Fisher v. Brown
104 Mass. 259
Mass.
1870
Check Treatment
Colt, J.

The plaintiff employed a broker in Providence to order the purchase for him of certain shares of stock in Boston, part to be bought for cash, and part on time at the buyer’s option. The order was transmitted to the defendants by letter, which, though it contained no information that the purchase was for the plaintiff by name, yet plainly disclosed that the broker in Providence was acting only as agent, and that the purchase was to be made for the account of a third person. The defendants were therein told that another order might be given on the next day, “ if the parties so decided ; ” and that the cash stock then ordered would probably be left in their hands “ as margin for our buyer.” The stock was in fact left in the defend*261ants’ hands according to this suggestion. Trial by jury was waived; and the court must have found, as matter of fact, that the defendants knew, or had the means of knowing, that their correspondent was acting only as agent, and that the stock belonged to his principal. Under such a state of facts, the defendants cannot hold the stock, or its proceeds, to secure the payment of a balance due them from the Providence broker.

The defendants rely upon the familiar doctrine which protects a party in transactions had in good faith with one who is acting in his own name, but who it afterwards appears was in fact the agent of an undisclosed principal. In such case, it is said, when sued, he is to be placed in the same situation, at the time of the disclosure of the real principal, as if the agent had been in fact the real contracting party. But this rule is not applicable to the facts of this case. Here there was an unnamed, not an undisclosed, principal, in the sense of the rule. The defendants knew, or had reason to know, that this stock, when bought, belonged to another party, and they had no reason to suppose that be was willing to have it used to pay the debts of his agent and broker. They could not, in good faith, so apply it. And it was wholly immaterial that they were not informed who the real owner was. It was subject to a trust in their Bands, upon these facts.

The case of Shaw v. Spencer, 100 Mass. 382, is in point. It was there held, that, if a certificate of stock issued in the name of “ A. B., trustee,” is by him pledged to secure his own debt, the pledgee is by the terms of the certificate put upon his inquiry, and primd facie there is no right to pledge it. It was said that the effect of the word “ trustee,” in the certificate, was the same as if it had been “ A. B., trustee for C. D: ” “ It means trustee for some one whose name is undisclosed; and there is no greater reason for assuming that a trustee is authorized to pledge for his own debt the property of an unnamed cestui que trust, than the property of one whose name is known.” See also Bank of Metropolis v. New England Bank, 6 How. 212 Brandao v. Barnett, 1 M. & G. 908; 6 M. & G. 630; 12 Cl. & Fin. 787; Fish v. Kempton, 7 C. B. 687.

*262The evidence offered by the defendants was rightly rejected as immaterial in this view of the case.

The court also rightly ruled that the plaintiff was entitled to recover the market value of the shares on the day they were demanded of the defendants, with interest, deducting the loss on the shares which had been sold at a loss in pursuance of orders. At the time the stock was demanded, the plaintiff offered to pay this loss. No objection was made that it was not accompanied with a tender of the money. The defendants refused to accede to the plaintiff’s claim, on the ground that they had a right to appropriate the stock to their own debt; and they had in fact already sold it and appropriated the proceeds. There was no need of further tender under these circumstances.

Case to be referred to an assessor.