Court Opinion

ID: 8508975
Source: CourtListenerOpinion
Date Created: 2022-11-23 08:34:46.178349+00
Date Added: 2024-06-11T16:51:01.499091
License: Public Domain

On Rehearing.
Upon application for a rehearing of this case it becomes important to ascertain certain facts, as shown by the evidence, before applying the law. The bonds were, according to the resolution of the board of directors of the new company, delivered to Holzman & Company, “for and on behalf of this company,” and so far as the record discloses the defendant bank had no communication with them as to the disposition of the bonds, but apparently assumed that the right of disposition was absolutely in the board of directors of the mortgagor. Nor is there any evidence that Holzman & Company were given any direction by any one as to the disposition of the bonds. It is certain that they were not the agents of the bank, and no trust or confidence was reposed by the bank in the firm or any member thereof with respect to the bonds. Colonel Nelson, the president *51of the new companyj told Mr. Stark, the trust officer of the bank, that it was necessary to have the bonds to consummate the deal and effect a transfer of the property from the old company to the neiv; but there was no assurance by the board of directors that this would be done. It is apparent, however, from the resolution of the board of directors of April 21, 1905, which is set forth in the trust deed or mortgage, that it was wholly unnecessary to deliver' the 300 bonds to Holzman & Company, in order to effect a transfer of the property:
‘•‘Be it resolved that the president and secretary of this company be empowered, authorized and directed upon receipt from the Georgetown Water, Gas, Electric & Power Company of a proper and sufficient conveyance in fee simple of all the property, rights, franchises and contracts belonging or appurtenant to the Georgetown Water, Gas, Electric & Power Company of a proper and sufficient conveyance in fee simple of all the property, rights, franchises and contracts belonging or appurtenant to the Georgetown Water, Gas, Electric & Power Company to pay it therefor two hundred and fifty thousand ($250,000) dollars, par value of the capital stock of this company, and one hundred thousand ($100,000) dollars first mortgage bonds of this company. ”
.The trust officer of the bank knew -the contents of the mortgage including this resolution, and retained 200 of the bonds amounting to $100,000, for the purpose therein expressed. The other 300 bonds were intended for distribution among the stockholders and Colonel Nelson so told Mr. Stark at the time. It seems not to have occurred to Colonel Nelson nor Mr. Stark that the trustee whose certificate gave life to the bonds ought to have retained possession of them until the property, intended to seeuye their payment, was conveyed or about to be conveyed to the mortgagor.
The bank did not retain even constructive possession or control of the bonds, although it accepted the trust for a valuable consideration.
In the ease of Westwood (Bd. of Ed.) v. Sinton, 41 Ohio St. 504, relied upon by counsel for defendant in error, the board took up and paid certain bonds issued by it and left them with *52its treasurer, who was also a member of the board, with instructions to cancel them, which he failed to do, but negotiated them before maturity as collateral security for a loan. Held-'
“There was no negligence on the part of the board in not seeing that its treasurer complied with its instructions to cancel the bonds.”
The treasurer was not only the custodian of the bonds, but was charged by the board with the performance of a specific act with reference to them.
If the bánk in the case before us had placed the certified bonds in the hands of one of its officers with instructions to deliver them only when the property intended for their security was acquired by the mortgagor, the facts would be inore like those in the case cited.
Although the bonds were delivered to Ilol'zman & Company on the order of the board of directors of the obligor, they were in law delivered to the latter, without any restrictions by the bank on their use.
When Mr. Stark testified that the purpose in delivering the bonds was to effect a transfer of the property of the old company to the new company, he evidently referred to the purpose expressed by Colonel Nelson, as he nowhere discloses any purpose on the part of the bank other than to obey the order of the board of directors of the new company. Such company was entitled to the possession of its own bonds after being certified, provided they were in fact what they purported to be; but when the certificate was false the obligor was no more entitled to the unrestricted possession than a stranger would be.
Farmers’ Bank v. Safe & Look Co. 66 Ohio St. 367 [64 N. E. Rep. 518; 58 L. R. A. 620; 90 Am. St. 586], was a ease of a stolen certificate of stock, wherein it was held that a pledgee in good faith acquired no title to the stock as against the real owner.
The case of Baxendale v. Bennett, 3 Q. B. D., 525, is of the same nature, and while it is true that Bramwell, L. J., asks the question at page 530,
“Is it not á rule that every one' has a'right to suppose that *53a crime will not be committed, and to' act on that belief?” yet he significantly adds on the same page:
“The defendant here has not voluntarily put into any one’s hands the means, or part of the means, for committing a crime.”
That is the precise distinction in the case before us. The bank after certifying to the identity of the bonds, voluntarily and unnecessarily parted with possession and thereby furnished ■ the means for committing a crime as well as the means for deceiving the public, of which plaintiff was one only.
Upon the same principle the railway company was held liable in the ease of C. N. O. & T. P. Ry. v. Bank, 56 Ohio St. 351 [47 N. E. Rep. 249; 43 L. R. A. 777], and the ease of Westlake Board of Ed. v. Sinton, supra.
The allegation of the petition that the bonds were delivered to Holzman & Company for “the purpose of negotiation and sale” was not at the trial supported by any evidence of an active present intention to so deliver them; but it does appear that the bonds were in such form that delivery to any one put in his hands all the means for such use..
The difficulty in the case is one of fact rather than law, and while our findings from the evidence may differ from those which a jury or other tribunal might make, yet it is reasonably certain that the transaction was unusually careless and such as a reasonably prudent man would shun because of the risk.
A rehearing of the case is therefore refused.
Smith and Swing, JJ., concur.