
111 U.S. 156 (1884)
MOORES
v.
CITIZENS' NATIONAL BANK OF PIQUA.
Supreme Court of United States.
Argued March 6th, 7th, 1884.
Decided March 31st, 1884.
IN ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF OHIO.
*162 Mr. John W. Warrington and Mr. E.W. Kittredge for plaintiff in error.
Mr. William M. Ramsey and Mr. E.M. Johnson for defendant in error.
*163 MR. JUSTICE GRAY delivered the opinion of the court. He stated the facts in the foregoing language, and continued:
The petition alleges that the false and fraudulent representations made by Robert B. Moores, and relied on by the plaintiff, that he had assigned and transferred the stock in question to her on the books of the bank, were made by him both as cashier and as stockholder; that the bank afterwards fraudulently permitted and procured him to transfer all the stock owned by him, or standing in his name, to its president, for its benefit; that the bank, through its cashier, fraudulently concealed from her the facts that no transfer had been made to her on its books at the time of the issue and delivery of the certificate to her, that the certificate was not authorized or recognized as valid *164 by the bank, and that the stock standing in his name had been transferred on its books to its president; and concludes by alleging that by reason of such fraudulent conduct and acts of the bank the certificate was invalid and worthless in her hands. But the evidence offered at the trial does not support the allegations of fraudulent conduct on the part of the bank.
The petition alleges "that the plaintiff relied upon the representations of said Robert B. Moores, as cashier and officer of the defendant, that the said certificate was duly issued, and that the stock had been duly transferred by said Robert B. Moores to the plaintiff on the books of said bank; and said plaintiff relied upon said certificate of stock which she received as genuine and valid for what it purported to be." And at the trial the plaintiff relied upon the representations made to her by Robert B. Moores orally and in the letter enclosing the certificate and in his contract of guaranty, as well as upon those arising out of the certificate itself. The two may be conveniently considered separately.
His representations outside of the certificate may be first disposed of. The plaintiff dealt with Robert B. Moores, and not with the bank. Her agreement was with him personally, and she lent her money to him for his private use. His representations to her that he owned stock in the bank, and that such stock had been transferred to her, were representations made by him personally, and not as cashier; and there is no evidence that the plaintiff understood, or had any reason to understand, that those representations were made by him in behalf of the bank. The duty of transferring his stock to the plaintiff before taking out a new certificate in her name was a duty that he, and not the bank, owed to the plaintiff. The making of such a transfer was an act to be done by him in his own behalf as between him and the plaintiff, and in the plaintiff's behalf as between her and the bank. There is nothing, therefore, in his extrinsic representations, for which the bank is responsible.
The certificate which he delivered to the plaintiff was not in his name, but in hers, stating that she was entitled to so much stock, and showed, upon its face, that no certificate could be lawfully issued without the surrender of a former certificate *165 and a transfer thereof upon the books of the bank. The by-laws, passed under the authority expressly conferred by the act of Congress under which the bank was organized, contained a corresponding provision, designed for the security of the bank as well as of persons taking legal transfers of stock without notice of any prior equitable title therein. Union Bank v. Laird, 2 Wheat. 390; Black v. Zacharie, 3 How. 483, 513. The very form of the certificate was such as to put her upon her guard. She was not applying to the bank to take stock, as an original subscriber or otherwise; but she was bargaining with Robert B. Moores for stock which she supposed him to hold as his own. She knew that she had not held or surrendered any certificate, and she never asked to see his certificate or a transfer thereof to her; and he in fact made no surrender to the bank or transfer on its books. She relied on his personal representation, as the party with whom she was dealing, that he had such stock; and she trusted him as her agent to see the proper transfer thereof made on the books of the bank. Having distinct notice that the surrender and transfer of a former certificate were prerequisites to the lawful issue of a new one, and having accepted a certificate that she owned stock, without taking any steps to assure herself that the legal prerequisites to the validity of her certificate, which were to be fulfilled by the former owner and not by the bank, had been complied with, she does not, as against the bank, stand in the position of one who receives a certificate of stock from the proper officers without notice of any facts impairing its validity.
Of the great number of cases referred to in the thorough and elaborate arguments at the bar, we shall notice only some of the most important. None of those cited by the learned counsel for the plaintiff affirm a broader proposition than this: A certificate of stock in a corporation, under the corporate seal, and signed by the officers authorized to issue certificates, estops the corporation to deny its validity, as against one who takes it for value and with no knowledge or notice of any fact tending to show that it has been irregularly issued.
