Case ID: ohio-st_35/html/0483-01.html
Source: Caselaw Access Project
Author: {"author": "White, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Cleveland and Mahoning Railroad Co. v. Robbins et al., Adm’rs of Elias Fassett.
    On the 9th of September, 1854, the Cleveland and Mahoning Railroad Company issued to V. certificates of its capital stock. The certificates declared upon their face that the stock was transferable on the books of the company upon the surrender of the certificates. On the 16th of September, 1854, the stock was sold to 3?. by V., who delivered to him the certificates with blank powers of attorney to enable him to have the stock transferred. The certificates were mislaid by 3? , and were not discovered until December, 1871. In the meantime, on May 8, 1863, the board of directors of the railroad company, on the application of V., issued to B. & P., to whom Y. assumed to sell the stock, new certificates of stock, on the supposition that the original certificates had been lost by Y. On the application of the administrators of 3?. for a transfer of the stock to their names, and for an account of the dividends, the company refused the application, on the ground of the issue of the new certificates to B. & P. The by-laws provided that no new certificates should be issued in place of any certificate previously issued, until such previous certificate was surrendered and canceled. There was also provision in the by-laws, that certificates might bo issued on the special order of the board of directors, in the place of certificates lost or destroyed, on proof of such loss and destruction, and on receiving security to indemnify the company against loss consequent upon the issuing of such new certificates. Held:
    
    1. The issuing of the new certificates to B. & P., and the allowing the transfer of the stock to them, was a breach of the duty which the company owed to B., as the holder of the original certificates, and this breach of duty created a liability on the company to replace the stock to which B. was entitled, or to account for its value.
    2. The issuing of the certificates under the by-law providing for the issue of certificates in place of such as may have been lost or destroyed, does not affect the liability of the company to B., as the holder of the original certificates. The object of the by-law is to enable persons whose certificates appear to have been lost or destroyed, to obtain others, on indemnifying tbe company against loss, in case other parties should assert rights against the company under the original certificates; but does not affect the rights of such parties.
    3. The company is not liable for the dividends paid on the stock, before if had notice of the transfer of the certificates to B. Unlike the transfer of the stock, the surrender or production of the certificates was not necessary to draw the dividends. Until the company was notified of the transfer of the certificates, it was warranted in paying the dividends to V., the registered owner, or to his order. And by paying the dividends to B. & P., as purchasers under V., the company is as fully protected as if the payments had been made to Y. directly.
    
