Rutland Railroad v. Haven

The opinion of the court was delivered by Taft, J. The defendant Haven was treasurer of the plaintiff company and acted as its agent in the transfer of its stock and in the issue of its certificates therefor. He fraudulently issued and sold large quantities of the plaintiff’s capital stock, putting the certificates therefor into circulation. The fraudulent stock became so intermingled with the genuine as to be indistinguishable from it, and the plaintiff has been compelled to, and does, treat it as genuine. Haven received the purchase price of the stock he so sold, in money. The certificates, when made, were the property of the plaintiff, and the money received by Haven for them was the money of the plaintiff. The result of Haven’s acts made the overissued stock legal; the company was compelled to recognize it, and when Haven received money for it, in equity and good conscience it belonged to the plaintiff. Conceding the illegality of the overissued stock, Haven, being agent of the plaintiff, could not allege its illegality as a reason for not paying the plaintiff the money he received for it. This rule has been applied in many cases in this State. Baldwin Bros. v. Potter, 47 Vt. 423; State v. Hopkins, 56 Vt. 250. The plaintiff, waiving the torts of Haven, may recover the moneys received by him, in an action of general assumpsit. The principles which underlie this action, in cases like the one under consideration, have been so fully and clearly stated by Kowell, J., in the late case of State v. St. Johnsbury, 59 Vt. 332, that it is needless to discuss them here. Judgment affirmed.