Pollock et al. v. National Bank et al.

Pollock et al. v. National Bank et al. Responsibility of Bank — Oross-bill. A hank which has permitted a transfer of stock, upon a forged power of attorney, may be compelled to issue new certificates, or to pay the value thereof. The character of a bill in equity, whether an original or a cross-bill, is to be determined by the relief sought. Appeal from the general term of the Supreme Court, in the first district, where a decree in equity, dismissing the plaintiffs’ bill, had been affirmed, without prejudice to the right of action. This was a bill in equity, filed in the late court of chancery against the Bank of America, and the National Bank, to compel the latter to issue new shares of stock to the complainants, in lieu of certain shares which had been transferred on a forged power of attorney, and for general relief. Prior to 1842, the plaintiffs’ brother, Andrew Pollock, had been a clerk in the Bank of America. They were each the owners, inter alia, of 25 shares of stock of the National Bank. Their securities were kept in a locked pocket-book and trunk, deposited, in charge of their brother, in the vault of the Bank of America; and he ^ had power to receive their dividends, *but not to -* sell. In June and August 1839, by means of forged powers of attorney, he sold and transferred the plaintiffs’ stock in the National Bank, and the certificates were delivered up and cancelled. In 1841, Andrew Pollock represented to Jarvis & Schrymser, customers of the Bank of America, that he frequently had moneys of the plaintiffs lying idle, and made an arrangement with them to deposit such funds to their credit, to be repaid, when required, with interest. He then, by false entries in the books of the bank, credited Jarvis & Schrymser with various sums, amounting to about $8000, upon which he subsequently obtained their check, and drew the money from the bank; he also borrowed their checks for $8000, upon which he received payment; and subsequently erased the charges from the cash-book, and then fraudulently returned the checks to Jarvis & Schrymser. In July 1842, with a part of the money thus fraudulently obtained, Andrew Pollock purchased 50 shares of the National Bank, which he caused to be transferred to the plaintiffs; and then absconded. The Bank of America, thereupon, filed a bill in equity against the plaintiffs, the said Andrew Pollock, and the National Bank, stating the above facts; insisting that the transfer of the plaintiffs’ original shares of stock, by means of the forged power of attorney, did not divest their title; and averring that the bank had an equitable right to follow and claim the 50 shares subsequently purchased with the funds thus fraudulently obtained from the bank. Pending that suit, the plaintiffs filed the present bill against the Bank of America and the National Bank, setting forth the former bill; insisting that they were entitled to the 50 shares of the stock of the National *Bank; and praying that if it should appear A that the Bank of America was entitled to them, *- then, that the National Bank might be decreed to deliver to them the 50 shares transferred by Andrew Pollock, by means of the forged power of attorney, or pay the value thereof. In the prayer for relief, this was denominated a cross-bill. The National Bank, by their answer, denied that the stock had been transferred upon a forged power; and insisted that having but a limited number of shares, all of which had been subscribed and issued, it had no authority to issue any shares to the plaintiffs; and was not liable for losses to stockholders resulting from irregular transfers of stock. On a hearing, upon the pleadings and proofs, before the late assistant vice-chancellor Bobertson, the plaintiffs’ bill was dismissed; and on a rehearing before the general term of the supreme court, to which the cause had been transferred, his decree was affirmed, without prejudice to the plaintiffs’ right of action; the latter, thereupon, appealed to this court., O'Conor, for the appellants. Sandford, for the respondents. And see Cushman v. Thayer Manufacturing Jewelry Co., 76 N. Y. 365, 369. [MAJORITY — *Gardiner, J.] *Gardiner, J. The Misses Pollock were the * 0-7» i 1 -* acknowledged owners of fifty shares of stock of the National Bank, standing in their names on the books of that institution, with the certificates, the evidence of their title, in their possession. This stock was subsequently transferred from their names to the names of other persons, by the permission of the bank, which received and cancelled the original certificates, and has ever since refused to pay dividends to the complainants, or in any way to recognise them as stockholders in the institution, and denied their title to, or any interest in, the capital stock of the bank. All this has been done, without any authority or assent, express or implied, upon the part of the true owners; and the question is, are they entitled to any relief? It is said, that inasmuch as the transfer was made by virtue of a forged power of attorney, the stock is still the property of the complainants. But a title to stock, in the abstract, without any legal evidence of such title, without the power of sale, or of obtaining dividends, is not the ownership which the complainants once possessed, and of which they have been deprived by the agents of the bank. They held certificates; these the bank have cancelled, and instead of issuing new ones to the complainants, it denies their right