      4. Until the transfer of the stock to the holders of the original certificate was refused, or they had notice of the transfer of the stock to other parties, the statute of limitations did not begin to run.
    Error to the District Court of Cuyahoga county.
    The original action was brought by defendants’ in error against the plaintiffs in error, in the Court of Common Pleas of Cuyahoga county.
    They set out in their petition, substantially, that on the 9th day of September, 1854, the Cleveland and Mahoning Railroad Company issued to Voce, Perkins & Co., of New York, two certificates for twenty shares each, of fifty dollars value per share, of the capital stock of the said railroad company. The certificates were numbered 340 and 341, and were in the ordinary form, transferable by their terms and by the by-laws of the company, on the books of the company, upon the surrender of the certificates.
    That on the 16th day of September, 1854, said Yoce, Perkins & Co., for value, sold said stock, and delivered said two certificates for said stock to Elias Eassett, the plaintiffs’ •intestate, and on the 22d day of November, Yoce, Perkins & Co. executed a power of attorney on the back of each of the said certificates, authorizing the transfer of said shares to the said Eassett.
    That no transfer of the shares was ever made by the said company to the said Eassett in his lifetime, and that lie continued to hold said certificates until his decease, which occurred May 29, 1863, up to which time no dividends were declared on the stock.
    That Elias Eassett, in his lifetime, mislaid said certificates among certain old papers of the said Eassett, and upon his decease said certificates came with all his papers into the possession of the plaintiffs, as his administrators, and they have ever since held the same, though the same were not discovered by the plaintiffs tobe among said papers, nor found by them, until on or about the 1st day of December, 1871; immediately after which said company and said Burke and Perkins were notified of such finding.
    That the said railroad company, having full notice from its stock and transfer books that the said certificates so issued to the said Yoce, Perkins & Co. were still outstanding and had never been surrendered, and also that the said Elias Eassett had become the holder and owner of the said stock on the 8th day of May, 1863, at the request of the said Yoce, Perkins & Co., the said O. M. Burke and Joseph Perkins, without full or any other proof than the representations of the said Yoce, Perkins & Co. of the pretended loss of the said certificates, said Yoce, Perkins & Co., then claiming to own the same and the stock represented thereby, and representing that they had lost the same, procured said company to issue and deliver to the defendant, O. M. Burke, for himself and said Josejjh Perkins, two other certificates, numbers 1759 and 1760, for the same number of shares of the said stock, to be by him held in place of the said cei’tificates, numbers 340 and 341, so claimed by the said Yoce, Perkins & Co. to have been lost.
    That the said Burke, prior to, and at the time of the issumg of the said certificates to him as aforesaid, was the acting secretary of the said railroad company, and that said Perkins was vice-president and one of the directors thereof. That the said O. M. Burke had previous to such issue to him for his own and the benefit of said Joseph Perkins, bought of said Yoee, Perkins & Co. their pretended title to said shares of stock, with notice of the rights of the said Elias Eassett, at the rate of fifty cents on the dollar of the par value thereof, and the said Burke and Perkins claimed to be the legal holders of the said forty shares of stock in virtue of the said purchase until April 18, 1872. That at and before the time of such purchase of said pretended title, said Burke and Perkins, and said railroad company had full notice and knowledge of the fact that said certificates, numbers 340 and 341, were still outstanding, and of all the facts in relation thereto, therein stated, and that, therefore, and by reason of their relations to the said railroad company, such attempted purchase of said pretended title by them of the said stock was fraudulent, and invested them with no bona fide right or title thereto, as against the plaintiffs. That the said Burke and Perkins remained officers of the said company long after the said attempted purchase, and the said Perkins so. remained until April 18, 1872. That the said O. M. Burke and Joseph Perkins, on the said 8th day of May, 1863, delivered to the said railroad company a bond of indemnity, signed by the said Voce, Perkins & Co., by J. V. Voce in liquidation, in the penalty of $2,347.33, conditioned that if the said Voce, Perkins &. Co. should at all times indemnify and save harmless the said railroad company against'any loss, damage, or dividends arising out of the loss of said original certificates, numbers 340 and 341, and the issuing of the new ones in the stead thereof, and the return to the said railroad company the-said forty shares of the stock so issued, in case the lost certificates should thereafter be found by the said Voce, Perkius & Co., or be in the hands of any innocent holder claiming title thereto, or, if unable to return the said certificates issued to them, or other stock of said company for like amount, should pay to the said company the full, not exceeding the par value thereof, then said bond to be void, otherwise in full force.
    That on the 8th day of May, 1863, the defendants, O. M. Burke and Joseph Perkins, executed and delivered to the railroad company their written guarantee, therein reciting that the Cleveland and Mahoning Railroad Company had on that day, at their request, and upon the delivery therewith of the bond mentioned, issued stock certificates, numbers 1759 and 1760, for forty shares to O. M. Burke, they thereby bound themselves, their heirs, executors, and administrators to the said Cleveland and Mahoning Railroad Company in the sum of $4,000, that the said Yoce, Perkins & Co. should well and truly fulfill all the terms and conditions of their said bond of indemnity ; and the said Burke and Perkins would pay any and all additional loss or damage that the said company might sustain by reason of the return or delivery of said stock certificates, numbers 340 and 341, over and above what said Yoce, Perkins & Co. had stipulated for.
    That the said railroad company, by their order entered upon the records, approved the said bond and guarantee, and authorized their said vice-president and secretary to issue new certificates for the said stock, which order is dated on the said 8th day of May, 1863, and in pursuance of which order said certificates were so issued to the said Burke for the joint benefit of himself and said Perkins.
    That the said Burke and Perkins purchased said stock with a view to an anticipated advance of the value of the same, and in view of large dividends upon said stock, which had-been earned and were about to be made, and which they then knew would, and which afterward did occur. That the said Burke and Perkins, as holders of the said certificates for the said shares, have from time to time since the purchase thereof, received from the said railroad company sundry dividends on said shares of stock, both in money and in additional shares to them, to wit, October 26, 1863, a dividend paid in stock, thirty-four and one-half per cent, upon the said stock, amounting in stock at par to $690.
    On March 7, 1864, a dividend paid in stock, of ten per cent, amounting at par to $200.
    It appears from the petition that the railroad company paid to the said Burke and Perkins upon the capital stock so increased by the said stock dividends, cash dividends, at suudry times, between November 10,1863, and November 10, 1871, amounting in the aggregate to $1,841.60.
    The petition further alleges, in substance, that the said Burke and Perkins held said certificates and received all of said dividends as such holders, and continued to hold said certificates until April 18, 1872, when they sold the same at and for the price or sum of $3,556.12, which they then received therefor; and thereupon the said railroad compauy, at the request of the said Burke and Perldus, transferred said stock to such purchasers, all of which was done by said railroad company and Burke and Perkins, with full knowledge of all the facts hereinbefore stated; that the said Burke and Perkins have never paid the plaintiffs any part of the moneys so had and received by them, nor in any manner accounted to the plaintiffs therefor; that, on the 3d of April, 1872, the plaintiff’, Francis Dunlevy, as one of the administrators of Elias Fassett, presented said certificates 340 and 341 to the secretary of said railroad company, at his office in Cleveland, and demanded payment of all dividends that had been declared and were then due on the said stock, and also demanded a transfer of the said stock on the books of said compauy to the names of the administrators of the estate of the said Elias Fassett, deceased, which demand the secretary declined to comply with, and the railroad company still refuses to make such a transfer.
    The plaintiff’s allege that they bring said certificates 340 and 341, and tender the same in court, and ask that by a proper action of the court, the railroad company be required to issue to the plaintiffs new certificates of stock in lieu of those which they hold, with interest thereon, and they ask that in the event that it shall be determined that said company has become incapacitated to so issue certificates for stock or are not liable to so issue the same, that then said company be required to pay the plaintiffs the value of said stock and dividends and interest; and'in case this court shall find that the said company is not, by reason of its said transactions with the said Burke and Perkins, or otherwise, liable to either issue said stock to the plaintiffs or account therefor, and for the dividends and interest thereon, then and in that case plaintiffs say: That the said Burke and Perkins become and are by reason of the facts set forth in this petition liable to account to the plaintiffs for the said stock, for the said dividends by them received thereon, with interest upon each from the date of its receipt, and for the amount received by them for the said stock up to the said sale thereof by them, with interest thereon, specifying over again the amount for which they claim the stock was sold and the amount of dividends received by the said Burke and Perkins, and they ask that judgment be given for the plaintiffs against said defendants, and execution awarded for the said sum, with interest, and for such further relief as to the court shall seem just.
    To this petition the railroad company and Burke and Perkins filed separate answers. The railroad company, in its answer, admits that it issued to Voce, Perkins & Co. the certificates of stock mentioned in the petition, and that said stock was transferable only upon the books of the company. It denies any knowledge of a sale of stock by Voce, Perkins & Co. to Eassett, and denies that such sale was made. It admits that no transfer was ever made to Eassett upon its books. It denies all knowledge that the said Eassett was ever the owner of or that he lost or mislaid said certificates of stock. It denies also that these certificates of stock came-into the hands of the plaintiffs as the administrators of Eassett. It alleges that the stock stood in the name of Voce, Perkins & Co., upon its books, from the date of said certificates of stock up to the 8th day of May, 1863, when it alleges that the said stock was duly and legally transferred upon its books to tbe defendants, Burke and Perkins; that at the time of the transfer to Burke and Perkins it had no knowledge or information upon the subject of the ownership of the said stock, except so far as it appeared upon its books, and so far as it was represented by Yoce, Perkins & Co. to be their stock; and the company denies that it had any knowledge whatever that the said stock, or any part thereof, belonged to Elias Fassett or to any other person .than Yoce, Perkins & Co.
    It further states that the said Yoce, Perkins & Co., at the time of the transfer to Burke and Perkins, claimed to be the owners, and claimed to have lost the certificates which had been issued to them, and which are mentioned in the petition ; that the railroad company, fully believing that the said stock was the property of Yoce, Perkins & Co., and Yoce, Perkins & Co. having presented to it satisfactory proof of the loss of the said certificates, it thereupon duly permitted said stock to be transferred upon its books from Yoce, Perkins & Co. to the said Burke and- Perkins; that such transfer was allowed and made by the railroad company in the utmost good faith, without any design to hinder, oppress, embarrass, or injure said Fassett or any one else. It admits the execution to it of the bond of indemnity at the time of the making of such transfer. It admits the demand by the plaintiff, Dunlevy, for the transfer of said stock to the plaintiffs upon its books, and admits that it refused to permit such transfer, and says that it refused to make such transfer for the reason that the said stock had been previously and legally transferred to the said Burke and Perkins. It admits that Burke was the secretary of the company at the time he purchased the stock, and that Perkins was at that time one of its directors. It admits that the dividends alleged in the petition to have been made upon said stock have been made as alleged, and it charges that it has paid regularly to the persons in -whose name said stock stood upon its books all the dividends made.
    It is unable to state at what time said Burke and Perkins sold said stock, or any part thereof, but it denies that they sold said stock at the time or times alleged in the petition. And it alleges that the said Burke sold the half of said stock held by him within a few months after he purchased the same.
    The defendant denies that it is bound to transfer any stock whatever claimed by the plaintiffs, upon its books, and denies that it has the-powerto issue to them any stock whatever upon account of the certificates held by them, and denies all the other allegations in the petition contained.
    The railroad company also pleads that the plaintiffs ought not to maintain their action because that it did not accrue to them or to their intestate at any time within four years ; and further, in a separate defense, pleads that the action ought not to be maintained, because it did not accrue to the plaintiff or said Eassett at any time within six years next before the commencement of the action.
    The answer of Burke and Perkins is joint, and is substantially the same as the answer of the railroad company. They admit the purchase of the stock, the receipt of the dividends up to the time that they sold out. They set out in the answer that Burke sold out in 1866 and Perkins in 1872. They say that they purchased the stock in the utmost good faith in the full belief that Voce, Perkins & Co. were- the owners thereof, and without any knowledge or conception that it belonged to any other person. They deny ' all allegations of fraud or notice of wrong charged in the petition. They claim to have purchased the stock in the utmost good faith and to be the owners thereof.
    The plaintiff, by reply, denied the new matter contained in these answers.
    Upon the trial, the plaintiff offered in evidence the following by-law of the Cleveland and Mahoning Railroad Company, to wit:
    “No certificate of new stock shall be issued, unless in obedience to the orders of the board of directors, or on subscriptions made and accepted by their authority and on full payment therefor being made.
    “No new certificates shall be issued in place of any certificates previously issued until such previous certificate shall have been surrendered and canceled, and such cancellation, with the date thereof, plainly written on the face of the certificate so surrendered.
    “A certificate or certificates may be issued on the special order of the board in place of certificates lost or destroyed, on full proof being made of such loss or destruction, and on receiving adequate security to indemnify the company against all loss consequent upon the issue of such new certificate or certificates.”
    The plaintiffs also offered in evidence the following resolutions, which were unanimously adopted at a meeting of the board of directors of said railroad company, held April 9,1863, to wit:
    “Resolved, That the large surplus of earnings of this company’ over and above its current expenses, interest and taxes fully entitle the stockholders to some income from their investments, and that the present situation and prospects of the company justify an early dividend upon the capital stock.
    
