Case Name: The West Branch and Susquehanna Canal Company's Appeal
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1870-05-05
Citations: 81 1/2 Pa. 19
Docket Number: 
Parties: The West Branch and Susquehanna Canal Company’s Appeal.
Judges: Before Thompson, C. J., Agnew and Sharswood, JJ., Read, J., at Nisi Prius.
Reporter: Pennsylvania State Reports
Volume: 81 1/2
Pages: 19–41

Head Matter:
The West Branch and Susquehanna Canal Company’s Appeal.
1. Quiggle and wife placed in the hands of Hepburn as their attorney in fact, 253 shares of a canal company’s stock with blank power to transfer, 100 shares being owned by the wife and standing in her name. Her power was witnessed by Quiggle. Hepburn delivered the certificates to Persch, who pledged them to a bank as collateral for his own debt. The stock was transferred under this power on the books of the company to the bank, and certificates issued to them. Neither Persch nor the bank knew that Mrs. Quiggle was a married woman. After this transfer Quiggle and wife notified the company not to allow the bank to transfer, as the stock had been “ illegally and fraudulently” transferred. The bank sold the stock, but the company refused to permit a transfer The transfer to the bank being in due form, and certificates issued to a bona fide purchaser without notice, the absolute legal title was in the bank, although the party transferring had been guilty of fraud.
2. Anything sufficient to put a party on inquiry is notice of whatever such inquiry would reveal.
[The West Branch and Susquehanna Canal Company’s Appeal.]
3. A note had been given by Persch to the bank, when due it was renewed, the stock being then delivered to the bank as collateral; the time given was sufficient consideration, and the bank thereupon held the stock bona fide.
4. The company were bound to pay the bank for the loss resulting from their refusal to permit the transfer.
5. In this case the measure of damages was ascertained from what was the value of the stock at the time they refused to transfer.
6. Principles of estimating damages and for refusal to transfer, stated in the Master’s report and the opinion of the Court in this case.
7. Persch v. Quiggle, 7 P. P. Smith, 247, referred to.
March, 1870.
Before Thompson, C. J., Agnew and Sharswood, JJ., Read, J., at Nisi Prius.
Appeal from the Court of Coramom Pleas of Lycoming County, of July Term, 1867, No. 34. In Equity.
On the 22d day of November, 1864, The Consolidation Bank filed a bill against The West Branch and Susquehanna Canal Company. The bill set out:
The plaintiffs, on the 16th day of October, 1863, and since, were holders of 253 shares of the stock of the defendants, for which the certificates were in the name of Joseph N. Piersol, cashier of plaintiffs’ bank; the par value of the stock was $100 per share and was worth to the plaintiffs $150 per share. On the 16th of October, 1863, and since the plaintiffs ■ were owners of the stock, the respondents had declared dividends of the value of $5000, to which the plaintiffs were entitled, and also to other dividends, of which the plaintiffs were not informed, but prayed that the same might be ascertained. On the :-day of--, 1864, the plaintiffs 'contracted to sell the 253 shares to P. H. Brice & Co.; on the 12th of April, 1864, the plaintiffs executed a power of attorney in blank, authorizing the person to be named therein to transfer the 253 shares of stock to Brice & Co. On the 16th of April, 1864, J. V. Watson, the plaintiffs’ president, in person and by virtue of the pbwer of attorney, tendered the certificates at the office of the defendants and demanded a transfer of the 253 shares of stock to Brice & Co.; the defendants refused to make the transfer to him or any other person. The plaintiffs, on 12th of September, 1864, and at divers other times since April 12th, 1864, demanded a transfer of the 253 shai’es to Brice & Co., but the defendants had always refused to make the transfer.
The plaintiffs believed Brice & Co. were still willing to take the stock, but the sale could not be completed by reason of the improper and unlawful conduct of defendants in refusing to permit the transfer. .
The plaintiffs further averred that they had demanded from the defendants the dividends which had been declared on the stock, and had been refused.
The prayer was for an- account; that defendants might be decreed to transfer the stock to Brice & Co., pay the dividends declared on it to the plaintiffs and also such damages as the plaintiffs have sustained; and for further relief.
The answer, filed June 9th, 1865, averred, that the defendants did not know that the plaintiffs were bona fide holders of the stock, but they hold certificates in the name of Joseph N. Piersol, alleged in the bill to be plaintifts’ stock ; the defendants were notified on the 4th of November, 1868, not to permit a transfer of the stock or pay the dividends, the notice alleging that the stock had been illegally and fraudulently transferred from the rightful owner and Piersol had no right to make any transfer; and in consequence of the notice the defendants refused to permit such transfer, but not from any desire to refuse a transfer by any person who was the rightful owner. Since filing the bill defendants have learned that the'parties who had claimed to own 158 shares were willing the transfer should be made, defendants were willing to permit the transfer and to pay over all unpaid dividends on those shares. They denied that either Piersol or the plaintiffs were the rightful owners of the 100 shares, but that they belonged to Cordelia Quiggle, wife of James W. Quiggle, in her own right, as her sole and separate property. The defendants have been informed and believe that on the 6th of June, 1859, she intrusted the care of the 100 shares to Samuel Hepburn as her agent and trustee, she being about to leave the United States for Antwerp, Hepburn to hold the same during her absence; and she signed a blank power of attorney, her husband not joining in its execution, and left it with Hepburn ; that Hepburn, without the knowledge or consent of Mrs. Quiggle, placed the 100 shares in the hands of John P. Persch, who, in 1862 or 1863, pledged the same to the plaintiffs as collateral security for an indebtedness of his own to the plaintiffs and filled the blank power- of attorney with Joseph N. Piersol’s name, Persch knowing that' Cordelia Quiggle was a married woman; and the defendants are informed and believe that the plaintiffs knew or might have known that she was a married woman and that without her husband joining her she could not authorize a transfer of the stock. Hepburn, on learning the improper and unauthorized use Persch had made of the stock, called upon the plaintiffs, long before their bill was filed, to ascertain the amount of Perseh’s indebtedness to them for which the stock had been pledged to them, and was told that $24,000 was the amount; and he subsequently tendered them the $24,000 for the purpose of having the 100 shares and other collaterals freed from the plaintiffs’ claim. Defendants are informed and believe that as the plaintiffs never purchased the stock, but held the same only as collateral security for Persch’s debt, which Ilepburn offered to pay, they have no right to the stock nor the dividends, nor to have the stock transferred. Long before the filing of this bill the defendants were notified by Ilepburn and Mr. and Mrs. Quiggle, not to permit a transfer nor pay over the dividends to any one; and therefore believing that neither Piersol nor the bank were the rightful owners, they would not permit the transfer; they st-ill believed that Mrs. Quiggle was the legal owner, and in equity could compel Piersol to transfer to her. After the notice not to pay over the dividends nor permit a transfer of the stock the defendants believed they were merely stakeholders for the legal owner and had no right to suffer a transfer by the direction of the plaintiffs; they averred that they had acted in good faith and impartially between the various claimants. After the notice they were advised by counsel that they might be held legally liable to an action at law at the suit of Mrs. Quiggle, for permitting a transfer.
