party in whose hands the certificate is found is a holder for value, without notice of any intervening equity, his title can not be impeached. The holder of the certificate may fill up the letter of attorney, éxecute the power, and thus obtain the legal title to the stock. And such a power is not limited to the person to whom it was first delivered, but inures to each bona fide holder into whose hands the certificate and power may pass. Under these well-recognized principles large amounts of property daily pass from hand to hand; are sold and resold, or hypothecated for loans without an actual transfer on the books of the corporation, and without other evidence of ownership than the possession by the holder of the certificate and power of attorney.'

Public securities and ordinary money bonds of corporations, payable to bearer, have all the ordinary characteristics of negotiable paper, and, therefore, are not subject, in the hands of a holder for value and in good faith before maturity, to equities existing against any prior holder."

§ 464. Certificates of stock not being negotiable instruments, the title to them is not changed by an involuntary transfer by the owner, as in the case of loss or theft, or the putting of them into circulation through forgery or fraud.' When a negotiable instrument is lost or stolen, or put into circulation without the knowledge or consent of the owner, a bona fide purchaser for value, without notice, acquires a valid title to it. But title to a certificate of stock can be acquired only through

1 Prall v. Tilt, 28 N. J. Eq. 479, per Green, J., 27 N. J. Eq. 393; and see Mount Holly Turnpike Co. v. Ferree, 17 N. J. Eq. 117; Broadway Bank v. McElrath, 13 N. J. Eq. 24; Leavitt v. Fisher, 4 Duer (N. Y.) 1.

2 Jones on Railroad Securities, §§ 197-210; Morris Canal & Banking Co. v. Lewis, 12 N. J. Eq. 323; Morris Canal & Banking Co. v. Fisher, 9 N. J. Eq. 667.

'Davis v. Bank of England, 2 Bing. 393; Pratt v. Taunton Copper Manuf.

Co., 123 Mass. 110, 25 Am. Rep. 37; Machinists' Nat. Bank v. Field, 126 Mass. 345; Shaw v. Spencer, 100 Mass. 382, 1 Am. Rep. 115; Bercich v. Marye, 9 Nev. 312; Aull v. Colket, 2 Weekly Notes Cas. 322; East Birmingham Land Co. v. Dennis, 85 Ala. 565, 5 So. Rep. 317; Merchants' Bank v. New York & N. H. R. Co., 13 N. Y. 599; Barstow v. Savage Mining Co., 64 Cal. 388, 1 Pac. Rep. 349, 49 Am. Rep. 705.

the voluntary act of the person entitled to dispose of the property. A certificate of stock indorsed in blank by the owner is in a condition to be passed from hand to hand, like any personal chattel. But if it was stolen from the owner, or lost by him, neither the thief nor the finder can convey any title by a transfer of it to an innocent purchaser for value; though, if the corporation issues a new certificate, a purchaser or pledgee of that acquires a good title as against the corporation.'

Thus, where the owner of shares in a railway company instructed a broker to sell certain shares, and the broker obtained from him transfers, in which blanks were left for the name of the purchaser and for the number of shares to be transferred, and the blanks were fraudulently filled up by the broker with shares not intended to be transferred, the certificates having been fraudulently obtained by the broker, and the shares sold to bona fide purchasers, it was held that the transfer of these shares was void, and that the original owner was entitled to have the shares delivered up, and their registration in the name of the purchaser rescinded."

Again, an owner of shares in two companies, wishing to sell those in one company, was induced by his broker to execute a blank transfer, which the broker fraudulently filled with the numbers and descriptions of the shares in the other company, which the owner did not intend to transfer; and the broker having forged the attestations of the transfers, and stolen the certificates of the latter shares from a box deposited in a bank for safe keeping, pledged them for his own benefit. It was held in the exchequer chamber that the transfer was void, and that there was no such negligence on the part of the owner as estopped him from insisting that the property in the shares did not pass under the transfer.3

1 See § 466.

Tayler v. Great Indian Peninsular R. Co., 4 De G. & J. 559, 28 L. J. N. S. Ch. 285.

Swan v. North British Australasian Co., 2 Hurl. & Colt. 175, on ap

peal from court of exchequer, 7 H. & N. 603, where the court was equally divided; the case first having been before the court of common pleas, 7 C. B. N. S. 400, where, also, that court was equally divided.