altogether. It was said, that there was no proof that the power of attorney was forged; but the answer is, that the ^original title of the Misses Pollock is admitted, and if the bank sets up a title derived from them, *- 1 in bar of their claim, it must be proved. The affirmative of the issue is with the respondent. The technical objection as to the form of the remedy is not well founded. This is not a cross-bill, in any sense. The complainants seek affirmative relief, which the bank refuses, upon the ground that the complainants have no claim to any stock, but have duly parted with all their title. I think, the bank is bound to issue new certificates, and account for the dividends, or if, upon inquiry, it should be ascertained that it has no stock which it can transfer to the names of the complainants, then it should pay to them the value of the shares owned by them, according to the prayer of the bill. The decree of the supreme court should be reversed, and a decree made in accordance with the prayer of the complainants’ bill. [DISSENT — Welles, J.] Welles, J. {Dissenting.) — There is no aspect in which the appellants, in the present state of the pleadings and proofs, are entitled to any relief against the respondents. The prayer of the bill is, that the appellants be decreed entitled to fifty shares of the capital stock of the National Bank, and that the fifty shares of stock standing on the books of the bank in their names, at the time of the filing of the bill, may be decreed to belong to them; or, in case the Bank of America should be decreed to be entitled to said fifty shares, that then the said National Bank be decreed to deliver to each of the complainants .twenty-five shares of their capital stock, or to pay them the value thereof. There has been a decree in the suit brought by the Bank of America against these appellants and others, which adjudges the plaintiffs in that suit entitled to the last-mentioned fifty shares of stock, together with, the dividends which had accrued thereon, after the same had * 280 1 k° transferred to the appellants, band requir- -* ing the said appellants to assign and transfer the same to the plaintiff therein, the Bank of America. On what ground, then, can the appellants ask to have the National Bank either furnish them with an equal number of shares of stock, or pay them the value thereof? They were the owners of fifty shares of stock in that bank, which they allege was sold and transferred in their names, by their brother, Andrew Pollock, upon a forged power of attorney. Admitting this was the case, they are still the owners of those fifty shares, and are entitled to receive the dividends payable thereon, unless they have in some way ratified the sale, which they deny. They could not be deprived of them, without their consent, or by due process of law. If the National Bank has refused or shall refuse to pay over to the appellants any dividends that may have accrued upon it, I see no difficulty in their sustaining an action at law, as for money had and received by the bank to their use. If it is important for the appellants to have the stock stand in their names upon the books of the bank, and it becomes necessary to invoke the equitable power of the court to effect that object, either by having the transfers or assignments fraudulently made of the same, in their names, by Andrew Pollock, declared void, or by compelling a re-assignment thereof to them, by their claiming to hold the stock, and have the same registered by the bank in their name, or in any other way to be re-instated the apparent as well as the real owners of such stock, the persons to whom the same was assigned or who claim title thereto through such fraudulent assignments or transfers, are, of all others, most interested, and have the best right to be heard, before the court can make any order or give any judgment in the premises. Without having those persons before them as parties, it would be manifestly improper, to give any judgment in the premises, which would afford the appellants any relief. Indeed, it could not be done, without at the same time, seriously affecting the purchaser of the stock in question. [ *281 It does not appear, that the respondents have done any act of which the appellants have a right to complain. The wrong, if any, which has been done, was committed by Andrew Pollock *in transferring the stock without authority; and in this the purchasers from him, as the appellants’ agent or attorney, must, of course, be the greatest sufferers; for they have bought without acquiring title to that which they purchased, and have consequently lost whatever they paid for it. But the bank, I repeat, has done nothing worthy of blame; it could have no legal interest in the question as to who were the owners of the stock in question. Upon a transfer of any of its stock, it was its duty to register it in the name of the transferree; and it would be a monstrous doctrine, to hold it responsible, in any event, for the genuineness or validity of such transfer, where gpod faith has been observed by its managing officers. The bill is not adapted to the relief which the appellants are entitled to, if any, either in its frame, prayer or parties defendants; and there is, as it seems to me, an entire absence of equity as against the respondents. For these reasons, as well as those assigned by the supreme court, the judgment should be affirmed. Decree reversed, and a decree made in favor of the plaintiffs, in accordance with the prayer of their bill.