      “jResoloed, That it is the true policy of this company to commence paying dividends as early as July next, and that measures be taken to provide therefor.”
    At a meeting of the board of directors of the company, the bond of Vose, Perkins & Co., for c'ertificates of stock said to have been lost, was approved, and the vice president and secretary authorized to issue new certificates.
    Such further facts as are necessary to an understanding of the ease will be found in the opinion.
    On appeal in the district court the following decree was rendered:
    “ This cause came on to be heard upon the petition of the plaintiffs, the separate answer of the Cleveland and Mahoning Railroad Company, the joint answers of Oscar M. Burke and Joseph Perkins, the replication thereto, the exhibits and testimony, and was argued by counsel. On consideration whereof the court do find the facts stated in the petition to be true; that said railroad company and said Burke and Perkins had notice in equity when said new certificates of stock Nos. 1759 and 1760 were issued to said Burke and Perkins, in place of certificates Nos. 340 and 341 previously issued to Yoce, Perkins & Go., and by said Yoce, Perkins & Co. sold aud delivered to Elias Bassett; that said last mentioned certificates were owned by some other party than said Yoce, Perkins & Co., and that the issue of said new certificates in place of said certificates previously issued, was a violation of the by-laws of said railroad company, aud of the assurances of the railroad company embodied in said certificates, as well as in said bylaws, that no new certificate should be issued in place of any certificates previously issued, until such previous certificate should have been surrendered and canceled; that said issue of certificates No. 1759 aud 1760, in place of said certificates Nos. 340 and 341, was a violation of corporate duty on the part of said railroad company and in law fraudulent, and conveyed no title in equity in said stock represented by said new certificates to said Burke and Perkins.
    
