Moores v. Citizens' Nat'l Bank of Piqua,
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111 U.S. 156 (1884)
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U.S. Supreme Court
Moores v. Citizens' Nat'l Bank of Piqua, 111 U.S. 156 (1884)
Moores v. Citizens' National Bank of Piqua
Argued March 6-7, 1884
Decided March 31, 1884
111 U.S. 156
A lent money to B for his own use, and, as security for its repayment, and on his false representation that he owned and had transferred to A a certificate of stock to an equal amount in a national bank of which B was cashier, received from him such a certificate, written by him in one of the printed forms which the president had signed and left with him to be used if needed in the president's absence, and certifying that A was the owner of that amount of stock "transferable only on the books of the bank on the surrender of this certificate," as was in fact provided by its bylaws. B did not surrender any certificate to the bank or make any transfer to A upon its books; never repaid the money lent, and was insolvent. The bank never ratified or received any benefit from the transaction. Held that A could not maintain an action against the bank to recover the value of the certificate. Held also that the action could not be supported by evidence that in one or two other instances stock was issued by B without any certificate having been surrendered, and that shares, once owned by B, and which there was evidence to show had been pledged by him to other persons before the issue of the certificate to A, were afterwards transferred to the president, with the approval of the directors, to secure a debt due from B to the bank, without further evidence that such issue of stock by B was known or recognized by the other officers of the bank.
This is an action against a national bank to recover the value of a certificate of stock therein which the bank had refused to recognize as valid.
The amended petition and other pleadings are stated in the report of the case at a former stage at which this Court, for an erroneous ruling of the circuit court on a question of the statute of limitations, reversed a judgment for the defendant and ordered a new trial. 104 U. S. 104 U.S. 625. A recital of the pleadings is unnecessary to the understanding of the case as now presented.
The undisputed facts, as appearing by the admissions in the petition, by the evidence introduced by the plaintiff before the jury at the new trial, and by the defendant's admissions at that trial, were as follows:
The defendant was organized in 1864, under the Act of Congress on June 3, 1864, c. 106, the 12th section of which provides that the capital stock shall be "transferable on the books of the association in such manner as may be prescribed by the bylaws or articles of association." 13 Stat. 99, 102. The defendant's bylaws relating to transfers of stock were as follows:
"SEC. 15. The stock of this bank shall be assignable only on the books of the bank, subject to the restrictions and provisions of the act, and a transfer book shall be kept, in which all assignments and transfers of stock shall be made. No transfer of the stock of this association shall be made without the consent of the board of directors by any stockholder who shall be liable to the association, either as principal debtor or otherwise, and certificate of stock shall contain upon them notice of this provision. Transfers of stock shall not be suspended preparatory to a declaration of dividends, and except in cases of agreement to the contrary, expressed in the assignment, dividends shall be paid to the stockholder in whose name the stock shall stand on the day on which the dividends are declared."
"SEC. 16. Certificates of stock signed by the president and cashier may be issued to stockholders, and the certificate shall state upon the face thereof that the stock is transferable only upon the books of the bank, and when stock is transferred, the certificates thereof shall be returned to the bank and cancelled, and new certificates issued."
The defendant's capital stock was one thousand shares of one hundred dollars each, the whole of which was in fact and was alleged in the petition to have been, taken and paid for, and certificates therefor issued to the stockholders at the time of its organization in 1864. The president and cashier of the bank were charged with the keeping of its transfer books and the issuing of certificates of stock, and the books of the bank were always open to the inspection of the directions. On July 15, 1867, G. Volney Dorsey was president and Robert B. Moores was cashier of the bank, and said Moores, who had previously owned two hundred and seventy-five shares of the
stock, appeared on the books of the bank to be still the owner thereof. He and John B. C. Moores, the plaintiff's husband, were sons of William B. Moores.
On that day, the plaintiff agreed to lend $9,100 of her own money to Robert and William for use in their private business; they agreed to give her, as security for its repayment, a certificate of ninety-one shares, which Robert represented to her that he owned, and also the contract of guarantee hereinafter set forth, and Robert sent to the plaintiff's husband, as her agent, the following letter and certificate:
"CITIZENS' NATIONAL BANK OF PIQUA"
"PIQUA, O., July 15, 1867"
"John: Herewith I hand you the stock transferred to Carrie. I don't know what day I will be down, and you can keep the contract there, and I will sign it the first time I am down. I will have to take a receipt for the stock from father, to file with my papers, to show where the stock is gone to. All well; may be down any day."
"Y'rs, R. B. MOORES"
"THE CITIZENS' NATIONAL BANK OF PIQUA"
"No. 56 STATE OF OHIO 91 Shares"
"This is to certify that Mrs. Carrie A. Moores is entitled to ninety-one shares of one hundred dollars each of the capital stock of the Citizens' National Bank of Piqua, transferable only on the books of the bank, in person or by attorney, on the surrender of this certificate."
"Piqua, O., July 15, 1867 [Seal]"
"ROB'T B. MOORES G. VOLNEY DORSEY"
This certificate was in the usual form of printed certificates used by the bank, and bore the genuine seal of the corporation, and the genuine signatures of the president and cashier, and the whole certificate, except the printed part and the president's signature, was in the cashier's handwriting, filled up by him in one of two or three blanks signed by the president and left with him to be used if needed in the president's absence.
Upon receiving the letter and certificate, the plaintiff paid the money to Robert B. Moores, and on July 18 he and William signed and sent to her the following contract:
"For value received, namely, the sum of ninety-one hundred dollars, Robert B. Moores has assigned and transferred to Caroline A. Moores ninety-one shares of stock of the Citizens' National Bank of Piqua, Ohio."
