Brisbane v. Delaware, Lackawanna & Western Railroad

Miller, J. The certificate for the ten shares of stock, issued by the defendant to the administrator of Samuel Benedict, deceased, was unauthorized, as no scrip was produced showing that the deceased held the stock at the time of his death. By the terms of the original certificate it was only transferable upon the production of the same, and, it not being produced, the defendant took the risk of the administrator being the owner thereof, and, as the proof showed that he was not, the defendant was properly held liable therefor. A different rule, however, prevails in reference to the dividends, and upon the books of the company they were properly payable to the person in whose name the stock stood or his legal representative. Prima facie, upon the books of the company, the administrator of Samuel Benedict was the owner of the dividends, as there was nothing to show a want of title in him, and they were only transferable upon the production and surrender of the certificate. Until this was done the defendant was bound to regard him as entitled to the same and the owner thereof. His title, as it appeared upon the books, was conclusive until impeached or impaired by the certificate itself with a transfer, or other evidence, showing that the stock belonged to the plaintiff or some other party. The administrator was clearly authorized to receive the dividends as the stock stood upon the books, and the defendant was bound to pay the same unless it had some notice of a change of the title, or of a transfer of the stock,- or such knowledge or information as would put it upon inquiry as to the ownership thereof. The failure of the administrator to present the certificate was not such a notice, at the time the dividends were received, as subjected the right to collect the same to suspicion or as required *208 the defendant to make inquiry in regard thereto. The plaintiff had not given any such notice to the defendant as would put it on its guard in reference to the title to the stock and dividends, and there is no rule of law which imposes upon the officers of corporations the duty of requiring the production of the certificate of stock before the payment of dividends on the same. The books containing the lists of the stockholders are evidence of the ownership of the stock, and a corporation is justified in being governed thereby until proof or notice is given showing that other parties than those named therein are the owners of the stock. This case is far different from that of one where a person purchases a bond and mortgage and is chargeable with notice of any defect in the assignor’s title thereto unless he requires the production of the bond. There was no notice, constructive or otherwise, which put the defendant upon inquiry in reference to the ownership of the stock in question. Plaintiff produced a letter from defendant’s assistant treasurer, which referred to a letter written "by him to the company, but it is not shown that the letter referred to communicated the fact that the stock had been transferred to or was claimed by the plaintiff. Although the answer to the letter shows that the plaintiff claimed ten shares of the stock of the company, yet it does not show that they were the same shares in controversy. The fact that the bond of indemnity was executed does not aid the plaintiff’s case. J.ts object and purpose "was to indemnify the company for issuing the new certificate in place of and without the production of the old one, which the defendant had been informed and had reason to believe had been destroyed. The .bond of indemnity upon its face has no relation whatever to the payment of the dividends and does not include the same. In no sense can it be regarded as a notice of any thing more than that the original certificate had been destroyed as stated therein. This was not calculated to arouse any suspicion as to the ownership of the stock or its dividends, and it fully justified the company in paying the latter to the administrator of Benedict. According to law the administrator was the ap *209 parent owner of and entitled to draw the dividends. The new certificate merely supplied the place of the one which was alleged to have been destroyed for the purpose of transfer and sale in accordance with the rules and regulations of corporations in such cases. In view of the long period of time which had elapsed since the transfer of the certificate by the original owner, and the failure to present the same to the proper officer of the company, for the purpose of obtaining a new certificate, every presumption is in favor of the good faith of the defendant’s officers in the payment of the dividends in accordance with the record on the books of the company. The judgment should be affirmed. All concur. - Judgment affirmed.