      “ And the court do further find, that prior to the commencement of this suit said Burke and Perkins conveyed all of said stock so wrongfully issued to bona fide purchasers without any notice of any outstanding equity in the plaintiffs as administrators of Elias Eassett, deceased ; that plaintiffs made demand for the transfer of said stock and for the dividends which had accrued thereon, of said company, on the 3d day of April, 1872; that the railroad company refused to transfer said stock and to pay said dividends; that the law and equity of the ease are wdth the plaintiffs, and that they are entitled to have and receive from the defendants the value of said stock on said 3d day of April, 1872, so wrongfully conveyed away from them, with the increase and dividends thereof, with interest on said cash dividends from the time the same were payable, and with interest on the value of said stock from the time of the demand thereof until the first day of this term.
    “ The court do also further find that said original issue of stock had been increased by said stock dividends from $2,000 to $2,890; .that the value of said stock so increased as aforesaid to $2,890, was on said 3d day of April, 1872, $3,368 ; that the interest on said sum of $3,368, to the first day of this term, is $808.32; and that the amount of cash dividends declared and payable on said stock after the same was so wrongfully issued to said Burke and Perkins, up to the 3d day of April, 1872, and the interest thereon from the date of said cash dividends respectively, to the first day of this term, is $2,908.18. The court do therefore find that there is due from the defendant, the Cleveland and Mahoning Railroad Company, to the said plaintiffs, as administrators of said Elias Eassett, deceased, in the premises the sum of $7,084.50, with interest thereon from the first day of this term, and order, adjudge, and decree that the said defendant,-the Cleveland and Mahoning Railroad Company, within teu days from the rising of this court, pay to said plaintiffs said sum of $7,084.50, with interest thereon as aforesaid, and the costs of the suit to be taxed, and that in default of such payment, execution issue therefor.”
    A motion for a new trial was overruled. To which ruling and to the said judgment and decree the defendants excepted.
    The object of this proceeding is to obtain a reversal of the judgment and decree of the district court.
    