On the 25th day of October, 1864, Mr. and Mrs. Quiggle, in her right, filed a bill in equity in the Supreme Court for the Eastern District, against Persch & Steeb, partners, Samuel Ilepburn, Joseph N. Piersol, cashier, the Consolidation Bank (plaintiff here) and these defendants charging that Mrs. Quiggle, in her own right, owned 100 shares of stock of these defendants (setting out the way the stock was dealt upon substantially as before, and as appears in these plaintiffs’ bill, as above set out and is fully found in the case of Persch v. Quiggle, 7 P. F. Smith, 247). The prayer of the bill was that Piersol and the Consolidation Bank might be decreed to transfer the stock to Mrs. Quiggle, that the West Branch and Susquehanna Canal Company might pay her the dividend, and for further relief. All the defendants named in the bill appeared, a Master was appointed, before whom the parties, including the Consolidation Bank, appeared. The case is still pending, etc.; the bill in that case was filed before the bill in this case; these defendants were advised that the subject-matter, etc., in this bill are the same; the same rights will be adjudicated between the same parties as in this bill, and the Supreme Court, having first taken cognizance of the cause, etc., the Court of Common Pleas of Lycoming had no jurisdiction in this suit. An Examiner was appointed, who took a considerable amount of testimony.
The casé was heard February 15th, 1867, on bill, answer, and evidence, before Jordan, P. J., who made the following decree:
“ That the defendants shall .... within sixty days hereafter, permit a transfer to be made on their books by the plaintiffs, in person or by attorney, duly constituted, upon the surrender of their certificates, to P. II. Price & Co., and to such other person or persons as the said plaintiffs may direct and desire, to transfer two hundred and fifty-three shares of the capital stock of the said West Branch and Susquehanna Canal Company, now standing in the name of Joseph N. Piersol, cashier, .... together with twenty-five hundred and thirty dollars of the stock dividend declared on the 31st of August, 1861 to which the said two hundred and fifty-three shares of stock are entitled and which remain not issued in the hands of the said West Branch and Susquehanna Canal Company ; and farther that the said defendant shall, on or before the expiration of sixty days hereafter, pay or cause to be paid to the said Consolidation Bank, the sum of thirty-six thousand and fifty-eight, dollars and sixty-six cents, being the amount of dividends due to the said plaintiff upon the said two hundred and fifty-three shares of stock, with interest, remaining in the hands of defendants and the damages sustained by the plaintiff by reason of the refusal of the said defendants to transfer said stock. The defendants appealed to the Supreme Court, and in several specifications assigned the decree for error.”.
The appeal was argued May 27th, 1868, before Thompson, C. J., Strong, Read, Agnew, and Sharswood, JJ. It was reargued May —, 1869, before Thompson, C. J., Read, Agnew, Sharswood, and Williams, JJ.
On the 20th of May, 1869, it was ordered that the bill, answer and proofs be referred to Joseph A. Clay, Esq., as Master, to report on the same, together with any additional testimony touching the question of the amount due the plaintiff for wrhieh the stock in question is alleged to have been pledged and is liable as collateral; and.to allow proof of the delay or laches in filing the within described bill in equity, etc.
The Master reports:
“ .... In the year 1862, John P. Perseh pledged 253 shares of the capital stock of the West Branch and Susquehanna Canal Company, with the Consolidation National Bank, £ as a general collateral security ’ for loans made or to be made to him by the bank. This stock had originally belonged partly to James WT. Quiggle and partly to his wife Cordelia Quiggle; it had been transferred to Perseh by Samuel Hepburn, the attorney in fact of Mr. and Mrs. Quiggle under the circumstances detailed succinctly in the report of the' case of Perseh v: Quiggle and fully .in the re port of the Master in that cause. The loans appear to have been continued by the bank, upon these and other securities, until the 29th of August, 1863, when Persch made a note at 4 months, payable to his own order, for $24,000, which was discounted on that day by the bank. There was a former note for $24,000, which fell due on that day and was paid by Persch. Mr. Watson, the president of the bank, in his testimony taken.under the present reference, says: ‘This prior note was paid. It was not paid by the discounting of the new $24,000 note, because the money paid to Mr. Persch, on that discounting, was country bank notes, while we always require payment'of notes in city funds.’ Afterwards, on cross-examination, he says: ‘ I cannot tell whence the money came from to pay the $24,000 note. I only know that it was paid that day in current funds. Mr. Persch was always dealing largely in country notes. This.particular note may have been paid with the notes given him, but he never said so to me, and I do not know.’ He had previously said that ‘ the special loan that was made upon that stock was the “ discount ” of the new note for $24,000.’