When a corporation, upon the delivery to it of a certificate of stock with a forged power of attorney purporting to be executed *166 by the rightful owner, issues a new certificate to the present holder, who sells it in the market to one who pays value for it, with no knowledge or notice of the forgery, the corporation is doubtless not relieved from its obligation to the original owner, but must still recognize him as a stockholder, because he cannot be deprived of his property without any consent or negligence of his. Midland Railway v. Taylor, 8 H.L. Cas. 751; Bank v. Lanier, 11 Wall. 369; Telegraph Company v. Davenport, 97 U.S. 369; Pratt v. Taunton Copper Company, 123 Mass. 110; Pratt v. Boston & Albany Railroad, 126 Mass. 443. And the corporation is obliged, if not to recognize the last purchaser as a stockholder also, at least to respond to him in damages for the value of the stock, because he has taken it for value without notice of any defect, and on the faith of the new certificate issued by the corporation. In re Bahia & San Francisco Railway, L.R. 3 Q.B. 584. Whether, before the last sale has taken place, the corporation is liable to the holder of the new certificate, is a question upon which there appears to have been a difference of opinion in England. According to the decision of Lord Northington in Ashby v. Blackwell, 2 Eden, 299; S.C. Ambler, 503; it would seem that the corporation would be liable. According to the decisions of Sir Joseph Jekyll in Hildyard v. South Sea Company, 2 P. Wms. 76, and of the Court of Appeal in Simm v. Anglo-American Telegraph Company, 5 Q.B.D. 188, it would seem that it would not, because the holder of the new certificate takes it, not on the faith of that or any other certificate of the corporation, but on the faith of the forged power of attorney. However that may be, it is clear that the corporation is not liable to any one taking with notice of the forgery in the transfer, or of any other fact tending to show that the new certificate has been irregularly issued, unless the corporation has ratified, or received some benefit from, the transaction.
In Hart v. Frontino Mining Company, L.R. 5 Ex. 111, the plaintiff, a bona fide purchaser of the shares, had paid assessments thereon to the company upon the faith of the certificate issued by it to him after his purchase. In Barwick v. English Joint Stock Bank, L.R. 2 Ex. 259, and in Mackay v. Commercial *167 Bank, L.R. 5 P.C. 394, the bank had derived a benefit from the fraud of its agent, and was held liable upon that ground. The decision in Swift v. Winterbotham, L.R. 8 Q.B. 244, that a bank was liable upon its official manager's representation to one of its customers that the credit of a certain person was good, was reversed in the Exchequer Chamber. Swift v. Jewsbury, L.R. 9 Q.B. 301. The decision in the Exchequer Chamber in The Queen v. Shropshire Union Company, L.R. 8 Q.B. 420, that a railway company, owning shares of its own stock, the legal title of which was registered in the name of one of its directors as trustee for the corporation, should transfer them to a person who, believing the director to be the absolute owner of the shares, had lent him money on the deposit of the certificate as security, was contrary to the judgment of the Court of Queen's Bench, and was reversed in the House of Lords. L.R. 7 H.L. 496.
The American cases on which the plaintiff principally relies are decisions in the courts of Connecticut, New York, Pennsylvania and Maryland, the soundness of some of which we are not prepared to affirm, but all of which are distinguishable from the case at bar.
The leading cases in Connecticut and New York arose out of what have been known as the Schuyler frauds. Robert Schuyler, the president and general transfer agent of the New York and New Haven Railroad Company, issued, beyond the capital limited by its charter, but in the form prescribed by its by-laws, purporting to be transferable on its books on surrender of the certificates, a large amount of certificates of stock, annexed to which were printed forms of assignment and power of attorney. In Bridgeport Bank v. New York & New Haven Railroad, 30 Conn. 231, a bank which had received, as collateral security for money lent to a firm of which Schuyler was a member, certificates of stock so issued by him, was held entitled to maintain an action against the corporation for the value of these certificates, upon the single ground that it was admitted that when the plaintiff took these certificates the firm held more than an equal amount of genuine certificates. In New York & New Haven Railroad v. Schuyler, 34 N.Y. 30, it appeared *168 that Schuyler had issued, in one and the same form, large numbers of genuine as well as of false certificates, and had raised on both indiscriminately large amounts of money which had been applied for the benefit of the corporation, that all his transactions appeared on its books, and that the directors had for years been guilty of negligence in not making any examination of the books or of the conduct of the transfer office; and none of the purchasers of the false certificates, for the value of which the corporation was held to be liable, had any notice, or means of knowing, that they were not such as Schuyler was authorized to issue.
