Schumacher v. Greene Cananea Copper Co.
| Citation | 134 N.W. 510,117 Minn. 124 |
| Decision Date | 09 February 1912 |
| Docket Number | 17,396 - (216) |
| Parties | M. REINHARD SCHUMACHER v. GREENE CANANEA COPPER COMPANY and Others |
| Court | Minnesota Supreme Court |
Action in the district court for St. Louis county against Greene Cananea Copper Company, the City Trust Company, the individual partners constituting the firm of Hamlin Nickerson & Company, J. Thomas Reinhardt and Philip Tillinghast, as receiver of the First National Bank of Ironwood, Michigan, to determine that plaintiff was the sole owner of certain shares of stock in defendant mining company and of a certain certificate of stock, and to enjoin defendants Hamlin, Nickerson & Company and defendant Reinhardt from asserting any claim thereto.
The answer of Greene Cananea Copper Company and City Trust Company admitted that on or about July 10, 1909, plaintiff notified defendant copper company that he was the sole owner of the certificate of stock and of the alleged theft thereof and demanded that the copper company refuse to transfer said certificate; alleged that on October 21, 1909, the certificate had been presented to these defendants for transfer by defendants Hamlin, Nickerson & Company and that thereupon, by reason of the notice theretofore received from plaintiff, defendant copper company refused to make the transfer; that defendants Hamlin, Nickerson & Company and Reinhardt claimed and still claim that they own the stock and certificate evidencing the same; admitted that the certificate had been in their possession and control ever since October 21, 1909; alleged that they were unable to determine which of the parties were the rightful owners of the stock, but that defendant copper company always had been and was willing to have the certificate of stock transferred to such person of the adverse claimants as the court should determine was the rightful owner. The answer of the partners constituting the firm of Hamlin, Nickerson & Company alleged that in making the purchase of the stock they acted in the utmost good faith in the belief they were dealing with the full equitable and legal owner, and they never dealt with the Larson referred to in the complaint.
The reply admitted the certificate was presented to the City Trust Company for transfer; that it took the certificate, but refused to issue a new certificate or to return the old certificate.
The case was tried before Dibell, J., who made findings and as conclusions of law found that plaintiff was the owner of the one hundred shares of stock of defendant Greene Cananea Copper Company evidenced by stock certificate numbered A 4708, and that none of the defendants had any interest therein; that defendant Greene Cananea Copper Company deliver the certificate of stock to plaintiff and transfer the same on its books, in such manner as he may direct. From an order denying their motion to amend the findings of fact and conclusions of law or for a new trial, defendants B. Nason Hamlin, William G. Nickerson and Alfred Codman appealed. Affirmed.
Pledge of stock certificate.
When a stock certificate is pledged with a bank, the act of an officer thereof in wrongfully appropriating the same for his own purposes is not the misappropriation of the bank to whose custody it was intrusted, even though the bank may be liable to the pledgor.
Pledge of stock certificate -- right of owner against purchaser for value.
The owner of a stock certificate indorsed in blank, who in pledging the same to a reputable going bank is free from negligence, is not estopped from asserting title thereto as against an innocent good-faith purchaser for value, who derives title through one who stole such certificate from the bank while it was pledged, even though the thief be the cashier of the bank.
Custom of brokers.
A custom prevailing among brokers and bankers to pass stock certificates indorsed in blank from hand to hand without inquiry as to source of title, the same as negotiable paper, does not override the established law that stock certificates have not all the attributes of negotiable instruments; nor does such custom warrant the court in changing the law to conform to the custom.
Wilson G. Crosby and Oliver S. Andresen, for appellants.
Haroldson & Colton and Herb M. Norris, for respondent.
This action was brought to determine the ownership of shares of stock in the defendant Greene Cananea Copper Company, a corporation of this state. The defendants Hamlin, Nickerson & Company claimed the share certificate evidencing the stock, and denied plaintiff's right thereto. The trial resulted in findings of fact and conclusions of law in favor of plaintiff. Hamlin, Nickerson & Company moved the court for amended findings, and, in case of a denial of such motion, for a new trial. An order denying both motions was made. From the order this appeal was taken.
The facts in the main are these: On May 12, 1909, plaintiff held and owned a share certificate in the Greene Cananea Copper Company, issued in his name and bearing the number A4708. He then borrowed from the First National Bank of Ironwood, Michigan, $700, giving his promissory note, due in four months, to the bank, and as security pledging the certificate in suit and two similar certificates in other corporations. When so pledged, the certificates were indorsed in blank by plaintiff and attached to the note. The note described the certificates pledged, and authorized the president or cashier of the bank, in case of default, to sell and apply the proceeds to the payment of the note. Elvin T. Larson was then cashier of the bank and managed its business, assisted by the other officers thereof.
May 17, 1909, Larson took the note and certificates from the bank, detached the certificate in question, and gave it, together with many other stock certificates, to a broker to sell. This certificate and others were sold by the broker to Miller & Company, of New York. The broker drew a draft for the price on that firm, payable to his own order, indorsed and delivered the draft to Larson, who thereto attached the certificates sold, and forwarded the same to a Duluth bank for collection, with instruction to credit the amount to the First National Bank of Ironwood. The stock certificates thus turned over to the broker by Larson, and sold, realized $20,081.74. June 21, 1909, the First National Bank of Ironwood was placed in the hands of a receiver.
Plaintiff did not discover that the pledged certificates had passed out of the possession of the pledgee till July 1, 1909, and on the ninth day of that month he notified the Greene Cananea Copper Company and its transfer agent in New York City of the loss. Thereafter plaintiff tendered payment of the note to the receiver of the bank at the proper time and demanded the return of the certificates pledged; but the receiver had neither note nor certificates under his control. The defendants Hamlin, Nickerson & Company, without notice of plaintiff's rights, bought in open market the certificate involved in this suit, in good faith, and at full market price.
The court also found that the cashier, Larson,...
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