Mandlebaum v. North American Mining Co.

4 Mich. 465 | Mich. | 1857

By the Court,

Martin, J.

The certificate which was issued to Ingersoll by the defendants, became the property of the plaintiff by purchase, and was transferred to him in the manner in which it is found by the Court below. Such instruments are usually negotiated in market. The endorsement was in blank; the power of attorney remaining to be filled up by whatever holder might desire an entry upon the books of the Company of the transfer of the stock, and the issue of a new certificate to himself. By this endorsement and delivery, the transfer was, under our statute, valid, as between the parties thereto. The entry thereof on the books of the Company being only necessary for the benefit and security of the Company, and not to the validity of the holder’s title. (See R. S., Ch. 55, *472§ 7, %>. 211.) "Whatever title, then, Ingersoll had in the stock for which the certificate was issued to him, or acquired by such transfer tipon the Company’s books and the new issue, this plaintiff now holds; and the transfer of this certificate he asks to have intimated upon the books of the defendants, and for a new certificate to be issued to him thereupon. This request the defendants refuse to comply with, until the title to the stock represented by the original certificate acquired by Ingersoll shall have been settled between this plaintiff and Pratt; and for such refusal this action is brought.

It becomes unnecessary, in the view we take of this case, to inquire into Pratt’s title, under the original certificate of stock issued to Buckley ; or into that of Ingersoll under his purchase from Martin. Neither is it necessary to inquire into the rights of Pratt as against .Ingersoll’s title, while the latter held the certificate now owned by this plaintiff, and which was substituted for the one he claims to have owned, nor what may be his rights as against the defendants, or as against this plaintiff, should he assert them by proper proceedings in law or equity. Indeed, there would be an impropriety in doing so, for he does not appear as a party in this suit, nor can we see that it is defended at his instance, or in his behalf. That it is the duty of the Company to allow intimations of transfer of stock to be made upon their books, upon the application of the owners thereof, is not denied, nor is the liability of the Company in case of an improper refusal questioned, and it appears that, upon the entry of the transfer, the Company cancels the, original certificate, and issues a new one to the transferee. Before Ingersoll presented his certificate to the defendants in order that the transfer might be thus intimated, and a new certificate issued to himself, and, indeed, before he purchased it from Martin, the defendants had been informed by Pratt of his loss of the certificate he purchased from Buckley, and cautioned against transferring the stock tothe holder thereof, *473if it should he presented for that purpose. Notwithstanding this caution, the defendants did transfer it upon their hooks upon Ingersoll’s request, canceled the certificate which Pratt claimed,'and issued the one which is the fonndation of this controversy. What may have induced the defendants to recognize the title of Ingersoll to the first certificate does not appear; perhaps it was the neglect of Pratt to take the steps for securing them.against loss or liability, as prescribed in their letter, which is made an exhibit in this case, or perhaps from the long silence of Pratt,, and the lapse of time since the communication to him, it was concluded that he had no valid claim upon it, or that it had been adjusted between him and Ingersoll. However this may be, the transfer seems to have been made by the Company deliberately, and without any fraud or concealment on Ingersoll’s part. Had they refused the request of Ingersoll, and compelled him and Pratt to interplead respecting,- or otherwise to settle their conflicting claims to the certificate, they could have fully protected themselves against the consequences of any transfer, and new issue which might thereafter be made, pursuant to such settlement; but not having done this, and having recognized Ingersoll’s title, canceled the original certificate, and issued a new one to him, they cannot now be permitted to question the genuineness of that recognition, or the validity of that new certificate upon this claim of Ingersoll’s transferee.

When the Company permitted this transfer to Ingersoll to be intimated upon their boobs, and issued this certificate to him, they well knew that it might, and probably would, pass from hand to hand, upon his endorsement, through numberless bona fide holders, before it would be returned for a like intimation of transfer, and new certificate thereupon. It is true that this is not commercial paper, in the strict sense of the term; but by our statute, as has been stated, it is transferable by endorsement and delivery, so as to confer a valid title as between the parties thereto, and is, we thinkj by this provision *474of tbe statute, so far assimilated to sucb paper, that the holder is entitled to every right respecting it, as against third parties, which the law confers upon the holder of commercial paper. In this respect, the provisions of our statute are unlike those of every charter, and of the by-laws of every incorporporated Company to which we have been referred, and upon which adjudications have been made. It enlarges the effect of the endorsement and delivery, and thereby facilitates the transfer of these instruments, thus adding another element of value to them. Once endorsed, the certificate passes from hand to hand, like commercial paper, and an ordinary purchaser would, and under our statute well might regard the usual endorsement, if genuine, as sufficient; and suspicion would naturally be lulled, and inquiry would be silenced beyond such as would, by mercantile law and usage, be required upon the purchase of commercial papei*. And if inquiry were further pressed, and the party desirous of purchasing should seek further evidence of the genuineness of the title of his vendor, the entry upon the Company’s books corresponding ;_with the issuing of such certificate, would, almost of necessity, impel Mm to the conclusion that, up to that point, the title was unquestionable, and that behind it he need not pursue his investigations. It would be regarded, and properly too, as the recognition by the Company of a title upon which every subsequent purchaser could safely rely.