In Titus v. Great Western Turnpike, 61 N.Y. 237, the certificates upon which the corporation was held liable stated the stock to be owned by the person who as officer of the corporation issued them, not by the person to whom they were issued, and the latter had no notice of any fraud or irregularity in the issue. In the other New York cases cited for the plaintiff, the certificates had been purchased in good faith, in the market. Bruff v. Mali, 36 N.Y. 200; McNeil v. Tenth National Bank, 46 N.Y. 325; Moore v. Metropolitan Bank, 55 N.Y. 41; Holbrook v. New Jersey Zinc Company, 57 N.Y. 616. See Merchants' Bank v. Livingston, 74 N.Y. 223.
In Kentucky Bank v. Schuylkill Bank, 1 Parsons, 180, the certificates upon which the corporation was held to be liable were in the hands of innocent purchasers without notice. The opinion in People's Bank v. Kurtz, 99 Penn. St. 344, 349, goes no farther. On the other hand, in Wright's Appeal, 99 Penn. St. 425, where the president of a bank, having no authority to borrow money in its behalf, induced his aunt, a stockholder therein, to surrender to him her certificates of shares with blank powers of attorney, by means of false and fraudulent representations that they were needed to aid the bank; gave her his own note therefor, sold the stock, and applied the proceeds to his own use; and afterwards, by a fraudulent combination with the other officers of the bank, issued stock in excess of the lawful limit, and gave her new certificates for those that he had obtained from her; it was held that he was her agent in the original transaction, and that, as she gave no value to the bank *169 for the new certificates, the loss must fall upon her, and not upon the bank.
In Tome v. Parkersburg Railroad, 39 Maryland, 36, there was no by-law requiring a surrender and transfer of old certificates before the issue of new ones, and no limit of the amount of stock to be issued; and it was not contended that there had been any over-issue, or that the plaintiff had any notice of fraud or want of authority in the officers of the corporation. In Western Maryland Railroad v. Franklin Bank, 60 Maryland, 36, the certificates were not issued to the plaintiff, but bought in the market, without any notice of their having been fraudulently or illegally issued.
In Hackensack Water Company v. De Kay, to which the plaintiff has referred us, the Court of Errors of New Jersey said: "Indeed, as is apparent from all the cases cited, the doctrine which validates securities within the apparent powers of the corporation, but improperly and therefore illegally issued, applies only in favor of bona fide holders for value. A person, who takes such a security with knowledge that the conditions on which alone the security was authorized were not fulfilled, is not protected, and in his hands the security is invalid, though the imperfection is in some matter relating to the internal affairs of the corporation, which would be unavailable against a bona fide holder of the same security." 9 Stew. (N.J.) 548, 565.
The general doctrine was stated with like limitations by this court in the case of Merchants' Bank v. State Bank: "Where a party deals with a corporation in good faith  the transaction is not ultra vires  and he is unaware of any defect of authority or other irregularity on the part of those acting for the corporation, and there is nothing to excite suspicion of such defect or irregularity, the corporation is bound by the contract, although such defect or irregularity in fact exists." 10 Wall. 604, 644.
This review of the cases shows that there is no precedent for holding that the plaintiff, having dealt with the cashier individually, and lent money to him for his private use, and received from him a certificate in her own name, which stated that shares were transferable only on the books of the bank and on *170 surrender of former certificates, and no certificate having been surrendered by him or by her, and there being no evidence of the bank having ratified or received any benefit from the transaction, can recover from the bank the value of the certificate delivered to her by its cashier.
The exceptions to the exclusion of evidence cannot be sustained. The evidence that in one or two other instances stock was issued by the cashier without the surrender of old certificates, and that the directors of the bank approved certain transfers to its president of shares once belonging to the cashier, was quite insufficient to prove that the bank ratified or received any benefit from the issue of the certificate to the plaintiff, or was guilty of any fraud towards her. The action of the directors was adapted to the single purpose of securing payment of a debt due from the cashier to the bank.
The evidence introduced and offered being insufficient to support a verdict for the plaintiff, the Circuit Court rightly directed the jury to return a verdict for the defendant. Randall v. Baltimore & Ohio Railroad, 109 U.S. 478.
Judgment affirmed.
MR. JUSTICE BRADLEY dissented.
MR. JUSTICE MATTHEWS, having been of counsel, did not sit in this case, or take any part in its decision.
