
    Given’s Appeal. [Davis, Admrx. v. American Bank.]
    The "owner of certain certificates of stock endorsed upon them blank .assignments and powers of attorney. He subsequently died, having bequeathed the stock to his wife. After the death of the decedent, his son, without his mother’s consent or knowledge, removed the certificates from a private desk, the key of which had not been entrusted to him. He pledged the stock to a bank as ■collateral for a loan. The president of the bank had notice of the death of the original otvnei‘, but made no inquiries and accepted the son’s assurance that the stock belonged to him, when they were offered as a pledge or collateral for a loan. On a bill in equity, by the widow against the bank, to recover the stock: Reid, that the facts were sufficient to put the bank upon inquiry, and the failure to inquire operated as a legal fraud ; and that complainant could recover.
    Oct. 26, 1888.
    Appeal, No. 141, Oct. T. 1888, from a decree ■of O. P. No. 1, Allegheny Co., dismissing exceptions to a master’s report on a bill hi equity by Winifred Davis, Administratrix c. t. a. ■of Wm. T. Davis, deceased, against T. II. Given, Receiver of the American Bank, at Dec. T. 1886, No. 375.
    The bill averred that certain certificates of stock, endorsed with blank assignments and powers of attorney, had been fraudulently procured, after the death of the owner, Wm. T. Davis, by his son, Richard B. Davis, and pledged to the bank as collateral for a loan; that the bank at that time knew of the death of Wm. T. Davis and that Richard B. Davis had no authority to pledge the ■certificates; and prayed, 1, an injunction to restrain the bank from ■disposing of the certificates; 2, a decree ordering the bank to deliver them to plaintiff; and, 3, general relief. The answer denied ■substantially all the facts alleged in the bill except the pledge of the .stock. An issue was joined by replication, and Wnj. M. Watson, Esq., was appointed master, who, after reviewing the pleadings, reported as follows:
    “ In the opinion of the master this case presents but one question upon the merits, viz.: In accepting from Richard B. Davis, on March 8, 1886, the two certificates of stock as collateral security for the money then advanced him by the defendant bank, did the bank act in good faith 1 In other words, is the defendant bank in ■& position to set up and successfully maintain the equitable defense of purchase for value without notice ? As it is fully admitted that the bank did advance value at the time of accepting the two ■certificates, on March 8, 1886, this leaves for the master but the one question to determine, namely, the question of good faith on the Sart of the defendant bank in accepting the two certificates from fichard B. Davis on that day.
    “ The general principle will not be denied, that, when a valuable instrument, such as a certificate of stock, comes into the hand of a third party, and the holder is brought into a court of equity by the original owner or his legal representative filing a bill against him, alleging a state of facts, which, if true, would fasten on him fraud, actual or legal, in acquiring possession of the certificate, the holder, in order successfully to resist such a claim, must prove satisfactorily to the court that he acquired possession of such certificate in good faith, for value and without notice of the claim adverse to his own. He must show that all these three elements, viz: good faith, value and absence of notice, exist in his purchase. Pomeroy’s Eq. Jur., § 745 ; Bispham, § 275. Eor example, if he prove merely that he gave full and adequate value, he may yet have been guilty of some bad faith in the transaction, or he may have had notice, at or before the time of the purchase, that the original owner, or legal representative, had a claim upon the stock and its certificate prior to his own, which notice he disregarded; in either of which events, he could not be regarded in equity as a bona fide purchaser. Pomeroy, § 762; Bispham, § 262. ‘In most instances the want of good faith consists in the completion-of the purchase after the party has been charged with notice, for such conduct is regarded by equity as constructively fraudulent;’ and, though the requisite of good faith extends much further and into the domain of ‘ inequitable concealments, etc.,’ yet it is deemed wholly unnecessary, in considering this case, to go into that more remote region.
