Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/621

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 597. a bill of interpleader to force opposing claimants to contest with each other the ownership of shares, when the corporation has already issued a certificate to one of them ; since, under such circumstances, having to admit that as to one of the con- testants it is a wrong-doer, it is not entitled to that form of remedy. 1 § 597. If a corporation by mistake or in ignorance of ma- terial facts registers an improper transfer or issues a certificate, it is not precluded from denying as against Registry of I • o t-. transfer by the transferee his title as shareholder. 2 But it can- mistake. not impugn his title under such circumstances to the injury of subsequent purchasers who, on the faith of the company's ac- tion, have bought the shares without notice of any impro- priety. 3 In a recent Maryland case a savings bank made a loan on the security of a stock certificate on which the indorse- ment for transfer was forged. The borrower afterwards ap- plied for a further loan, and the bank assented on condition that the corporation should make out a new certificate to the bank. This the corporation did, and the bank on the security 1 Mount Holly Turnpike Co. v. Ferree, 17 N. J. Eq. 117. 2 Wright" s Appeal, 99 Pa. St. 425; Houston, etc., R'y Co. u.Van Alstyne, 56 Tex. 439; Central R. R Co. v. Ward, 37 Ga. 515; Hare u. London and N. W. R'y Co., Johns. (Eng.) 722. In a Massachusetts case the de- fendant, in good faith, presented to plaintiff for a transfer a certificate of plaintiff's stock, on which the owner's name to the power of at- torney on the back had been forged. Afterwards defendant sold the stock to a third person, to whom, on de- fendant's request, the plaintiff issued a new certificate. Thus the plain- tiff had no remedy against such third person, being estopped as to him ; and having been forced to issue equivalent certificates to the real owner, was damaged. Held, it could maintain an action against de- fendant, and as damages could recover the costs and expenses of the suit (exclusive of counsel fees) by which plaintiff had been forced to issue new certificates to the real owner, plaintiff having notified de- fendant to defend that suit; also the amount paid in good faith by plain- tiff for the equivalent shares with which it replaced the shares trans- ferred on the forgery, and this although the stock was then of a higher value in the market than at the time when the forgery was com- mitted; and also the dividends which plaintiff had had to pay the real owner. Boston and A. R. R. Co. v. Richardson, 135 Mass. 473. 3 See Ward v. South Eastern R'y Co., 2 E. & E. 812; Hart v. Fron- tino, etc., Mining Co., L. R. 5 Ex. Ill; Boston and A. R. R. Co. v. Richardson, 135 Mass. 473; Metro- politan Savings Bank v. Baltimore, 63 Md. G. 601