'West & Co. v. Montgomery National Bank et al. Plaintiffs also, under similar circumstances, acquired all the other stocks mentioned and promptly thereafter either agreed to sell, or did actually sell, them at an advance of a few points, showing a reasonable business profit. While this was the only transaction plaintiffs ever had with Tilden, Reade & Co., it, so far as they were concerned, was a legitimate and perfectly regular one, conducted by them in entire good faith, and embraced many securities in addition to those involved in this litigation. 13. As the stocks were acquired by plaintiffs the certificates, by their direction, were delivered by Tilden, Reade & Co., Incorporated, by runner, at plaintiffs' New York City office and paid for by check as deliveries were made. Amongst the many certificates so delivered and paid for were the six described in our 5th, 6th and 7th findings. 14. When so delivered to plaintiffs' cage-man or representative at their office in New York City on June 17, 1924, and paid for, certificates “(a)” and "(b)," described in our 5th finding, had written or endorsed upon them in ink, below the signature "Mary Ann Davis," the following: H. SEYMORE. "H. SEYMORE. MICHAEL LIEBSTER. Signature of Michael Liebster guaranteed Hamilton National Bank of (Name undecipherable) Cashier." 15. When so delivered to plaintiffs' cage-man or representative at their office in New York City on June 21, 1924, and paid for, certificates “(c)” and "(d)," described in our 5th finding, had written or endorsed upon them in ink, below the signature "Mary Ann Davis," the following: "H. SEYMORE. H. SEYMORE WILLARD KOHN CO. Signature guaranteed only. 16. When so delivered to plaintiffs' cage-man or representative at their office in New York City on June 21, 1924, and paid for, the certificates described in our 6th and 7th findings had written or endorsed upon them in ink, below the signature "Mary Ann Davis," at the end or bottom of the printed assignment and power, the following: "H. SEYMORE. H. SEYMORE WILLARD KOHN CO. 17. Plaintiffs having agreed to sell the ten shares of Montgomery National Bank stock, for which they had paid $275 per share, to William H. Slingluff, who is president of the bank, for $280 per share, on June 19, 1924, mailed both certificates to Mr. Slingluff for transfer. They had, on the same day or earlier, mailed a blank assignment and power of attorney to transfer to Miss Davis, with a request that she execute it and deliver it to Mr. Slingluff, who was well known to her. They informed Mr. Slingluff of this fact when they sent the certificates to him. Miss Davis called later on Mr. Slingluff, informed him of the circumstances under which she had parted with her stock, and refused to execute the assignment and power. Mr. Slingluff then declined West & Co. v. Montgomery National Bank et al, to buy the stock, and both certificates were returned by him to West & Co. It was in this way that plaintiffs first learned of any irregularity or wrong in Miss Davis's parting with her securities. 18. The forty-one shares of Norristown Insurance and Water Company stock, for which plaintiffs had paid $50 per share, were sold promptly by them to Barnes & Lofland at $53 per share, but, upon such irregularity having been learned, this sale also failed. 19. Plaintiffs then wrote on the two Montgomery National Bank certificates, below the guarantee of the signature of Michael Liebster, "Signature guaranteed. West & Co.," and requested the bank to transfer the stock on the books of the institution directly to them and issue a new certificate for it in their name. This the bank refused to do. 20. Plaintiffs then wrote on the two oldest Norristown Insurance and Water Company certificates, being (c) and (d) of our 5th finding, below the guarantee of the signature of Willard Kohn Co., "Signature guaranteed. West & Co.," and wrote upon those of the same company, described in our 6th and 7th findings, above the printed endorsed assignment: "We hereby irrevocably constitute and appoint our substitute to transfer the within-named stock under the foregoing power of attorney, with like power of substitution. "Dated June 25, 1924. "Witness: (Name undecipherable.)" WEST & CO. They also wrote or filled their own firm name into the power of attorney on the two last-mentioned certificates which Miss Davis had signed, and underneath the guarantee of Willard Kohn Co.'s signature on these certificates, wrote "Signature guaranteed. West & Co." And, also, they wrote on the lower left-hand corner of both: "We hereby irrevocably constitute and appoint West & Co. our substitute to transfer the within-named stock under the foregoing power of attorney, with like power of substitution. "Dated June 23, 1924. "Witness: (Name undecipherable.)" WEST & CO. They then presented said four certificates to Norristown Insurance and Water Company and requested that the stock be transferred on the books of the company directly to them and a new certificate for it issued in their name. This the water company refused to do. 21. The present bills were filed on Oct. 27, 1924, and they pray for decrees ordering such transfers and the issuance and delivery to plaintiffs of new certificates for the stock by the proper defendant corporation. 22. Plaintiffs have possession of all six of the stock certificates mentioned in our 5th, 6th and 7th findings. 23. By the custom which prevails, only the last signature appearing on the back of a stock certificate needs to be guaranteed to a purchaser, and such guarantees, when made by stock exchange houses and officers of national banks, are accepted. 24. At the time of hearing, none of the four certificates mentioned and described in our 5th finding had endorsed upon or attached to it an assignment or power of attorney to transfer it. Counsel for plaintiffs then offered to type such on each above the signatures endorsed thereon. The offer was objected to and the objection was sustained. 