Such being the force and effect of the transfer and the certificate to Ingersoll, the defendants are estopped from denying their validity, or from going behind them; and asserting, in defence of this action, a title which was thereby repudiated. Now, when this certificate was issued, the defendants virtually guaranteed its genuineness to whomsoever might become the purchaser of it; and it would operate as a fraud upon the publiqto permit them, under such circumstances, to question the validity of the instrument, or *475to deny their obligation under it. No higher recognition of Ingersoll’s title could be given than has been given, and the purchaser from him, or from one deriving title from him, can, by no principle of law or of fair dealing, be required by the defendants to look beyond their books to inquire under what circumstances it was issued. The principle of estoppel is peculiarly applicable to this case, both for the protection of private rights, and upon grounds of public policy. “If,’’ says Parke, B., in Freeman vs. Cooke (2 Exch. R. 654), “ whatever a man’s intentions may be, he so conducts himself, that a reasonable man would, take the representations to be true, and believe that it was meant that he should act upon it, and he did act upon it as true, the party making the representation would be precluded from contesting its truth.” This principle applies as well to Corporations as to individuals, and to acts as to assertions, and with conclusive force when these acts result from deliberate purpose, with a full knowledge of surrounding facts, and are induced by no fraudulent representations or concealments.

Nor is there anything in the circumstances attending the plaintiff’s purchase of this certificate which relieves the defendants from the operation of this rule. It is true that he purchased with a full knowledge of all the facts known to Ingersoll; but he also knew that these facts were known to the Company, and that Ingersoll’s title had been recognized by them, notwithstanding Pratt’s claim, and with full knowledge of it. The very fact that he purchased with such knowledge, is evidence of his reliance upon the acts of the defendants for the protection of his title, and of Iona fides in making the purchase. He had a right to believe that the defendants had deliberately recognized Ingersoll’s title, and had assumed a liability to him and his transferees, after a full investigation of that title, and he had a right to rely upon this new certificate, as an assertion by them of their repudiation of Pratt’s claim, and that all persons weré safe in *476purchasing it, and of their undertaking with whomsoever might become the owner that his title would be recognized. And he may now insist that a responsibility thus deliberately assumed ought not to be resisted by the assertion of that claim which was thus disregarded when the certificate which he holds was issued.

Good faith and public policy require that the defendants should be held to this rule, and it is upon these broad grounds that this doctrine of estoppel stands interposed, to-prevent injustice, and to guard against fraud, by denying to a party the right to repudiate his deliberate acts or admissions, when these have been acted upon by those persons to whom they were directed, and whose conduct they were intended to influence. (8 Gill., 239.)

We have not been referred to, nor have we been able to find upon examination, any case which is precisely parallel with the present, but we think the reasoning of all the cases, and especially of Davis vs. the Bank of England (2 Bing., 392), and of Hunter vs. The Westminster Internal Improvement Commissioners (14 Eng. L. & Eq. Rep., 379; S. C., 7 Exch. R., 780), sustains the conclusion to which we have arrived. In the former of these cases, when certain stock belonging to Davis had been transferred upon the books of the Bapk under a forged power of attorney, but, unlike this case, without notice to the Bank, suit was brought for the refusal to pay over the dividends which had fallen due upon the transferred stock, and for permitting the transfer. The Court held, that the Bank was liable to the plaintiff for not paying over the dividends notwithstanding the transfer ; but in speaking of the rights of subsequent purchasers of the stock transferred under the forged power, they use this language : “We are not called upon to decide, whether those who purchased the stock transferred to them under the forged power might require the Bank to confirm that purchase to them, and to pay them the dividend on such stocks, or *477■whether their neglect to inquire into the authenticity of the power of attorney might not throw the loss on them that has been occasioned by the forgeries. But to prevent as far as we can, the alarm which an argument urged on behalf of the Bank is likely to eseite, we will say, that the Bank cannot refuse to pay the dividends to subsequent purchasers of these stocks. If the Bank should say to such subsequent purchasers, the persons of whom you bought are not legally possessed of the stocks they sold you, the answer would be, the Bank in the books which the law requires them to keep, and for the keeping which they receive a remuneration from the public, have registered these persons as the owners of these stocks, and the Bank cannot be permitted to say that such persons were not the owners. If this be not the law, who will purchase stock, or who can be certain that the stock which he holds belongs to him? It has ever been an object of the Legislature to give facility to the transfer of shares in the public funds. This facility of transfer is one of the advantages belonging to this species of property, and this advantage would be entirely destroyed if a purchaser should be required to look to the regularity of the transfers to all the various persons through whom such- stock has passed. Indeed, from the manner in which stock passes from man to man, from the union of stocks bought of different persons, under the same name, and the imposibility'of distinguishing what was regularly transferred from what was not, it is impossible to trace the title of stock as you can that of an estate. You cannot look further, nor is it the practice ever to attempt to look further than the Bank books for the title of the person who proposes to transfer to you.”

Although this is obiter dictum, yet it is so consonant to reason and sound policy, that we do not dorrbt the correctness of the principle, nor hesitate to apply it to the case at bar. If, in such a case, the Bank would be prohibited from denying the right of the subsequent purchasers of the stock, *478by a much stronger reason, do we think these defendants are estopped from denying this plaintiff’s right, since the transfer to Ingersoll was entered upon their books with full knowledge of Pratt’s claim of title, and of loss; and a certificate was issued thereupon to Mm gemiine in form, and containing nothing to excite suspicion, or to suggest inquiry on the part of the purchaser.

Let it be certified to the Circuit Court for the County of Wayne, as the opinion of this Court, that the plaintiff is entitled to recover.

Present, Martin, Green, Willson, Bacon, Douglass, Johnson, J. J.