Court Opinion

ID: 3501119
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:08:06.157821+00
Date Added: 2024-06-11T13:57:31.005006
License: Public Domain

I am in accord with that portion of the opinion of Mr. Justice WIEST in this case in which he holds that it was error to submit to the jury the question whether the shares were feloniously obtained because of a lack of proof on that question, but I am not in accord with the statement in the opinion that "a purchaser in good faith of certificates of stock, indorsed in blank, is protected although they may have been stolen by the prior holder."
It is not my understanding that this statement is the law. It is at variance with the following authorities:
"Share certificates not being negotiable instruments, if such a certificate is lost or stolen from the owner, without fault on his part, his right to it is superior to that of any person who may acquire it by purchase for value from any other holder; and he may maintain, against the corporation and the person who sold the stolen scrip, an action to establish his right to it." 10 Cyc. p. 619.
"Stock certificates are assignable, and pass by indorsement or delivery as bills of exchange and promissory notes pass, but a majority of the courts have declared that they are not negotiable instruments, notwithstanding a custom or usage among stock brokers to the contrary; and an innocent purchaser for value of such certificate, although indorsed in blank by the owner, is deemed to obtain no better title to the stock than his vendor had." 7 Rawle C. L. p. 213.
"One of the most important elements of the negotiability of promissory notes is that, if the holder of such note loses it or it is stolen from him when it is indorsed in blank, a subsequent bona fide purchaser of such note is protected as against the person who loses it. A different rule seems to prevail as regards certificates of stock indorsed in blank and then lost or stolen. In this respect certificates of stock are not negotiable. It has been clearly held that a purchaser from a thief of certificates of stock indorsed in blank is not protected, nor is any subsequent purchaser of *Page 475 
that identical certificate allowed to claim the stock." 1 Cook on Corporations (3d Ed.), § 368.
"The rule as to the rights of a bona fide holder in respect to paper which has been lost or stolen does not extend to cases where the paper is nonnegotiable. So it has been decided that a certificate of stock is not negotiable and that a purchaser of such a certificate acquires no rights thereto where it was stolen without fault or negligence of the owner though it was regularly indorsed." 1 Joyce on Defenses to Commercial Paper (2d Ed.), § 592.
See, also, Brannan's Negotiable Instruments Law (4th Ed.), p. 11; Jones on Collateral Securities (3d Ed.), § 461; Swim v.Wilson, 90 Cal. 126 (27 P. 33, 13 L.R.A. 605, 25 Am. St. Rep. 110); O'Herron v. Gray, 168 Mass. 573 (47 N.E. 429, 40 L.R.A. 498, 60 Am. St. Rep. 411); People v. Martin,116 Mich. 446; Millard v. Green, 94 Conn. 597 (110 A. 177,9 A.L.R. 1610); Bangor Electric Light  Power Co. v. Robinson, 52 Fed. 520; East Birmingham Land Co. v. Dennis, 85 Ala. 565
(5 So. 317, 2 L.R.A. 836, 7 Am. St. Rep. 73); Perkins v.Cowles, 157 Cal. 625 (108 P. 711, 30 L.R.A. [N. S.] 283, 137 Am. St. Rep. 158); Clark v. American Coal Co., 86 Iowa, 436
(53 N.W. 291, 17 L.R.A. 557); Farmers Bank v.Diebold Safe  Lock Co., 66 Ohio St. 367 (64 N.E. 518, 58 L.R.A. 620, 90 Am. St. Rep. 586); Scollans v. Rollins,173 Mass. 275 (53 N.E. 863, 73 Am. St. Rep. 284); Schumacher v.Greene-Cananea Copper Co., 117 Minn. 124 (134 N.W. 510, 38 L.R.A. [N. S.] 180). (See extensive note to this case in Ann. Cas. 1913C, 1117.)
Further, I am unable to see the object of discussing this legal question in this case, as the opinion holds that the question whether the shares were stolen is not in the case. After reviewing the testimony on that question, the opinion states "if larceny by trick or felonious appropriation was claimed the burden *Page 476 
rested on plaintiff to make some proof thereof. The instruction was erroneous." This holding clearly put the question out of the case, and what the law may be on that question is immaterial so far as this case is concerned.
As to whether our stock transfer act (3 Comp. Laws 1915, § 11920 et seq.) has changed or modified this rule, see discussion in the case of Jackson v. Peerless Portland CementCo., post, 476.
I concur in the reversal of the case on the ground of a lack of proof that the certificates of stock were stolen. Defendant is entitled to costs of this court.
SNOW, J., concurred with BIRD, J.