William P. Burnham, Plaintiff, v. Maynard C. Eyre and Others, Copartners Trading under the Firm Name of Prince & Whitely, Defendants

William P. Burnham, Plaintiff, v. Maynard C. Eyre and Others, Copartners Trading under the Firm Name of Prince & Whitely, Defendants. Second Department, January 24, 1908. Principal and agent — purchase of stock for undisclosed principal — conversion of purchase money by agent — payment to brokers prerequisite to delivery. The defendant stockbrokers on receiving a telegram from one M. to buy stock purchased the same, and, following subsequent instructions from M., had the certificate transferred on the books of the corporation so as to stand in the name of the plaintiff, and sent the certificate, together with a draft on M. for the purchase price, to a bank to collect tlie amount and deliver the certificate upon payment. M. after receiving payment from the plaintiff absconded and the draft on him was dishonored, whereupon the bank returned the stock cer- • tificate and unpaid draft to the defendants. It appeared that M. had directed the defendants to purchase the stock on an order received from the plaintiff, of which fact, however, the defendants had no knowledge. Held, that the plaintiff, although the undisclosed principal of M., was not entitled to a delivery of the certificate until he paid the purchase price to the defendants; That the fact that M. ordered the certificate to be taken in the name of the plaintiff did not disclose the latter as his principal, and, even considering it to have had that effect, it was immaterial, as at the time the purchase had already been made for M. and the right of the parties fixed; That payment by the plaintiff to M. was not payment to the defendants as M. was not the defendants’ jigent but the plaintiff’s; That, as the defendants transferred the certificate to the plaintiff’s name under an agreement requiring payment on delivery, the plaintiff’s legal title thereto was defeasible. Submission of a controversy upon an agreed statement of facts pursuant to section 1279 of the Code of Civil Procedure. The defendants are stockbrokers in New York city, and members of the Stock Exchange there. They received by telegraph an order from one Mitchell, a stockbroker in San Francisco, California, to purchase 40 shares of stock as follows : “Buy 40 Union Bag & Paper market for delivery. Will instruct later.” They made the purchase, paid for it in cash, and advised Mitchell by telegraph that they had made the purchase “for your account and risk”-. Mitchell responded directing them to send on the certificate of the shares in the name of William P. Burnham (namely, the plaintiff), . and attach draft for $3,300, which was the purchase price. ' They had the stock transferred to the said Burnham on the books of the company and obtained a new certificate thereof in his name, and delivered the same, with the di’aft on Mitchell attached, to the Bank of New York to collect the draft and thereupon to deliver the certificate. Before the draft had reached San Francisco, Mitchell had suspended business and absconded, and the draft was dishonored, and came back in due course to the defendants with the certificate attached. The defendants have possession of the unpaid draft and the certificate. Mitchell ordered the defendants to purchase the stock because he had received an order for the purchase of the said stock from Burn-ham, the plaintiff, but Mitchell did not communicate that fact to the defendants, and they, had no knowledge of it in purchasing the stock. After Mitchell received the said telegram from the defendants of the purchase of the stock, the plaintiff paid him therefor the next day.. We are called upon to decide whether the plaintiff is entitled to have the certificate of the shares of stock delivered to him by the defendants without his paying to them the purchase price thereof. Joseph M. Hartfield, for the plaintiff. Eliot Norton [Alexander H. Jackson with him on the brief], for the defendants. [MAJORITY — Gaynor, J.:] Gaynor, J.: The rights of the defendants am in no way changed by the fact, that Mitchell purchased for an undisclosed principal, viz., the plaintiff. They can no more be required to deliver the certificate of the shares of stock to the plaintiff without being paid the amount which they paid therefor than the plaintiff’s agent, Mitchell, could require them to deliver it .to him without such payment. The fact that the shares were put in the name of the plaintiff by.the defendants, by the direction-of the plaintiff’s said agent, after they had made the purchase, is immaterial, even if such direction could be held to have disclosed that the plaintiff was the principal of Mitchell. The purchase had already been made for Mitchell, and the rights of the parties fixed thereby. The act of the defendants in putting the shares in the name of the plaintiff did not change the right of the defendants to be paid on delivery of the certificate, whoever had to pay. The mere fact of Mitchell talcing the certificate in a name other than his own, did not disclose that person as his principal, if that could make a difference. It is a common thing for the real purchaser of stock to take it in the name of another. The act is equivocal at best. But if it did, the case would still he that the defendants were to deliver the certificate only on payment. Payment by the plaintiff to Mitchell was not payment to them. He was not the defendants’ agent, but the plaintiff’s. We have before ns the common case of property, or the written certificate of title thereto, to be delivered on payment therefor. That the legal title to the shares may be in the plaintiff by reason of the transfer of the shares to his name, does not .alter the case. It is only a defeasible title,, at the suit of the defendants, for they made the transfer under a contract to be paid on delivery of the certificate by them (Empire State Type Founding Co. v. Grant, 114 N. Y. 40); and equity will not require the certificate to be delivered to the plaintiff until he pays the purchase price. Judgment for the defendants. Woodward, Jenks, Hooker and Miller, JJ., concurred. Judgment for defendants on submission of controversy, with costs.