§ 465. Whether it is negligence in the owner of shares to execute a transfer in blank as to the transferee, and the description of the shares such that he is estopped from disputing the genuineness of the transfer, is a question that has been much discussed. The best and most authoritative statement of the law upon this subject is by Chief Justice Cockburn, in the exchequer chamber. "I am of opinion," he said, "that negligence alone, although it may have afforded an opportunity for the perpetration of a forgery, by means of which another party has been damnified, is not of itself a ground of estoppel. The rule relating to negotiable instruments stands on peculiar grounds. The law relating to these instruments is part of the law merchant, which, in order that the negotiability of such instruments, which is of the very essence of their commercial utility, shall not be impaired, establishes that if a man once puts his name to such an instrument he shall be liable to a bona fide owner without notice, in respect of what may be added to give effect or negotiability to the instrument, notwithstanding this may be done in the absence of authority, or even for the purpose of fraud." But the doctrine of estoppel by which a genuine signature will make good a negotiable instrument fraudulenly written above it, can not be applied to make good other instruments executed in blank, and used for a purpose other than that intended by the maker. Moreover, negligence, to operate as an estoppel in any case, must be the proximate cause of the loss.

The negligence of a guardian in leaving his ward's certificate of stock, indorsed by the guardian in blank, for safe keeping in a bank, from which the cashier abstracted it and pledged it for his own debt, does not estop the ward from reclaiming his certificate from the person to whom it was pledged.'

§ 466. One taking, in good faith, a certificate of stock from the apparent owner may acquire title as against the true owner,

1 Swan v. North British Australasian Co., 2 Hurl. & Colt. 175; and see Denny v. Lyon, 38 Pa. St. 98, 80 Am. Dec. 463; Biddle v. Bayard, 13 Pa.

St. 150; Pennsylvania R. Co.'s Appeal, 86 Pa. St. 80.

2 O'Herron v. Gray, 168 Mass. 573, 47 N. E. Rep. 429.

although the certificate is not in any true sense a negotiable instrument, and does not even partake of the character of such an instrument. The rights of a bona fide holder in such case rest upon another principle; namely, that one who has conferred upon another by a written transfer all the indicia of ownership of property is estopped to assert title to it as against a third person who has in good faith purchased it for value from the apparent owner.' This forms an exception to the

rule that a purchaser of personal property other than negotiable commercial paper obtains no better title than his vendor had. This estoppel applies whenever the real owner of property has vested another with the apparent absolute title to it, by an instrument in writing, upon the faith of which a third person has dealt, whether the property be a specific chattel or a chose in action. It is of frequent application to cases of pledges of stock. "The rightful owner may be estopped by his own acts from asserting his title, as he may be in respect to other property of a like character. If he has invested another with the usual evidence of title or an apparent authority to dispose of it, he will not be allowed to make claim against an innocent purchaser dealing upon the faith of such apparent ownership, and jus disponendi.""

A pledge of a certificate of stock issued in the name of the pledgor and showing him to be the owner, entitles the pledgee to hold it as against the wife of the pledgor, whose separate means were used to purchase the stock and who had not known of or consented to its issuance in the husband's name or to the pledge by him for his own debt."

power. If the owner of the stock voluntarily give certificates with blank assignment and power to make transfers to his brokers, who betray the confidence reposed in them, such owner must suffer the loss rather than innocent strangers whose money the brokers were thereby enabled to obtain. The principle applies to pledges of stock, and one who purchases from the pledgee may hold against the pledgor. And if the pledgee pledge it to secure payment of his own debt, the second pledgee may hold it as security till his debt be paid. 'A person loaning money on such certificate and power, has a right to believe that the borrower from whom he receives them has an absolute right to pledge the stock.' By commercial usage a certificate of stock, accompanied by an irrevocable power of attorney,

either filled up or in blank, is, in the hands of a third party, presumptive evidence of ownership in the holder. And where the party in whose hands the certificate is found is a holder for value, without notice of any intervening equity, his title can not be impeached."

1 Weaver v. Barden, 49 N. Y. 286, 288, per Allen, J.

2

Anderson v. Waco State Bank, 92 Tex. 506, 49 S. W. Rep. 1030, citing Winter v. Montgomery Gas - Light Co., 89 Ala. 544, 7 So. Rep. 773; Machinists' Nat. Bank v. Field, 126 Mass. 345; Pratt v. Taunton Copper Co., 123 Mass. 110; Mandlebaum v. N. A. Min. Co., 4 Mich. 465; Hill v. Moore, 62 Tex. 610; Edwards v. Brown, 68 Tex. 329, 4 S. W. Rep. 380, 5 S. W. Rep. 87.