder of seventy shares of said stock, issued as aforesaid and transferred to him by the said R. B. Moores on the books of this bank September 4th, 1867, as per certificate No. 59, did, on the 20th day of February, 1869, transfer to G. Volney Dorsey, on the books of this bank, by his power of attorney, all his right, title and interest in the same; therefore said transfers, as hereinbefore stated, are approved and affirmed by the directors of this bank."

The plaintiff also offered evidence that there were one or two other instances in which stock was issued by the cashier without any certificate being surrendered. But, as she offered no evidence, other than the directors' record of August 9th, 1869, that the other officers of the bank had any knowledge at the time of such transactions, or subsequently recognized them, the court excluded the evidence.

The plaintiff offered to prove that there was an arrangement between Robert and her husband, by which interest, equal to ten per cent. on $9,100, on a debt due from the latter to his father, was to be treated as dividends upon this stock. But the court excluded the evidence as immaterial.

The court instructed the jury that the plaintiff having knowledge of the fact that Robert B. Moores, upon whom she relied to have the stock transferred to her, was acting for himself as well as in his capacity of cashier, in reference to the matter of issuing this certificate, she was not an innocent holder of the stock, and as the certificate was issued without authority, in fraud of the rights of the bank, they should return a verdict for the defendant. A verdict was returned accordingly, and judgment rendered thereon, and the plaintiff excepted to the

VOL. CXI-11

Argument for Plaintiff in Error.

exclusion of evidence and to this instruction, and sued out this writ of error.

Mr. John W. Warrington and Mr. E. W. Kittredge for plaintiff in error.-I. The issuing of such a certificate of stock, signed by the president and the cashier of the defendant, and under its corporate seal, is the corporate act of the defendant, and not the act of the president and cashier, as mere agents of the corporation. Such certificate is, to all intents and purposes, the certificate of defendant corporation in its corporate capacity. Wilson v. Salamanca, 99 U. S. 499; Pollard v. Vinton, 105 U. S. 7; Scotland County v. Thomas, 94 U. S. 682.—II. The by-laws of defendant required a certificate for stock owned by its cashier or president to be in the same form, and issued and transferred in the same manner as certificates of stock owned by any other stockholder of defendant. The fact, therefore, that the plaintiff's certificate was understood by her at the time to be issued upon a surrender or transfer of stock owned by Robert B. Moores, the defendant's cashier, was not notice of any irregularity in the issuing of said certificate, or want of validity thereof, to the plaintiff. Titus v. Great Western Turnpike, 61 N. Y. 237; S. C. 5 Lansing, 250; Western Maryland Railroad v. Franklin Bank, 60 Md. 36; American and English Corporation Cases, Jan. 1884, p. 46; Willis v. Fry et al. 13 Phila. Penn. 33; Ashton v. Atlantic Bank, 3 Allen, 217.-III. The defendant is estopped to deny, as against a bona fide purchaser for value, the validity of such a certificate, if it was not an over-issue; and if it was an over-issue, the defendant is responsible for the loss sustained by such a bona fide purchaser for value. Bank v. Lanier, 11 Wall. 369; Case v. Bank, 100 U. S. 446; Johnston v. Laflin, 103 U. S. 800; New York & New Haven Railroad Company v. Schuyler et al, 34 N. Y. 30; Bruff v. Mali, 36 N. Y. 200; Holbrook v. New Jersey Zinc Company, 57 N. Y. 616; Titus v. Great Western Turnpike, 61 N. Y. 237; Tome v. Parkersbury Railroad, 39 Md. 36; Western Maryland Railroad v. Franklin Bank, 60 Md. 36; Machinists' National Bank v. Field, 126 Mass. 345; Bank of Kentucky v. Schuylkill Bank, 1 Parsons Sel. Cases,

Opinion of the Court.

