The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1856-06-30
THE SCHUYLER FRAlTDS.


assInst the New York and New IA avca
Railroad Sompany.
COURT or APPgALs.
This cause heard NJ the last pr OF As
Albany before Hon. Hiram Demo- Chisf Jusuce, ana
HeDs. A. ). Johnson O. y. Comsseck, VIM ~ Wright,
sy Mrs wiissn Curtis Moves George Wood an, Ncls
as ,f Jr for the Defendants sud by Messss. g. van
| wInSc aad Daniel Lord, for she plsintsfss
II heft under sdysenscat until the I7th 1usc 1850
whcn fhe s0lcwing znanmous opnou Of che Court wzS
CoMrcex JThs /, an actor. for darnsFes foutsd o.
certificate FOR eighty ave shares Of stock IN the tf
security OF wkch the phinris oeqed to rnat person
sum Of money, and the arst nqusy naturally is whAh
was The force AID effect "a the certificate in ys hands
The mode Of pres snrng this inquiry most fyoric 10 the
plaintiffs Is to consider IL free from me diicity tnax
there was no power in the corporacon its Hoard Of
| non had siock own disposal, ana that Robert.
and sas me nsa u oesses e eso ss,
clear that an person dealing WITH him good faith; and
4 fveer-or ~stockhoifsr aishearStSs sesr4 50 g
cref fraud, intcaaed the transaction to- bo fy his
bebe used She funds which he received o- his
private purposes. In such the acts OF tsc agent
being such as the corporation compeent to perform
principles entirely amiar NE law would not permit
third pe-sons TO sulsr by secret abuse Ct the trust
But 1t ~ equally CLEAR that rights wogad be acquired
by partF not dealing with the ayent in good faith and
receiving sceriicate N stock ythout paying any value
therefor To say that he original holder of such
sfeae couS not be ad sed 10 participation with tho
genuine anc 5eno de stockholders the property fran
oAfses and revenues OF the corpora;.sn proposition
i1in that it reeds only tcbe stated Such was the situ-
ascn of Aexaseer Kyle ne original holder of The cerun
oase now in queston TO what eytcns he implicated
IL the frauds oNShuyier E not material The certificate
is admitted TO haye been saed rauduenty and he paid
nc hing for it, On this ground his hands spurious
anS yOid and is conclusion which Is reached with
out calling IN question the power Of the corporation
create the stock o. Of schuyler agent the pro-
per evidence thereof 10 purchaser in good faith.
The certificate imshe hands cf KYLE was also void for
the reasons which sill be nentoned-1. Schuyler
the agent Of the company lad no power TO issue q
AZ
preced.nt Of transfer the books by previous
owner and the surrender of that owners cerlcate He
the transfer age5a merely, and his powers ex-
pressly ed TO that department. OF the business Of the
corporation He hal no general certifying power, nor
any power at all TO certify, except incidental to
transfer of stock by its else
incidental power could only be exercised upon tho
dons named. 2. Neither the Board OF Directors, by
whom Schuyler appointed agent the whole body
Of the corporation had to create the stock which the
the stock itself could not be brought into existence by the
whole power of the corporation the certificate issued
the evidence OF its existence and the right of the holder
thereto necessarily void Upon the premises last
the conclusion would be the same If had paid
10 the transfer agent the full value OF the stock He could
purchase stock of who owned it, but he could
not under any conditions obtain tfrom the corporation
hs agents, because there be had, mona
could be created.
Thus far do not understand that my conclusions dines
essentially from the views OF the counsel who have ar
gucd the cause for the plaintiffs and if mista-
ken in regard to the general scope OF their argument
they conceded the further result that the plaintiffs hold
ing the certificate by transfer from Kyle have rights
stockholders merely for the particular that the
stock cannot exist under the charter the essential ground
y the action in the view Of the counsel being the injury
sustained by dealing upon the faith of the false represc
,aion Of stock which the certificate contains The opin-
TONS however, Of the Judges the court below are bebrs
Us for examination well those of eminent lawyers
who have not appeared upon the argument, aud think
proper TO refer to these opinions for tho purpose Of
bringing into view ell the theories upon which il has been
supposed the plaintiffs rights depend.