      S. Burke, for plaintiff in error :
    I. Eassett was not a stockholder; he had no right to dividends, or to vote, or to exercise any of the rights of stock - holders.
    Voce, Perkins & Co., so far as the railroad company knew or had the means of knowing, were the owners of the stock, and as to all the world, except Eassett, they were as clearly the owners after as before the sale to Eassett.
    We trust we are not misunderstood here. We make no claim that the sale and signature to the power of attorney was not good between the parties. As to them it doubtless was good and conveyed the entire title. In any contest between them the sale and transfer such as it was, would be conclusive. But we claim that as to the railroad company and innocent purchasers of the stock from the registered owner, and all other strangers to the sale and transfer, the, case is entirely different. 73 Penn. St. 59 ; Sherman v. Ins. Co., 29 Conn. 245 ; 13 Conn. 498; 12 Gray, 213; 11 Cush. 183 ; 17 N. J. 117 ; 34 Cal. 653 ; 20 Cal. 530 ; 49 Me. 315 ; 38 Barb. 535 ; 2 Wheat. 390; 2 Comst. 447; 34 N. Y. 30; 42 N. H. 424.
    We maintain that whoever purchases stock from the registered owner in good faith, without notice that it has been sold, or agreed to be sold to another, and who procures a transfer to be made to himself on the books, and thereby unites in himself both the equitable and legal title, will be protected, and will hold the stock as stock against the holder of the outstanding certificate.
    This doctrine is too well settled to be shaken.
    II. The action was barred by the statute of Limitations* Code, § 15.
    This is not such a case as comes within the saving clause of the statute, to wit, “ the cause of action shall not be deemed to have accrued until the discovery of the wrongdoer.” See 19 Ohio St. 462; 1 Superior Ct. Rep. 456; 1 Ohio St. 478.
    The injury was complete at the time of the transfer to them, and the statute of limitations began to run at the time of the transfer to them, upon the 8th day of May, 1863, and in four years from that time the plaintiffs’ cause of action, if any they ever had, was barred. They had slept upon their rights until, by the positive provisions of the statute, their rights, if any, were extinguished. 10 Ohio, 469 ; 5 B. & C. 149; 2 Munf. 444; 4 Ohio, 331; 6 Ohio St. 296 ; 14 Ohio, 443; 11 Ohio St. 201. See Batterly v. Faulkner, 3 B. & A. 288 ; Short v. McCartney, 3 B. & A. 626 ; Brown v. Howard, 4 Moore, 508.
    
