National Safe Deposit, Savings & Trust Co. v. Hibbs - 229 U.S. 391 (1913)
U.S. Supreme Court
National Safe Deposit, Savings & Trust Co. v. Hibbs, 229 U.S. 391 (1913)
National Safe Deposit, Savings & Trust Company v. Hibbs
Argued April 14, 15, 1913
Decided June 10, 1913
229 U.S. 391
A bank's trusted agent, in gross breach of his duty, took certain stock certificates belonging to the bank, endorsed and authenticated with evidence of title, to a broker who, in ordinary course of business and in good faith, sold them to third parties for full value and paid over the proceeds to such agent. Held, in a suit by the bank against the broker that:
Where one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it.
Stock certificates are a peculiar kind of property; although, strictly speaking, not negotiable paper, they are frequently the basis of commercial transaction and bought and sold in open market as negotiable securities are. Bank v. Lanier, 11 Wall. 369.
The fact that principles affecting the matters involved are well known to businessmen and are constantly acted upon by them should be given due weight in determining the rights of parties in a transaction relating to the sale of stock certificates. Russell v. Am. Bell Telephone Co., 180 Mass. 467, approved.
Under the principles of equitable estoppel, the bank is estopped to make any claim against the broker.
32 App.D.C. 459 affirmed.
The facts, which involve the question of liability of a broker for sale of stolen stock certificates, are stated in the opinion.