    “ The good faith requisite in the equitable defense of bona fide purchase for value, etc., has been variously defined by the text-writers, and, though there have been many sub-divisions and classifications of the cases involving the principle, it seems to be universally admitted that, outside of the limits of what may be termed prescribed notification, almost every case must be judged of, in this respect, by its own circumstances. And especially is this apparent in that large class of cases in which the lack of good faith is the product of notice; in that class, what would be held to be notice in a given case might not be held notice in another case, and vice versa; and, further, if the presence of notice is held, then arises the question — was it such notice as imposed the duty of inquiry % And, even further, if it did impose the duty of inquiry, was the inquiry duly made ? Pomeroy, § 607. As the legal conception of the term ‘knowledge’ as a fact is the same as the common acceptation of its meaning, it seems more important to define what is meant by the term ‘ notice.’ The most comprehensive and satisfactory definition of notice yet given seems to be that laid down by Pomeroy at § 594, Pomeroy’s Eq. Jur., where the author states that ‘ notice may be correctly defined as the information concerning a fact, actually communicated to a party by an authorized person, or actually derived by him from a proper source, or else presumed by law to have been acquired by him, which information is regarded as equivalent in its legal effect to full knowdedge of the fact, and to which the law attributes the same consequence as would be imputed to knowledge.’ This definition is clear and full, and, it is believed, renders it unnecessary to give those of other writers. ‘Notice’ is either actual or constructive, according to the circumstances, but, when the presence of either is affirmatively established, equity imposes upon the purchaser the same consequences as rightly flow from positive knowledge of the adverse claim. Pomeroy, § 603; Kerr on Fraud and-Mistake, 235. For, whether it be actual or constructive, notice is-the legal substitute for, and equivalent to, knowledge, and, when the-former is declared to exist, the purchaser is held to have had full'l knowledge of the prior adverse claim. This conclusion or principle? is, indeed, purely artificial, but having been adopted from considerations of policy and expediency, its constant application in adjusting and adjudicating upon the daily transactions of life, has proven it.to be most wise, just and salutary. It is the efficient agent of the right, serving in the dual role of being at once a warning to the careless and dishonest, and a protection to the innocent.
    “ In considering a case involving the equitable defense of purchase for value, without notice, etc., the element of value being affirmatively established, it is important, in determining the presence of notice, to decide definitely if the facts tending to establish notice are such as impose the duty of inquiry. Pomeroy, § 591. As a preface to this investigation, it may be stated that ‘ notice is actual when the purchaser is aware of the adverse claim or title, or has such information as would lead to knowledge.’ Am. note in 2d L. C. Eq. p. 144, 4th Am. ed.; Bispham, § 268. Under the latter branch of this definition, the ‘ information ’ spoken of as being such ‘ as would lead to knowledge ’ is ‘ information ’ which is sufficient to put an ordinarily prudent man upon inquiry. Pomeroy, § 598. Or, stated differently, it is such information of a fact, which, either from its nature or source, suggests to the mind of a prudent man that he should first follow up, by due inquiry, the matter or thing which he has learned concerning the subject-matter of the proposed transaction. So that, if the information be held sufficient to impose the duty of inquiry, and that duty be disregarded, the inference of notice becomes absolute ; or, in other words, there is an absolute inference of fact that the purchaser acquired the property or thing knowing of the prior claim to it, thus destroying his good faith. If, however, the duty of inquiry be not imposed, or if, being imposed, is duly prosecuted, the purchaser, if acting in good faith throughout, and giving value, will receive the protection afforded in equity to bona fide purchasers for value, etc. But the vast number of cases in which the doctrine of ‘ notice ’ is invoked shows that the sufficiency of the information in imposing the duty of inquiry must be arrived at and determined not by any known rule, for that would be impracticable, but from the accumulated and common experience of mankind. Pomeroy, § 897, and cases cited. Many decisions have helped as guides to explain and throw light upon the .question of sufficiency of information, according to the varying circumstances, but still each case must be decided, in this respect, by its peculiar circumstances. And, in passing, it may be remarked that this method seems eminently proper in deliberating upon a doctrine which frequently takes property from its possessor and declares him guilty of negligence or fraud, though he may have honestly believed his purchase was wholly free from taint.
    “ To the foregoing cursory view of the doctrine of notice, it should be added explicitly, that, if the information imposed the duty of inquiry, and that duty be neglected, or only partially performed, and the purchase be thus completed, equity imputes to the purchaser a full knowledge of the prior claim, and declares him guilty <of bad faith toward the prior claimant, for the reason that it is against conscience and good faith for one knowing of a prior claim to the subject-matter of a proposed transaction to go on and acquire title to it. Pomeroy, §§ 753 and 740, and cases cited in notes. In acquiring possession of the two certificates in the present case, did the American Bank exercise good faith ? The answer and testimony of the respondent and the theory of its counsel proceed upon the affirmative of this question, but, before passing upon it, it will ibe proper for the master to state his findings of facts.