“On the 5th of October, 1863, Persch deposited with the Consolidation Bank a check of his firm of Persch & Steeb, on the Tradesmen’s Bank for $24,000, and drew that amount on his own check. On the following day the check was returned by the Tradesmen’s Bank as not good and on the 6th or 7th day of the same month Persch &. Bteeb conveyed real estate to the amount of $13,043.55 to the bank, with other collaterals, in part as security for the overdraft. Other payments were made by Persch or received from collaterals on the account, until the 28th of January, 1868, when the balance was reduced to $6000, for which he gave his note of that date, at 4 months, payable to the order of the cashier of the bank. This note remains .unpaid.
“ On the 16th of October, 1863, the 253 shares of the stock of the canal company were regularly transferred on the books of the company, to Joseph N. Piersol, who -was then cashier of the Consolidation Bank. This transfer was made under the powers of attorney of Mr. and Mrs. Quiggle, by Erancis T. Carpenter, the treasurer of the canal company, -whose name was inserted in the powers, at the request of the bank. New certificates were issued by the company to Mr. Piersol, as cashier, in the ordinary form.
“ The Master in the case of Quiggle v. Persch et aL, reported that ‘ Persch, when he received the said stock from Hepburn, believed that it belonged to Hepburn, and the bank in taking it from Persch and when it was transferred to Persch, both gave value and acted in good faith; and neither of them knew that Cordelia Quiggle was a married woman ; and the canal company, though knowing that she was a married, woman, made the transfer in the ordinary mode of transacting business in their office and without any knowledge of any fraud, deceit, or bad faith on the part of any one in procuring or using the power of attorney executed by her.’
“On the 4th of November, 1863, Samuel Hepburn and James Quiggle notified the president and secretary of the canal company in writing, ‘not to pajito any person whatever any dividends on the stock’ of the company ‘ which was held in the names of Samuel Hepburn, J. W. Quiggle •and Cordelia Quiggle, as the stock still belonged to them and was illegally and fraudulently transferred,’ and they added that they would ‘ indemnify the said company and officers for their refusing either to pay the dividends or transfer the stock.’
“Five days after the notice, on the 9th of November, 1863, Hon. A. V. Parsons, for Mr. Quiggle, in right of his wife, filed a bill in the equity side of the Court of Common Pleas of Philadelphia, against Persch & Steeb, the Consolidation Bank and the Tradesmen’s Bank, setting forth among other things, that in May, 1863, Quiggle had given to Persch & Steeb, 100 shares of the stock of the canal, belonging to Mrs. Quiggle, as a collateral security for a loan of $2500, etc., and praying for an injunction.
“Answers were filed by the defendants, and the bill was dismissed on the' 11th of January, 1864,. at the instance of the plaintiffs, and without prejudice to their future rights.
“ Mr. Parsons in his examination before the Master in the present case; said that ‘ the suit in the Common Pleas was withdrawn, because when the affidavits came in by the respondents ’ he ‘ became satisfied and so advised ’ his ‘ clients that they had not got all the parties that were necessary in order to obtain the redress that we were seeking for.’
“ It may be remarked that Hepburn, who ultimately settled with Mrs. Quiggle for the stock, was not made a party to this bill.
“ On the 4th of January, 1864, before the bill was dismissed, Mr. Quiggle, for himself and Mrs. Quiggle, notified Mr. Gamble, the president of the canal company, that they were about to institute ‘ certain legal proceedings ’ for the recovery of 300 shares of the stock heretofore standing in his name or that of his wife and improperly transferred, and he repeated the notice not to pay dividends to any other person than himself. On the 25th of the same month of January, 1864, a bill in equity was drawn by Mr. Parsons, in which Quiggle and wife, in her right, were plaintiffs, and Persch & Steeb, Hepburn, Piersol as cashier, the Consolidation Bank and the canal company were made defendants.
“ The material parts of this bill are stated in the report of the case of Persch v. Quiggle, already cited. It is sufficient here to say that the claim made by it was for 1Ó0 shares only. The prayer is that Persch & Steeb and Hepburn may account for the stock at $105 per share, that Piersol and the bank may be decreed to transfer the shares to Mrs. Quiggle, and that the canal company may be also decreed to account for the stock which they have wrongfully suffered to be transferred ‘ to the said Joseph N. Piersol, in violation of the rights of the said Cordelia.’
“ This bill was not filed until the 25th of October, 1864. Mr. Parsons in his examination said that the reason it was not filed before was, ‘ that we wanted to get a service of the subpcena in equity on Samuel Hepburn if we could catch him here in this city, arid on the West Branch and Susquehanna Canal Company, or get them, to accept service or enter an appearance on their behalf so that all the parties named as respondents might be brought into court.’ There was some doub't as to whether parties in another county could be brought in by service, as provided in the'act of Assembly.
‘“After the bill had been sworn to,’ Mr. Parsons said that he had conversations with the president and counsel of the canal company, soliciting them, to enter an appearance, and referring to the notices of Quiggle and Hepburn not to, ■transfer. This notice he ‘reiterated substantially,” — hoped that they would not permit a transfer, and said that the ibank had no right to the stock, and that a great fraud had been practiced on Mrs. Quiggle.
“ The note of $24,000 given by Persch to the bank was mot paid at maturity, and was duly protested. On the 14th ■of March, 1864, Persch authorized the bank, in writing, ■* to sell at any time, all or any part of the collaterals ’ which he had deposited with them, ‘for the purpose of liquidating .any debt ’ due to the bank, for which the collaterals were pledged. Shortly afterwards, the bank contracted to sell to P. H. Brice & Co., the whole 253 shares standing in the name of the cashier. Mr. Piersol executed a power of attorney in blank for the sale and transfer of the shares to the pur■chasers. This power is dated on the 12th of April, 1864 ; mud on the 16th of that month, Mr. Watson, the president of the bank, presented the letter-of attorney to the president and treasurer'of the company at their office in Jersey ■Shore, tendered the certificate which had been'issued for the stock and demanded a transfer of the shares and the issue of a new certificate to Brice & Co. This demand was refused, unless the bank would agree to' indemnify the company, by bond, against the claims made for the stock. Mr. Watson refused to accept the transfer on these terms. Mr. Gamble, the president, was ‘ under the impression ’ that he communicated the notice, given to the company by Hepburn and Q.uiggle, ‘ either by showing him the letters or verbally.’ ‘ I wanted,’ he says, ‘ indemnity on both sides.’ Another demand for a transfer was made by telegraph, on the 4th of May, 1864, apparently with a like result, and again, on the 23d of May, the certificates and power to transfer were sent to the company, through an agent, who m.et with a refusal.
