Court Opinion

ID: 8315634
Source: CourtListenerOpinion
Date Created: 2022-10-17 20:00:55.295359+00
Date Added: 2024-06-11T16:44:55.516536
License: Public Domain

Cranch, C. J.,
delivered the opinion of the Court.
(Thruston, J., absent.)
The whole evidence in this cause is contained in the answer, the depositions of E. J. .Lee, and H. Peake, and' in the certifi- , cates of stock exhibited.
From the evidence the facts appear to be, that the certificates *427of stock in question, were signed by the president and countersigned by the treasurer, in the form required by the sixth section of the chartei;, and were delivered to the said C. J. Love, by the president, without consideration; and from the circumstance that the books of the company contain no evidence of the issue of such certificates, it may be inferred that they were issued without the order of the directors. That the shares never were transferred by C. J. Love, upon the books of the company. That neither the said C. J. Love nor John Love ever subscribed for the said shares, or any of them, and never paid any consideration therefor. That the said certificates were received by Mr. E. J. Lee, as agent for Mr. R. B..Lee, from the said C. J. Love for a full- and valuable consideration, and with a belief that they had been issued for a full and valuable consideration paid by Mm to the company; that the'shares had been duly transferred to the said E. J. Lee, in trust for the said R. B. Lee, and that the plaintiff received the certificate with the same belief, and for a full and valuable consideration paid by him to the said R. B. Lee.
By the 6th section of the charter of the company it is enacted, “ That the president and directors shall cause a written or printed certificate to be given to each subscriber for every share by him subscribed, signed by the president and directors, and countersigned by the treasurer; which certificates shall be transferable by an assignment made thereof, on the books of the company, by the owner in person, or by. an attorney in fact.”-
The president of the company, without the directors,' has no power by the charter, to do any act, except to sign the certificate, and to render to the courts of Fauquier, Prince William, and Fairfax, an account of the cost of the road, and of the expenses of repairs, &c. He does not appear to have had authority to make any contract for stock, nor to issue certificates'of stock, nor to certify transfers; much less could he issue a valid certificate of stock not subscribed for,’ and without consideration. These certificates are therefore void. '
But the plaintiff has been induced to part with his money by a false certificate of the president of the company. Is not the company bound to make it good ?
In general, the principal is not bound by the act of his agent, unless it be within .the scope of his authority; and if it be a special agency, the authority must be strictly pursued.. Here the president certainly had not- more power to issue'certificates of stock'than the president and .directors had; yet, by the 6th section of the charter, they could only cause certificates of stock to be issued to subscribers. The president, therefore, was not acting within the scope of his authority, in issuing a certificate *428to a non-subscriber. The authority of the president to sign certificates, was a special authority to sign certificates to subscribers, by order of the president and directors. In signing a certificate to a person who was not a subscriber, and without the authority of the directors, the president did not pursue his special authority strictly.
Upon both grounds, therefore, namely, that he was not acting within the scope of his authority, and that he did not strictly pursue his special authority, the company is not responsible for his act.
Besides, the plaintiff cannot complain of a deception which he might have avoided by ordinary diligence. The president had no authority to certify a transfer, if it had been made upon the books; much less, one not so made. But he did not certify that the transfer was made upon the books; and the plaintiff was bound to know that such only could be á legal transfer. If the certificate of the president was equivocal, it was negligence in the plaintiff not to insist on a satisfactory explanation before he took the paper.
There having been no legal transfer of the stock, the plaintiff cannot avail himself of the principle that he is a purchaser for valuable consideration without notice ; for that is a plea only in defence of a legal title against a prior equity; not a substantial ground of relief for a plaintiff in equity against an equity. Whatever legal or equitable defence the company would have had against C. J. Love or J. Love, in regard to these certificates, they have against the plaintiff. The equity follows the certificates into the hands of every one who cannot, at law, avail himself of them.
I am, therefore, of opinion that the bill should be dismissed, with costs.
If the bill be dismissed as against the company, it cannot be continued against C. J. Love, and John Love, because, being non-residents, the Court has no jurisdiction as to them.
Moesell, J., concurred. Bill dismissed with costs.