25. It is the custom of the trade, in the negotiation and transfer of stocks, where the owner has endorsed the certificate in blank, afterwards to write over the signature an assignment and power of attorney. West & Co. v. Montgomery National Bank et al. 26. Mary Ann Davis having been allowed to intervene as a party defendant in both cases and having filed cross-bills therein, all interested parties are before the court. Discussion. Courts have shown a constant tendency to protect bona fide purchasers of certificates of stock. The trend of modern decisions has been to encourage the free circulation of stock certificates . . . on the theory that they are a valuable aid to commercial transactions, and that the public interest is best subserved by removing all restrictions against their circulation and by placing them as nearly as possible on the plane of commercial paper: Masury v. Arkansas Nat. Bank, 93 Fed. Repr. 603. There is no serious controversy as to any of the relevant facts. With them established, the real difficulty is to be found in drawing from them the correct conclusions or results, and it has been sought to make this task the easier and, at the same time, to obviate the necessity of a lengthy discussion of the case by finding its facts in painstaking detail. Miss Davis is old and both physically and mentally slightly impaired. She has, however, never been adjudicated as unable to care for her property, and the testimony indicates that, until this occurrence, she had looked after and added to it with a considerable degree of success. She had had some experience in the purchase and sale of securities—more as to the former than the latter, however knew that when stock was sold the certificate was signed on the back by the owner, and, apparently, was both penurious and crafty. She had never made an income tax return nor paid such a tax. When the swindler, who called himself Seymore, arrived, he found her an easy mark, not so much because of her mental condition, as because she had, in her love of money, made herself amenable to the law. ried with him virtually all of her valuable securities. them over to him-the intention that she may have doing so is, under the facts, of little, if any, interest. did at the time is very relevant. When he left he carHer purpose in turning had in her mind when But what she actually She delivered to him physical possession of not only the six certificates involved here, but many others. All, except the four mentioned in our 5th finding, had been endorsed with blank assignments and powers to transfer. These four very old certificates were the only ones without such. She had affixed her genuine signature on the back of each, and it was witnessed by Seymore. Where a certificate carried a blank assignment and power, she had signed it at the proper place its end. Where it did not, she had affixed her name at such a place as to allow space for the writing above of such assignment and power. This fact is regarded as relatively very important. Had her signature on these four certificates been written so near the top as not to permit such to be done, the effect might not have been the same. The only thing that was not done that could have been done was to write, or have written, on these four old certificates the blank assignments and powers above the signature which were already printed on all the rest. Moreover, this was all done at the same time; all the certificates were delivered to Seymore at that time; they included her holdings of stock in at least ten corporations, and amongst the lot were four certificates of Norristown Insurance and Water Company, two of which had printed on their backs blank assignments and powers and two of which were without such. The conclusion is irresistible that, under these facts, Miss Davis gave to Seymore the indicia of ownership of all her stock, the certificates for which she delivered to him. West & Co. v. Montgomery National Bank et al. Every one of these certificates came in a short time, and in regular course of their perfectly legitimate business, into the possession of plaintiffs, who are a reputable concern. That they bought them in good faith and for value is not open to controversy. That they took them without notice, either actual or implied, of the infirmity of Tilden, Reade & Co.'s title, or of the wrong that had been done by Seymore to Miss Davis, is, in our opinion, equally well established. It is, however, not at once apparent how this question can arise under the facts as to the two certificates mentioned in our 6th and 7th findings, and the only thing that differentiates the four mentioned in our 5th finding from these two is the absence of the blank assignment and power over the signature of Miss Davis. West & Co. did not, of course, know during their negotiation in whose name the certificates involved had been made out. They had not been offered a single certificate or stock in but one corporation. When they had bought and received deliveries they, for the first time, saw the certificates. All were in customary and similar condition, except as to the four old certificates, and, as stated, the only difference as to them was the absence of the blank assignment and power over the signature of Miss Davis. Under all the circumstances as they existed at that time and confronted plaintiffs, this fact alone was not, in our opinion, sufficient to put them on inquiry. The dates of these certificates showed them to have been issued before it had become customary to print blank assignments and powers on the back of stock certificates. Their absence was thus accounted for. Miss Davis's name had been written at such a place as reasonably to indicate that she had intended such to have been afterwards written above; these four