180; In re Bahia & San Francisco Railroad Company, L. R. 3 Q. B. 584.-IV. It was negligence for the president of the defendant to sign certificates in blank, and leave them with its cashier. And the rule of law applies that where one of two innocent persons must suffer by the fraud of a third party, he who has, by his trust and negligence, enabled such third party to commit the fraud must answer for the loss. Merchants Bank v. State Bank, 10 Wall. 604 (citing on page 646, with approval, New York, &c., Railroad Company v. Schuyler, 34 N. Y. 30); Pompton v. Cooper Union, 101 U. S. 196; Dair v. United States, 16 Wall. 1.-V. If, at the date. of said certificate, Robert B. Moores was the owner of any stock in the defendant corporation, the plaintiff became entitled to it, to the extent of ninety-one shares, whether it was then surrendered and cancelled or not; and it was error for the court to exclude Exhibit K, and to assume, and to charge the jury, upon the evidence adduced, that Robert B. Moores was not the owner of such stock and that defendant was entitled to a verdict. Moores v. National Bank, 104 U. S. 625; Bridgeport Bank v. New York & New Haven Railroad, 30 Conn. 231.

Mr. William M. Ramsey and Mr. E. M. Johnson for defendant in error.

MR. JUSTICE GRAY delivered the opinion of the court. He stated the facts in the foregoing language, and continued:

The petition alleges that the false and fraudulent representations made by Robert B. Moores, and relied on by the plaintiff, that he had assigned and transferred the stock in question to her on the books of the bank, were made by him both as cashier and as stockholder; that the bank afterwards fraudulently permitted and procured him to transfer all the stock owned by him, or standing in his name, to its president, for its benefit; that the bank, through its cashier, fraudulently concealed from her the facts that no transfer had been made to her on its books at the time of the issue and delivery of the certificate to her, that the certificate was not authorized or recognized as valid

Opinion of the Court.

by the bank, and that the stock standing in his name had been transferred on its books to its president; and concludes by alleging that by reason of such fraudulent conduct and acts of the bank the certificate was invalid and worthless in her hands. But the evidence offered at the trial does not support the allegations of fraudulent conduct on the part of the bank.

The petition alleges "that the plaintiff relied upon the representations of said Robert B. Moores, as cashier and officer of the defendant, that the said certificate was duly issued, and that the stock had been duly transferred by said Robert B. Moores to the plaintiff on the books of said bank; and said plaintiff relied upon said certificate of stock which she received as genuine and valid for what it purported to be." And at the trial the plaintiff relied upon the representations made to her by Robert B. Moores orally and in the letter enclosing the certificate and in his contract of guaranty, as well as upon those arising out of the certificate itself. The two may be conveniently considered separately.

His representations outside of the certificate may be first disposed of. The plaintiff dealt with Robert B. Moores, and not with the bank. Her agreement was with him personally, and she lent her money to him for his private use. His representations to her that he owned stock in the bank, and that such stock had been transferred to her, were representations made by him personally, and not as cashier; and there is no evidence that the plaintiff understood, or had any reason to understand, that those representations were made by him in behalf of the bank. The duty of transferring his stock to the plaintiff before taking out a new certificate in her name was a duty that he, and not the bank, owed to the plaintiff. The making of such a transfer was an act to be done by him in his own behalf as between him and the plaintiff, and in the plaintiff's behalf as between her and the bank. There is nothing, therefore, in his extrinsic representations, for which the bank is responsible.

The certificate which he delivered to the plaintiff was not in his name, but in hers, stating that she was entitled to so much stock, and showed, upon its face, that no certificate could be lawfully issued without the surrender of a former certificate

Opinion of the Court.

and a transfer thereof upon the books of the bank. The bylaws, passed under the authority expressly conferred by the act of Congress under which the bank was organized, contained a corresponding provision, designed for the security of the bank as well as of persons taking legal transfers of stock without notice of any prior equitable title therein. Union Bank v. Laird, 2 Wheat. 390; Black v. Zacharie, 3 How. 483, 513. The very form of the certificate was such as to put her upon her guard. She was not applying to the bank to take stock, as an original subscriber or otherwise; but she was bargaining with Robert B. Moores for stock which she supposed him to hold as. his own. She knew that she had not held or surrendered any certificate, and she never asked to see his certificate or a transfer thereof to her; and he in fact made no surrender to the bank or transfer on its books. She relied on his personal representation, as the party with whom she was dealing, that he 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 prerequisites 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 prerequisites 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.

Of the great number of cases referred to in the thorough and elaborate arguments at the bar, we shall notice only some of the most important. None of those cited by the learned counsel for the plaintiff affirm a broader proposition than this: A certificate of stock in a corporation, under the corporate seal, 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.

When a corporation, upon the delivery to it of a certificate of stock with a forged power of attorney purporting to be ex