“ The date of the sale to Brice & Co. is not clearly made out. Mr. Emory, a broker, states that h.e sold them part of the stock on the 25th of April, 1864, and 218 shares on the 21st of May, yet he sent to the company the power to transfer, which, as already mentioned, is dated on the 12th of April. The difference is really immaterial, as there was no great variation shown in the price agreed to be paid by Brice & Co., which was $185 per share for 35 shares, and $130 per share for the remaining 218 shares.
“ At a meeting óf the canal company, held on the 26th of July, 1864, it was resolved to reduce the par value of the stock from $100 to $50, and to issue two shares of the new stock for each one of the original issue. The Master has not been informed when the new stock was actually issued, but the resolution was carried into effect and this has a material bearing on the question of the present value of the shares.
“ The bill in the case of Quiggle v. Perseh et al. was filed, as already stated, on the 25th of October, 1864. Answers ■were filed by the various defendants in December, 1864, and February, 1865. The bill of the bank, in the present case, was filed on the 22d of November, 1864.
“In March, 1865, a disastrous freshet occurred on the west branch of the Susquehanna River, by which the canal and other works of the defendants were so seriously injured as to reduce the market value of the stock, and it has not recovered since.
“ The answer of the canal company to the bill of the plaintiff was not filed until the 8th of June, 1865. They allege that they were stockholders, and recite the notices not to transfer, together with the material allegations of the seóond bill in equity, filed on behalf of Mrs. Quiggle.
“ They state that they are ready and willing to transfer 153 shares of the stock, standing in the name of Mr. Pier-sol, to the person duly authorized to receive such transfer, and also to pay the .dividends which had accrued on so much of the stock, but they refused to transfer the remaining one hundred shares, or to pay the dividends declared upon them.
“ The final decree in the case of Quiggle v. Perseh was made on the 15th of February, 1868.
* Jfc -if ‡ *
“ The Master has carefully considered the testimony, and the arguments of counsel, and he proceeds to report upon them.
“ The transfer of stock on the books of a corporation in due form, and the issue of a certificate of the shares transferred to the transferee, vest in him the absolute legal title to the stock. If the transfer is made to a bona fide purchaser, without notice, his title is perfect, and the corporation cannot dispute it, even although the party transferring was guilty of a fraud.
“ A purchaser of stock is protected in the enjoyment of his purchase, even though there was no right to make the transfer to himPer Strong, J. Bayard v. Farmers’ and Mechanics’ Bank, 2 P. F. Smith, 232-235.
If the instruments authorizing the transfer are void, as, for instance, if executed by a lunatic, the purchaser in good faith is protected, although the corporation may be liable for permitting the transfer: Chew v. Bank of Baltimore, 14 Maryland, 300; Hodges v. Planters’ Bank, 7 Gil. & J., 306.
Even where the stock in the hands of the original holder was subject to a lien for a debt due by him to the corporation, by the express terms of the charter, if a transfer is allowed to be regularly made on the books, the lien is gone, and the party to whom it has been transferred holds the stock discharged from the lien: Sewall v. Lancaster Bank, 17 Serg. & R., 285. As soon as the transfer is made, it is conclusive, and all control over the stock by the corporation is gone.
It is true that a corporation is a trustee “ alike of the property and of the title,” and that they are liable for an unauthorized transfer. “ They have in their keeping the primary evidence of title and are held to proper diligence and care in its preservation,” so that “ they may rightfully demand evidence of authority to make a transfer, before they permit it to be made:” Bayard v. Bank, supra. Where, however, the title of the party asking to transfer is perfect, the corporation cannot look beyond it. If the holder of the certificate holds it in good faith, the corporation cannot go back to previous transfers in the chain of title, and allege a previous fraud in some former transfer as a reason for refusing or delaying a transfer by one whose title is perfect on its face. Because the corporation may be liable for a former omission of vigilance, they cannot visit the consequences of their neglect on any one unconnected with the error. If this could be done there could be no security for a purchaser of stock, and the difficulty of proving a complete and unquestionable title would, be insurmountable.
The case is very different where the title to the stock is not necessarily absolute, as where the holder is designated as a trustee: Larkin’s Appeal, 2 Wright, 457; Bayard v. The Bank, 2 P. F. Smith, 232. There the corporation may require evidence of the right of the trustee to transfer, or may perhaps act upon notice from the cestui que trust of an intended violation of duty by the trustee, but they can only inquire into the extent of the authority. Where that is absolute, as in the case of an administrator or the assignee of an insolvent debtor, the transfer must be allowed.
“ In the case before the Master the canal company permitted a transfer of 253 shares of their stock to be made to the cashier of the bank in October, 1863, and certificates were issued in conformity with the transfer.
“The legal title of the bank, through its officer, is thus complete, and the' good faith of the transaction on their part is conclusively shown by the report of the Master in the case of Quiggle v. Persch, and the decree of the court confirming it on appeal: 7 P. F. Smith, 247. The Master expressly says, that the bank, in i good faith r accepted the stock from Persch as owner, and on the security thereof, advanced him large sums of money, which he yet owes,’— and the bill was finally dismissed as to the bank. Both requisites to an absolute title — good "faith in the acquisition of the stock, and the possession of legal evidence of title— were combined in the bank when they sold the stock to Brice & Co., and required the canal company to transfer it to the purchasers.
