Works v. Quarter Sav. Bank S.
| Decision Date | 23 June 1914 |
| Citation | 74 W.Va. 569 |
| Parties | La Belle Iron Works v. Quarter Savings Bank et als. |
| Court | West Virginia Supreme Court |
The declaration on a bond of indemnity given a corporation issuing a duplicate certificate of stock in lieu of one alleged to have been lost, pursuant to section 38, chapter 53, serial section 2871, Code 1913, held good on demurrer, (p. 573).
istration of Stock.
A corporation is trustee for its stockholders, and is bound to protect their interests, as well in respect to transfers and registrations of its stock, as in all other matters pertaining to the business intrusted to it. (p.574).
In case of loss of an original certificate of stock a corporation by the common law, and now by virtue of the statute, may be compelled, on terms of being secured by bond against loss, to issue to the owner of the stock a duplicate certificate, but not without incurring liability to a bona fide holder for value of the original certificate not lost, and also to an innocent holder alter transfer of a certificate based on such duplicate certificate; but in either case the bond of indemnity taken protects it against loss from any source growing out of the issuance of such duplicate certificate, (p. 574).
To be binding on a surety a bond of indemnity purporting to be the bond of both principal and surety must be signed by-the principal, or be executed on his behalf by some one duly authorized, or the unauthorized act be subseojuently ratified, or the principal be bound independently of the bond for breaches thereof, unless the surety has otherwise agreed to be bound thereby, or by his act he has estopped himself from denying his liability, and pleas of non est factum by the surety setting up want of such proper execution of the bond by the principal, and his non-liability thereon, or for breaches thereof, constitute a good defense. (p. 575).
If such bond on its face purports to be the bond of principal and surety, and to be executed on behalf of the principal by an agent, it is the duty of the obligee in the bond to know the authority of the agent, and if such agent is not so authorized and the obligee accept the bond, the surety will not be bound thereby, though he may know that the bond has been so executed on behalf of the principal, and have reasonable cause to know the agent's want of authority, nor will he be thereby deprived of his right to set up sueb want of authority by way of defense, (p. 577).
fl. Principal and Agent Unauthorized Acts Ratification.
If the principal named in such bond would escape responsibility for the unauthorized act of his agent in signing and executing the bond on his behalf he must promptly repudiate the same before the rights of third persons intervene, else he will be held to have ratified the unauthorized act, and be estopped to deny the agent's authority, (p.578).
7. Indemnity Action on Bond-Evidence Declaration.
Though a good cause of action on such indemnity bond be presented by the declaration the corporation plaintiff must fail if its evidence is insufficient to support the material allegations on which right of recovery on the bond depends, (p. 580).
8. Appeal and Error Review Trial By Court Disposition of Cause.
Where a jury is waived and a case is submitted to the trial court on the law and facts the rule in this court is to treat the case as upon demurrer to the evidence, and if plaintiff's evidence is not sufficient to support the findings and judgment below in his favor to reverse the judgment and enter judgment here for defendant, (p. 582).
9. Same Trial by Court.
But if in such case it appears that the evidence in fact probably exists by which a good case can be made on any issue on which right of recovery depends, and that there has been omission under misapprehension of law to adduce such evidence, the trial court should withhold its findings and judgment, and give the party in default reasonable opportunity to sustain his case; and if this has not been done, the judgment below will be reversed on writ of error and a new trial awarded. (p. 583). (Lynch, Judge, absent.)
Error to Circuit Court, Ohio County.
Action by the La Belle Iron Works against the Quarter Savings Bank and others. Judgment for plaintiff, and the defendant United States Fidelity & Guaranty Company brings error.
Reversed and Remanded.
Russell & Russell and Ritz, Blackford, Bradshaw & Beans, for plaintiff in error.
John J. Coniff and A. C. Lewis, for defendant in error.
Miller, President:
This is an action on an indemnity bond purporting to have been executed to plaintiff by defendants, Quarter Savings Bank and White & White, as principals, and the United States Fidelity and Guaranty Company, plaintiff in error, as surety, pursuant to section 38, chapter 53, serial section 2871, Code 1913, indemnifying plaintiff in issuing to White & White a duplicate certificate for 50 shares of its capital stock then standing on its books in their names and numbered 5022, and represented as having been lost after being pledged by them to said bank as collateral security for a loan.
Said section of the statute is as follows:
The bond reciting the issue of said certificate, the reputed loss thereof after it was so pledged, in the penalty of ten thousand dollars, is conditioned as follows: "Now the condition of this obligation is such, that if the above bounden Quarter Savings Bank and White and White, their heirs, representatives, successors or assigns, shall and do, from time to time, and at all times hereafter, well and sufficiently indemnify save and keep harmless the said La Belle Iron Works, its successors and assigns and all persons, and corporations, from and against any use of the said certificate of stock hereinbefore particularly described, and from and against all claims, demands, costs and expenses to which the said La Belle Iron Works, its successors or assigns, shall or may be subjected by reason or growing out of the loss or destruction of said certificate as above recited, and by reason or growing out of the issue of the said new certificate in lieu of the said certificate so lost or destroyed; and further if the above bounders Quarter Savings Bank and White and White, their heirs, representatives, successors or assigns, shall and do surrender or deliver to the said La Belle Iron Works the said lost certificate, if found; then this obligation to be void, otherwise to be and remain in full force and virtue." It will be observed that this condition is an amplification of the condition prescribed in the statute.
The amended declaration avers the execution of said bond, setting the same out in full. It avers issuance on the faith thereof of the duplicate certificate, the subsequent surrender thereof and on blank assignments of White & White issuance to others of new certificates therefor, whom the declaration alleges, were, at the time the original certificate turned up, innocent holders thereof; that the said original certificate, subsequent to the issue of said duplicate, and the making of the various transfers thereof, turned up in the hands of one Holloway, pledged to him by one Khodahamel for a loan, and to whom, afterwards and at the request of Rhodahamel, the same was transferred on plaintiff's books, and a new certificate or certificates issued to him therefor, which were then delivered to said Holloway, pledgee, and who it is averred has been the real and bone fide owner and holder thereof since June, 1906. And it is averred that White & White at the time of the discovery of said original certificate had no longer any interest in any of said certificates.
It is moreover averred that upon discovery that said original certificate had not been lost, plaintiff demanded of the principals and the surety in said bond compliance with the several conditions thereof, hut which they had neglected, refused and failed to do, whereby an action had accrued, &c.
The demurrers being overruled, the case was tried by the court in lieu of a jury on the plea of nil debet by United States Fidelity and Guaranty Company, and the Quarter Savings Bank, and also on a plea of non est factum by the bank, and issue joined thereon by plaintiff. The ease as to defendants White & White, not served with process, was continued.
Upon the issues and the evidence thereon the court below by the judgment complained of was of opinion that the Quarter Savings Bank was not liable to plaintiff, and as to said bank the case was dismissed with costs. But the court being further of opinion that under the evidence the United States Fidelity and Guaranty Company was liable to plaintiff, it was further considered that plaintiff recover from it the sum of seven thousand nine hundred and twenty-four and 50/100 dollars, with interest and the costs of the suit.
The first point of error to be considered is the overruling of defendants' demurrers to the amended declaration. It is said that...
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