# Unity Banking Saving Company v. Bettman/Opinion of the Court

* Court Documents
* Case Syllabus
* Opinion of the Court
United States Supreme Court
217 U.S. 127
Unity Banking Saving Company v. Bettman
Argued: March 4, 7, 1910. --- Decided: April 4, 1910
Briefly outlined, the case, as disclosed by the above statement, is this: The certificate of stock in the Carey Manufacturing Company was placed in the possession of Holzman & Company under an express agreement that it should not go out of their possession, but be held simply for the purpose of showing Fritz's financial responsibility; that Holzman & Company had no authority to pledge the stock with the Unity Banking & Saving Company as security for the payment of their individual note for $10,000 to that institution; that the pledging of the stock with the bank by Holzman & Company was without Fritz's knowledge; that his signature to the blank power of attorney was unauthorized by him and was a forgery; that Fritz did not, by anything said, done, or omitted by him, lead the bank to believe that he had executed such power of attorney, or had authorized anyone to do so for him; and that he never, in any way, ratified the forgery of his name, or approved the pledging of the stock to the Unity Banking & Saving Company for the individual debt of Holzman & Company.
In view of these facts,-which the referee as well as the district and circuit courts of appeals correctly held to have been established by the evidence,-it would seem unnecessary to cite authorities to show that, as between the bank and Fritz, the bank did not acquire any interest, legal or equitable, in the stock represented by the certificate placed in the possession of Holzman & Company under the circumstances stated. The bank no doubt relied upon the integrity of that firm, and acted in the belief that Frtiz had in fact signed the blank power of attorney or authorized it to be signed for him. But that belief was not, according to the evidence, superinduced by anything said, done, or omitted by Fritz. He was not chargeable with laches or negligence. The bank, having elected to rely upon Holzman & Company, must stand the consequences. It cannot say that it was misled by Fritz to its prejudice. It could not, therefore, as between itself and Fritz, take anything in virtue of the forgery. As against the true owner, a right of property cannot be acquired by means of a forged written instrument relating to such property. This is the general rule. An exception to the rule arises where the owner by laches, or by culpable, gross negligence, or by remaining silent when he should speak, has induced another, proceeding with reasonable caution, to act with reference to the property, in the belief that the instrument was genuine, or would be so recognized by the owner. In such cases, the owner would be equitably estopped to rely upon the fact of forgery, as against the person who was misled by his conduct. There are no facts in this case from which could arise an exception to the general rule.
Nor, in view of the facts, need we follow the example of counsel and enter upon an examination of the cases bearing on the general inquiry as to the circumstances under which a broker who, by the act of the owner, comes into the lawful possession of a stock certificate,-but without the legal title having been transferred to him,-may retain the certificate as security for any balance ascertained upon settlement due him on account of dealings for or on behalf of such customer. We say this because it appears and it is so found, that, at the close of the business transacted by Holzman & Company for Fritz, the letter was a creditor, not a debtor, of that firm.
In any aspect in which the case can be properly viewed, and for the reasons stated, the judgment sustaining Fritz's claim to the stock and certificate in question must be affirmed.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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