150 N.Y.S. 1010 | N.Y. App. Div. | 1914
Lead Opinion
The plaintiffs, as executors of the estate of Ann W. Roberts, deceased, were, prior to March 28, 1908, the registered owners and holders of $23,400 consols, hereafter called bonds, of the defendant Securities Company. These bonds were nonnegotiable and transferable only by indorsement, duly authenticated, upon surrender to the company. They were kept by the plaintiffs in a tin box in a vault of the First National Bank of West Chester, Penn. On or about the date named Gibbons G. Cornwell, a son of the plaintiff R. T. Cornwell, in some way not clearly explained in the record, gained access to the vault, broke open the box and stole $23,000 of the bonds. He then forged the names of the executors to the blank form of assignment for transfer on the back of each bond. The signature of his father was affixed by the use of a rubber stamp and that of the Chester County Guarantee Trust and Safe Deposit Company by a rubber stamp, and forging with a pen the name of B. S. Walton, its president. The corporate seal of the company was affixed to the assignment, and Gibbons G. Cornwell attached to each his false certificate of acknowledg
Three questions are presented by the appeal: (a) The right of the plaintiffs to recover the bonds from the Equitable Securities- Company; (b) the liability of the Securities Company; and (c) the liability of the Equitable Company and the intervenors.
I am of the opinion that the judgment, in so far as it directs the Equitable Securities Company to deliver to the plaintiffs the bonds held by it, properly indorsed, and to pay the interest thereon from March, 1912, is right and should be affirmed. The principal relief sought by the plaintiffs is the recovery of the bonds themselves from the Equitable Securities Company, and their registration by the Securities Company in the names of the plaintiffs.
It is strenuously urged by the intervenors on behalf of themselves and the Equitable Securities Company that the plaintiffs have no rights to these bonds; that their rights attached only to the bonds originally issued to them; and that they acquired no interest whatever in the bonds issued in their place in the name of E. T. Cornwell, subsequently transferred in the name of the Equitable Securities Company. I am unable to find any authority to support this contention.' As I understand it, the owner of securities which have been stolen and transferred by means of forged indorsements may reclaim them in the hands of the transferee, and this even though new securities have been issued to the transferee in his own name in place of the stolen ones. (Clarkson Home v. Missouri, Kansas & Texas R. Co., 182 N. Y. 47; Comstock v. Buchanan, 51 Barb. 146; Cottam v. Eastern Counties Ry. Co., 3 L. T. [N. S.] 465; Johnston v. Renton, L. R 9 Eq. 181; 26 Am. & Eng. Ency. of Law [2d ed.], 889; Cook Corp. [6th ed.] § 366.)
The Equitable Company having received the interest upon the bonds since March 1, 1912, judgment was also properly directed against it and the Securities Company for that amount. .
The trial court found that the Securities Company was grossly negligent in making a transfer from the plaintiffs tc*
I think, therefore, that the court was right in holding that the intervenors were not liable to either company, but I think it erred in not giving the Equitable Company a judgment
The decision and judgment appealed from, therefore, should be modified to this extent and as thus modified the judgment should be affirmed, with costs to the plaintiffs.
Clarke and Scott, JJ., concurred; Ingraham, P. J., and Laughlin, J., dissented.
Dissenting Opinion
The essential facts upon which this judgment was entered are as follows: The defendant the Securities Company, a domestic corporation, issued in the year 1899 certain certificates of indebtedness known as consols, and such obligations of the face value of $23,300 were held by the plaintiffs as executors under the will of one Ann W. Roberts, deceased; these certificates of indebtedness were payable to the order of the plaintiffs as such executors as aforesaid and were transferable only by indorsement and on surrender thereof to the said Securities Company at its office or agency; that on or about March 28, 1908, one Gibbons Gray Cornwell forged the name of the plaintiffs to an indorsement upon said certificates for transfer and presented the same to the Securities Company, which canceled such certificates and issued new certificates to the name of R. T. Cornwell, individually, who was one of the plaintiffs and one of the executors and trustees of the Ann W. Roberts estate; that thereafter the said Gibbons Gray Cornwell obtained possession of the said certificates issued in the name of R. T. Cornwell and forged the signature of the said R. T. Cornwell to the form of indorsement on the back of each of said certificates, and on or about April 1, 1908, pledged the said certificates with the forged indorsements with a firm of stockbrokers in the city of Philadelphia as collateral for a speculative account which said Gibbons Gray Cornwell had with the said brokers; that the said brokers delivered the said certificates of indebtedness to one Toland, who, on or about June 1, 1911, sold $18,000 par value of the said certificates of indebtedness and the same were purchased by the Equitable Securities Company; that the remaining $5,000 of the said certificates of indebtedness were subsequently sold by the brokers
Upon these facts the court below directed judgment by which it was adjudged that the plaintiffs, as the executors of Ann W. Roberts, deceased, are entitled to the immediate possession of $23,000 face amount of consols issued by the defendant the Securities Company, and registered in the name of the plaintiffs as such executors on the books of the said company on March 27, 1900, which consols are in the possession of the defendant the Equitable Securities Company,' and requiring the defendant the Securities Company to issue twenty-three new consols of the face value of $1,000 each, respectively, and to register said consols on their books in the names of the plaintiffs as executors of the estate of Ann W. Roberts, deceased, and to deliver said twenty-three certificates so registered to the plaintiffs herein; and that the plaintiffs have judg