Mr.. Justice Hoffman, in the opinion pronounced by
him. holds that the certificate was not void as trans-
cending the powers Of the corporon the creation
of stock and issuing certificates therefor or those deega
n TRANSIT there
sideIs the obligation to be one which the defendants
can ga perform rn. ana ought % 70 h perform according
an over issue Is to increase the number Of
shares bat not the actual capital and, according
10 his views the spurious certificates are TO be
made good ~ reduction in the actual valuc those
that are now genuine. IIe holds therefore, that the
tendants were bound to ADMIT 10 plaintiffs stock
holders ard 70 register their shares the books accord
ngy; and that this suit depends purely and simply ON
the nonpcrtornance Of that duty being requested
10 perform It. Without demand he says and re-
Gsa to transfer, there would be no ground OF action
whatever
Directly opposed these those of Chief Jus-
ce Oakley He holds the certificate utterly void, because
transcended the powers Of the transfer agent whose
COMMISSION ne thinks was special and not general and
the action depended the validity OF the certificate
he says the following questions woul have 10 be
swered:-1. Whether the plaintiffs, bona de holders,
could acquire any rights under it superior to those ot
Kyle, in whose hands il was voids And 2. Whether the
plaintiffs can be considered as bona fde holders.
As to the last point he ncnes to think that the plain
tGs bound to that Schuyler agent did not
exceed his special powers and therefore If they chose
10 deal In the stock without mqrng to that feet they
took the certificate from Kyle at their peril. But tho
learned Chief Justice nevertheless holds the defendants
liable the ground that the certificate was false repre-
sentaon that Kyle held stock, when in truth he did not.
He thinks that Schuyler, the agent had implied
thoIty from the company make such a represents
ton-an authority resulting from his constant habit
! of issuing certificates in the same form in tho
OF the regular business OF the corporation.
IT, he assumes the ccrt ;ae void tested simply
BY the authority given to the agent and If he also
sumes, the plaintiffs were bound to take notice Of thu
want Of authority with Difference, it appears that
they are affected by the same considerations when they
change the grounds of complaint to misrepresentation
and fraud Can an agents authority to misrepresent in
the course OF dealing be inferred, when is admitted
he has no authority to enter into the dealing allp
Justice Bosworh and Slosson, if do not misunder-
stand them, both admit that there power in the
corporation to create the shares of which the
tcate processes TO represent and that the Instrument
considered real representation Of stock, void
that reason; thus dscardng the only ground upon which,
in the opinion OF one Of their brethren the action
maintained They nevertheless hold that the suit noA
founded upon the motion OF Misrepresentation and fraud
and thus distinctly rejecting the theory the other
| They appear 10 have found a middle ground Of
liability, which sperhaps fairly expressed in the following
he says so far any differences be drawn from
| its terms or appearance, purports 10 be and is
that has been issued by the company representinS
genuine stock. The plaintiffs took it believing 1t to
be what i parports to be- and their acton is based
dans, 1t is in judgment of law the act OF the deen-
| dants; and that the defendants are esopped from
asserting the contrary, far the question Of their
liability for refusing to reimburse to the plaintiff
the amount of their Loan to the value Of tho
/ stock Is ConccIucu Anu tgan, ne SayS-"Ihf action
based the assumption, as right to be com
pcnsacd in damages concerned that the company has
given assurance that Kyle owned the stock which tho
certificate represents stood to his credit is books
The reasoning by which these results reached is in
substance that the acts of Schuyler in issuing cert
cate within the apparent scope Of his powers and
therefore, although the contract vod because IL
transcribed all the powers Of the corpOratn and waa
impossible to be performed for tho reason the
fendant must, nevertheless make II good in damages
upon assurance that was valid the beinae
part Of the contract itself confess my own impress
be that this reasoning rcnned. AdmittnaR
that the agent acted within the scope of the power dele
gated to him by the Board OF Directors do rot cloarly
see how certificates Of stock which They Themselves ha0
authority TO ssue, void in their origin ard under all
conceivable circumstances, can Do made th2 basis Of
liability rupous 70 the genuine stec2hodcns bu turning
the spurious instruments into promise ca undostckina
| that the stock in fact existed.
The extreme difficulty which has been encountered N
eadeavorng TO find principle which 10 ress tho &C..
may be further illustrated by reference 10 tho pro-.