Citizens' Bank of Shelbyville v. Mutual Trust & Deposit Co.

• Decision Date: 09 December 1924
• Parties: CITIZENS' BANK OF SHELBYVILLE ET AL. v. MUTUAL TRUST & DEPOSIT CO. CITIZENS' BANK OF WADDY ET AL. v. MUTUAL TRUST & DEPOSIT CO.
• Court: Kentucky Court of Appeals

266 S.W. 875

206 Ky. 86

CITIZENS' BANK OF SHELBYVILLE ET AL. v. MUTUAL TRUST & DEPOSIT CO.

CITIZENS' BANK OF WADDY ET AL. v. MUTUAL TRUST & DEPOSIT CO.

Court of Appeals of Kentucky.

December 9, 1924

Appeal from Circuit Court, Shelby County.

Action by the Mutual Trust & Deposit Company against the Citizens' Bank of Shelbyville, the Citizens' Bank of Waddy, and others. Judgment for plaintiff, and certain defendants separately appeal. Affirmed.

E. B Beard and Willis, Todd & Willis, all of Shelbyville, for appellants.

Stotsenburg & Weathers, of New Albany, Ind., and Edwards, Ogden & Peak of Louisville, for appellee.

HOBSON C.

These two appeals on the same record will be disposed of in one opinion. In January, 1919, E. W. McCormack held five shares of the capital stock of the Citizens' Bank of Waddy, Ky also three shares of the capital stock of the Citizens' Bank of Shelbyville, Ky. McCormack delivered these certificates of stock to Morgan & Co., who were brokers in Louisville. Upon each certificate he signed a writing transferring it to ________, and he also at the same time delivered to them a power of attorney to ________, authorizing such person to transfer the stock to ________, on the books of the company. These were the usual papers executed where stock was put on the market. The blanks were left so that the purchaser could fill in the blanks, and have the stock transferred to him when it reached the hands of a purchaser who wished to hold the stock. Morgan & Co. fell in debt to the Mutual Trust & Deposit Company of New Albany, Ind., and delivered the shares of stock with accompanying papers to it as collateral security for a debt. They did not pay the debt, and became bankrupt. The trust company then, by appropriate proceedings, sold the stock and purchased it at the sale. The two banks refused to recognize the trust company as a stockholder, and this action was brought to require them to issue the stock to the trust company. On final hearing, the circuit court adjudged the plaintiff the relief sought. The defendants appeal.

E. W. McCormack is dead. His executrix filed her petition and answer, claiming the stock for his estate. The sum of the position of the appellants on the appeal is that McCormack paid Morgan & Co. all he owed them, that he died before the blanks in the power of attorney were filled out, and that the power of attorney was vacated by his death.

Section 545 and 546, Ky. St. prescribes how shares of stock may be transferred on the books of the company, but the statute is only for the protection of the company. A contract of sale passes the rights of the vendor, and the vendee may compel the transfer upon the records of the company by a proper showing. American, etc., Co. v. Bayless, 91 Ky. 105, 15 S.W. 10, 12 Ky. Law Rep. 694; 14 C.J. 672.

In Will's Adm'r v. Wiedmann Brewing Co., 171 Ky. 681, 188 S.W. 778, Ann.Cas. 1918E, 62, this court thus defined the nature of stock certificates:

"Although neither in form nor character is a stock certificate negotiable paper, it nearly approximates it where, as in the case of the lost certificates here involved, they are indorsed in blank by the owner, with power of attorney to transfer them to any one who may obtain possession of them as holder; for such indorsement is a notification to all persons

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