"Now it is agreed that the said Caroline A. Moores shall, upon demand by Robert B. Moores or his assigns, reassign to said R. B. Moores the said stock for the same amount. And it is also agreed that whenever the said Caroline A. Moores shall require it, the said Robert B. Moores shall purchase said stock at the amount aforesaid and pay the same to her in cash. And in the meantime it is agreed, and the said Robert B. Moores and William B. Moores do hereby guarantee and assure to said Caroline A. Moores an annual dividend upon said stock of not less than ten percent upon the par value of said stock, namely, ninety-one hundred dollars, which guarantee shall be performed and fulfilled at the end of each year herefrom, or at the time of each dividend declared, if such dividend shall be declared oftener than once a year, and all deficiencies in said dividends shall be made good at the time of such repurchase or transfer to R. B. Moores."
"In witness whereof the said Caroline A. Moores and J. B. C. Moores, her husband, and Robert B. Moores and William B. Moores, hereunto set their hands on this 15th day of July, 1867."
"CAROLINE A. MOORES"
"J. B. C. MOORES"
"ROBT. B. MOORES"
"W. B. MOORES"
Robert B. Moores surrendered no certificate to the bank, and made no transfer to the plaintiff on its books. The plaintiff had no other knowledge of the rule requiring the surrender of an old certificate of stock before the issue of a new one, or of any fraud on the part of Robert, than was obtained by her reading and possession of the certificate. The value of the stock of the bank at that time was ninety percent of its par value. Robert B. Moores was insolvent, and the money lent to him by the plaintiff was never repaid.
The plaintiff put in evidence two letters to her husband from Dorsey, the president of the bank, one dated June 25, 1872, stating that the writer had just learned that he held a certificate of stock purporting to be issued by the bank and asking for its number, date, and amount, and the other dated July 5, 1872, the body of which was as follows:
"There is no such certificate as mentioned in yours of June 27 on our books. No. 56 is marked on the stub in our certificate book 'destroyed,' in R. B. Moores' handwriting. Your wife's name was never entered among our stockholders, and the certificate is a fraud. We never heard of this certificate until you mentioned it to Dr. Parker, who first informed me of it."
Robert B. Moores and Dorsey, being called as witnesses for the defendant, testified that it had no interest in the transaction of July 15, 1867. Moores testified that at that date he had pledged to Jason Evans and other persons all the stock he had previously owned, and did not own any stock, and that he issued the certificate to the plaintiff without any authority from the bank, or any knowledge of the other officers. Dorsey testified that he had no knowledge of the issue of the certificate until June 25, 1872, and that the bank never paid any dividends upon it, and he produced the certificate book of the bank, which showed the stub of a certificate, in its regular order, corresponding in number with that produced by the plaintiff, and having the word "destroyed" upon it in the handwriting of Robert B. Moores.
The plaintiff offered in evidence, and the court declined to admit, the record of a meeting of the board of directors of the bank, on August 9, 1869, containing the following entry:
"On motion, the following resolution was adopted and ordered to be placed upon the minutes: Whereas, Robert B. Moores, who was the owner of 275 shares of the capital stock of this bank -- evidenced by certificate No. forty-seven (47) for fifty shares, dated May 2, 1867; certificate No. forty-eight (48) for fifty shares, dated May 2, 1867; certificate No. forty-nine (49) for sixty-five shares, dated May 2, 1867; certificate No. fifty-three (53) for
seventy shares, dated June 11, 1867, and certificate No. fifty-four (54) for forty shares, dated June 11, 1867 -- became indebted to this bank in the sum of thirty-seven thousand two hundred and forty-seven 29/100 dollars ($37,247.29), and did, on the 16th day of January, 1868, transfer one hundred and eighty-five shares of said stock, and on the 15th day of May, 1869, did transfer ten shares of said stock, on the books of this bank, to G. Volney Dorsey, in consideration that said G. Volney Dorsey pay to this bank the sum of nineteen thousand five hundred dollars of said indebtedness, and whereas, Jason Evans, who became the holder of seventy shares of said stock, issued as aforesaid, and transferred to him by the said R. B. Moores on the books of this bank, September 4, 1867, as per certificate No. 59, did, on the 20th day of February, 1869, transfer to G. Volney Dorsey, on the books of this bank, by his power of attorney, all his right, title, and interest in the same, therefore, said transfers, as hereinbefore stated, are approved and affirmed by the directors of this bank."
The plaintiff also offered evidence that there were one or two other instances in which stock was issued by the cashier without any certificate being surrendered. But as she offered no evidence, other than the directors' record of August 9, 1869, that the other officers of the bank had any knowledge at the time of such transactions or subsequently recognized them, the court excluded the evidence. The plaintiff offered to prove that there was an arrangement between Robert and her husband by which interest equal to ten percent on $9,100, on a debt due from the latter to his father was to be treated as dividends upon this stock. But the court excluded the evidence as immaterial.
The court instructed the jury that the plaintiff, having knowledge of the fact that Robert B. Moores, upon whom she relied to have the stock transferred to her, was acting for himself as well as in his capacity of cashier, in reference to the matter of issuing this certificate, she was not an innocent holder of the stock, and as the certificate was issued without authority, in fraud of the rights of the bank, they should return a verdict for the defendant. A verdict was returned accordingly, and judgment rendered thereon and the plaintiff excepted to the
exclusion of evidence and to this instruction, and sued out this writ of error.