certificates were accompanied by many others, and all had been originally issued to the same individual; and, so far as the two old water company certificates are concerned, they were actually accompanied by two others, issued much later by the same corporation to Miss Davis, having blank assignments and powers printed upon their backs. West & Co. were, as to all of the six certificates involved here, purchasers for value in good faith without notice of any facts making the transfer wrongful. For that matter, we do not attach the same controlling importance to the absence of the blank assignments and powers from the four old certificates as is given by counsel for defendants. It is unnecessary here to discuss the negotiability of stock certificates, the law on which subject is well settled. They are not negotiable by mere endorsement freely as is commercial paper. And yet the Uniform Stock Transfer Act of 1911 says in its 20th section, in so many words, that a certificate is endorsed when the signature of the person appearing by the certificate to be the owner of the shares represented thereby is written without more upon the back of the certificate. This act applies, of course, only to certificates issued after it became effective and is not to be understood as affecting the rights of parties as between themselves. Its purpose was to make uniform the law relating to transfers of stock and, generally and almost entirely, it was declaratory of the existing law. Had the four old certificates been dated after Jan. 1, 1912, they would have been sufficiently endorsed by the presence of Miss Davis's name without more thereon, and there is respectable authority for holding that this has always been the law in Pennsylvania. Judge Paxson, afterwards Chief Justice, in a dictum in Wood v. Maitland, 10 Phila. 84, said a certificate of stock might be transferred by a blank endorsement, which might be filled up by the holder by writing an assignment and power of attorney over the signature endorsed, and he relied on the New York case of Kortland v. The Buffalo Commercial West & Co. v. Montgomery National Bank et al. Bank and Angell and Ames on Corporations. The Kortland case, which is to be found reported in 20 Wendell, 90, is of especial interest in this connection, because that is precisely what was done there. One Barker had endorsed his certificate with his name and seal and a subsequent holder had filled up the blank transfer by writing over his name and seal an assignment and power which the lower court held was but the execution of an authority clearly conveyed to him, lawful in itself and convenient to all parties. In other words, it was there decided, so early as 1838, that a certificate of stock was transferable by a blank endorsement, which might be filled up by the holder by writing an assignment and a power of attorney over the signature endorsed. The judgment of the Supreme Court was affirmed by the Court of Errors in 22 Wendell, 348. In construing an assignment of corporate stock, the court should take into account surrounding facts and circumstances, and the assignment is not required to be in any particular form: Holmes v. Holmes, 196 N. W. Repr. 248. Miss Davis, therefore, not only delivered the six certificates in question to Seymore, but, by her endorsement of them under all the facts and circumstances, entrusted to him the indicia of their ownership. Plaintiffs ultimately and promptly thereafter acquired them by purchase in regular course of business, in good faith, for value and without notice, actual or implied, of the wrong that had been done her. In consequence, they obtained a good title to all. One who delivers stock to another accompanied by power of attorney for the transfer thereof clothes such other person with apparent ownership, and a bona fide purchaser or pledgee for value thereof from such apparent owner obtains a good title: Little v. Fearon & Co., 252 Pa. 430. And this is so here, regardless of any private understanding between Miss Davis and Seymore. Moreover, Miss Davis is, in view of all the circumstances, estopped against asserting title to any of the stock in question as against the plaintiffs: Wood's Appeal, 92 Pa. 379; Little v. Fearon & Co., 252 Pa. 430; Shattuck v. American Cement Co., 205 Pa. 197. And this is especially true, if for no other reason, because of her clearly established negligence in the manner in which she parted with the certificates. The equities, as between her and plaintiffs are not equal. Where one of two innocent persons is to suffer from the tortuous act of a third, he who gave the aggressor the means of doing the wrong must alone bear the consequences of the act: Bank of Kentucky v. Schuylkill Bank, 1 Parson's Equity Rep. 248; Pennsylvania R. R. Co.'s Appeal, 86 Pa. 80. The underlying principle in all our cases of this class is well and aptly expressed in the first syllabus to Hale's Estate, 3 D. & C. 287, as follows: "A bona fide purchaser of stock for value, without notice that such stock had been wrongfully taken by the vendor or pledgor from the true owner, is entitled to hold the stock as against the owner, whose loose business methods made possible the transfer of the stock." As between plaintiffs and Miss Davis, title to all the stock embraced in the six certificates involved here is in the former and she will not be heard to attack it. The only case to which our attention has been directed by counsel for defendants which holds to the contrary is Boston Safe Deposit and Trust Co. v. Adams (Mass., 1916), 113 N. E. Repr. 277, but its facts are distinguishable from those before us. The same is also true of Treadwell v. Clark, 114 N. Y. App. Div. 493; 190 N. Y. 51; and Gillett v. Chicago T. & T. Co., 230 Ill. 373. In the Boston case the owner had signed his name on the back of the certificate immediately below some matter printed thereon. |