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 NOTES OF RECENT CASES Corporation to act upon an instrument which turned oit to be invalid. But this judgment was reversed by the Appeal Court (1903, 2 K. B., 580) on the ground that as the transfer to the bank was registered and the certificate issued to them by the Corporation in pursuance of their statutory duty, and not voluntarily by reason of a request by the bank, there was no implied contract by the bank to indemnify the Corpora tion against the loss which they had sustained. Their view was based upon Balkis Consolidated Co. v. Tompkins (1893, A. C. 413); Simm v. Anglo American Telegraph Company (5 Q. B. D. 188), and Anglo American Telegraph Company v. Spurling (5 Q. B. D. 194). The House of Lords has now, however, reversed the Appeal Court and restored the judgment of the Lord Chief Justice in favor of the bank. In a judgment delivered by the Lord Chancellor and by Lord Davey it is, therefore, now finally determined that where both parties, in the circumstances mentioned, have acted bona fide and without negligence, a banker is bound to indemnify a corporation against the liability to a shareholder upon an implied contract between the bank and the corporation that the transfer is genuine. It will be noted that in England shares are trans ferred by a separate document under seal, and not, as in America, upon a transfer indorsed upon the back of the share certificate. This decision affirms the proposition that a person who brings a transfer of a stock certificate to a transfer-office for transfer or registration impliedly warrants that all the signatures are genuine. In this country the practice has com monly been for a transfer-agent to require an express warranty of the genuineness of signatures by some known broker, or other responsible person, before transferring shares or issuing a new certi ficate. We submit that the present decision of the House of Lords is incorrect and that the better view is that of the Court of Appeals which is over ruled. The decision rests on the common law principle that the person, who, at the request of another, does something that is not manifestly tortious, is entitled to be indemnified for injuries to the rights of third persons for which he becomes responsible. This, however, assumes that the first person is under some obligation to act, and does not have the right to exercise any volition or discretion as to whether he will, or will not, comply with the request. The duty of a transferagent is to keep the register correct and to look after the transfer between parties. There is no duty in the transfer-agent to transfer or register the stock unless the signatures attached to the instrument of transfer are, in fact, genuine. It

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can refuse to make any transfer until, and unless satisfied of, its correctness. There is no custom of the law merchant of an implied warranty of the genuineness of signatures to stock certificates, as is the case with signatures to negotiable bills or notes. So that if the transfer-agent does not require an express warranty of the signatures it then acts at its peril. Lee M. Friedman. This is, as stated, a case of very great impor tance. Where a transfer of shares has been made in reliance upon a forged assignment, a number of conflicting interests may arise, which it is diffi cult to reconcile. There is, first, the right of the true owner whose name has been forged) whose certificate has been surrendered and can celed, and whose position as a shareholder upon the books of the corporation has been temporarily destroyed. There is the bona fide purchaser (from the forger) who has surrendered the certifi cate and procured the issuing of a new one to himself. In many cases this purchaser, armed with this new and genuine certificate, has in good faith transferred it, before the discovery of the forgery, to another bona fide purchaser who has bought in reliance upon the new certificate. And lastly, there is the corporation which has, in good faith, but without right, canceled the orig inal certificate for which it must make amends to the true owner (usually by restoring him to his original status) and which has also misled the second purchaser above referred to into part ing with his money in reliance upon the new cer tificate which the corporation has innocently issued. If the authorized capital had already been fully issued, there is now an overissue. The whole subject is too large to be adequately dealt with in a note. But usually the outcome will be this: The corporation will restore the true owner to his rights, and it will pay damages to the second purchaser. It will then endeavor to get indem nity from the first innocent purchaser who bought the original certificate with the forged indorse ment upon it and who surrendered it for cancel lation and reissue. What are the rights of the corporation against him? The answer which the cases make is this: Where he comes in with a forged assignment and power of attorney to make the transfer, and is permitted, in person, or by the agent he selects, to make the transfer, as is customary in the United States, he is liable to the corporation upon an implied warranty of the genuineness of the authority: Boston R. Co. v. Richardson, 135 Mass. 473; Starkey v. Bank of England (1903) A. C. 114. See also Clarkson Home v. Missouri Pac. Ry. Co., 182 N. Y. 47, 74 N. E. 571; Hambleton v. Central Ohio R. Co.