Barstow v. City Trust Co.

A certificate of stock issued by a corporation with a form of assignment and power of attorney to make the necessary transfer printed on the back, which has been signed in blank by the owner, is not at common law a negotiable instrument, title to which passes by delivery. If obtained feloniously from the true owner, his title ordinarily is not divested upon sale by the thief to a purchaser for value, without notice of the theft. Scollans v. Rollins, 173 Mass. 275, 278. The case at bar upon the agreed facts falls within this familiar rule. The original owner of the stock in question, one Schumacher, after signing the certificate in blank, pledged .it as security for a loan to a national bank whose ^cashier subsequently embezzled and appropriated the certificate to his own use. It is under his felonious act that the plaintiffs derive their alleged title. But as no title passed, the defendant as the transfer agent of the corporation is not liable either in contract, or tort for its refusal to return the certificate presented for transfer, or to issue therefor a new certificate. Spooner v. Holmes, 102 Mass. 503. O’Herron v. Gray, 168 Mass. 573.

*334The evidence of a local custom that a good title passed by delivery under either a sale or a pledge, where the certificate is indorsed in blank or is transferred by a separate instrument, and power of attorney, if the signature is guaranteed by a stock exchange house and witnessed, because as stated in Baker v. Davie, 211 Mass. 429, 436, “the owner, having given another such indicia of title as clothes him with the appearance of ownership, is precludedfrom setting up title in himself as against a holder in good faith,” was rightly excluded. If the custom is good, — a question we do not decide, — the pledge took place in another jurisdiction where a custom of this character is not shown to have prevailed, and under such circumstances as to preclude any inference that Schumacher had any reason to anticipate embezzlement by the cashier or that the certificate through his criminal act might come into the possession of ,the plaintiff or other foreign purchasers who were ignorant of the true ownership. Barrie v. Quinby, 206 Mass. 259, 264, 265. Russell v. American Bell Telephone Co. 180 Mass. 467.

We add, as matter of precaution, that the St. of 1910, c. 171, §§ 1, 5, and 7 has no extraterritorial application.

The failure of the plaintiffs for these reasons to prove title in themselves justified the presiding judge in refusing the first seven rulings requested, and the remaining seven requests, to meet other grounds of defense, therefore became immaterial.

Judgment for the defendant.