Bangor Electric Light & Power Co. v. Robinson

• Decision Date: 20 September 1892
• Docket Number: 2,744.
• Citation: 52 F. 520
• Parties: BANGOR ELECTRIC LIGHT & POWER CO. et al. v. ROBINSON et al.
• Court: U.S. District Court — District of Massachusetts

52 F. 520

BANGOR ELECTRIC LIGHT & POWER CO. et al. v. ROBINSON et al.

No. 2,744.

United States Circuit Court, D. Massachusetts.

September 20, 1892

Charles G. Chick, for complainant.

George C. Abbott, for defendant Lee.

Charles L. Woodbury and Henry Walker, for defendant Robinson.

PUTNAM Circuit Judge.

In view of the court, no statute, either of Maine or Massachusetts affects this case. The statute of Maine applicable to certificates of stock provides that they may be transferred by indorsement and delivery, but that transfers shall not be valid, 'except between the parties thereto, until the same is so entered on the books of the corporation,' etc. The question under this statute applicable to this case is Who are the 'parties' with reference to whom the statute by exception declares this transfer valid? In other words, whose name shall be inserted in the blank transfer under the circumstances of this case, to make it complete? When this is ascertained, the transfer becomes perfect in favor of the person so ascertained as against the other 'party,' namely, F. M. Laughton, who indorsed the certificate in blank. So far as this case is concerned, there are not outstanding equities in strangers to be considered and the statute has no controlling effect. Without a due consideration of this rule of construction of the Maine statute, Iron Co. v. Lissberger, 116 U.S. 8, 6 S.Ct. 241, could not have been decided as it was; because here the court held that the transfer was valid, under the particular circumstances, in favor of an unregistered transferee as against an attaching creditor of the stockholder of record. When read together, the following cases in the supreme court will be found to be entirely consistent with this conclusion, and to fully sustain it, namely: Baldwin v. Ely, 9 How. 580; Combs v. Hodge, 21 How. 397; Bank v. Lanier, 11 Wall. 369; Vermilye v. Express Co., 21 Wall. 138; Parsons v. Jackson, 99 U.S. 434; Cowdrey v. Vandenburg, 101 U.S. 572; Railway Co. v. Sprague, 103 U.S. 756, and Hammond v. Hastings, 134 U.S. 401, 404, 10 S.Ct. 727.

Pub.St. Mass. c. 78, Sec. 6, is apparently aimed at stock jobbing, as is shown by reference in Brown v. Phelps, 103 Mass. 313, to Stebbins v. Leowolf, 3 Cush. 137. Likewise the Massachusetts statute of 1884, c. 229, does not seem pertinent, whether it reaches certificates of stock of foreign corporations or not. Its only purpose appears to be to remove the necessity of the registration of transfers of stock certificates as against subsequent purchasers, and it does not touch the question of the effect of an unauthorized sale of a certificate indorsed in blank. Fiske v. Carr, 20 Me. 301, turned on the very peculiar language of the statute cited in it, which unqualifiedly provided that the stock should not pass from the proprietor until the transfer has been recorded. So far as the question at bar is concerned, that statute was essentially different from the present. The latter, by implication and uniform construction, makes an unrecorded transfer valid, not only as between the parties to it, but also as between all others having notice. Bank v. Cutler, 49 Me. 315, is the ordinary application of the present statute, and in no way touches the questions at bar. The court does not perceive that any other Maine decision cited bears on this case. On the whole, the court is satisfied that this suit is to be disposed of according to the general principles of jurisprudence, applicable to certificates of corporate stocks indorsed in blank.

The court is of the opinion that whatever took place personally between Robinson and Mrs. Lee was purely of a friendly character, in no sense allied to business transactions, entirely in good faith, and not to be held by the law to prejudice either. The counsel for Mrs. Lee bring forward the proposition that when one of two innocent persons must suffer from the fraud of a third, the loss must be borne by him whose negligence enabled the third person to commit the fraud; and they cite on this point Allen v. Railroad Co., 150 Mass. 200, 207 22 N.E. 917. It can hardly be said that this is a rule of the common law; but, if it were, the practical application of it is not helped by the general terms in which it is expressed. The court is forced to the conclusion that it does not apply to relieve Mrs. Lee any more than it would an innocent purchaser for full value of jewelry stolen as the result of careless exposure by the owner. Mrs. Lee either purchased outright, or advanced money on a pledge of the certificate, or both; but the details of this are of no consequence, because, having advanced a valuable consideration in good faith, she stands in the courts of the United States the same in either view. Robinson was absent when the transaction took place; and, if he had been within reach, non constat that she would have inquired of him concerning the certificate, there being nothing on it to show that he had any interest in it. Indeed, there was no person of whom she could inquire, unless of Laughton, the indorser of the certificates. As he had parted with it long before, he could not have aided her. She had no means of protecting herself. Robinson, with reasonable care, could easily have protected all parties. If it were a mere question of balancing equities, or of throwing the loss on the innocent party, the court would have little difficulty, and it regrets that the result of the case must be contrary to what seems natural justice.

The evidence shows, and it is not disputed, that the certificate of stock was deposited by Robinson in a box in the Boston Safe-Deposit & Trust Company, under such circumstances that both Robinson and the broker of whom Mrs. Lee purchased had access to it. The certificate, however, was not intrusted to the possession of the broker, either directly, indirectly, or impliedly;...