    “At the outset of this branch of the report it will be well to ¡state certain facts admitted by counsel for each side, or by implication, as not denied by the answer. It is admitted, then, that Mrs. Davis, the plaintiff, is the duly appointed administratrix c. t. a. of William T. Davis, deceased, the probate of the last will and testament of said decedent is not disputed, and the answer admits by implication that the defendant bank is a corporation as alleged in the bill.
    “ It is admitted that the thirty shares of the capital stock of the Ohio Iron Oo. still stand on the books of that Oo., in the name of William T. Davis, and the master finds that William T. Davis owned said stock in the year 1883, prior to and at the time of the first loan by the American Bank to Richard B. Davis, which was in October, 1883.
    “ It is admitted that, on October 13, 1886, a formal demand by the. plaintiff, as administratrix of her husband, was made on the American Bank for the return of the certificates to her, which ■demand was and still is refused.
    “ The master finds that William T. Davis was the lawful owner •of said thirty shares of stock continuously down to the time of his death, in February, 1885, which ownershipwas temporarily qualified by his loan of the certificates to his son Richard in October, 1883, for the purpose of obtaining from the American Bank a loan of money on them as collateral security. That, in October, 1883, the American Bank loaned to Richard B. Davis on these two certificates $1,700, the note for which, after frequent renewals thereof, was finally paid in January, 1885, and that the bank was-informed by Richard B. Davis, at the time of making said loan in 1883, that the stock belonged to William T. Davis, the father, who loaned the certificates to him to raise money on them, and for which purpose the father had signed in blank, on the back of said certificates, assignments and powers of attorney to transfer.
    “ That, at the time of the final payment of the $1,700, in January, 1885, Richard B. Davis lifted the certificates and returned them to his father, who kept them continuously thereafter in his possession down to the time of his death.
    “That immediately on the death of William T. Davis, in February, 1885, the lawful title to said thirty shares of stock and the possession of said two certificates were at once vested in Mrs. Winifred Davis, the widow and sole legatee and devisee, under her husband’s said will.
    “ That, on March 8,1886, Richard B. Davis, having wrongfully obtained possession of the two certificates, at a time and in a way now unknown, but without the knowledge or consent of the plaintiff, pledged them to the American Bank for a loan of $2,500 on that day advanced by the bank to him, and at the time of such pledging, the bank was informed by him that he was then the owner of the stock, it' having been given to him, as he alleged, by his father.
    “ That on these representations alone, which were wholly false, the bank loaned Richard the money, knowing the fact of his father’s death, and the bank made no inquiry whatever, outside, as to how, if in any way, the title to the stock was affected by the father’s death.
    “ That Richard Davis, the son, lived in the house with his father and mother, and with his mother until his death in September, 1886, but that Mrs. Winifred Davis did not; at any time, permit Richard to have the possession or use of said certificates after William T. Davis’s death, for any purpose whatever; and though she knew of the endorsement in blank on said certificates, it seems clear, and the master so decides, that she was not careless about her custody of said certificates. On the contrary, the evidence shows that the certificates were always kept locked in a private desk in the bed-room of Mrs. Steece, Mrs. Davis’s daughter; that Mrs. Davis kept the key of this desk and that Richard was not allowed to open the place where the certificates were kept, nor did he use that desk for his own papers. That about October 1, 1886, which was about a week or ten days after the death of her son Richard, the plaintiff first learned of the certificates having been pledged to the American Bank.
    “ That the plaintiff had continuous possession of her husband’s will, dated January 31, 1885, from the execution of it until it was probated in October, 18S6.
    “ That Mr. William Floyd is President of the American Bank and has been so for about four years.
    “Applying the law to these admissions and findings of fact, and assuming the not disputed point that notice to the President of the bank was notice to the bank, the master is of the opinion that when Mr. William Floyd, the President of the American Bank, accepted the two certificates in suit from Richard B. Davis on the 8th day of March, 1886, as collateral security for the $2,500 then advanced to Richard upon said certificates and his own note, Mr. Floyd knew (in some way — how, it does not appear) that Win. T. Davis, the man in whose name the two certificates were issued and in whose name the 30 shares of stock then stood upon the books of the Ohio Iron Co., at Zanesville, Ohio, was dead; that the only evidence of Richard B. Davis’s title to said certificates or right to use them known by Mr. Floyd, was' Davis’s naked possession of them, his ‘ unqualified assurance ’ that the stock was then his, and the blank assignments and powers of attorney endorsed; and upon this state of facts, the master decides as follows :
    “1st. That Mr. Floyd’s knowledge of William T. Davis’s death was the knowledge of the bank and was such notice as would put an ordinarily prudent man upon inquiry and that therefore it imposed upon the bank the duty of inquiry concerning William T. Davis’s disposition, if any, of said stock and the status of said certificates.
