#### LOUISA T. BUDD, Respondent, *v.*GEORGE D. MUNROE, Appellant, Impleaded with LINDLEY MURRAY AND THE EMPIRE CITY FIRE INSURANCE COMPANY, Respondents.

*Ceriificate of stack*— *words “ in trust*” *in, is notice to a pwehaser of the rights of the true*owner— *Costs to one defendant against Ms co-defendant.*

The plaintiff allowed a certificate, for ten stares of insurance stock owned Tby ter, to te issued to one “Lindley Murray, in trust,” to enable Mm to become a director in tte company. Subsequently Murray, without authority, transfei’red the stock to one Munroe, to secure money borrowed of him at that time. Munroe noticed the words “ in trust ” in the certificate, but was told by Murray that he had control of the stock and could transfer it if necessary.

*Held,*that the words “in trust” imposed upon Munroe the duty of ascertaining the authority of Murray to hypothecate the stock, and that plaintiff was entitled to recover it.

That in an action brought by the plaintiff, in which her right to the stock was established, and to wMch the insurance company and Munroe were defendants, a judgment for costs was properly rendered in favor of the company against Munroe.

Appeal from a judgment entered upon the report of a referee, in favor of the plaintiff, declaring her to be the sole owner of ten shares of stock of the Empire City Fire Insurance Company, and directing the defendant Munroe to surrender up for cancellation *317tbe certificate of stock held by bim, and from a judgment in favor of tbe insurance company against tbe defendant Munroe, for costs.

*William Wirt Hewitt,*for tbe appellant.

*J. A. Shoudy,*for tbe respondent, Budd.

*F. F. Marbury, Jr.,*for tbe respondent, Tbe Empire City Eire Insurance Company.

Brady, P. J.:

Tbe plaintiff was tbe owner of tbe ten shares of stock in controversy, tbe title to which stands in tbe name of Lindley Murray, in trust, and a certificate, therefor, was issued in that form. Murray bad no title to tbe stock, but tbe plaintiff allowed tbe certificate to be issued, as stated, to enable bim to become a director in the company. Murray subsequently borrowed $1,000 from the defendant Munroe, and deposited with bim as collateral security for the payment of tbe loan the certificate of stock in question, together with an instrument purporting to be a transfer of tbe certificate signed Lindley Murray, in trust, but tbe stock was never transferred on tbe books of the company to Munroe. It appears that when the loan was applied for by Murray and tbe certificate was offered as security, tbe attention of tbe defendant Munroe was called to the words “ in trust *”*in tbe certificate, and be spoke to Murray about it, who answered that tbe stock wás bis or that be bad control over it, and could transfer it if necessary. Tbe defendant seems to have relied entirely upon this explanation or statement of Murray, and to have made no other investigation for the purpose of ascertaining tbe terms of tbe trust or anything regarding it.

Upon those facts it is quite apparent that if tbe plaintiff can be divested of her title by the transfer of Murray, which was made without her consent, it can only be on tbe prmciple of estoppel, and that principle docs not spring out of tbe facts narrated, because not only did it appear from tbe certificate that Murray held tbe stock in trust, but it also appears from tbe transfer itself, which was signed by Murray, in trust.

There are several adjudications in kindred cases which establish tbe doctrine, that the words “ in trust ” contained in tbe certificate *318were notice to all into whose hands the instrument might fall, and, therefore, imposed the obligation to inquire as to the authority of the person named as trustee or holding the trust, to sell or hypothe-cate the subject of the trust. *(Sturtevant*v. Jaques, 96 Mass. [14 Allen], 523; *Bancroft*v. *Consens,*95 id. [13 Allen], 50; *Trull*v. *Trull,*id., 407; *Shaw*v. *Spencer,*100 Mass., 389; *Duncan*v. *Jaudon,*15 Wall., 165.)

The appellant urges upon the consideration of the court the point, that the loan of the stock for the purpose of enabling 'Murray to become a director was against public policy. No case decisive of this proposition was cited and none has been found. It does not appear from any fact or circumstance in this case, that there was any intention to evade any statute or to violate any rule of public policy. So far as it can be ascertained, the transfer may have been for the purpose of securing the services and experience of a person as a director which would be valuable to the company, and enure to its benefit and advantage.

For these reasons the judgment must be affirmed, with costs. In regard to the appeal from that part of the judgment by which costs are given to the Empire City Fire Insurance Company, it is only necessary to say, that that company was brought into court by no fault of its own, but by the assertion of an unlawful claim upon the part of the defendant Munroe, and it is just that it should be indemnified for the expenses attendant upon its proper representation in this controversy.

Ordered accordingly.

INGALLS, J., concurred.

Present — Beady, P. J., Ingalls and Daniels, JJ.

Judgment affirmed, with costs.