Tome v. Parkersburg Branch R. Co.

• Decision Date: 26 November 1873
• Citation: 39 Md. 36
• Parties: JACOB TOME v. THE PARKERSBURG BRANCH RAILROAD COMPANY.
• Court: Maryland Court of Appeals

39 Md. 36

JACOB TOME v. THE PARKERSBURG BRANCH RAILROAD COMPANY.

Court of Appeals of Maryland

November 26, 1873

APPEAL from the Superior Court of Baltimore City.

The nature of the case, together with the pleadings, are stated in the opinion of the Court. The appellant, the plaintiff below, on the 2nd October, 1869, loaned Thos. R. Rich & Co. $6650, on the security of 350 shares of the appellee's stock, on that day issued from its office, by John L Crawford, the treasurer of the company, in the usual way, in the name of the plaintiff. On the 9th May, 1870, he renewed a loan on the same certificate for $6000, taking Rich & Co's obligation for its return on the 8th August, 1870. On the 8th or 9th of April, 1870, he made a like loan of $3300, upon a certificate of 200 shares of like stock, on that day, issued as before, in his name. This loan was afterwards reduced by payments to $3000, and on the 9th July 1870, was renewed for that sum, upon the same certificate for 200 shares. Afterwards, the plaintiff demanding further security for the loan of $6000, a certificate for fifty shares was issued in his name and delivered to him on the 27th July, 1870. The plaintiff "made both of the loans upon the faith of the certificates of stock, and would not have made them on the personal responsibility of Rich & Co." Rich, who was examined as a witness for the plaintiff, stated that the principal in the transaction, for whom the money was borrowed, was John L. Crawford, though he did not mention this fact at the time, to the plaintiff. That Crawford never repaid him the money, so that he was unable to re-pay the plaintiff, and is now unable to pay his debts. "That when he received these and other certificates of stock from Crawford they were usually taken from a book of certificates, in which there were certificates signed by Van Winkle, which book was taken from the safe, (there being only one safe in the office,) by Crawford, who would then put the seal of the company upon them and sign his own name to them and then hand them to witness. This was done openly in the office."

In August, 1870, the directors of the appellee for the first time discovered certain frauds of their treasurer and stock transfer agent, Crawford, extending back for some years; he was thereupon removed from his office, and absconded; and Louis McKim was appointed treasurer and transfer agent in his place. The old office of the company was closed, and the transfer of stock of the company was suspended and disallowed until 30th December, 1870, when a notice was published that the transfer books of the company would be re-opened 3rd January, 1871, at the banking house of McKim & Co. in Baltimore.

Holders of the genuine stock were requested to present their certificates at that place, and receive in exchange the new certificates that had been prepared for them respectively. In consequence of this notice the plaintiff called at the banking house of McKim & Co., presented his three certificates to Louis McKim, the treasurer, and asked for his new certificates in exchange. McKim examined them, said the certificates were spurious, because they were over-issues and he could not do anything with them.

Before the discovery of Crawford's alleged frauds the stock of the company had a market value of about $24 per share afterwards at about $12 only. The stock which was repudiated by the company was rendered worthless. It had no market value at all. It was admitted by the defendant, that the company delivered to Crawford, as its treasurer and stock transfer agent, for the purposes of that office, three books of blank engraved certificates of stock. That one of the books had been used up in the regular business of the office, by the issuing of all the certificates therein; and that the second book, in August, 1870, was in process of being used for the same purpose, and was nearly exhausted. They were both offered in evidence. It was contended by the company, that the three certificates in suit, as well as others, which they repudiated as spurious, had been issued by Crawford out of the third book of blank certificates, which had been destroyed by him; and that the signatures of P. G. Van Winkle as president, upon all certificates taken from the third book, were forgeries. On the part of the plaintiff it was contended that the signatures in question were genuine, and proof to that effect was offered. It was also shown, that P. G. Van Winkle, the president, who did not reside in Baltimore, was in the habit of leaving his signatures upon blank certificates, in the books, to be filled up and countersigned by Crawford. It was further in evidence that the signatures of Van Winkle to the certificates in the third book, from which the spurious certificates were taken, were surreptitiously procured by Crawford. It was further shown, that Messrs. McKim and Garrett, directors in the company, had each loaned money to Crawford upon a certificate of stock, accepted as genuine, but since alleged by the defendant to be a forgery; and that Mr. Van Winkle, the president, himself had pronounced his signatures genuine, upon certificates held by the National Mechanics' Bank, which were afterwards repudiated by the company as forgeries.

