Prince v. Childs Co.

• Decision Date: 09 January 1928
• Docket Number: No. 120.,120.
• Citation: 23 F.2d 605
• Parties: PRINCE v. CHILDS CO. et al.
• Court: U.S. Court of Appeals — Second Circuit

23 F.2d 605 (1928)

PRINCE v. CHILDS CO. et al.

No. 120.

Circuit Court of Appeals, Second Circuit.

January 9, 1928.

COPYRIGHT MATERIAL OMITTED

Reynolds & Goodwin, of New York City (John Reynolds, of New York City, of counsel), for plaintiff.

Barber, Fackenthal & Giddings, of New York City (Joseph Diehl Fackenthal, of New York City, of counsel), for Childs Co.

Charles Franklin, of New York City (Charles L. Minor, of New York City, of counsel), for Stone, Prosser & Doty.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge (after stating the facts as above).

We can discover no justification for the intervention of Stone, Prosser & Doty. The main suit was to compel the issue to the plaintiff of a certificate for her stock and the payment to her of all unpaid dividends. No alternative relief was asked to recover damages for conversion, and no attempt was made to ratify the sale of the forged certificate and follow the proceeds. The bill relied solely on an ownership, which had never been divested. Any liability of Stone, Prosser & Doty to Childs Company, because of a guaranty of the plaintiff's signature, made to Childs Company at the time the forged certificate was presented for transfer, was unrelated to plaintiff's claim, and a matter with which she had no concern. Her cause of action was founded on an assertion of a continuing title to her stock, which gave her a right to secure the proper muniments, as well as the earnings derived therefrom. Stone, Prosser & Doty had no interest in the stock. The rights of Childs Company against Stone, Prosser & Doty could not be asserted in a dependent bill, ancillary to the main suit, but had to be determined in an entirely separate action for breach of warranty, where lack of diverse citizenship between Childs Company and Stone, Prosser & Doty would be fatal to federal jurisdiction. The situation is quite different from that of Rickey Land & Cattle Co. v. Miller & Lux, 218 U. S. 258, 31 S. Ct. 11, 54 L. Ed. 1032.

The so-called cross-bill of Stone, Prosser & Doty is not a cross-bill at all. After intervention, and under plaintiff's protest, they proceeded to set up defenses to the complaint, based on estoppel and laches, in a suit in which there was no controversy between the plaintiff and themselves. Accordingly the bill must be dismissed as against Stone, Prosser & Doty for lack of equity, and the cross-bill of Childs Company against them must be dismissed for lack of jurisdiction.

The case is thus reduced to a cause of action against a single defendant for the restoration of the stock and dividends. The defenses relied upon are: (a) That the plaintiff has an adequate remedy at law; (b) that she has been guilty of such negligence as to debar her from equitable relief; (c) that she is barred from recovery by laches; (d) that she is not entitled to a decree for the recovery of 200 shares of stock, unless Childs Company has treasury stock to that extent available.

As for the first point it is perfectly settled that the plaintiff is entitled to a remedy in equity. Her rights to the advantages and earnings which may inhere in her stock are quite different, and may be very much superior to anything which she can obtain from a mere decree for damages. An action at law would therefore be an inadequate remedy, and she is not bound to resort to it. A remedy in equity has been granted in numerous cases. Western Union Telegraph Co. v. Davenport, 97 U. S. 369, 24 L. Ed. 1047; Wilson v. Colorado Mining Co. (C. C. A.) 227 F. 721; Barton v. North Staffordshire Ry. Co., 38 Ch. 458; Taylor v. Midland Ry. Co., 8 H. L. C. 751; Citizens' Nat. Bank v. State, 179 Ind. 621, 101 N. E. 620, 45 L. R. A. (N. S.) 1075; Pratt v. Boston & Albany R. R., 126 Mass. 443; Pollock v. National Bank, 7 N. Y. 274, 57 Am. Dec. 520; Travis v. Knox Terpezone Co., 215 N. Y. 259, 109 N. E. 250, L. R. A. 1916A, 542, Ann. Cas. 1917A, 387; Penn Co. v. Franklin Fire Ins. Co., 181 Pa. 40, 37 A. 191, 37 L. R. A. 780.

The negligence relied upon to debar equitable relief is based upon giving Sweeney access to plaintiff's safe-deposit box; occasionally ordering purchases of stock through Sweeney, though plaintiff always paid the brokers by her own check; allowing Sweeney to deposit dividend checks and coupons in plaintiff's bank account; and acceding to the practice, which obtained in the Boston office, of having mail thought to contain checks for plaintiff opened by her father or Sweeney.

We do not regard such conduct as negligent, or as sufficient to clothe Sweeney with apparent authority to indorse plaintiff's certificates of stock for any purpose. That is an act very different from depositing checks in plaintiff's bank account, and even signing the latter's name for that purpose. It is common knowledge that scores of people are allowed to negotiate for the purchase of stocks, as well as houses and land, and to sign depositors' names on the backs of checks drawn to their order, without any authority, real or supposed, to draw checks, to sign deeds, indorse certificates, or take other steps which finally assume to sell and pass title to property. To hold the contrary would be by our...