§ 171. But on the other hand other courts hold that the delivery of a certificate with a power of transfer, gives the holder nothing more than an equitable title.' Such a transfer makes the holder presumptively the equitable owner of the shares, and if he has given value for them without notice of any intervening equity, his title as such owner can not be impeached. "The certificate of stock, accompanied by the power of attorney authorizing the transfer of the stock to any person, is prima facie evidence of equitable ownership in the holder, and renders the stock transferable by the delivery of the certificate. And when the party in whose hands the certificate is found is shown to be a holder for value and without notice of any intervening equity, his title as such owner can not be impeached. The holder of the certificate may insert his own name in the power of attorney and execute the power, and thus obtain the legal title to the stock, whenever the loan for which it was hypothecated becomes due, or whenever, by the terms of his contract, he becomes entitled to the stock. And such a power is not limited to the person to whom it was first delivered, but inures to the benefit of each bona fide holder, into whose hands the certificate and power may pass. 12 VI. Such Transfers as between the Parties and the Corporation. § 172. But as against the corporation itself a transfer not entered upon the books of the company is, as a general rule, not binding upon it. The corporation is not bound to recog 1 Black v. Zacharie, 3 How. 483; Mount Holly, etc., Turnpike Co. v. Ferree, 17 N. J. Eq. 117; Bank of America v. McNeil, 10 Bush (Ky.) 54. See State Ins. Co. v. Sax, 2 Tenn. Ch. 507; United States v. Vaughan, 3 Binn. (Pa.) 394, 398; Willis v. Philadelphia & Darby R. Co., 6 Weekly Notes of Cases, 461; Bruce v. Smith, 44 Ind. 1, 5. In Bank of America v. McNeil, 10 Bush (Ky.) 54, the court spoke of an assignment of the certifi cate, with a power to transfer, where the corporation's charter provides for a transfer upon its books, as a symbolical delivery of the stock, effectual against persons having actual notice of it. 2 Mount Holly, etc., Turnpike Co. v. Ferree, 17 N. J. Eq. 117, per Green, Chancellor. 3 Stockwell v. St. Louis Mercantile Co., 9 Mo. App. 133; Becher v. Wells Flouring Mill Co., 1 Fed. Rep. 276; nize as stockholders any persons who do not appear to be such upon the corporation's books. Thus an assignee of shares can not at law recover a dividend declared by the company until his assignment has been entered upon the company's books, as required by its charter and by-laws.' On the other hand, until an assignment has been made and entered in the manner prescribed, the assignee does not become liable to pay assessments laid upon the shares. A lien given by the charter and by-laws of a corporation upon the shares of its stockholders, may be enforced by it against the stockholder of record,' and can not be enforced against an equitable assignee, no transfer having been executed upon its books.* § 173. An actual transfer upon its books is necessary, as against the corporation to make an available and complete title; and such a transfer is necessary even in the absence of any provision in the charter, or in the stock certificate requiring such a transfer. This was the case in Bank of Commerce's Appeal. A shareholder in a building association obtained from this bank a loan upon his certificate of stock, accompanied by a power of attorney to transfer it. By the articles of association the shareholder was entitled to a loan from the association of a certain sum upon each share, and he subsequently borrowed from the association the full amount to which he was entitled, and transferred his stock to it, although the bank still held his certificate. The charter of the association expired while this state of facts continued, and the assets were distributed by the officers amongst the stockholders shown to be such by its books, including the association itself as pledgee of the stock of this shareholder, without notice from Laing v. Burley, 101 Ill. 591; Otis v. 390. Union Bank v. Laird, 2 Wheat. 4 Helm v. 5 1 Oxford Turnpike Co. v. Bunnel, 6 Am. Dec. 463; Sitgreaves v. Farmers' Conn. 552. & Mechanics' Bank, 49 Pa. St. 359, 2 Marlborough Manuf. Co. v. Smith, 365. 2 Conn. 579. 673 Pa. St. 59. the bank. It was held that the bank had no claim under its certificate. The court, by Agnew, Justice, say: "The assignment of the certificate is only an equitable transfer of the stock, and to be made available must be produced to the corporation and a transfer demanded. As between adverse claimants of the certificate, the possession of it with the transfer upon it is often the test of title. But when the corporation itself is not dealing with its stockholder on the security of his stock, and is merely performing a corporate duty, its own record is all it needs to consult, for whoever would demand the privileges of a stockholder should produce the evidence of his title and ask to be permitted to participate. The officers acted officially as the trustees of the expired corporation, to settle its affairs under the powers conferred by the law, and in doing so made their distribution, according to the record of the corporation, which exhibited the membership of the corporation. In doing this, without any notice from the bank of its equitable assignment of the stock, clearly they were not guilty of any