Green v. Forsyth Furniture Lines, Inc.

CoNNOR, J. The weight of the evidence offered at the trial of this action by the plaintiff does not, we think, sustain the allegations of the complaint, which are denied in the answer, to the effect that at or prior to the transfer of the stock on its books, the defendant corporation had notice of the' false and fraudulent representations by means of which Dorsey Brockett had procured from plaintiff his certificate of stock, properly endorsed by him; that prior to such transfer, plaintiff had requested said corporation not to cancel said certificate or to transfer his stock, upon presentation of said certificate by the holder thereof, for the reason that the same had been obtained from him by means of false and fraudulent representations made to plaintiff by Dorsey Brockett, and that by reason of such notice and such request, the transfer of said stock on its books by the defendant corporation was wrongful. The evidence tends strongly to show that said stock was transferred on its books by the defendant corporation on 5 May, 1926, and that plaintiff did not notify said defendant of the circumstances under which he endorsed his certificate and delivered same to Dorsey Brockett, until 8 June, 1926. On 11 June, 1926, the treasurer of the defendant corporation, in reply to a letter from plaintiff dated 8 June, 1926, advised plaintiff that the stock had not been transferred at the date of his letter. There was evidence tending to show that at the date of his letter to plaintiff, the treasurer did not know that prior to 8 June, 1926, the stock had been transferred by .another officer of the corporation. It is immaterial whether or not the treasurer of the corporation was negligent in failing to examine the stock book of the corporation before writing the letter to plaintiff, advising him that the stock had not been transferred, at the date of said letter, for the reason that all the evidence offered by plaintiff shows that the certificate, properly endorsed by plaintiff, had been sold and delivered by Dorsey Brockett to W1 A. Blair, an innocent purchaser for value, on- 4 May, 1926. ' It is said in Cook on Corporations, 8 ed., Vol. 2, sec. 438, that “Shares of stock are the same as other kinds of property, in that a person who has been deprived of his stock by fraud cannot follow the stock and take it from the hands of a bona fide purchaser for value. The remedy of the defrauded person is for damages against the person defrauding him, or *107 for a retransfer of tbe stock, if tbe latter still bolds it, together witb an injunction against tbe transfer of tbe latter. But if tbe person obtaining tbe stock by fraud sells it, even in violation of an injunction, tbe bona fide purchaser for value and without notice, is protected.” Tbe evidence offered by plaintiff tends to show that tbe defendant, "W. A. Blair, was an innocent purchaser of tbe certificate, properly endorsed by plaintiff, for value; there was no evidence to tbe contrary. By bis purchase of said certificate, although from Dorsey Brockett, who bad procured it from plaintiff by fraud, and who therefore bad no title to tbe certificate as against tbe plaintiff, tbe said W. A. Blair became tbe owner of tbe ten shares of stock, for which tbe certificate bad been issued to plaintiff by tbe defendant corporation. As such owner, tbe said W. A. Blair bad tbe right to require tbe defendant corporation to cancel said certificate, .and to issue in lieu thereof new certificates, thus transferring tbe stock on tbe books of tbe corporation. Upon tbe presentation of said certificate, properly endorsed by plaintiff, to it by tbe said W. A. Blair, witb tbe request that same be canceled, and that new certificates be issued in lieu thereof, it was tbe duty of tbe defendant corporation to comply witb said requests, notwithstanding it bad notice of tbe false and fraudulent representations by means of which Dorsey Brockett bad procured tbe certificate from plaintiff, if tbe said ~W. A. Blair was an innocent purchaser for value, of said certificate. Defendant corporation cannot be held liable to plaintiff in this action when all tbe evidence was to tbe effect that W. A. Blair was an innocent purchaser, for value, of tbe certificate and therefore tbe owner of tbe stock. Defendants’ motion at tbe close of tbe evidence for judgment dismissing tbe action as of nonsuit should have been sustained. Tbe judgment must be Beversed.