The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1899-10-31
MINING STOCK CASE DECIDED
POWER OF TRUSTEE TO SELL
STOCK.
Charles B. Stark Secures Judgment
Against the Geyser-Marion Com
pany For Value of Stock Sold.

An important decision bearing on the
methods of conducting sales upon the
local mining market was handed down
yesterday by Judge Marshall in the
case of Charles B. Stark VS.. Geyser-
Marion Gold Mining & Milling compa-
ny. Mr. Stark was the equitable owner
of 5000 shares of stock in the Geyser-
Marion company. The certificates of
shares were issued in the name of Felix
J. Stark, trustee, and were in his pos
session. The trustee sold these shares,
J it is alleged. without any authority,
and endorsed the certificates to Vendees
and converted the proceeds of the sales
/ to his own use. The various vendees
! presented the certificates to the officers
of the Geyser- Marion company for
! transfer: the old certificates We're cam
| celed and new certificates issued in the
names of the respective Vendees, who
have ever since been recognized by the
corporation as the owners of the shares,
and have received the dividends APP
portioned to them.
In the case OF Charles B. Stark
against the company, Mr.. Stark de-
mands that the company either replace
in his name the 5000 shares of stock
and pay him the dividends on them
since the transfer, or, if for any reason
the stock cannot be replaced, pay to
MIN the value OF the STOCK DIT the
of transfer, with interest.
Duty of the Company.
Judge Marshall's opinion on the case
is that a corporation undertakes the
transfer on its books of the shares of
its stockholders. 1t requires this trans
fer in order to complete, as between
it and an assignee of shares, the nova
ton Of the contract. 1t owes a duty to
the shareholder to use ordinary care in
the transfer of his stock to prevent in
jury to him. This duty is not only due
TO the holder of both the legal and
equitable titles, but is equally due to
the beneficial owner where the legal
title is outstanding in a trustee, pro-
vided the corporation has notice of the
cestui que trust. A failure to perform
this duty causing damage to the bene-
fetal owner renders it liable. In this
case the form of the certificate notified
the defendant that some one other than
Felix ]. Stark was interested in the
beneficial ownership. Seven authorities
are cited to prove this point.
Continuing, Judge Marshall states
with some hesitation / have conclud-
ed that the fact that Felix j. Stark |
was known by the plaintiff to be in the
business of buying and selling stocks |
did not change this rule. The plain |
tiff did not invest him with the APP
parent beneficial ownership of the
stock, so that he might deal with it in |
his own name. And if the rule was
that the mere custody of stock by |
broker implied a power of sale. then
a broker who has purchased stock for
his principal and taken the certificates |
in the name of that principal could re-
sell them and pass a good title to ono I
ignorant, of his want of authority"
Stock Exchange Dealings.
The decision goes on to state that the
interest of Felix j. Stark and that of a
trustee merely, and saying regarding the
method of dealings on the local stock
exchange: Evidence WIS introduced,
the plaintiff Directing, that in dealings
Jn the Salt Lake Stock exchange an
authority to sell was implied by usage
from the possession by a broker of al
certificate of stock issued to him as
trustee The witness testified that the
usage was TO regard the trustee as the
beneficial owner of the stock, but this
s but another way of expressing the
same thing. The substantial matter is
hat such certificates were customarily
bought and sold on the exchange with
,ut inquiry as to who was the bene-
icial owner, or as to the authority of
he trustee to sell. This was a par
ocular or local usage of which the
plaintiff had no notice. This usage to
disregard the rights of cesuis que
rustent and to change the fundamen-
al implications of trust must be held
o be unreasonable. contrary to law
md void as against one who had no
lcyual knowledge of it.
1t follows that the plaintiff is en-
itlsd to a decree. under the stipuIa-
ion filed, for the value of the stock
transferred, with interest from the date
f transfer; and it is so ordered.