The transfers of these certificates on the books of the defendant the Securities Company being based upon the forged indorsements of the plaintiffs’ names as trustees conveyed no title to the transferees, including the Equitable Securities Company, and on demand the plaintiffs were entitled to have transferred to them new certificates of indebtedness certifying that they were the holders of $23,000 of these certificates of indebtedness. The Equitable Securities Company, however, to whom had been transferred these certificates, having been made a party defendant to the action, and subsequent to the institution of the action certain persons by and through whom these securities had been transferred by the brokers to whom the forger had pledged these securities as collateral security for his indebtedness, had been allowed to intervene in the case as defendants, had interposed answers, and were authorized by the order allowing them to intervene to answer the complaint and raise such issues and set up such new matter and demand such judgment both in defense against the complainant, and also as to the ultimate liability, if any, as between the defendant the Securities Company and the defendant the Equitable Securities, Company as may be right and proper in the premises. The answer interposed by these intervenors asked for judgment either dismissing the complaint, or, if the court held that the plaintiffs were entitled to such certificates of indebtedness, that the act of issuing new securities on the part of the defendant the Securities Company caused no damage whatever, either to the plaintiffs or to the defendant the Securities Company; that if the judgment of the court should be that because of any invalidity in the issue of said consols in the name of E. T. Cornwell, the consols subsequently issued to and now held by the defendant Equitable Securities Company should be surrendered or canceled for the benefit of the plaintiffs, or that defendant Equitable Securities Company pay to the plaintiffs any sum of money by reason of such invalidity, then a cross judgment be awarded to
The defendant the Equitable Securities Company also interposed an answer alleging that it bought the $23,000 of bonds for full value and without notice of any of the matters alleged in the complaint; that this defendant the Equitable Securities Company, after purchasing the certificates of indebtedness, surrendered the same to the Securities Company, which issued new certificates of indebtedness in the name of the Equitable Securities Company, and since such surrender the Securities Company had paid to the Equitable Securities Company the interest due on said certificates of indebtedness; and the defendant the Equitable Securities Company demanded judgment dismissing the complaint and that in case there should be a judgment resulting in the cancellation of the certificates of indebtedness issued to the Equitable Securities Company by the Securities Company, the Equitable Securities Company demanded judgment against its codefendant, the Securities Company, for the amount of the loss or damage that it may have suffered thereby; and the defendant Equitable Securities Company further demanded judgment against the intervenors to indemnify and hold harmless the defendant on account of any judgment that may be obtained against it by reason of the acquisition or possession of $18,000, the principal amount of the certificates of indebtedness of the Securities Company acquired by them from Taylor, Smith & Evans.
It seems to me that the plaintiffs’ demand having been satisfied by the judgment requiring the Securities Company to issue to them certificates of indebtedness to the amount owned by them, the ownership of which the fraudulent transfer had never divested, and the plaintiffs having obtained the judgment to which they were entitled, the only question remaining is the judgment these defendants were entitled to as between
There is no question of estoppel presented as I read the testimony, because the purchase by the Equitable Securities Company of these securities was not based upon any representations or acts of the defendant the Securities Company as to the validity of these indorsements or the right of the transferors of the certificates of indebtedness to the Equitable Securities Company to make such transfer. But as between the Equitable Securities Company and the intervenors, I think that company was entitled to judgment against the intervenors to recover back the money that it had paid to them for the securities that it had purchased from them. These intervenors had sold to the Equitable Securities Company certificates of indebtedness which upon their face bore the indorsement of the person in whose name the securities were registered. Of course the right to those securities depended upon the genuineness of the signature to the transfer upon the back of the certificates of indebtedness. I think that if R. T. Cornwell, in whose name the certificates then stood, had actually signed the trans-
Stress is laid by my brother McLaughlin in his opinion upon the finding of the trial court that the Securities Company had been grossly negligent in making the transfer from the plaintiffs to R T. Cornwell, and that by reason of this negligence the Equitable Securities Company is entitled to a judgment against the Securities Company for the amount that it paid for these certificates of indebtedness. I cannot see, however, that this negligence was in any way the proximate cause of any injury that was sustained by the Equitable Securities Company. A different question would be presented if R T. Cornwell had actually signed the transfer of the certificates standing in his name. Undoubtedly the Securities Company by transferring the certificates from the names of the plaintiffs as executors to R. T. Cornwell individually, had certified that R. T. Cornwell was the owner of those certificates, and if R. T. Cornwell had sold them either to the Equitable Securities Company or to the Equitable Securities Company’s transferors, undoubtedly as between the Equitable Securities Company and the Securities Company the Securities Company would have been entitled to recover the amount paid, relying upon the certificates standing in the name of Cornwell. But R. T. Corn-well never signed the transfer, and assuming that the Securities Company was estopped from denying to a bona fide purchaser for value that these certificates of indebtedness did stand in the name of R. T. Cornwell and that he had a right to sell or transfer them, R. T. Cornwell has never attempted to sell or transfer them. Whether these certificates of indebt
I think, therefore, the judgment should be modified as above indicated and as thus modified affirmed.
Laughlin, J., concurred.
Decision and judgment modified as directed in opinion, and as so modified judgment affirmed, with costs to plaintiffs. Order to be settled on notice.