Court Opinion

ID: 6121618
Source: CourtListenerOpinion
Date Created: 2022-02-04 18:50:11.780582+00
Date Added: 2024-06-11T08:23:31.069804
License: Public Domain

Brady, P. J.:
Tbe plaintiff was tbe owner of tbe ten shares of stock in controversy, tbe title to which stands in tbe name of Lindley Murray, in trust, and a certificate, therefor, was issued in that form. Murray bad no title to tbe stock, but tbe plaintiff allowed tbe certificate to be issued, as stated, to enable bim to become a director in the company. Murray subsequently borrowed $1,000 from the defendant Munroe, and deposited with bim as collateral security for the payment of tbe loan the certificate of stock in question, together with an instrument purporting to be a transfer of tbe certificate signed Lindley Murray, in trust, but tbe stock was never transferred on tbe books of the company to Munroe. It appears that when the loan was applied for by Murray and tbe certificate was offered as security, tbe attention of tbe defendant Munroe was called to the words “ in trust ” in tbe certificate, and be spoke to Murray about it, who answered that tbe stock wás bis or that be bad control over it, and could transfer it if necessary. Tbe defendant seems to have relied entirely upon this explanation or statement of Murray, and to have made no other investigation for the purpose of ascertaining tbe terms of tbe trust or anything regarding it.
Upon those facts it is quite apparent that if tbe plaintiff can be divested of her title by the transfer of Murray, which was made without her consent, it can only be on tbe prmciple of estoppel, and that principle docs not spring out of tbe facts narrated, because not only did it appear from tbe certificate that Murray held tbe stock in trust, but it also appears from tbe transfer itself, which was signed by Murray, in trust.
There are several adjudications in kindred cases which establish tbe doctrine, that the words “ in trust ” contained in tbe certificate *318were notice to all into whose hands the instrument might fall, and, therefore, imposed the obligation to inquire as to the authority of the person named as trustee or holding the trust, to sell or hypothe-cate the subject of the trust. (Sturtevant v. Jaques, 96 Mass. [14 Allen], 523; Bancroft v. Consens, 95 id. [13 Allen], 50; Trull v. Trull, id., 407; Shaw v. Spencer, 100 Mass., 389; Duncan v. Jaudon, 15 Wall., 165.)
The appellant urges upon the consideration of the court the point, that the loan of the stock for the purpose of enabling 'Murray to become a director was against public policy. No case decisive of this proposition was cited and none has been found. It does not appear from any fact or circumstance in this case, that there was any intention to evade any statute or to violate any rule of public policy. So far as it can be ascertained, the transfer may have been for the purpose of securing the services and experience of a person as a director which would be valuable to the company, and enure to its benefit and advantage.
For these reasons the judgment must be affirmed, with costs. In regard to the appeal from that part of the judgment by which costs are given to the Empire City Fire Insurance Company, it is only necessary to say, that that company was brought into court by no fault of its own, but by the assertion of an unlawful claim upon the part of the defendant Munroe, and it is just that it should be indemnified for the expenses attendant upon its proper representation in this controversy.
Ordered accordingly.
INGALLS, J., concurred.
Present — Beady, P. J., Ingalls and Daniels, JJ.
Judgment affirmed, with costs.