30 Conn. 231 | Conn. | 1861
Several questions of the gravest character have been raised in this case, and have been argued with great learning and ability. Most of them we do not find it necessary to decide, as there is one which, in our opinion, is essentially decisive of the case. Thus, we need not determine whether, if the stock in question had been found to be spurious, there could be a recovery for the refusal of the defendants to allow a transfer of it, nor whether, if the transfer had been made, it would in that case have been of any benefit to the plaintiffs; nor need we determine whether the form of action adopted is the proper one for trying the question of the liability of the defendants for the frauds of their transfer agent in issuing fraudulent certificates of stock, nor whether such liability exists. We place our decision upon the ground that the defendants, upon whom the burden of proof upon this point clearly rests, do not show that the certificates held by the plaintiffs do not represent genuine stock, as in the absence of proof to the contrary they must certainly be taken as doing. The burden of proof upon this point, we say, is upon the defendants. Their agent, appointed for the express duty of issuing certificates to the holders of stock, issued these certificates, in the usual form, and for the purposes prescribed by their rules, and it is to be presumed, certainly in favor of these plaintiffs, who had become bona fide holders of the certificates upon the credit which their official character gave them, that R. & G. L. Schuyler had, at the time, good stock to which they would apply; which presumption must stand until the defendants show, as they can do, if such was the fact, that there was no stock standing in their names which could be represented by the certificates. When we say that the defendants could show how the actual fact was, we mean merely that they had the power to show it, and do not intend to express an opinion upon the question, controverted in the ease,
The defendants have not shown that, at the time when the plaintiffs took their certificates, there was not genuine stock held by the Schuylers sufficient to answer to them. On the contrary, it appears that at that time the Schuylers held one hundred and sixty shares of good stock, which stood in their names, and which they could have legally transferred to the plaintiffs or any other purchaser. If there were nothing more in the case it would be clear that the defendants ought to have allowed the ninety shares, covered by the certificates held by the plaintiffs, to be transferred to them.
But here the defendants come in, and show that, before the plaintiffs received their certificates, Robert Schuyler, their transfer agent, and one of the firm of R. & Gr. L. Schuyler, had issued to the firm, in his official capacity, certificates of stock to the amount of four hundred and ninety shares, beyond the one hundred and sixty shares of good stock held by the firm, and thus they say that the genuine stock had been all exhausted before the plaintiffs’ certificates were issued. It is, however, not found, and the judge expressly states that it was his intention not to find, that these certificates for the four hundred.and ninety shares had ever passed out of the hands of the Schuylers. It can not be presumed, in the absence of all evidence on the subject, that those certificates had been transferred to other parties; much less can it be presumed that they had been so transferred upon a valuable consideration and to bona fide holders. So far as we can see, therefore, and as, upon the finding, we are to presume, the plaintiffs, when they received their certificates, were the first and only equitable purchasers and owners of ninety out of the one hundred and sixty shares held by the Schuylers.
The fact which is found, and which has been pressed upon us by the counsel for the defendants as one of great importance, that the greater part of these certificates were afterwards, in the years 1849,1850 and 1851, surrendered to the railroad company by the Schuylers, and cancelled, and new certificates issued in their place to other parties, can not, we think, affect
But there is a further, and we think decisive, reason why the defendants can not avail themselves of this transfer of the stock to other parties. These very transfers to other parties were a fraud upon the plaintiffs. This fraud is wholly distinct from the fraud of their transfer agent in issuing spurious certificates. The agent who issued the certificates might be a different person entirely from the agent who superintended the transfers, and it will make the point clearer to suppose him to have been so. Now their transfer agent knew, when he allowed these transfers to other parties, that the stock had already been sold to a prior purchaser, who held a legal certificate for it, and that it was a fraud on that party to allow the stock to be transferred to other parties, so long as the certificate was not surrendered. Their transfer agent, in allowing these transfers, was acting precisely within the scope of
But if the defendants are right in claiming that they are protected in transfers made to other parties where they have no notice of equitable transfers to prior purchasers, yet this principle very clearly could not avail them here. The plaintiffs, it is said, should have given them notice of their equitable title. But how should they have given such notice ? Why, only to that officer of the company whose duties related to the transfer of their stock ; that is, to their transfer agent, Robert Schuyler himself. But Robert Schuyler already had full knowledge of the fact, for he was the very party who sold the stock to the plaintiffs ; and though a distinction may be made between the knowledge which he
Two questions remain to be considered. One is, whether the plaintiffs have proved a sufficient demand upon the defendants for a transfer of the stock, to enable them to sustain their suit. That a demand was necessary is admitted by the plaintiffs. The first demand, made by the plaintiffs’ cashier at the office of the company in New York, on the morning of July 5th, 1854, the day after the great fraud of Schuyler had been discovered, was not in our opinion sufficient. It appears that there was no transfer agent in the office, and that the company had appointed none in the place of Schuyler, who had just fled from the country, and the confusion incident to the developments then being made fully justified1 the defendants in temporarily closing their transfer books and in deferring the appointment of a new transfer agent. Such a course was necessary to the safety of the company, and was absolutely required by the condition of its affairs. As there was no absolute refusal to allow a transfer at some future time, we are inclined to the opinion that it was not such a refusal as to give the plaintiffs a right of action. The second demand, however, made by Mr. Buckingham in behalf of the plaintiffs, shortly before
The remaining question is, whether the blank power of attorney given by' R. & G-. L. Schuyler to the plaintiffs, under seal, at the time they took the certificates, was sufficient, and whether the plaintiffs could afterwards fill it up and use it as a valid power, taking effect at the time it bears date. We think that it was sufficient, and that they could fill it up and use it, although it was under seal. We are satisfied that it has been the practice of this railroad company from the first, as it is of many other corporations, to their own great convenience and that of the public, to allow blank powers of
We do not find it necessary to go out of the record to learn what course this railroad company has always pursued with regard to the transfers of their stock under powers of attorney. It is found that the certificates held by the plaintiffs
But we feel relieved from embarrassment in holding this power sufficient, by the fact that the transfer was to be made under it in the state of New York, where, it is admitted by the defendants’ counsel, the law is settled by the highest judicial authority in favor of the validity of a blank power of attorney. As the power was to be executed there, it is certainly sufficient that it was a valid one under the law prevailing there ; and a citizen from Connecticut, who has taken his certificate here, has certainly the same rights under it in New York that a citizen of that state would have under a certificate taken there.
We will only remark in .conclusion, that the tendency of judicial decisions and of legislation in this country, is to do away, so far as can be done without too violent a departure from ancient rules, with distinctions in the character and effect of written instruments founded upon the mystical power of a seal. The legislature of this state has repeatedly, by confirmatory acts, enacted that instruments purporting to be specialties, but from which the seal had been omitted, should be as good and valid as if sealed, and has further enacted that the letters L. S. or the letter S. or some equivalent, in the place where a seal is ordinarily affixed, shall be
We have taken no notice of any security held by the plaintiffs, as affecting the amount of damages to be recovered, because no allusion was made to it in the argument. Independently of that, we advise the superior court to render judgment for the plaintiffs for the value of the stock in question at the time of the last demand, which is agreed to be sixty dollars per share, with interest from that date.
In this opinion the other judges concurred.