“ What valid reason, then, does the company allege for refusing to permit the exercise of this apparent right ? Their reason is this: they show that on the 4th of November,- 1863, after the transfer to the bank, Samuel Hepburn and James W. Quiggle notified them in writing not to pay any dividends on the stock held in their names or in that of Mrs. Quiggle, as the stock still belonged to them, and had been illegally transferred. Five days after this notice, a bill in equity was' filed in the Common Pleas of Philadelphia, against Persch & Steeb, the. Consolidation Bank and the Tradesmen’s Bank, praying, among other things, for an in junction to restrain tbe transfer of the stock. The canal company was not made a party to this bill. No special injunction was granted, and the bill was dismissed in January, 1864. A few days previous to the dismissal, Quiggle, for himself and his wife, notified the company that they were about to institute certain legal proceedings for the recovery of 300 shares of the stock, and on the 25th of January, the bill in the case of Quiggle v. Persch and others, including the bank and the canal company, was drawn by the Hon. A. Y. Parsons, the counsel of the Quiggles ; but instead of claiming 300 shares, it claimed only that 100 shares of Mrs. Quiggle’s stock had been fraudulently transferred by Hepburn.
“ This bill was retained by the plaintiff, and never filed until the succeeding month of October, though it seems that Mr. Parsons communicated to the president of the canal company his reasons for withholding the filing; and, it is to be fairly presumed, made him- acquainted with the objects of the bill. The effect of this withholding and of the excuse for it, will be discussed presently. It must first be remarked that, even supposing the notice to have been complete and an effectual protection for the company, it could only be so to the extent of the claim in the bill, that is, as to one hundred shares, and was thus a waiver of any previous notice by Quiggle or his wife, as to any of the other shares of stock held" by the bank. Certainly after the statements of Mr. Parsons to the president of the canal company, 153 shares of the entire 253 were unfettered by any notice whatever, ' and the canal company had not a shadow of right to refuse a transfer so far by the bank, even granting the validity of the prior notices. Therefore when the bank applied for leave to transfer to Brice & Co., in April and May, 1864, .the company should have agreed to allow the conveyance of 153 of the shares, and have merely notified the bank that there was still an outstanding notice as to the remaining 100 shares only.
“ The justification of the Canal company in refusing to transfer was based by its counsel on the notice of the fraud practiced on Mrs. Quiggle, and of her equitable claim to the '"stock, involving the duty of inquiry, and on the pending litigation to enforce Mrs. Quiggle’s right.
“ First as to the notice. The first apparent intimation of the adverse claim was the general note of November, 1863, followed by a bill in equity in the same month. Mrs. Quiggle’s claim was not clearly or even correctly set out in either the notice or the bill, and the suit was discontinued. After-wards Mr. Parsons notified the company of the second bill, and of course of the exact claim. When this was done does not appear, but it may be assumed that it was before the bank demanded a transfer, in April, 1864. The company was either indemnified by the adverse claimants, or eonsid-. ered themselves sufficiently guarantied against the consequences of refusing to transfer, but offered to do it if the bank would also secure them by bond; wishing, as the president of the company' said, ‘ to have indemnity from both sides.’ This bond the bank declined to give, and, it appears to the Master that they were perfectly justified in their refusal.
“ They had the legal title to the stock, and had given a valuable consideration for their title, while the company had no right to claim the indemnity. They might, perhaps, under the circumstances, have claimed a reasonable delay to enable them to take proper steps for their own security, but' this they did not ask. What has been called the dogmatic demand of the bank for the transfer, was met by an equally decided refusal, unless the security was first given. The company had ample means of protection. They knew that the second bill in equity was drawn, and that.it was withheld to meet the convenience of the claimants. They might have notified them of the demand of the bank, and have insisted on the immediate filing of the bill, and of an application for a special injunction to prevent the transfer. This was one plain and obvious course. Another would have been to have filed a bill of interpleader, by which the right to the stock would have been determined. They did not see fit to adopt either measure, but appear to have relied upon the notices, or upon the indemnity from the claimants. They must, therefore, abide the consequences of the course .they have chosen, unless the alleged neglect of the bank in not making due inquiry is a sufficient defence of their conduct.
. “ The effect of notice was properly stated by the company’s counsel. Anything sufficient to put a party upon inquiry, is notice of whatever that inquiry would reveal.
“ Without going into the question of whether the bank was bound to inquire or not, let it be supposed that both the bank and the company were not only obliged to inquire into the extent of Mrs. Quiggle’s title, but that they had inquired.
“ This inquiry, if pushed to its utmost limit, would have revealed exactly what has been decided in Persch v. Quiggle, that while Mrs. Quiggle had been defrauded of her stock, and had a complete claim for indemnity against Hepburn and Persch, the bank was a bona fide holder for the value of the stock, and was consequently entitled to a transfer. Let it be granted that the bank and the canal company were bound to. discover all the circumstances of the case, — and a less extensive inquiry would have been no protection to either party, — they would have found that Mrs. Quiggle had no title to the stock itself, and could not recover it. This is the conclusion to which they must necessarily have come, unless the decree in Persch v. Quiggle was a mistake.
“The principle involved in the question of notice thus rather strengthens the demand of the bank than weakens it, and it forms no available excuse for the refusal to transfer.
“ It was said that there was a pending litigation upon the very question of which notice was given; to which litigation both the bank and the company were made parties.
“ The doctrine of lis pendens has a wide application where notice is given by it to a party about to make a purchase ; but ‘ the institution of a suit for the recovery of a specific property or demand, is notice only to those who acquire an interest in the property after the suit is instituted, and by purchase or grant from the parties or privies.’ Note to Le Neve v. Le Neve, 2 Lead. Cas. Eq., 174, and cases cited. ' Here the title of a bank was acquired before the institution of the first suit. If Brice & Company had been made parties to the bill, or notified of its filing ór intended filing, and they had afterwards actually received the stock from the bank, Mrs. Quiggle, if she had succeeded in establishing her right to the stock itself, might have recovered it back from them, but this course was not pursued, and if it had been taken the decree in Persch v. Quiggle would have confirmed their title.