      III. As to measure of damages:
    1. It is very clear that the railroad, company had no' notice at the time it paid any dividends of the transfer to Fassett; and not having any actual notice of such transfer, it seems too clear for debate that the company had the right to deal with Voce, Perkins & Co. as the holders and owners of the stock, and that in declaring and paying dividends the officers of the company were justified in treating them as the owners and paying the dividends over to them or to their order. Confessedly, no other person but Voce, Perkins & Co., or Burke and Perkius, as claiming under them, ever claimed any dividends from the railroad company until about the time that this action was instituted in the spring of 1872. The company commenced declaring dividends in 1868, and from that time, down to the commencement of this action, it continued to declare dividends, some in stock and some in cash. .During all that time, if the stock had not been transferred to Burke and Perkins, Voce, Perkins & Co. would clearly have been entitled to have di'awn these dividends ; they having caused the stock to be transferred to Burke and Perkins, and having thereby, so far as they w’ere concerned, authorized them to receive the dividends.
    It seems to us very clear that such transfer, such action upon their part, would, as to all the world, for the purpose of receiving dividends, put Burke and Perkins in their shoes, and put the railroad company in a position to deal with them as the representatives of Voce, Perkins & Co., in regard to dividends; and hence, there may be a very broad distinction in this case between the plaintiffs’- right to recover for the original stock, and to recover the dividends that have been paid by the company in good faith.
    In dealing with stockholders, a corporation has the right to be governed by its register. 36 Barb. 57; 42 N. H. 424; 29 Barb. 353; 45 Barb. 510 ; 13 Ill. 516.
    Interest should not have been allowed upon dividends.
    Whenever a dividend has been declared, it is the duty of the stockholder to apply for and collect his dividend, and the railroad company is never in default or in the wrong in regard to its payment until after demand and refusal. 2: Redf. on Rys. 531, and note 6; 6 Gill. 363; 28 Penn. St. 329; 49 Penn. St. 270; 98 Mass. 462; 34 Conn. 542, and cases cited in note on p. 139, Brice’s Ultra Vires ; 2 Redf. on Rys. 529, and note 2 ; 6 Ohio St. 489; 5 Dutcher, 82; 7 Ohio St. 299; 15 Ohio St. 413; 8 Pick. 90; 2 Minn. 323; 18 Mich. 60; 1 Bush (Ky.), 489 ; 52 Me. 578; 18 Md. 468.
    The rule of damages is the highest price of the property up to the time of trial. 26 N. Y. 309; 28 N. Y. 285; 34 N. Y. 88; 11 Wall. 369; 42 N. H. 424; 45 N. H. 545; 8 Cush. 168; 10 Pick, 415; 35 Me. 208; 48 Me. 180 ; 12 Ill. 99-184; 21 Ill. 118; 2 J. J. Marshall, 390; 13 Law, 225; 26 Conn. 389; 21 Mo. 279; 13 Mich. 9; 40 Miss. 360; 2 Nevada, 112; 7 Ohio St. 308.
    