It was also in evidence that Mr. Van Winkle, although informed by Mr. McKim as early as March, 1870, that a great deal of money was being borrowed on the stock, and "that Crawford was operating in Parkersburg stock," he was contented to accept Crawford's statement "that all was right." On a subsequent occasion he was sent for to Hyde Park to come again and look into the matter, and he reported "that he had given Mr. Crawford's books a thorough examination, and had a free conversation with him, and was satisfied everything was right." Again he was called on to go with Mr. McKim to the Mechanics' Bank to examine two certificates held by that bank. Mr. Coleman, the cashier, told him that he had heard rumors of an over-issue of stock. Van Winkle said he had heard those rumors, asked to look at the two certificates, inspected them carefully for two or three minutes, handed them to Mr. McKim, who looked at them for a minute or two and handed them back to Van Winkle, who returned them to Coleman, saying, """ these are all right," remarking that it was his habit to leave certificates signed at the office, as it was impossible for him to be within reach at all times. These two certificates were shown at the trial not to have come out of the first or second book, and were repudiated by the defendant as forgeries.

First Exception: The plaintiff offered to prove by Josias Lee Johnston as follows:

I am a banker and broker; before August, 1870, I called Mr. Garrett's attention to the unusual quantity of Parkersburg stock on the market, and he said he would go to the Parkersburg Railroad office and look into it; he returned, and while I do not remember his exact answer, it was such as to re-assure my mind that all was right at the Parkersburg Branch Railroad office; I had already made a small loan on the stock, and I made two large loans afterwards; they were made on thirty days' call, and I called them in before August, 1870, but they were not all paid; I made the loans on March 26th, and April 8th, 1870; those were the loans made after my conversation with Mr. Garrett; I never had a second conversation with Mr. Garrett before the difficulties became known.

On cross-examination, the witness said: The small loan was for $4500, the loan in March was for $10,000, and in April for $10,500: I took Mr. Crawford's note for each loan; I had my conversation with Mr. Garrett in February or March, 1870; I do not remember shewing him any certificates; I cannot remember whether he told me my certificates were right or the books of the company were right; I do not recollect why he said all was right; both interviews were at my office; I did not send for him, and the conversation was incidental; I don't think Mr Garrett has ever seen the two certificates upon which I made the loans; all was paid me except $2500; that was on the third loan of $10,000; Mr. Crawford paid the $10,500 loan on the 29th of July, 1870.

To the admissibility of this testimony the defendant objected, and the Court sustained the objection. The plaintiff thereupon excepted.

Second Exception: Waived.

Third Exception: The plaintiff offered to read in evidence from the record book of proceedings of the directors of the defendant, of the 10th of August, 1870. The defendant objected and the Court sustained the objection. The plaintiff excepted.

Fourth Exception: The defendant offered in evidence by Joseph E. Paine, that he was an expert in the matter of hand-writing, and that he believed the signatures, P. G. Van Winkle, in the certificates sued upon in this case, were not genuine signatures. The defendant then offered to ask the said Joseph E. Paine, as a witness familiar with the hand-writing of P. G. Van Winkle, whether from his knowledge of the hand-writing of said Van Winkle, he believed the said signatures to be in his hand-writing; the witness being then interrogated as to his knowledge of Van Winkle's hand-writing, stated that he had never seen him write, nor received any letter from him, nor in the course of his business had he become acquainted with it; that his only knowledge on that subject was derived from an examination of the signatures of said Van Winkle in the two certificate books in evidence, which had been put in his hands by the defendant for the purpose of enabling him to testify in this case, and that he had carefully examined them for five or six months, and had thus acquired a knowledge of the hand-writing of Van Winkle; the plaintiff then objected to his competency as a witness to testify...