“ This first suit was incorrectly brought, and could not be sustained. The claim made in it was for one hundred shares of the company’s stock; but the company itself was no party to it.
“ Admitting that the one hundred shares claimed in the second suit were the same as those claimed in the first, the difference of parties in the two cases prevents the supposition that the one was a continuation of the other. Moreover, the second suit was not really begun until more than seven months after the withdrawal of the first bill.
“ Mr. Parsons, the counsel for the plaintiffs, was examined to account for the delay, under a special reference to the Master. His reason, or rather excuse, for the delay_ was that he was not sure that he could effect a valid service of the bill on parties out of the county in which the suit was brought. They wanted, he says, ‘ to get a service of the subpoena in equity on Samuel Hepburn, if they could catch him in the city, and on the West Branch and Susquehanna Canal Company, if we could get them to accept service or enter an appearance on their behalf’
“ Thus one of the grounds of delay would seem to be that the company itself would neither accept service nor enter an appearance, — and they are thus, partially at least, responsible for the laches. Besides this, the cause of the retention of the bill was one with which the bank had nothing to do. They were not bound to wait for the transfer of their stock until an adverse claimant should find it convenient to assert a counter title. The delay might more naturally be said to have led them to believe that the claim was or would be abandoned; for, admitting that the company did notify them that the new bill had been drawn, how long were they to wait for its filing? One suit had been withdrawn, and why not another ?
“Again, it would have been necessary under any circumstances, that the litigation, even if continuous, should have been prosecuted with diligence if it were to affect any parties thi’ough notice of its pendency. The two suits, however, were not only distinct as to parties and objects, but there was a delay, which is certainly sufficient to relieve the parties from all consequences while it lasted, even if it may be thought to have been not altogether inexcusable.
“ The company, it was said, offered in their answer to the bill of the bank to allow them to transfer the 153 shares not included in the claim of Mrs. Quiggle; but this offer was not made until June 8th, 1865, after the damage to the canal by the freshet. The stock had then fallen from $130 per share to at least $80, and perhaps to a lower price. The offer to transfer should therefore have been accompanied by a tender of indemnity to the bank for the loss occasioned by the fall of the stock.
“ No such tender was made, and the bank was justified in refusing to accept the stock without further compensation.
“ The bank was alleged not to be a bona fide holder of the stock, because the testimony showed that it was pledged for a pre-existing debt, and, therefore, could not be held against the original owner. This is a mistake; at least so far as it extends to the note of August 29th, 1863, for $24,000. Whether this note was or was not a renewal of a similar note which fell due that day, may not be perfectly clear, but the point is not very material, as, if it were a re newal, there was the consideration of the time given on the new note, and the consequent delay of the demand for the payment of the old one. The stock was pledged, with other collaterals, as a continuing guarantee for loans to be made from time to time; a contract which is perfectly intelligible and valid.
“ As to the other sums due by Persch, the question is by no means clear. In October, 1864, while the note of $24,000 was running to maturity, Persch made the overdraft of the same amount, and, shortly after', conveyed real estate to the Consolidation Bank, and other creditors, which Steeb testifid was taken-with other collaterals in payment for the debt. Mr. Hyer, who acted as counsel in the matter for the creditors, says that it was conveyed to secure the overdraft, and it seems there was misrepresentation or mistake as to its value and the amount of incumbrances on it. This real estate has since been sold, and, upon' settlement of the overdraft account between Persch and the bank, there is still a balance due by him, amounting, with interest to' January 10th, 1869, to $5790.23. In the paper given by Persch to the president of the bank, on the 14th of March, 1864, he authorized them to sell ‘ all or any part of the collaterals ’ he had deposited with them, ‘for the purpose of liquidating any debt due to your bank for security of which the said collaterals were pledged.’
“ This leaves the question open as to whether the stock was such a continuing guarantee as would embrace the overdraft, or whether it was a part of the pledges for securing it, shortly after it occurred. If this were not so, the stock was either pledged for no more than the note of $21,000, or, if embraced for the first time in the paper of March, 1864, it was a pledge for an antecedent debt, for all beyond the note, unless fresh time were given for payment of the surplus at that date. The bank, however, held the title to the whole stock, and they have been decreed to have been bona fide holders for value by a decision which cannot be disturbed. The company refused to transfer the shares when they had been sold at a high price, and they must be decreed to make, compensation for the loss occasioned by their refusal. The complicated equities which may arise in the ultimate disposition of part of the damages will be noticed hereafter.
“ The Master, therefore, reports that the legal title to the 253 shares of the stock of the canal company belonged to the bank, that they were entitled to a transfer of them tó their vendees in April or May, 1864, and that neither the notices of the adverse claim of Mrs. Quiggle, nor the insti tution of the first suit and the notice of the intended filing of another bill on her behalf, nor the refusal of the bank to give indemnity, were sufficient excuses for the defendants below, in refusing to permit the transfer.
“ The next point to be considered is the question of damages. The measure of compensation in the present case is settled in pari materia by the decision in Persch v. Quiggle. Mrs. Quiggle was there decreed to recover damages for the loss of part of the very stock involved in the present controversy, at the rate of $134.50 per share, the highest value reported by the Master, after the conversion, with bonus and dividends received or interest, and the same principle is asserted in the Bank of Montgomery ¶. Eeese, 2 Casey, 143. It is therefore a very moderate rate of compensation if the bank shall be allowed no more than the actual value of the stock at the time of the refusal to transfer, which was the rule adopted in the Building Association v. Sendineyer, 14 Wright, 67.
“ The price agreed to be paid by Brice & Co. may be accepted as sufficient evidence of this value. They were to pay $185 per share for 35 shares, and $130 per share for 218 shares, at which rates the 253 shares would be worth $33,-065.00. In order to allow the canal company a very reasonable time for notifying Mrs. Quiggle to file her bill or for applying for an interpleader, the Master computes interest on this sum from June 10th, 1864, instead of the dates of the demands for transfer in April or May.