      Otis, Adams & Russell, for defendants in error,
    in support of the judgment of the district court, cited: Kortright v. Buffalo Com. Bank, 20 Wend. 91; Pollock v. Bank, 3 Selden, 274; Railroad Co. v. Schuyler, 34 N. Y. 30; 4 Allen, 277; 46 N. Y. 325; 48 N. Y. 385; 30 Conn. 231; Campbell (Taney’s C. C. Decisions), 310; Bank v. Lanier, 11 Wall. 369; 14 Md. 299; 35 Md. 238.
    The question properly arises : What is the remedy for a breach of trust ? The usual and most effectual remedy for’ a breach of trust is a suit in equity, or, as we claim this action to be, and as the counsel of the defendants has by his-conduct hitherto admitted it to be, a petition in the nature’ of a suit in equity, and not simply an action at law for the recovery of damages sustained by such breach.
    Not only was the railroad company a trustee for Eassett of the title of its capital stock owned by him, but when the-same was transferred by the company to Burke and Perkins with knowledge that the previous certificates were still outstanding, Burke and Perkins also became trustees for Eassett of the title of the same stock.
    The district court, in finding that the issue of the new certificates in place of the ones previously issued was fraudnlent, in law, fixed the liability of all the defendants so far ■as it related to the plaintiffs, but as the railroad company was pecuniarily and legally liable to the plaintiffs, for the whole amount, while Burke and Perkins might be liable to the company only for the amount “ nominated in their bond,” the court voluntarily singled out the company, and made it responsible for the whole amount, in the first instance, very properly leaving the question of the liability «of the defendants among themselves undetermined until presented in a suit brought for that purpose.
    In case(of a breach of trust, a court of equity in the first place endeavors as far as possible to replace the parties in the same situation as they would have been in if no breach had been committed. Hence, where the trust property has been improperly disposed of, and is capable of being followed in specie, it will compel the trustee, or the party in possession (if the latter have taken with notice of the trust), to reconvey the estate.
    See the rule as laid down by Judge Story in Oliver v. Pratt, 3 How. (U. S.), 333.
    If the property can not be followed in specie, or if the holder can not be made liable because he is a bona fide purchaser, the trustee will be decreed to compensate the cestui ique trusts by payment of a sum equal to the value of the trust property. And in taking the account against the trustee, he will be invariably charged with the amount of principal and income, which would or might have been received from the trust estate, if no breach of trust had been committed. 1 Wood & Minot, 195.
    Every characteristic of the petition in the case at bar shows that it is a petition in equity, and not at law.
    As to the bar of the statute, see section 15 of the code.
    This is really and in form a proceeding in equity for relief oh the ground of fraud in law, and the lapse of time begins to run only from the discovery of the fraud. Longworth v. Hunt, 11 Ohio St. 194.
    Again, the directors of the railroad company, who permitted the new certificates to- be issued to Burke and Perkins, occupied, in regard to that stock, a fiduciary relation to Eassett. Jackson v. Ludwelling, 21 Wall. 616.
    Time does not begin to run against a cestui que trust till he has knowledge of the trust and a breach of it. Carlisle et al. v. Hunt, 10 Ohio St. 194.
    
      James R. Stanbery, also for defendants in error.
   White, J.

The original action was in the nature of a suit in equity, brought against the Cleveland and Mahoning Railroad Company, O. M. Burke, and Joseph Perkins. The object of the action was to obtain the transfer to the plaintiffs, upon the hooks of the railroad company, of forty shares of its stock,' the original certificates for which were held by Elias Eassett, the plaintiffs’ intestate, at the time of his death, and also to obtain from the company the payment of the dividends that had accrued on the stock. If the transfer of the stock could not be obtained, the plaintiffs prayed that the company be required to account for the value of the stock and the dividends; and in the event that it should be found that the plaintiffs were not entitled to such relief against the company, that the same be decreed to them against Burke and Perkins.

A separate answer was filed by the railroad company. Burke and Perkins answered jointly; but no decree was rendered, either in favor of or against them, nor are they parties to this proceeding in error. There was a finding against them in favor of the plaintiffs; but there was no judgment or decree on such finding.

Judgment was rendered against the railroad company .alone; and the present petition in error is prosecuted by the company against the plaintiffs below, Robbins and Dunlevy, administrators of Eassett.

The principal question arising in the ease, therefore, is, whether the railroad company is liable to the administrators of Eassett, the plaintiffs below, on account of the stock; and, if so, as to the nature and extent of such liability.

The duty of a corporation toward those interested in the-transfer of its shares of stock has been thus stated: “It is made the custodian of the shares, and is clothed with power to protect the rights of evei’y one from unauthorized transfers. The power thus vested in the corporation is a trust placed in its- hands for the protection of individual interests, and, like every other trustee, it is bound to-execute the trust with proper diligence and care, and is responsible for any injury sustained by its negligence or misconduct.” Lowry v. Commercial and Farmers' Bank of Baltimore, Campbell’s Rep. (Taney’s C. C. Decisions), 310.

In all such cases there may be no actual fault on the part of the corporation, yet the principle results from the justice and expediency, in such transactions, of casting the loss on those who can best provide against it. Chew et al. v. The Bank of Baltimore, 14 Md. 300.

