Moores v. Citizens' Nat. Bank

• Decision Date: 08 February 1883
• Citation: Moores v. Citizens' Nat. Bank, 15 F. 141 (S.D. Ohio 1883)
• Parties: MOORES v. CITIZENS' NATIONAL BANK OF PIQUA, OHIO. [1]
• Court: U.S. District Court — Southern District of Ohio

15 F. 141

MOORES v. CITIZENS' NATIONAL BANK OF PIQUA, OHIO. ^[1]

United States Circuit Court, S.D. Ohio, Western Division.

February 8, 1883

(1) Certificates of stock are non-negotiable instruments.Lanier v. Bank,11 Wall. 369;Mechanics' Bank v. Railroad,13 N.Y. 599;Schuyler v Railroad,34 N.Y. 30.

(2) The assignee of a non-negotiable instrument takes no better title than his assignor.Where a party intentionally issues such a paper, he will be held liable to innocent holders on the ground of estoppel in pais.But mere negligence will not create such estoppel.Mechanics' Bank Case, and other cases above cited;Swan v. AustralasianCo. 2 Hurl.& C. 175;Queen v. ShropshireCo. L.R. 7 Eng.& Ir.Ap. 496;Pollard v. Vinton,105 U.S. 7;Walbridge v. Bank,19 Ohio St. 419.

(3)The act of the cashier in the present case was done upon his own behalf.He was not dealing upon behalf of the bank, and the plaintiff knew that he was acting in his own business.The act, therefore, was not within the scope of his agency, real or apparent.The act of the president in signing in blank was done upon behalf of the bank, but it was, at most, an act of ordinary negligence, and can create no liability, not being the proximate cause of the injury.The bank did not issue the certificate.Dickson v. Reuter, L.R. 3 C.P. 1;Lowry v Telegraph Co.60 N.Y. 198;Bank v. Telegraph Co.30 Ohio St. 554;Bank v. Bank of Columbia, 5 Wheat. 336;Bank v. Dunn, 6 Pet. 51;Bank v. City Bank,21 How. 356;Claflin v. Bank,22 N.Y. 293;Foster v. Essery Bank,17 Mass. 478.

Paxton & Warrington and Stallo, Kittredge & Shoemaker, for plaintiff.

Ramsey & Matthews and Hoadly, Johnson & Colston, for defendant.

BAXTER J., (charging the jury.)

This controversy is one in which a loss occasioned by the wrongful act of a third party must be borne either by the plaintiff or defendant to this action.There is no substantial disagreement between opposing counsel as to the facts.Robert B. Moores, at the time the defendant's cashier, desired to borrow money from the plaintiff.She was willing to make a loan upon satisfactory security.Moores represented he owned a considerable amount of the defendant's capital stock and promised to transfer 91 shares, of $100 each, on the books of the bank to the plaintiff, and issue a certificate to her therefor.He thereupon made out a certificate in the usual form, in which it was certified that the plaintiff was entitled to 91 shares, of $100 each, of the capital stock of said bank, transferable on the books of the bank by the plaintiff in person, or by her attorney, on the surrender of said certificate; and upon the faith of this certificate, which the plaintiff then believed to be a valid evidence of the ownership of the stock called for therein, supplemented by the contract of the fifteenth of July, 1867, which has been read in evidence, the plaintiff loaned or advanced Moores $9,100.It is conceded that this money so advanced belonged to her, and that she did not then possess any personal knowledge of the fraudulent character of said certificate.

But it is now admitted that although the books of the defendant showed Moores was the owner of 275 shares of the capital stock of the defendant at that time, the same had bene transferred and hypothecated by him to others, and that in point of fact he did not own any stock.But, in order to supply the security for the loan according to his promise and agreement, he, without authority and without any consideration to the bank, and without any knowledge on the part of any officer or directors thereof, fraudulently made and issued the certificate to the plaintiff, offered in evidence herein, and delivered the same to her; and at the same time, and as a part of the same contract, the parties entered into the aforesaid agreement of the fifteenth of July, 1867, in which it is stipulated that the plaintiff should, upon demand of Robert B. Moores or his assigns, reassign the same to him.And further, if the plaintiff should require it, said Moores agreed to repurchase said stock at its par value, and in the mean time to guaranty an annual dividend thereon of not less than 10 per cent.This certificate is verified by the genuine signatures of the defendant's then president and cashier.It is furthermore conceded that the defendant and all of its officers, except Moores, who withdrew therefrom in July, 1869, were ignorant of the existence of plaintiff's said certificate until June, 1872.When a knowledge thereof was communicated to the defendant's officers, they insisted that it was fraudulent and spurious, and not obligatory upon the bank, and the defendant has hitherto declined to recognize plaintiff as a stockholder, denied to her all the rights pertaining to that relation, and refused to account with or pay her anything therefor.It further appears that no part of the money loaned or advanced by the plaintiff as aforesaid for said certificate has been repaid her.Moores, who perpetrated the wrong, is, it is said, insolvent, and per consequence the loss, as we have already said, must be sustained by either the plaintiff or defendant.It must fall wherever the law upon the foregoing statement of the facts requires it to be placed.

Now, if we accept the plaintiff's theory of the law, to-wit, that a party purchasing or loaning money in good faith upon a certificate of stock, bearing the genuine signatures of the corporate officers authorized and charged with the duty of transferring stock on the books of the company, and issuing certificates of ownership therefor, in the usual form, and regular in all respects upon its face, without any knowledge of its fraudulent or spurious character, is entitled to recover from the corporation the damages sustained by reason of the spurious, fraudulent, and invalid character of such certificate, this court, as at present advised, entertains the opinion, and so instructs you, that no such recovery can be had upon the facts proven in this case.If a recovery could be had in any case, it could only be had by an innocent holder for value.The plaintiff is, in the ordinary sense, an innocent holder,-- that is, she relied on Moores' representations; believed he owned stock in the defendant's corporation; relied, no doubt, in good faith, upon his promise to have 91 shares thereof transferred to her; and accepted the same in the belief that the certificate was issued by authority, in the due course of business, in lieu of stock belonging to him, and which he had surrendered and caused to be canceled.

But it must be borne in mind that Moores, in his efforts and negotiations to borrow, was acting for himself and not as cashier of the bank.His...