
    Robert M. Henning, survivor, &c., Plaintiff and Appellant, v. The New York and New Haven Railroad Company et al., Defendants and Respondents.
    1. The possession, by the transfer agent of a corporation, of the transfer books of its stock, and his authority to allow them to be used, do not constitute the indicia of an authority to make representations as to the ownership of stock, so as to render the company liable for the falsity of such representations made by him.
    2. Nor does mere permission, given by the agent, to enter upon such books a transfer of reputed stock, there being no new certificate given, amount to a representation by him that the person making the transfer was the owner of any genuine stock.
    (Before Robertson and White, J. J.)
    Heard, March 11, 1862;
    decided, April 12, 1862.
    This action was brought by John O. Woodruff and Bobert M. Henning, against the New York and New Haven Bailroad Company, Luther 0. Clark, Edward Dodge, Joseph W. Clark, Jay Cooke, Thomas P. Huntington and John D. Maxwell, to recover for fraudulent representations which plaintiffs alleged had been made by the defendants, through their transfer agent, Bobert Schuyler, and involved the question as to the liability of the company on account of the spurious stock issued by Schuyler. The facts relative to this transaction fully appear in the Mechanics’ Bank case, 4 Duer, 430, and 13 N. Y., 599.
    It appeared on the trial, in substance, that on the 23d June, 1854, E. W. Clark, Dodge & Co., as agents of the plaintiffs, doing business under the name of Woodruff & Co., were applied to by Gouverneur Morris for a loan of $20,000 on a certificate for two hundred and seventy shares of the company’s stock, dated that day, (being one of Schuyler’s fraudulent issues,) and that upon the faith of it, and after insisting that the stock should be transferred to them on the books prior to making the" loan, they agreed to make such loan for sixty days, without any knowledge of the true character of the certificate, and believing it to be genuine. The stock was duly transferred into the name of E. W. Clark, Dodge & Co., the same day, by the usual transfer, executed in the office of the company, the transaction being- superintended and consented to by the usual clerk in the transfer office, but no new certificate was taken out. The loan was then made, and Morris not having repaid it, and the company havifig declined to recognize the certificate or to admit the right of the plaintiffs to the stock, this action was brought, claiming that the company was liable in an action on the case, for the fraud of Schuyler in inducing the loan upon the faith of the false and fraudulent certificate and transfer of the two hundred and seventy shares.
    The cause was tried at a Special Term, held by Mr. Justice Woodruff, without a Jury, on the 14th of January, 1860, and a decision was rendered in favor of the defendants, dismissing the complaint, with costs; the Court holding that the case came within the principles declared by the Court of Appeals in the case of the Mechanics’ Bank against the same defendants, (13 U. Y., [3 Kern.] 599.)
    After judgment had been entered, the plaintiff, Wood-ruff, died, and the action was, by order of Court, continued in the name of Henning, as survivor, and he took the' present appeal from the judgment.
    
      Walter Rutherfurd, for plaintiff, appellant.
    I. The principal is liable, civilly, to third persons for the frauds, &c., of his agent in the course of his business, although the principal did not authorize or know of them. (Story on Agency, 555, § 452, and cases cited; 2 Strange, 653.)
    II. These corporations act wholly by agents. As a necessary correlative to the principle of the exercise of corporate powers by representatives, is the recognition of a corporate responsibility for their acts. For acts done by their agents, either in contractu or delicto, in the course of its business, and other employment, the corporation is responsible. (Yarborough v. The Bank of England, 16 East, 6; Eastern Counties Railway v. Broom, 2 Eng. L. & E;, 406; Philadelphia, Wilmington & Baltimore Railroad, Company v. Quigley, 21 How. [U. S.], 207; National Exchange Co. of Glasgow v. Drew, 2 Macqueen, House of Lords Cases, 103; S. C., 32 Eng. L. & E., 1.)
    III. Where one of two innocent parties must suffer by the misconduct of another, the party who intrusted that other should bear the loss. (Judge Denio, in the case of Farmers’ & Mechanics’ Bank v. Butchers’ & Drovers’ Bank, 4 Kern., 624.)
    IV. Where a false representation is made knowingly, to which another gives credit, and damage is suffered, he has a remedy by action against the person who has made the representation. (Zabriskie v. Smith, 3 Kern., 323; Mechanics’ Bank of Brooklyn v. Townsend, 17 How. Pr., 569; Cross v. Sackett, 6 Abb. Pr., 247; National Exchange Company v. Drew, 32 Eng. L. & E., 4; Gerhard v. Bates, 20 Id., 130; Denton v. Great Northern Railway, 34 Id., 154.)
    V. Schuyler was the president and director of the defendants, and their sole and only transfer agent in New York. He alone, in New York, could make representations on behalf of the company, as to who, by the books of the company, were the stockholders; in no other way could third persons possibly ascertain that fact. It was directly within the scope of his authority, and within the defined limits of his duty. The company held him out as competent to be trusted, and thereby, in effect, warranted his fidelity and good conduct in all matters within the scope of the agency. (Farmers’ & Mechanics’ Bank v. Butchers’ & Drovers’ Bank, 4 Kern., 624; 16 N. Y. R., 126; Stoney v. American Life Insurance Company, 11 Paige, 635; Hern v. Nichols, 1 Salk., 289; North River Bank v. Aymar, 3 Hill, 262; Thompson v. Bell, 26 Eng. L. & Eq., 536; Northrop v. Curtis, 5 Conn. R., 246; Ang. & A. on Corp., 588; Bulkley v. Derby Fishing Co., 2 Conn. R., 252; Oxford Turnpike Co. v. Bunnel, 6 Id., 552; Bank of Bengal v. East India Co., 2 Knapp P. C., 245; Foster v. Essex Bank, 17 Mass. R., 479.)
    
