209 Pa. 34 | Pa. | 1904
Opinion by
We are all of opinion this judgment must be reversed. However, the importance "of the case to the parties and to many others in like business transactions as well as the judicial weight to which the opinion of the experienced judge who tried the issue is entitled, renders it proper for us to again put upon record our view of the law, a course we do not usually adopt when the case is clear and we are all of one mind.
The question involved is: “ Whether or not a bank, to which stolen coupon bonds payable to bearer have been pledged as collateral security for a loan by the thief in the ordinary course of business, without notice to the bank of any infirmity in the title, and without any circumstances to put the bank on inquiry, takes a good title thereto as against him from whom they were stolen.”
The Pox Chase Bank is a banking corporation, incorporated under the laws of the state of Pennsylvania, doing business at Fox Chase, a suburb of Philadelphia. On July 17, 1900, William A. Douglas opened an account with the bank. Douglas at this time was a reputable and respected resident of Fox Chase, well known to the officers of the bank. Pie held responsible and lucrative positions with reputable financial institutions of the city of Philadelphia, being assistant receiv
Some months after this transaction it was discovered, that Louisa T. Cochran, the plaintiff, had placed for safe-keeping with the Chestnut Street Trust Company certain shares of stock of the Wellsbach Light Company; that Douglas had stolen this stock and exchanged it for these coupon bonds of the company and pledged them for the loan. He was prosecuted, convicted and sentenced to prison. On these facts the learned judge of the court below being of opinion the question was one purely of law for the court, peremptorily directed a verdict for plaintiff, and this appeal by defendant followed the judgment entered on the verdict.
These three facts are established by the evidence: 1. The bonds were stolen from the plaintiff; 2. They were transferred by the thief to the bank; 3. They were accepted by the bank in the ordinary course of business, in good faith without knowledge that they had been stolen.
The bonds were ordinary bonds payable to bearer with coupons attached. At a not very remote period in our judicial history such a bond would not have been considered negotiable, as a note or bill of exchange and the holder would have taken it subject to the burden if called upon, of proving his title to it as against one claiming to be the real owner; but at least as early as 1824 in Gorgier v. Mieville, 3 B. & C. 45,
It is also settled that a bona fide holder of such an instrument for value before maturity, taken in the usual course of business, acquires a good title thereto, even as against him from whom it was stolen: 2 Cook on Corporations, page 1731, says, “ A bona fide purchaser of a bond which has been stolen takes a good title.” He gives ample authority in his notes supporting this text. Mason v. Frick, 105 Pa. 162, held to the same -rule. In that case, like the one before us, the bond was that of a private corporation, payable to bearer; the plaintiff, Mason, kept it in his safe; the safe was broken open and the bond stolen; the thief transferred it to one Freeman, who knew when he took it that it had been stolen; Freeman pledged it as collateral security for a loan to Frick, the defendant, who took it in good faith. The rule that the bona fide holder of a stolen negotiable security is protected against a claim of the real owner was not even contested by the owner, but it was argued that the bond being that of a private corporation was not negotiable and that the holder took it subject to the equitable right of the real owner. It was held by this court that the law governing the case was that announced in County of Beaver v. Armstrong, supra, and that the bona fide holder was protected against the claim
It is further argued by appellee that the circumstances here proven show that defendant acted in bad faith when it took the bonds and therefore is not a bona fide holder. Good faith is defined to be honesty of intention and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The circumstances pointed to here as calculated to arouse inquiry are the facts, that Douglas although reputable was a young unmarried man living with his mother at the village of Fox Chase, not engaged in large business; that he held a subordinate position as clerk in a trust company; therefore it was improbable he would be the actual owner of this amount of bonds. The argument answers itself,—if he was a reputable young man living inexpensively and without ostentation with his mother, the conclusion would be that he did possess, from accumulations, securities worth |2,500, and that if he occupied a position of responsibility in a large trust company, he was honest and worthy. That he offered them in pledge for a loan at a small village bank instead of to a larger institution, only showed that like many others, especially those of limited means, he preferred just that kind of business. There does not seem to us to be a single circumstance in the case or anything in all of them together, which was calculated to arouse suspicion or put the defendant upon inquiry.
Appellant’s first assignment of error, that the court below erred in directing a verdict for plaintiff, is sustained. The judgment is reversed and judgment entered for defendant.