negligence, while the loss of the bank was attributable to its own negligence, and negligence on their part is the only ground of its bill." § 174. A provision that a certificate of stock shall be transferable only upon the books of the corporation is designed primarily for the safety and security of the corporation, and incidentally only for the safety of purchasers. Upon this point the supreme court of Louisiana say: "The by-law which requires transfers of stock to be recorded on the books of the corporation regulates merely the respective rights of the corporation and the individual stockholders. No one can claim to be 1 Fraser v. Charleston, 11 S. C. 486; ker v. Bethel Hotel Co., 96 Tenn. 252, Merchants' Nat. Bank v. Richard, 6 284, 34 S. W. Rep. 209; Smith v. RailMo. App. 454; Insurance Co. v. Good- road, 91 Tenn. 221, 238, 18 S. W. Rep. fellow, 9 Mo. 150; Johnston v. Laflin, 546. Dicta to the contrary in White 103 U. S. 800; Carroll v. Mullanphy v. Salisbury, 33 Mo. 150, and BoatSav. Bank, 8 Mo. App. 249; Chouteau men's Ins. Co. v. Able, 48 Mo. 136, Spring Co. v. Harris, 20 Mo. 382; are not considered as law. a stockholder, and to exercise the rights of a corporator, in virtue of a sale of stock to him, until the corporation has taken cognizance of the sale, and, by transfer on its books, has substituted the purchaser for the seller. Whether one has acquired the character and the rights of a corporator, is a question to be determined by the laws of the corporation. Whether a purchaser has acquired a good and perfect title to any property or thing, tangible or intangible, is a question to be solved by the general laws of the state applicable to the sale and transfer of such objects."" It has been argued that an actual transfer upon the books of a corporation is not the only and essential evidence of ownership, except for the corporation itself, because the books of a corporation are of a private nature and are not open to public inspection. "It is not, therefore, to apprise the world and prevent it from giving a false credit to the apparent owner of stock that the transfer thereof is required to be made on the books of the bank in the presence of one of its officers. The great object of requiring transfers to be made in this manner, is to prevent all difficulty that otherwise might arise with those who have the direction and management of the corporation in ascertaining the persons who are to be regarded and treated by them as the owners of the stock and as corporators. No persons, therefore, are to be regarded by them as such, excepting those in whose names the stock is entered and holden.'' § 175. As against the corporation a transfer upon its books is necessary to confer a legal title. The mere transfer of the certificate, although accompanied by a written direction to the secretary of the corporation to make the necessary transfer upon the books, gives the assignee an equitable title only, so far as the corporation is concerned, until the transfer is actually made upon the books. "The certificates do not consti 1 Smith v. Slaughter-House Co., 30 La. Ann. 1378, 1382. 2 Commonwealth v. Watmough, 6 Whart. (Pa.) 117, 139. Becher v. Wells Flouring Mill Co., 1 Fed. Rep. 276. tute property in the corporation; they are the muniments of title, but it is the shares of stock which constitute the property, and the persons whose names appear upon the books of the corporation are presumed to be the stockholders; they have the right to vote and participate in directing the policy of the company. Until the transfer is made upon the books the corporation does not recognize an assignee as a stockholder. If an assignee having the proper muniments of title should make a demand upon the proper officers of the corporation for a transfer upon the books, and the corporation should neglect or refuse to make it, relief could be had by proper legal proceedings. § 176. A transfer of shares upon the books of a corporation without a surrender of the outstanding certificate is ineffectual when the certificate issued by the corporation formally provides that the shares are transferable on the books of the corporation, in person or by attorney, only on the surrender of the certificate. A national bank having issued such certificates, made a loan to a stockholder upon a transfer of shares to the bank without his producing or surrendering his certificate, which he had already sold and assigned to a purchaser for value with a power of attorney to transfer; but the purchaser delayed obtaining a transfer upon the books of the bank until the bank in the meantime made the loan to the stockholder and in fact sold a part of the stock upon the borrower's default. In a suit by the purchaser of the stock against the bank for refusing to transfer the stock to him upon the books, the supreme court of the United States held the bank liable." The bank in allowing a transfer to itself of the stock upon its books while the certificate was outstanding in the hands of a bona fide purchaser, was guilty of a breach of corporate duty, 1 Becher v. Wells Flouring Mill Co., 76 N. Y. 365, 32 Am. Rep. 315; Hall 1 Fed. Rep. 276, per Nelson, J. v. Rose Hill & Evanston Road Co., 70 Ill. 673; Johnston v. Laflin, 5 Dill. 65, affirmed, 103 U. S. 800; Strange v. Houston & Tex. Cent. R. Co., 53 Tex. 162. 2 Bank v. Lanier, 11 Wall. 369. And see New York & New Haven R. Co. v. Schuyler, 34 N. Y. 30; Cushman v. Thayer Manufacturing Jewelry Co., |