Loring v. Goodhue

• Decision Date: 23 May 1927
• Citation: 259 Mass. 495,156 N.E. 704
• Parties: LORING et al. v. GOODHUE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

259 Mass. 495

156 N.E. 704

LORING et al.

v.GOODHUE et al.

Supreme Judicial Court of Massachusetts, Suffolk.

May 23, 1927.

Appeal from Supreme Judicial Court, Suffolk County.

Suit in equity by Augustus P. Loring, Jr., and another, executors of the will of Ellen S. Bacon, against L. Cushing Goodhue, administrator of the estate of George Burroughs, and others, to recover shares of a real estate trust wrongfully pledged by said Burroughs. From interlocutory decree confirming the master's report and final decree dismissing the bill, plaintiffs appeal. Interlocutory and final decrees affirmed.

J. Noble, of Boston, for appellants.

N. Leonard, of Boston, for appellee Old Colony Trust Co.

E. K. Arnold, of Boston, for appellee State Street Trust Co.

RUGG, G. J.

This is a suit whereby the plaintiffs seek to recover ten shares in the Boston Real Estate Trust wrongfully pledged by one Burroughs. The case was referred to a master. His report has been confirmed and a final decree entered dismissing the bill. No evidence is reported. The facts found by the master must be accepted as true. Goldband v. Commissioner of Banks, 245 Mass. 143, 146, 139 N. E. 834.

The plaintiffs, in June, 1925, decided to sell thirty shares in the Boston Real Estate Trust represented by a single certificate standing in the name of a testatrix of whose will they were executors. This trust was an unincorporated association managed by trustees, the beneficial interest in which was represented by transferable shares. The plaintiffs arranged for the sale with one Burroughs, the leading specialist in this class of securities, with whom the plaintiffs had dealt extensively for a number of years, whose reputation was excellant and who was trusted by all the parties. A price was fixed for which it was thought the shares could be sold, but the representative of Burroughs suggested that it probably would be necessary to split the single certificate into smaller units, because each share had a part of $1,000 and thirty shares was a large block to sell to any one purchaser. This suggestion was accepted in behalf of the plaintiffs. Thereafter the certificate for thirty shares was delivered to the representative of Burroughs, accompanied by a blank power of attorney executed by the plaintiffs. To save time in effecting a transfer after sale, the plaintiffs also provided the necessary probate papers showing the authority of the plaintiffs to sell the shares. It was intended that the shares represented by the single certificate should be split into such blocks as Burroughs should sell, and all necessary papers were furnished to that end. Immediately on receipt of the certificate with accompanying papers, Burroughs presented them to the transfer agents and received in return six certificates each for five shares in his own name. Of this transfer the plaintiffs had no knowledge. Burroughs immediately thereafter indorsed in blank each of these six new certificates and for value pledged three of them with the Old Colony Trust Company and three with the State Street Trust Company. A few days later Burroughs notified the plaintiffs that he had sold twenty of the shares and sent to them his check in payment therefor at the price fixed. Shortly thereafter Burroughs died without having given notice of the sale to the trust companies or made delivery to the purchaser, and without finding a purchaser for the remaining ten shares. Each of the trust companies still holds the fifteen shares as originally pledged, and neither holds any other such shares pledged to it by Burroughs. The master's report concludes in these words:

‘When the plaintiffs delivered the thirty-share lot to Burroughs with the blank power of attorney and the probate papers, as already described, they did it to enable Burroughs to split the lot into convenient blocks and to speed up transfers after sale. It is clear that the plaintiffs trusted Burroughs and had no reason to expect any such breach of trust as was committed. ...