has the right to, pay a demand certificate at any time, for the reason that the policy of the law interdicts a perpetual loan; and while the creditor holding the certificate cannot regard the bank as in default, and is not himself in default, until a demand has been made, yet these circumstances should not prevent the operation upon certificates of deposit of the ordinary principle, that the debtor owing a demand loan has the right to pay at any time. The ordinary principles applicable to debts due on demand are only modified to fit the nature of the case, the policy of the law, and the intention of the parties to the contract.

CHAPTER LII.

CERTIFICATES OF STOCK; AND OTHER QUASI NEGOTIABLE INSTRUMENTS.

SECTION I.

CERTIFICATES OF STOCK.

§ 1708. The certificates of stock issued to shareholders by incorporated companies are not regarded as coming within the classification of negotiable instruments,' although they generally inure, subject to certain rules, to the benefit of the bearer.2 Very frequently by application of the principles of estoppel, and to effectuate the ends of justice, and the intention of the parties, the courts deeree a better title to the transferee than actually existed in his transferrer; and as the result reached in many cases is the same as would be reached if the certificate were negotiable, certificates of stock may be classed amongst instruments quasi negotiable. The phrase "quasi negotiable" has been termed an unhappy one;"

1. Pierce on Railroads, 111; Dos Passos on Stockbrokers, 596; Biddle on Stockbrokers, 149, 156; Lewis on Stocks, 64, 71, 72 et seq.; 1 Edwards on Bills and Notes, § 22, p. 61; Schouler on Personal Property, 606, note; 2 Ames on Bills and Notes, 784; Shaw v. Spencer, 100 Mass. 383; Bank v. Lanier, 11 Wall. 377; Railroad Co. v. Howard, 7 Wall. 415; Mechanics' Bank v. N. Y. & N. H. R. Co., 13 N. Y. 599; Jarvis v. Rogers, 13 Mass. 105; Sewall v. Boston Water Power Co., 4 Allen, 277; London, etc., Banking Co. v. London & River Platte Branch, 38 Eng. Rep. 635; Clark v. Am. Coal Co., 86 Iowa, 436, 53 N. W.

291.

2. Railroad Co. v. Howard, 7 Wall. 415; Supply Ditch Co. v. Elliot, 10 Colo. 327; Graves v. Mining Co., 81 Cal. 325; Barstow v. Savage Mining Co., 64 Cal. 388; Schlandecker's Appeal (Pa.), 14 Atl. 234.

3. Lewis on Stocks, 82. For a clear statement of the status of certificates of stock, see case of Knox v. Eden Musee Co., 148 N. Y. 441, 42 N. E. 988, 51 Am. St. Rep. 700. In this case, Chief Justice Andrews said the owner of shares may transfer his title by delivery of the certificate with a blank power of attorney indorsed thereon, signed by the owner of the shares named in the certificates. Such delivery transfers the legal title to the shares as between the parties to the transfer, and not a mere equitable right. (McNeil v. Tenth Nat. Bank, 46 N. Y. 325.) The transferee in good faith and for value holds

and certainly it is far from satisfactory, as it conveys no accurate, well-defined meaning. But still it describes better than any other shorthand expression the nature of those instruments which, while not negotiable in the sense of the law merchant, are so framed and so dealt with, as frequently to convey as good a title to the transferee as if they were negotiable.

In a case before the United States Supreme Court it was said: "Written contracts are not necessarily negotiable simply because by their terms they inure to the benefit of the bearer. Doubtless the certificates were assignable, and they would have been so if the word "bearer" had been omitted, but they were not negotiable instruments in the sense supposed by the appellants. Holders might transfer them, but the assignees took them subject to every equity in the hands of the original owners." 4

§ 1708a. Nature of certificates of stock. A share in the capital stock of a corporation is not a debt, nor money, nor a security for money, but it is a species of incorporeal personal property." The capital stock of the corporation is so much money, or property assessed at money valuation, which is divided into a number of shares, which shares are the holder's interest in the corporate estate. The stock of the corporation is generally raised by mutual subscription of the members in the first instance, and its amount is regulated by the statutory provisions by or under which the corporation is chartered. The persons interested in

his title from latent equities between prior parties in the line of transmission. Under the doctrine of implied agency and the application of the principle of estoppel to the satisfaction, the true owner is in many cases precluded from asserting his title. The case of McNeil v. Tenth Nat. Bank is a leading case on the subject and marks the limit to which the court has hitherto gone in subordinating the rights of the true owner of a stock certificate to the title of a transferee derived under one who, being in the possession of a certificate by the consent of a true owner, has transferred it in fraud of his rights. That case holds that an agent to whom the owner has delivered a certificate of stock duly indorsed for transmission, with a limited power of disposition for a special purpose, may bind the title thereto as against the true owner, by transferring it to a bona fide transferee who has no notice of the limitations of the agent's authority, although the transfer was made for an unauthorized purpose and with the intention on the part of the agent to commit a fraud upon his principal. See also Jarvis v. Manhattan Beach Co., 148 N. Y. 652, 43 N. E. 68, 51 Am. St. Rep. 727; Shepaug Voting Trust Cases, 60 Conn. 553, 24 Atl. 32.