      VI. When the purchaser of an instrument not negotiable wishes to exercise extreme caution, he will inquire of the maker, and procure his admission of its validity and his assent to the transfer, and having done so, an estoppel will arise in his favor, not because he has invested his money in the purchase, but because he purchased after procuring such admission or consent, and upon the faith thereof. In this case, the plaintiffs did procure from the defendant an admission of the validity of their shares, in the proper and authorized manner, from the agent intrusted by them with the transfer books of the company, who alone was authorized to make this admission entirely within the scope of his authority, and an assent from this agent to a transfer of the shares to them, and parted with their money on the faith of such admission and transfer.
    VII. The act of Schuyler, in this .case, was authorized by the by-laws, and the company is bound by the act, as to all persons dealing in good faith with the transfer agent.
    1. It is incumbent on a corporation not to permit a transfer of stock until they are satisfied of a party’s authority to transfer. (Angel & Ames on Corp., 588; Pollock v. National Bank, 3 Seld., 274.)
    2. The power to regulate the transfer of stock, was given for the security and benefit of the company.
    3. The object of the Legislature in authorizing the company to make by-laws for the transfer of stock, was to give facility to its transfer. This facility of transfer is one of the advantages of this species of property; and would be entirely destroyed, if a purchaser should, be required to look to the regularity of all previous transfers. (Davis v. Bank of England, 2 Bing., 393.)
    4. The transferring the shares of the capital stock on the books of the company, is a matter of ordinary occurrence, and in the absence of any proof to the contrary, it may be fairly presumed that the principal officer, or clerk in attendance at the transfer office of the company, during the usual hours of business, is authorized to permit such a transfer. The charter of the company in the present case having authorized the owners of stock to sell and transfer it on the books of the corporation, it is the duty of the directors to see that some proper officer of the company is usually in attendance, duly authorized to allow such transfers, when proper to be made, and it is no excuse to say, that they have neglected that duty. (Com. Bank of Buffalo v. Kortright, 22 Wend., 351.)
    5. It is no excuse for the company, that the act of the agent was willfully or fraudulently done without the knowledge or consent of the company.
    6. A corporation must act by agents. The authorized act of those agents within the scope of their authority is the act of the corporation. (Bank of United States v. Davis, 2 Hill, 451; Corn Exchange Bank v. Cumberland Coal Co., 1 Bosw., 434; Oldfield v. New York & Harlem R. R. Co., 14 N. Y. R., 310; Weed v. Panama R. R., 17 N. Y. R., 362; Blackstock v. New York & Erie R. Co., 20 N. Y. R., 48; National Exchange Co. v. Drew, 32 Eng. Law and Eq. R., 9.)
    VIII. The fact that the defendants are liable in this, action has been judicially determined by a Cotfrt'of competent jurisdiction upon this identical stock and transfer, upon the same facts, since the trial of this action. " A -
    
      William Curtis Noyes, for defendants, respondents.
    I. The certificate given by Schuyler to Morris, dated June 23d, 1854, for 270 shares, was void. (Mechanics’ Bank v. N. Y. & N. H. R. R. Co., 3 Kern., 599; N. Y. & N. H. R. R. Co. v. Schuyler, 17 N. Y. R., 592.) These decisions have been followed by the United States Circuit Court, (Nelson J.) in Illius v. The same defendants.
    