In the present case, in addition to the statement contained upon the face of each of said certificates, that the stock mentioned therein is “ transferable upon the books of the company upon the surrender of this certificate,” a by-law of the company declared that “no new certificates shall be issued in place of any certificate previously issued, until such previous certificate shall have been surrendered and canceled, and such cancellation, with the date thereof, plainly written on the face of the certificate so surrendered.”

The original certificates in question were issued by the railroad company, on the 9th day of September, 1854, to Voce* Perkins & Co., who appeared on the books of the company as the owners of the stock. In the same year the stock was sold to Elias Fassett by Voce, Perkins & Co., who delivered to him the certificates, with blank powers of attorney, to enable him to have the stock transferred upon the books of the company. The certificates were mislaid by Fassett, and they were not discovered until December, 1871, after his death. In the meantime, on the 8th of May, 1863, the board of directors of the railroad company, on -the application of'Voce, Perkins & Co., issued to Burke or to Burke and Perkins, new certificates of stock, on the supposition that the original certificates had been lost by Voce, Perkins & Co. On the application of the administrators of Eassett, for the transfer of the stock to their names, •and for an account of the dividends that had been declared ■on the stock, the company refused to make the transfer, or to account for the dividends, on the ground of the issue of ■the new certificates.

The issue of these certificates and the transfer of the stock on which they were founded, was a breach of the •duty which the company owed to Eassett as the holder of the original certificates. This breach of duty on the part of the company resulted in Eassett’s losing the stock to which he was entitled, and created a liability on the company to replace it or to account for its value.

It is claimed that the by-law which provides for the issuing of certificates by the board of directors, in place of certificates lost or destroyed, on receiving adequate security to indemnify the company against loss consequent upon the issuing of such new certificates, relieves the company of the liability which would otherwise rest upon it.

The claim is,that if new certificates are issued, upon the order of the board of directors, made in good faith, on evidence satisfactory to them of the loss of the originals, that the company is discharged from all liability to the holder of the original certificate, although it may subsequently •appear that the original certificate had been transferred, instead of lost; that the effect of the new certificate is to supersede and invalidate the original, in whosesoever hands it may be.

But, in the opinion of a majority of the court, the issuing of the new certificates, under the by-law in question, has no such effect. The by-law is prescribed by the directors, and they have no authority to determine the equitable-rights of parties to the stock of the company, should they .assume to do so. The object of the by-law is to enable persons whose certificates appear to have been lost or destroyed to obtain others, on indemnifying the company against loss, in case other parties should assert rights against the company, under the original certificates. But it is not intended to affect the rights of such parties.

Whether the company is liable for the dividends paid on the stock, before they had notice of the transfer of the certificates to Eassett, depends upon other considerations.

Yoce, Perkins & Co. were the registered owners of the stock, and, by failing to have the stock transferred, Eassett consented that they might vote upon the stock, and, in the absence of notice to the company that he was the holder of the certificates, he took the risk of Yoce, Perkins & Co. drawing the dividends. Unlike the transfer of the stock,, the surrender or production of the certificates was not necessary to draw the dividends. Until the company were notified of the transfer of the certificates to Eassett, they were warranted in paying the dividends to Yoce, Perkins & Co., or to their order. And, by paying the dividends to Burke and Perkins, as purchasers under Yoce, Perkins & Co., the company are as fully protected as if the payments, had been made to Yoce, Perkins & Co., directly.

The railroad company also relies on the statute of limitations. •

• The answer sets up that the cause of action did not accrue within four years from the commencement of the action. The claim made in support of the plea is that the cause of action accrued at the time of the transfer of the stock to Burke and Perkins, on the 8th day of May, 1863.

We can not assent to this view. The certificates stated, in effect, that the stock would be transferred on the books of the company, upon the surrender of the certificates. Upon this statement of the company, the holder of the certificates had a right to rely, until the transfer was refused, or he had notice that the stock had been transferred to. other parties.

In the present case, the transfer was refused on the 3d of' April, 1872. Eassett, in his lifetime, had no notice of the transfer of the stock to other parties, nor had his administrators such notice, until a few months before the refusal of the company to allow the transfer to be made to them* and, on the 10th day of August, 1872, the action was commenced.

As Burke and Perkins are neither of them before us on this proceeding in error, we express no opinion as to their liability.

The findings of the court below do not distinguish between the value of the stock and the aggregate value of the stock and dividends. The entire judgment must therefore be reversed; and the cause is remanded to the district, court for further proceedings.