Kenyon v. Fowler

• Citation: 155 F. 107
• Decision Date: 10 June 1907
• Docket Number: 286.
• Parties: KENYON v. FOWLER.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

155 F. 107

KENYON v. FOWLER.

No. 286.

United States Court of Appeals, Second Circuit.

June 10, 1907

In Error to the Circuit Court of the United States for the Northern District of New York.

D. R Cobb, for plaintiff in error.

Fowler Crouch & Vann, for defendant in error.

Before LACOMBE, TOWNSEND, and COXE, Circuit Judges.

COXE Circuit Judge.

The action was brought by the receiver of the American Exchange National Bank of Syracuse to recover an assessment on 40 shares of stock standing in the name of the defendant on the books of the bank. The defense is that the stock was issued and his name as owner entered upon the books, without his knowledge or consent.

It is apparent that the record does not present the entire transaction, but the salient features, so far as they appear are as follows:

The stock register of the bank contains entries showing that on December 11, 1903, two old certificates for 20 shares each in the name of Herman Bartels were surrendered and two new certificates for the same number of shares were issued in the name of Otis W. Kenyon, the defendant. This business was done by Carl H. Reynolds, a broker, who took the Bartels certificates to the bank, received the new certificates and receipted for them on the stubs of the scrip book. With the new certificates he went to the office of the defendant where the following interview took place:

'I told Mr. Kenyon that this was the stock of Jim Ratchford, and that Jim wanted the stock put in his (Kenyon's) name, and I told him 'here are the certificates made out in your name,' and asked him to put his name on the back of them, and assign them in blank, which he did. I took the certificates over to the office of Mr. Ratchford and delivered them to him. Never heard of them since.'

The defendant testified that he first knew that his name appeared on the books of the bank some time after the failure of the bank, which occurred in February, 1904; that he never purchased any of its stock or authorized any other person to purchase for him. Regarding the interview with Reynolds he gives the following account:

'He came to my office and I was very busy, and he called me out and said, 'You are a stockholder of a bank.' He said, 'I have got the certificates here,' but I don't know whether there was one or two, 'in your name, and I wish you would assign them in blank.' I didn't even look at them; turned them on my desk bottom side up; put my name on them and he went out. I never saw them after that.'

The answer contains an averment as follows:

'In the latter part of the year 1903, or early in the year 1904, one Carl H. Reynolds came to defendant's office and informed him that he had just purchased some stock in the American National Exchange Bank of Syracuse, and had taken it in his (defendant's name), and asked defendant, since he had no interest in the same, to formally assign it, which defendant then and there did.'

We are of the opinion that the following facts are established:

First. The defendant's name appeared on the books of the bank as a stockholder, two certificates for 20 shares each having been issued in his name.

Second. The defendant knew that the certificates were taken in his name and he knew, or should have known, that his name appeared as a stockholder on the books of the bank.

Third. In December, 1903, the defendant duly assigned the certificates in blank and has not seen them since.

Fourth. The defendant made no effort to have his name removed from the books of the bank as a stockholder or to have the name of the legal owner of the certificates substituted.

Fifth. On August 9, 1904, the Comptroller of the Currency made an assessment of $67 per share on the stockholders of the bank pursuant to the provisions of the National Bank Act.

Upon the undisputed testimony it was the duty of the court to direct a verdict, it being manifest that there was no question of fact for the jury to determine.

It cannot be denied that the rule invoked by the plaintiff, and followed by the Circuit Court, is a severe and drastic one imposing upon the stockholder the duty, after he has sold and assigned his stock, of seeing to it that his name is removed from the books of the bank. In the case at bar the defendant would have had no difficulty in doing this, but in many cases, where the certificates are assigned in blank and the stockholder does not know who the purchaser is, it might become an exceedingly arduous and complicated undertaking. Nevertheless, we are constrained to hold, under the authorities which must govern our action, that the court below was right in directing a verdict for the plaintiff. Harsh as the rule may seem, it is clear that it is necessary for the speedy and efficient winding up by the Comptroller of the affairs of insolvent banks. He cannot enter upon an investigation and hear proofs pro and con to determine who are the stockholders, and the reasons are manifest and cogent for holding that, in making his assessment, he is justified in relying upon statements found in books of...