This interest to January 10,1870, §11,076.77 and the principal make $44,141.77 To be added dividend of January, 1864, . . . $1771.00
Interest to January 10,1870,..... 637.56
—--- 2,408.56
Extra amount of damages,........§46,550.33
“ The next point is the present value of the stock, which still stands in the name of the bank. As to this, there is positively no conclusive testimony. The property of the company has passed into the hands of a receiver, and before this happened it is clear that there was no market rate for the stock. In 1866 or 1867, the old shares may have been worth $80, or in May, 1867', $56 or $68, according to the testimony of the brokers and the president of the company. No such price could, probably, be obtained now. Any valuation of the Master must be a mere estimate, and, with this explanation, he rates the stock at $30 for the old shares, making the valuation of the 253 shares held by the bank, $7590.
The note for which the stock was unquestionably pledged to
the bank, amounted to......$24,000.00
Interest from January 1st, 1864,....... 8,672.40
$32,672.40
Note due June 1st, 1878, for overdraft, . . . $6000.00
Paid on this note,........ 695.16
$5304.84
Interest to January 10th, 1870,..... 485.39
■--$5,790.23
The entire claim of the bank,.......$38,462.63
“ The entire amount of damages is,......$46,550.33
The claim of the bank,......... 38,462.63
Balance over claim,.........$8,087.70
“ Even admitting the entire claim to be payable absolutely, to whom does this surplus belong ? Not to the company, for it has arisen through their own default, nor to the bank, for it is an excess beyond all it can possibly claim. It may belong to Persch, the pledger, or to Hepburn, who has settled with Mrs. Quiggle and yet is said to have guarantied the company against the claim of the bank. These questions are beyond the scope of the reference to the Master. They may form the subject of another reference or of another suit.
“ The bank must first be paid its unquestioned debt, and then the balance due on the overdraft; for which, however, as a pledgee, it may be liable to account to whom it may concern; if not entitled to hold it under the pledge.
“ The estimate of the present value of the stock is a mere approximation. Its true value can only be ascertained by a sale. The canal company, as has been stated, is in the hands of a receiver. It is, therefore, by no means certain that there will be any surplus, or even that the bank will receive what is undoubtedly due to it.
“ If the parties cannot agree upon the value at which the stock should be taken, it must be sold, and the proceeds paid to the bank. The bank must then collect from the company the balance of the sum of $32,672.40, with interest on so much of it as is principal unto the date of payment: This amount is to be received - for the absolute use of the bank, which must then collect from the company the further sum of $5790.23, with interest on $5304.84 from, January 10th, 1870, to the date of payment. This last sum of $5790.23, with the interest, will be held by the bank, in trust, for its own use if entitled to‘retain the same for the overdraft, otherwise for the use of such persons as may be found to be entitled thereto. The remainder of the sum of $46,550.33 is to be held by the company for whom it may concern.
“ The Master reports the following form of decree:
“ This cause came on to be heard and was argued by counsel, and thereupon, upon consideration thereof, it is ordered, adjudged and decreed that the West Branch and Susquehanna Canal Company do pay to the Consolidation National Bank, the plaintiffs, the sum of thirty-two thousand six hundred and seventy-two dollars and forty cents (with interest on $24,000 from the 10th of January, 1870, to the date of payment), deducting therefrom the valuation, by agreement, of 253 shares of the old stock of the said canal company, or if no such agreement be made between the parties, deducting the net proceeds of the sale of the said 253 shares of stock at public sale under the direction of the Master, — and that the said West Branch and Susquehanna Canal Company do further pay to the said Consolidation Bank the sum of $5790.23 (with interest on $5304.84, from 10th of January, 1870, unto the day of payment), to be held by the said bank subject to their own claim thereon and to the claim of any other party who may establish a right thereto, — and that the said West Branch and Susquehanna Canal Company hold the sum of $8087.70, the balance of the sum of $46,550.33, reported by the Master as due by the said company for damages, in trust for the use of whom it may concern.”
The defendants filed with the Master a number of exceptions as to his findings of fact, and also as to his rulings in matters of law.
The exceptions to the rulings on matters of law were:
1. That the formal transfer of the certificates of stock into the name of Joseph N. Piersol, cashier, on the 16th day of October, 1863, under the circumstances of this case, altered the relations of the parties so as substantially to affect their reciprocal duties, rights, and obligations. .
2. That one of the effects of such formal transfer of the certificates was to render, the defendants’ demand for indemnity, before permitting a transfer, inequitable and unreasonable, and to justify complainants in refusing to indemnify.
3. That the circumstances of the case fully justified the demand for indemnity, and that a refusal to give such indemnity under the circumstances of the case, should defeat the title of complainants to recover in this proceeding.
4. That complainants are to be charged with the 153 shares of stock retained by them after the coming in of defendants’ answer on June 8th, 1865 (by which answer an offer to transfer said shares was made), at the highest market price of said shares, at any time since that date, in reduction of any claim on their part against defendants.
5. In not charging complainants with the highest market value of the entire stock.
6. Not ruling that it is the right and the duty of a corporation to exercise great care and prudence in permitting transfers of stock, and that whore circumstances of grave doubt touching the right of the party to demand the transfer exist, and no evidence of bad faith or unreasonableness or oppression is produced, the corporation is not to be held liable for refusal to transfer, even if it should afterward appear as the result of litigation that the party was really entitled to the transfer. And that this is especially the case where the stock has been in fact fraudulently transferred away from the party opposing the transfer.
7. Not ruling that facts and circumstances, such as those stated in .the previous (6th)'point, justify a demand for indemnity, and relieve from all responsibility where it is refused.
8. That the stock shall be sold for the purpose of ascer- . taining its value, instead of crediting its value as ascertained by the evidence, against the amount with which he charges the defendants.
9. That the bank had no right to hold the stock as a security for the overdraft, and that no amount is chargeable to defendants by reason thereof.
