Opinion ID: 1232739
Heading Depth: 1
Heading Rank: 6

Heading: Individual Claim

Text: We first address whether Aaron failed to state a claim against E&S in his individual capacity. Aaron argues on appeal that the district court erred in dismissing his individual claim for wrongful registration against E&S on rule 12(b)(6) grounds. [2,3] Complaints should be liberally construed in the plaintiff's favor, and a complaint should not be dismissed merely because it does not state with precision all elements that give rise to a legal basis for recovery. Anderson v. Wells Fargo Fin. Accept., supra . Nonetheless, in Anderson, we stated that complaints must set forth sufficient information to suggest that there is some recognized theory upon which relief may be granted. Id. In his operative complaint, Aaron alleges that E&S registered a transfer of Aaron's stock to a person not entitled thereto because the transfer was registered pursuant to an ineffective endorsement or instruction. He claims the registration was ineffective because Aaron, the appropriate person, did not authorize the transfer. Specifically, Aaron alleges that E&S, in its capacity as transfer agent for AFSC, issued stock certificate No. 468 for 11,764 shares of AFSC common stock to Aaron. Aaron further alleges that pursuant to a request by Matthew Ferer, E&S purportedly canceled certificate No. 468 and caused certificate No. 479 to be issued for 11,764 shares of AFSC common stock in the name of Harvey Ferer and subsequently in the names of Matthew Ferer and Whitney Ferer without any endorsement on certificate No. 468, duly executed stock power, or any other evidence of authority by Aaron. The district court treated Aaron's individual claim as one based on legal malpractice. The court concluded that E&S did not owe Aaron a duty and therefore dismissed Aaron's individual claim. We disagree. We find instead that Aaron has stated a claim for wrongful registration under Neb. U.C.C. § 8-407 (Reissue 2001), and reverse the district court's order on this issue. [4] We have stated that an attorney's alleged professional misconduct gives rise to a professional negligence action. See, Swanson v. Ptak, 268 Neb. 265, 682 N.W.2d 225 (2004); Gravel v. Schmidt, 247 Neb. 404, 527 N.W.2d 199 (1995). In the instant case, however, E&S was not acting as legal counsel with respect to the allegedly wrongful registration of Aaron's stock. Rather, it was alleged to be acting as transfer agent for AFSC. Transfer agents are frequently employed to take charge of stock transfers on the corporate stock books and the issuance of new stock certificates in order to facilitate the transfer of shares and to guard against mistakes or overissues. 12 William Meade Fletcher et al., Fletcher Cyclopedia of the Law of Private Corporations § 5485 (perm. ed., rev. vol. 2004). See, e.g., Geiger v. S.E.C., 363 F.3d 481 (D.C. Cir. 2004); Ins. Co. of N. America v. Breham, 257 Or. 385, 478 P.2d 387 (1970). The transfer agent must pass on and satisfy himself as to the validity and propriety of the transfer, and the transfer agent is generally held liable for the improper issue and transfer of certificates, both to the corporation and to persons injured. 12 Fletcher, supra. See § 8-407. There is no restriction under Nebraska law that a transfer agent must be a lawyer or a law firm. See, e.g., Neb. U.C.C. § 8-102 (Reissue 2001). In fact, a transfer agent may be any individual or a department of the corporation itself, though the transfer agent is usually a bank or trust company with a special transfer department and trained staff. 12 Fletcher, supra. Accordingly, an attorney or law firm may serve as transfer agent for a corporation notwithstanding its role as legal counsel for the corporation and, consequently, may be liable under § 8-407 for wrongful registration. Were we to conclude otherwise, we would in essence be saying that attorneys and law firms enjoy a special protection from liability under § 8-407, which holds a transfer agent liable to the owner of a security for the wrongful registration of that security. See § 8-407, official comment 1. In the instant case, E&S was alleged to be acting in its capacity as transfer agent for AFSC, not in its capacity as legal counsel, when it transferred Aaron's shares of AFSC stock. Hence, E&S may potentially be held liable under § 8-407 for wrongful registration. Having determined that E&S transferred Aaron's stock shares in its capacity as transfer agent, we must next determine whether Aaron alleged sufficient facts to state a claim for wrongful registration under § 8-407. [5] Section 8-407 bestows on a transfer agent the same obligations to the holder or owner of a security as the issuer and holds a transfer agent liable where the issuer would itself be liable. Neb. U.C.C. § 8-404(a)(1) (Reissue 2001) provides that an issuer is liable for wrongful registration if the issuer has registered the transfer of security to a person not entitled to it as a result of an ineffective endorsement or instruction. The official comment 1 to this section explains in part that [t]he fact that the issuer had no reason to suspect that the [e]ndorsement was forged or that the issuer obtained the ordinary assurances under section 8-402 does not relieve the issuer from liability. Aaron has alleged in his operative complaint that E&S transferred his shares of AFSC to Harvey Ferer and then to Matthew Ferer and Whitney Ferer, despite his failure to endorse the stock certificate or authorize the transfer. If Aaron's allegations are true, which we must assume for purposes of a motion to dismiss, see Carruth v. State, 271 Neb. 433, 712 N.W.2d 575 (2006), E&S would be liable under § 8-407 because of the alleged ineffective endorsement. We therefore conclude that Aaron has stated a claim for wrongful registration, and the district court erred in concluding otherwise.