The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1856-07-14


this in favor of the railroad company has awakened
new interest in the question presented for the adudca
ton Of that Court.
The con sequences likely &c flow from it, and the
unanmity Of the Court in the conclusion arrived and
so much at variance with the great number Of opinions Of
subject make that decision just cause for comment.
The opinion Of the Court she wing the their
s
with the powers conferred him. and that by the char
ter OF the corporation the company itself could not have
issued such stock. 1t Is on this ground alone
dersand the decision that spurious stock sta ndng In the
Of innocent third parties the books Of the
pany and for which certificates have been issued TO them
has been declared void against the company and
not emitting the holders TO claim for damages against It,
Because therefore, the company are limited By their
Schuyler was only authorized to transfer stock TO that
amount, is argued that when he went over
for money paid by innocent third parties
for such over issue As this the branch Of the opinion
which affects the rights Of parties who have had the
stock transferred 10 them in their own names and who
constitute the larger part the spurious stockholders and
whose claims the strongest from their having
ourselves the consideration OF this part the subject
II would seem aat because the Court met by the
difficulty that the charter Of the company allowed
stock 10 be issued than thirty thousand shares which diff
lcuy they could not reconcile with the transfer Of
greater number OF shares that therefore they hare de-
cded that such issue gives the holders Of spurious stock
no remedies against the company.
This equivalent to the proposition that an ncor porated
conany py force of the controng power OF its charter
30 wrong An. il Is this fallacious premise,
that property 10 the amount millions of dollars has
been declared WORTHLESS ana constituting basis for
decision OF the Court Of Appeals II the
themselves had issued the stock without authority
Court has thus made the relations which existed be-
tween the Legislature which granted the charter
pany and innocent third parties Loders Of its spurious
stock), and extinguish the companys liability for
damages has thus botted out Of existence the
dy OF quo icdTao, which, rs was intended to punish
Incorporated companies when they nrngcd their
ters becomes entirely useless being declared that
Sonssant aersn, pa II IN. or,n~a .S eo .hs.
selves and with the recognized principles OF law
tanned in it. II says that the question .whether the
transfer Of an obligation apparently sound and from
the apparent owner acquires any better right 10 enforce
than his assgnor had depends tho nature Of the OBJ
legation ITSELF The general and familiar rule Is that he
does III the instrument has negotiable qualities then
he may And this latter position Is supported by
If an Incorporated company issue negotiable security
which appears IL face to be duly issued but which
in fact g issued contrary TO the charter Of the company.
still IT binds the company. Now, II this Is law-and the
opinion recognizes IL as such-what becomes OF the
position that such security could be issued under tho
vitality ana cannot exist without such charter whether
II be negotiable not must draw its existence from the
charter.
An aggrieved party holding a negotiable security Of
which had been improperly ssued and with
authority would declare In much the same way a.
what avail according 10 the decisions, and recognized by
the Court OF Appeals would be for the company say
that their charter only allowed them 70 issue 500 900,
and that their agent empowered 10 issue that $lo0 000
had issued or a. the New Haven Company say forged
800, 900 mores But such agent would have
thory under the charter for such issue than Schuy
Ter had.
would have been better for the Court OF Appeals no,
10 have alluded At all TO negotiable securitles-they
should have ignored their existence entirely
But let hook the question Of the limit Of Schu,lcr's
authority In another point OF view. great deal OF dis
h, ons w
argument may be expended in trying to bring q
particular act within the definition which com
certain relation between principal and agent Without
entering into minute consideration OF what kind Of an
agent senuysr w we . wSSa IF s no say ns 70 s
which the company itself had delegated to him and
Il were possible Tor the company % appoint general
agent Tor the particular business Of the transfer Of stock
But no power L. 50 general that i has no hmt-ncne
sufficiently general 70 embrace fraud perpetraei On
the principal. For, Is act done within the porcr.
Il " fraud: and If fraud, II must be an act done
which noi justified by the power. And when psinci
pal l. held Liable for the fraud Of his agent such
done IN vo on Of the power yet appears to third par
ties without notice 20 be within the POWER, such princl
pal Is obliged By the Judgment Of Law which holds him
liable to enlarge the original power 50 as TO embrace the
fraudulent act which by Us original limits II could not do
For instance, PRINCIPAL IN the dry goods business
goods III, T power 'ns shoug "s general Sas s
mits, which arc, hrst 10 yurchae only, not 10 sell,
secondly 70 purchase only dry goods thirdly 70 par
chase goods only for his principal Under this power,
and after being known the general agent OF the princ
pal in the market for time he purchases goods for
himself but In the way be does for his principal
II he wishes 10 dcraud hi principal he do by this
act, yet will pretend TO say tina, the purchase
Of goods for himself waS embraced In his original
power 70 purchase and 70 hold the principal liable y0u
snarge the sna power 10 embrace this act
And VI the had intention 70 defaud but failed 10
state the that be purchasing for himself indi
Tally the principal vii be bound Truman Iodcr,
III ADD Ellis SOD But IN The abstract principles OF
truth this power Il lust limited and mmutabe the
New Haven Railroad charter, although has o.
those formidable lndcia Of INN Inability which 70
have terrified coerced the Court ~ Appeals into their
The part OF the opinion which says that because
the smpany could create the stock should not be
liable for damages Or refusing 10 transfer what had
existence, really too taing and technical argument
70 deserve rcfutaticn.
The allegation in tho complaint tia, the company re-
fused 10 allow the transfer h always inserted because
from a acton Of law, damages always supposed 10
Tow from this refusal But when all arbitrary forms Of
action and plcednr are presumed 70 have been abolish
ed and where all the facts constituting the fraud set
forth In the complaint understand that they
this case and where. by section 2I5 Of the Code ofPro-
cedure n IN enacted that sthe Court may grant the
plaintiff any re lei consistent with the made by the
Complaint and embraced within she ISSUE" Il realty
seems too technical ilat the highest In the State
should say that the plaintiffs are not entitled 70 the
amornt o damage which they aver has flowed from the
fraud.