10. Not deciding that complainants have no equity to sustain a decree for any amount whatever against defendants, and that complainants’ bill should be dismissed.
The Master overruled all the exceptions, and adhered to his report.
On the report of the Master coming into court it was argued by
T. Cuyler, for the defendants appellants.
W. PL. Armstrong, for appellees.
(The reporter received but part of the paperbooks in the case, and is therefore unable to give the arguments.)

Opinion:
Mr. Justice Agnew
delivered the opinion of the court May 5th, 1870, Mr. Justice Sharswood dissenting.
This case was argued before us in 1868, and an opinion prepared by Mr. Justice Strong, then a member of the bench ; but the case was ordered to a reargument on the question of damages. A reargument took place in 1869, and a question arising as to the actual amount of the debt due to the plaintiff for which the stock in question had been pledged, the case was referred to Joseph A. Clay, Esq., to report on the bill, answer, and proofs, and other testimony then ordered to be taken. That report is now before us on exceptions taken by the West Branch and Susquehanna Canal Company. I premise these matters for the purpose of saying that the opinion of Justice Strong is adopted so far as it. is applicable to the present state of the ease, and I shall proceed to state our conclusions as to the report now before us.
As will appear in the opinion of Justice Strong, we think wre have jurisdiction of the matters stated in the plaintiffs' bill, that we have all necessary parties to make a decree and that the plaintiffs are entitled to a decree enabling them to transfer the 253 shares of stock, and also for damages, interest, and costs for the inj ury done in refusing the transfer in April, 1864. The matters now claiming our attention are the sum at which the damages should be found, the disposition of the stock, and the surplus of the damages above the debt due to the plaintiffs.
The Master has found the value of the stock, when it should have been transferred, with interest, to be $44,141.77, and the dividend declared, with interest, $2408.56, making, the total damages $46,550.33. He finds the debt due from Perseh, viz., $24,000, note and interest $32,672.40, for which the 253 shares of stock were certainly pledged, and the remainder of the $24,000 overdraft, with interest at $5790.28,, making a total, January 10th, 1870, of $38,462.63. He properly reports this remainder of the overdraft, $5790.23, as payable to the plaintiffs, as between them and the defendants, leaving the question of the liability of the stock for the overdraft to be settled by the bank with the adverse claimant of the stock if any such claim arise.
The effect of the findings of the Master is to leave a difference of $8087.70 between the total debt and total damages, which the Master recommends, as by his reported decree, to stand in the hands of the canal company in trust for the use of whom it may concern. We are inclined to think the calculations and final decree as reported by the Master should be modified so as to do justice to the defendants, who have been forced into their present position by the notice and indemnity of Quiggle and Hepburn, and at the same time to do no injury to the plaintiffs. When the answer of the defendants came in, they offered to permit 153 shares of the stock to be transferred by the plaintiffs, the other 100 shares being all then in contest. At this time, and for a time afterwards, the stock was worth from $60 to $80 a share. Had the stock then been sold and transferred it would have saved to the defendants probably $50 per share, the difference between say $30 per share and $30, at which the Master appraised its present worth. This loss ought not to be thrown upon the defendants by our decree, nor should it be borne by the plaintiffs. The bill of Quiggleand wife was filed on the 25th of October, 1864, but had been drawn in the preceding January, and its purport known to the defendants as early as April, 1864, as the Master reports; yet the defendants, with the knowledge thus brought home to them that Mrs. Quiggle claimed but 100 shares, made no offer to the plaintiffs to permit a transfer of the 158 shares till the 9th June, 1865, when the answer was filed. In the meantime a great flood had ruined the canal and made its stock of but little value. When the defendants made the offer in their answer they made no offer to indemnify the plaintiffs for the intermediate loss by the fall of the stock, a loss caused by their own laches from April, 1864 to June, 1865. The question whether the stock was then worth $80, or even $60 per share was purely speculative, there being no certainty what would be done to put the canal in order and make it remunerative to the stockholders. Subsequent events show that this was really the ease. The stock-having no intrinsic value when the offer was made to permit the transfer, and no indemnity being offered by the defendants, it would not be equitable to visit the results, which the present time shows to be the case,.upon the plaintiffs, and it is equally certain that it wou d not be right that we should visit upon the defendants tne consequences of the notice and indemnity of Quiggle and Hepburn, further than the necessity of doifig justice to the plaintiffs' demands. It is not just, therefore, that we should decree the excess of the damages, $8087.70 against the defendants, and to stand for the use of whom it may concern. Our decree would fix them to this extent, while we think they should be left free to contest any claim that may be set up to the excess, if any there be, by Quiggle or Hepburn, or any other claimant of the stock. It will be a question whether any one beside the bank can claim the highest price at which the stock stood on or after the 16th of April, 1864, when the defendants refused to make the transfer at the instance of Quiggle and Hepburn. We shall, therefore, modify the report of the Master by making the following decree:
This cause came on to be heard and was argued by counsel, and thereupon, upon consideration thereof, it is now, this 5th day of May, 1870, ordered, adjudged, and decreed that the West Branch and Susquehanna Canal Company do pay to the Consolidation National Bank, the plaintiffs, the sum of thirty-two thousand six hundred and seventy-two dollars and forty cents ($32,672.40), with interest on $24,000 from the 10th of January, 1870, to the date of payment, deducting therefrom the valuation by agreement of 253 shares of the old stock of the said canal eompauy, or if no such agreement be made between the parties, deducting the net proceeds of the sale of the said 253 shares of stock at public sale under the direction of the Master, and which sale the Master is authorized to make in the event of the disagreement of the parties upon the said valuation, and that' the said West Branch and Susquehanna Canal Company do further pay to the said Consolidation Bank the sum of five thousand seven hundred and ninety dollars and twenty-three cents, with interest on $5304.84 from the 10th of January, 1870, unto the day of payment, to be held by the said bank subject to their own claim thereon, and to the claim of any other party who may establish a right thereto; and that the said West Branch and Susquehanna Canal Company do pay the costs.