Court Opinion

ID: 8861142
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:48:55.042158+00
Date Added: 2024-06-11T17:05:49.602720
License: Public Domain

PHILIPS, District Judge,
after slating the case as above, delivered the opinion of the court.
It must be assumed from the argument of counsel that the circuit court regarded the certificate of stock issued to the plaintiff in the *378nature of a written contract between the parties, the terms of which could not be varied, nor the legal effect thereof avoided, by parol testimony; and that plaintiff was estopped from controverting its apparent character as establishing her status as a stockholder in the bank. On no other theory is it apparent why the learned judge who heard this case directed the verdict for defendant. Evidence tending to show that a deed absolute on its face, or an assignment of a note without qualification, was made to the grantee or assignee in fact only as a mortgage or security to secure the payment of a sum of money owing by the grantor or assignor to the grantee or assignee, has long been held to be admissible. In McMahon v. Macy, 51 N. Y. 155, the referee refused to entertain evidence tending to show that the apparent stockholder held the stock as collateral security. The court said:
“In this he erred. It is always competent to show that an assignment or conveyance, absolute in form, was only intended as a security. There is nothing in'any statute which makes the books of the company incontrovertible evidence of ownership of stock. A person may be the absolute legal and equitable owner of stock without any transfer apparent upon the books.”
Instruments of writing expressing on their face a mere sale of property, specifying the articles sold, and acknowledging receipt of payment, is in the nature of a bill of parcels, a,nd, as between the parties, is always open to parol evidence to show the real terms upon which the agreement of sale was made. Hazard v. Loring, 10 Cush. 268; Caswell v. Keith, 12 Gray, 351; Shaw v. Wilshire, 65 Me. 492; Grant v. Frost (Me.) 13 Atl. 881. The law does not invest a certificate of stock in a national bank with such sanctity as to give it immunity against such general rules. It was expressly held in Burgess v. Seligman, 107 U. S. 20, 2 Sup. Ct. 10, that a certificate of stock might be shown aliunde to have been taken and held as collateral security. The court said:
“Thdugh issued in form, it was only issued in a qualified sense to subserve a specific purpose by way of collateral security for a limited period, and was returnable to the company when that purpose should be accomplished. It seems to us that the Seligmans, in taking and holding the stock, held it merely in trust by way of collateral security for themselves and others.”
The court further observed:
“We do not know of any iron rule of law which would prevent them from showing this contract relation between them and the company. It is the origin and foundation of their whole connection with it. The sufficiency of the evidence to control their status towards the company is another thing. Its competency seems to us free from doubt. * * * J. and W. Seligman are mere trustees or custodians of it for a special purpose; that purpose being collateral security.”
There is no evidence in this record showing that any transfer had been made on the stock register of the bank to the plaintiff, nor that she had participated in any stockholders’ meeting, or in any declared dividends. On the contrary, her testimony was that she never authorized any such transfer, nor had any knowledge thereof. Without her knowledge and consent, no action of the bank officers could create an estoppel against her, or render her liable as a stockholder as between her and the bank. Stephens v. Follett, 43 Fed. 842; *379Keyser v. Hitz, 133 U. S. 138, 10 Sup. Ct. 290; Burgess v. Seliginan, supra. While there may have been ads by the plaintiff — such as statements in some of her letters — inconsistent with some statements made in her testimony at the trial, they were not so conclusive as to warrant the court in pronouncing judgment thereon. Their probative force lay within the exclusive province of the jury, for the reason that they were debatable in character. It follows that it was likewise error to exclude the testimony of the witness McCluuey.
The plea of ultra vires interposed against the contract declared on is not tenable. The plainiiff’s action, in its essence, is not predicated upon, nor is it for the enforcement of, a contract for stock. In effect, the action is for money had and received.- It is to recover the amount of money deposited and loaned by the plaintiff with and to the hank. The bank owes the plaintiff for the money left by her with it, independent of the certificate of stock. Such certificate, according to her contention, having been issued by the hank merely as collateral security for the money received from the plaintiff, it is a matter of entire indifference whether that certificate of stock be with or without value, or invalid in law for the want of power on the part of the bank or aut+hority of the cashier to issue it as collateral security for a loan of money made to it. The plaintiff in the petition tenders* hack to the hank the certificate of stock, and demands her money. It is no defense to an action for money had and received, based upon a good consideration, both in law and morals, for the bank to say that the collateral security it put up with the plaintiff was issued without authority. This proposition so stands do reason and justice as not io require anv authorities for its support. 4 Thomp. Corp. par. 5258; Sioux Oily Terminal Railroad & Warehouse Co. v. Trust Co. of North America, 82 Fed. 125.
The judgment of the circuit court is reversed, and the case is remanded for further proceedings in conformity with this opinion.