278 Mass. 18 | Mass. | 1931
This suit was brought to compel the defendant to turn over to the plaintiff certain certificates of stock which he originally owned, and which he had pledged to a money lender named Almy D. Adams as security for loans made to him by Adams and which were rehypothecated by Adams to the defendant to secure loans from the defendant to Adams. The plaintiff’s appeals were from an interlocutory decree ordering that the bill would be dismissed unless the plaintiff tendered to the defendant a specified sum of money on or before July 13, 1931, and further ordering, in case such tender should be made, that the defendant turn over to the plaintiff certificates for shares of stock therein specified, and from a final decree dismissing the bill after the plaintiff failed to make any tender of money to the defendant.
The case was referred to a master who found as follows: On or about May 3, 1930, the plaintiff borrowed $1,000 of Adams and pledged to him as collateral security for the loan certain shares of stock, and on later dates other shares were delivered as collateral security for the same loan, and for the loan of an additional sum of money. The certificates representing the shares pledged either were accompanied by a stock power in the usual form signed by the plaintiff but blank as to transferee and as to the person to exercise the power of attorney, the signature of the owner in such case being guaranteed by The First National Bank of Boston, or were indorsed by the owner and his signature guaranteed by a Boston stock exchange house. Before entering into negotiations with Adams the plaintiff made an independent investigation of Adams’s reputation and was told that it was good. The defendant was in the business of lending money on collateral and had known
By the provisions of G. L. c. 155, § 27, title to a
In Baker v. Davie, 211 Mass. 429, 436, the court said that the principle of law established by Scollans v. E. H. Rollins & Sons, 179 Mass. 346, and Russell v. American Bell Telephone Co. 180 Mass. 467, is “that if the owner of stock knowingly places in the hand of another the certificate therefor, either indorsed in blank or by a separate instrument of transfer and power of attorney, the person to whom the certificate and instrument are delivered can pass a good title by delivery or pledge regardless of the relations between him and the owner. This is not on the ground that the certificate becomes a negotiable instrument, but on the ground of estoppel, because the owner, having given another such indicia of title as clothes him with the .appearance of ownership, is precluded from setting up title in himself as against a holder in good faith.” See Loring v. Goodhue, 259 Mass. 495, 498.
The word “purchaser” as used in the uniform stock transfer act, unless the context or subject matter otherwise requires, includes pledgee. G. L. c. 155, § 26 (1). Andrews v. Worcester, Nashua & Rochester Railroad, 159 Mass. 64, 67. “A thing is done in 'good faith’ within the meaning of
In Freeman’s National Bank v. Savery, 127 Mass. 75, 79, the court said in referring to good faith of one taking a negotiable promissory note: “A suspicion that there is a defect of title, or a knowledge of circumstances which might excite suspicion in the mind of a cautious person, or even gross negligence, not amounting to evidence of fraud, or bad faith, will not defeat the title of the purchaser.” See Puffer v. Hazzard, 240 Mass. 195, 198.
Upon the findings of the master the defendant took the certificates for the shares of stock for value and without knowledge or notice of the actual transactions between the plaintiff and Adams, and upon those findings the plaintiff has not maintained the burden of proving the defendant did not take the stock in “good faith” within the meaning of those words as used in the statute. The plaintiff, therefore, had no greater rights in the shares of stock, or the certificates representing them, after they had been pledged to the defendant in the circumstances stated, than Adams would have had. The conclusions reached by the master and the trial judge are not controlled by the facts upon which the plaintiff relies, some of which are to the effect that the plaintiff’s indorsement was not upon the certificates themselves; that the plaintiff had not in fact authorized the hypothecation of the certificates by Adams for more than the amount of the loans; that there was no express assent in the powers of attorney to a repledging of the securities; that Adams was not a stockbroker; that in some instances the stock powers of attorney were dated the day of rehypothecation to the defendant; that the defendant knew that Adams was engaged in the business of lending money on securities; that the rates of interest charged by the defendant were high; that Johnson had no interest in the transaction; and that the signatures of the plaintiff were guaranteed by a bank and not by a stock brokerage house. The rights of.the plaintiff were protected by the opportunity given him in the interlocutory decree to re
Interlocutory decree affirmed.
Final decree affirmed with 'costs.