Gray v. Fankhauser

Mr. Justice McBride delivered the opinion of the court. 1. The blank assignment made by Gray upon the delivery of the certificates to Anson gave to him the apparent authority to deal absolutely with the stock; and a pledgee in good faith, without notice of any infirmity [427] in Anson’s title, is entitled to have the proceeds of the shares applied on Anson’s debt. When the true owner places in the hands of another all the indicia of the ownership of property, so that he appears to have the full power of disposing of it, innocent persons dealing with such apparent owner will be protected. Their rights in such a case do not depend upon the actual authority of the person with whom they deal, but upon the apparent authority with which the confidence or negligence of the true owner has invested him: McNeil v. Tenth National Bank, 46 N. Y. 325 (7 Am. Rep. 341). Assignments in blank of the character of that now under consideration are perhaps the most common method of transferring the title tó certificates of stock, and have been generally recognized by the courts of our great commercial states. N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y. 30; Kortright v. Buffalo Commercial Bank, 20 Wend. 91. In the latter case the court says: “The execution in blank must have been for the express purpose of enabling the holder, whoever he might be, to fill it up. If intended to have been filled up in the name of the first transferee, there would have been no necessity for its execution in blank. Barker might have completed the instrument. The usage, however, is well established, and was fully understood by Barker, as he made the transfer in conformity to it; and he or those setting up a claim under him should not now be permitted to deny its validity. The filling up is but the execution of an authority clearly conveyed to the holder, is lawful in itself, and convenient to all parties, as it avoids the necessity of needlessly multiplying transfers upon the books.” 2. We cannot agree with counsel that the national banking act limits the right of passing title to stock certificates by assignment. The provisions of the United States Revised Statutes, § 5139 (U. S. Comp. St. 1901, p. 5139), and similar state statutes, providing that stock shall be transferred by indorsement on the books of the [428] corporation, have generally been held to be for the protection and convenience of the bank, and that no effect should be given to them except for the protection of the corporation which can waive them at pleasure: McNeil v. Tenth National Bank, 46 N. Y. 325 (7 Am. Rep. 341),. was a case arising upon a pledge of certificates of national bank stock under circumstances exactly similar to the case at bar, and it was there held that an assignment in blank, almost word for word in the same language as used in the assignment in the presentíase, transferred the entire title to the shares, both legal and equitable. That case is so thoroughly discussed and its every feature so similar to the one at bar that we feel constrained to adopt it as aptly expressing our opinion on the contentions here involved. It follows from these considerations that plaintiff is not entitled to the possession of the stock in question until he redeems by paying the Anson note, with interest, and the question now is with regard to the remedy which should be applied to do justice to both parties. 3. Fankhauser has shown no diligence to protect plaintiff after being informed of his rights, and, under the circumstances, we think that it will be better to retain this case and see that both parties receive their dues, rather than return the stock to the defendant, who might be tempted to pursue his own advantage in preference to the mutual advantage of himself and plaintiff. We will therefore direct that defendant corporation deposit the ten shares held by it with the clerk of this court, and that plaintiff deposit, within thirty days, with the clerk, the sum of $1,000, due upon the note, with interest at six per cent from maturity, and the costs and disbursements of this suit, with $160 attorney fees and expenses; that such sum be held for sixty days, within which time the-defendant shall deposit with such receiver the six shares of stock now in his hands, and thereupon the receiver shall pay him the amount deposited, as before required, and [429] return to Gray the 16 shares of stock; and that if defendant shall fail to deposit the six shares he shall be charged, by supplemental decree herein, with the sum of $146 per share, the present value of the shares of stock, and such sum deducted from the amount of money paid by Gray. In case Gray fails to deposit the sum of money required herein, within thirty days from the rendition of the decree, the stock shall be returned to defendant Fankhauser and he shall be decreed, by a suitable supplementary order herein, to recover his costs, expenses, and attorney fees, as above indicated. Modified.