4. Railroad Co. v. Howard, 7 Wall. 415.

5. Allen v. Pegram, 16 Iowa, 173, Dillon, J.; Lewis on Stocks, 19.

the corporation are termed shareholders, or stockholders; and certificates of stock are generally issued to them by the corporate authorities of the muniments of their title to a proportionate part of the profits of the corporation, and as evidence of their right to participate in its concerns. Unless otherwise provided by statute, the shares in the corporation are generally deemed personal estate.

The certificate of stock is the customary and convenient evidence of the holder's interest in the corporation which issues it; but in the absence of legal provisions requiring it, no certificate of stock is necessary to attest the rights of the shareholder. If the corporation issues certificates to its shareholders, as is usual to do, any shareholder may compel it by legal proceedings to issue to him a certificate for the number of shares to which he is entitled. Certificates of stock are generally deemed choses in action, and as the holder may be driven to an action to recover the proportionate part of the corporate property or assets, or the interests therein which his shares entitle him to, they are properly within the classification of "choses in action." As said in Massachusetts by Shaw, C. J.: "A certificate of stock is a muniment

6. Hutchins v. State Bank, 12 Metc. (Mass.) 421; Arnold v. Ruggles, 1 R. I. 165; Denton v. Livingston, 9 Johns. 100; Johns v. Johns, 1 Ohio St. 350; Payne v. Elliot, 54 Cal. 339; Lewis on Stocks, 18; Dos Passos on Stockbrokers, 142, 587, 589; Biddle on Stockbrokers, 142.

7. Chester Glass Co. v. Dewey, 16 Mass. 94; Agricultural Bank v. Burr, 24 Me. 256; Angell & Ames on Corporations, § 565; Biddle on Stockbrokers, 266; Dos Passos on Stockbrokers, 582; Thompson on Stockbrokers, § 106. 8. Angell & Ames on Corporations, § 565.

9. City of Utica v. Churchill, 33 N. Y. 161; Driscoll v. West Bradley & C. M. Co., 59 N. Y. 105; The King v. Capper, 5 Price, 264; Humble v. Mitchell, 11 Ad. & El. 205; Haseltine v. Siggers, 1 W., H. & G. 856; Hutchins v. State Bank, 12 Metc. (Mass.) 421, Shaw, C. J.: "If a share in a bank is not a chose in action, it is in the nature of a chose in action, and, what is more to the purpose, it is personal property." In Schouler on Personal Property, p. 32, it is said: "If I own bank stock and draw regular dividends, is not the stock a chose in possession, since I occupy and enjoy it to the fullest extent? No, is the reply, for this is never anything more than a chose in action." Dos Passos on Stockbrokers, 586, 762; Biddle on Stockbrokers, 145. “It is really nothing more than a chose in action, and trover will not lie for it, though it might for the certificate." Lewis on Stocks, 19; Acraman v. Cooper, 10 M. & W. 585; Neiler v. Kelley, 19 P. F. S. 403. Contra, that trover will lie for stock as such. See Boylan v. Huguet, 8 Nebr. 245; Kuhn v. McAllister, 1 Utah, 273, cited in Biddle on Stockbrokers, 146, note; Buffalo German Ins. Co. v. Third Nat. Bank, 29 App. Div. 137, 51 N. Y. Supp. 667.

of title of the same nature with the note or bond of a private person, ordinarily called a 'chose in action,' or of a State or United States bond, or certificate of debt." 10

In the United States the stockholder's interest in the corporation is generally deemed liable to attachment, and execution at the suit of such stockholder's creditor, and to legal process of the like kind, and the usual method of levy is by leaving a copy of the writ with the proper officer of the corporation in which the shares are held, with notice that such shares are levied upon.1

11

12

Certificates of

1708b. The transfer of certificates of stock. stock represent so great a portion of the wealth of the country, and the transactions in them are so numerous, that all questions bearing upon their validity, and upon the forms and effect of transfers, are highly important. The full discussion and elucidation of such questions, however, belong rather to the treatises on corporations and on stockbrokers than to a work on negotiable instruments; and only an outline of the general principles affecting the negotiation of stock certificates seems pertinent here.

(1) As between the transferrer and transferee of a stock certificate, it is very well settled that, in the absence of statutory restrictions, the beneficial interest passes by assignment, and delivery of the certificate, as in the case of any other species of personal property, or chose in action, no particular formality being necessary to invest the transferee with the right and title of the transferrer, as between the parties to the transfer.13 The equitable title passes as between the immediate parties, whatever may. be the rights of others in the premises.14 And, as a general rule, statutory restrictions do not affect the immediate parties to the transfer, being designed for other purposes.

10. Hutchins v. State Bank, 12 Metc. (Mass.) 421.

11. Chesapeake & Ohio R. Co. v. Paine, 29 Gratt. 502; Foster v. Potter, 37 Mo. 525; Howe v. Starkweather, 17 Mass. 243; Lewis on Stocks, 20; Dos Passos on Stockbrokers, 589; Pierce on Railroads, 110.

12. Freeman on Executions, § 262a.

13. Biddle on Stockbrokers, 268; Dos Passos on Stockbrokers, 591, 623, 628; Angell & Ames on Corporations, §§ 354, 564; Morawetz on Private Corporations, § 326.

14. Gilbert v. Iron Mfg. Co., 11 Wend. 628; Utica Bank v. Smalley, 2 Cow. 770; Johnson v. Underhill, 52 N. Y. 203; Johnston v. Laflin, 103 U. S. 804; Farmers' Bank v. Wasson, 48 Iowa, 338.