    II. There was no proof, nor did the Judge find, that any representation whatever was made by the company, or by its transfer agent, or any other of its officers, that Morris was, at the time, the owner or proprietor of the shares he assumed to transfer. Huntington, the, clerk, was simply permitted to execute a transfer in the office of the company under the power given by Morris.
    
      III. Heither Schuyler, nor any clerk representing him had authority to make any representation binding upon the company in respect of stock or a certificate of stock, beyond the legal capital authorized by the charter of the company. As transfer.agent, Schuyler had no other power than to make a certificate for lawful shares of the company, after an owner of them had duly transferred them to the person to whom the certificate was made; the making of such transfer being a condition precedent to the performance of any act by Schuyler.
    IV. Ho estoppel against the company from the issuing of the certificate by Schuyler, or from the acquiescence of his clerk, in permitting a void transfer to be executed in his presence in the office of the company. Heither of them had any authority to do any act creating an estoppel in reference to the stock or certificates. (Fairtitle v. Gilbert, 2 Durnf. & East, 171; Day v. Green, 4 Cushing, 433; Howard v. Hudson, 2 Q. B., 1; Carpenter v. Stilwell, 1 Kern., 73, 74; Freeman v. Cook, 2 Exch. R., 654; Frost v. Saratoga Mut. Ins. Co., 5 Denio, 157.)
   By the Court—Robertson, J.

The Referee has not found in this case that any certificate of stock was issued to Mr. Morris before the advance by the plaintiff’s agents, and the evidence is clear that such advance was made immediately after, and solely on the faith of, the transfer on the books of the company, by Mr. Morris, to the plaintiff’s agents. The only representation, therefore, by the company or any of its agents, of the holding of any stock by Mr. Morris, was that, if any, arising from the. permission by the transfer clerk to him to transfer reputed stock, on a transfer book kept in the company’s office. Ho subsequent recognition of that, by the issue of a new certificate, operated to deceive the plaintiff’s agents before the advance of the money.

The® case is, therefore, distinguishable from the case of the Mechanics’ Bank against the present defendants, (3 Kern., 599,) solely by the fact that the transfer clerk of the latter permitted an entry, to be made in a transfer book kept in their office, of as much stock as was contained in the spurious certificate. It is true that case may not have gone the length of deciding that the company could not have authorized its officers and agents to bind it by representations as to the ownership of its stock by persons who, in fact, did not hold any, and thus become liable to those injured by reliance on such representations for damages sustained by them. But I understand the Court to have held, that the transfer agent, (Schuyler,) was not so authorized in fact, and that the company did not give him the appearance of having such authority, or hold him out to the world as having it, by placing him in the position of trust and confidence they did. The language of the prevailing opinion is: “ The power of the agent to charge “ Ms principals, by doing a wrong, must be traced dis- “ tinctly to Ms authority, and it cannot be referred to an “ increased facility for imposing on the credulity of others, derived incidentally from his appointment to a situation “of trust” This, of course, is entirely independent of the question whether the false statement was culpable or innocent. *'

The question of fact, therefore, arises in this case, whether the company, in fact, gave any power to the transfer agent or his clerk who had charge of the transfer book, to represent to any one, that another person owned shares of stock in the company. If not, the questions of law arise, whether the possession of the transfer books and ^authority to allow them to be used, constituted the indiefk of an authority so to represent, and whether per-mission to Mr. Morris to enter a transfer on such books, and Ms subsequent entry, constituted such a representa-, tion. There was no evidence of any direct authority to make such representation. In the case already referred to, it was held that even the authority of the agent, who signed the certificates of stock, to do so, being limited by the necessity of actual ownership of such stock, by the person whom he therein certified to.be the holder,, such certificates were not sufficient to bind the company as a representation that such person owned it 5 and that all assumption that the agent appeared from his position to have such authority, was unwarranted. The same reasoning must apply to the possession of the transfer books; and an authority of the transfer agent to permit a transfer, accompanied with such possession, does not amount to such indicia of authority to. certify to ownership of stock, as to fix a liability upon the defendants. Of course, if it does not, the mere permission to enter the transfer would not be equivalent to a representation that Mr. Morris owned the stock in question. Possibly the effect might have been different, had a new certificate been issued after the transfer on the faith of which the advance was made. But-that is not this case.

The judgment, therefore, must be affirmed, with costs.  