52 Pa. 232 | Pa. | 1866
The opinion of the court was delivered, May 15th 1866, by
Passing by the question whether the defendants, being mere agents of the Commonwealth, are liable to damages at the suit of the plaintiff, even for a wrongful refusal to permit him to transfer the stock, we come immediately to the inquiry whether their refusal was wrongful. Certainly they were under no obligation to permit a transfer if their permission would have exposed them or their principals to a successful claim by any one for the replacement of the stock, or for its value. In a certain
A purchaser of stock does not receive the certificate of his vendor, but a new one, made out in his own name, and reciting nothing contained in the former. He is therefore protected in the enjoyment of his purchase, even though there was no right to make the transfer to him. For this reason, an unauthorized transfer is a wrong done to the owner of stock, for which not only the person who makes it, but any one knowingly assisting in the wrong, is responsible. That a bank or other corporation, and also these defendants, are trustees to a certain extent for stockholders — that is, for the protection of individual interests — cannot be denied. They are alike trustees of the property and of the title of each owner. They have in their keeping the primary evidence of title, and they are justly held to proper diligence and care in its preservation. From this it results that they may rightfully demand evidence of authority to make a transfer before they permit it to be made. Their own safety requires that they be satisfied of the right of the person proposing to make a transfer to do what he proposes. Generally, sufficient evidence of such right is found in the possession of legal title to the stock. Yet it is well settled that it is not in all cases sufficient, notwithstanding that the true equitable ownership may be in some other than the holder of the legal right, and a transfer may be a gross wrong to such an equitable owner. To that wrong the corporation or keepers of the register make themselves parties, if, with knowledge that there is no equitable right to transfer, they permit it to be done. And in equity, whatever puts a party upon inquiry, is notice of what inquiry must reveal. The real difficulty* is in determining how far it is the duty of the transfer agent to inquire. The law casts the legal ownership of personal property of a deceased intestate upon his administrators. They are sometimes said to be trustees, but they are such for administration. Their primary duty always is to dispose of the personal property, and therewith pay the debts of the intestate and make distribution amongst his next of kin. A sale and transfer of stocks by them is therefore in the line of their duty. There is no cestui que trust having a right to interfere and prevent such a transfer. Hence, letters of administration are always sufficient evidence of authority.
A trustee of an insolvent debtor would seem to stand on the same footing. And so,' generally, does an executor. His primary duty is administration. He is to pay debts and legacies out of the personal estate, and use even specific legacies to pay debts if necessary. His letters testamentary, therefore,
Yet even in cases in which executors have attempted to make transfers of stock, or a public loan, transfer agents (meaning thereby the corporations in which the stock is held) have sometimes been required to make inquiry into the right of the executor beyond the letters testamentary, and even beyond the will itself. In Lowry v. The Commercial and Farmers’ Bank of Baltimore, decided by Chief Justice Taney, in the Circuit Court of the United States for the Maryland District, and reported in American Law Journal, N. S., vol. 3, page 111, it was ruled that where bank stock had been bequeathed to an executor in trust to pay the dividends to certain persons, and -the executor had transferred it to one who' made allowances, thereon for the use of the executor, the bank which had issued the certificate, having notice that the stock belonged originally to the testator, was bound to look at the title of the executor under the will before it permitted the transfer. In that case the transfer was made by the executor as such, and there was no proof of any actual notice to the bank that the stock had been specifically bequeathed, and that the executor was violating his trust by making the transfer. Yet the chief justice held that the bank was bound to take notice of the will when the transfer was proposed by one of the executors; that it was negligence in the bank not to examine it, and that if it was ignorant of its contents, and of the specific bequest of the stock, it was its own fault; that it' must be dealt with as if it had possessed actual knowledge that the stock in question was specifically bequeathed- by the testator, and was not by the will to be transferred. He then proceeded to show that while it might have been sold if necessary for the payr ment of debts, there was enough to indicate to the bank that it was not needed for such an use. The bank was therefore held
The judgment is affirmed.