    “ 2d. That due inquiry by the bank would have led to a discovery of the facts that, in and by his last will and testament, William T. Davis bequeathed and devised all his estate to his widow, the plaintiff, and that the said 30 shares of stock formed a part of decedent’s estate.
    “ 3d. That no inquiry whatever, was- made by the bank concerning the stock or certificates, and the inference of fact follows absolutely that the bank knew the true state of affairs concerning the stock and its representative certificates.
    “ 4th. That, in accepting the two certificates with such knowledge of Mrs. Davis’s prior claim to the stock, the bank acted in bad faith, and cannot now claim the protection afforded by equity to bona fide purchasers. Kerr on Fraud and Mistake, p. 231.
    “ 5th. That no valid title to, or interest in, said stock, or in or to either of the two certificates vested in Richard B. Davis after the ■return of the certificates by him to his father in January, 1885, on the payment of the loan of October, 1883, because the testimony of Mrs. Davis and of Mrs. Steece, the daughter, Thomas W. Davis, the son, regarding Mrs. Davis’s custody and continuous possession of the certificates and of William T. Davis, her husband, having left them with her to keep, wholly precludes all intendments in favor of the theory that William T. Davis had delivered or made a gift of them to Richard.
    “ 6th. It therefore follows, that Richard Davis had not the interest in said stock requisite to a survival of the powers of attorney, and, therefore, the master decides that the powers of attorney were revoked by the father’s death in February, 1885. Frederick’s Appeal, 52 Pa. 338; ■ Lightner’s Appeal, 82 Pa. 301, and cases cited.
    
      “The pivotal point of the whole ease, then, is the bank’s knowledge of William T. Davis’s death, and its neglect to ascertain, as it might have done, by due inquiry, what effect the death had upon the stock in question. It cannot be denied that, in this case, even slight inquiry would have disclosed to the bank Mrs. Davis’s claim to the stock and to the certificates, and if the bank chose to rely wholly upon Richard B. Davis’s statements and the blank assignments and powers of attorney, as it certainly did, it was a plain case of misplaced confidence, and it must now be held guilty of legal fraud. It may be proper to remark here, that Mr. Wm. Floyd’s reputation and high standing in the business community forbids the imputation to him of intentional wrong in this matter. Mr. Floyd may have paid but little attention to the matter, and especially as Richard Davis was a daily frequenter of the bank, and was well known there; or it may be that Mr. Floyd honestly thought the bank was acting properly in relying upon Richard Davis’s statements, but, if Mr.. Floyd so thought, it is unfortunate for the bank that its action in this matter was not up to the standard required in .equity of him who seeks shelter under the plea of purchase for value in good faith.
    “ It has been argued on behalf of the defendant that as Richard B. Davis was armed with the certificates and the assignments and powers of attorney endorsed thereon in blank, he had all the external indicia of title, and an apparently unlimited power of disposition, with all the power necessary to perfect title, and when the bank gave value, it became and is a bona fide holder for value, etc., and in support of this point is cited the leading case of McNeil v. The Tenth National Bank, 46 N. Y. 325, and others. But the very obvious distinction between that case and the present one is, that in that case the owner of the stock had voluntarily deposited the certificates, endorsed with an assignment and power of attorney in blank, in the hands of another person for a specific purpose, and the bailee wrongfully assigned the certificates for value to one who had no notice of the prior deposit, and the court rightly decided that the original owner should bear the loss and not the purchaser (though in fact the original owner was equally innocent with the holder), because, by his deposit of the certificate with his bailee, he had voluntarily made it possible for the bailee to commit a fraud with the certificate. But, in the present case, the evidence shows, beyond doubt, that Mrs. Davis never permitted Richard to take the certificates, that she kept them locked up in a private desk and retained the key, and that the certificates were taken thereout and pledged without her knowledge or consent. She did nothing which enabled her son to commit this fraud upon the bank, and she should not be visited with the consequences of the double wrong done by her son. Had she simply given him custody of the certificates, that one act would probably have required the dismissal of this bill under the authority of McNeil v. The Bank, supra; Woods’ Appeal, 92 Pa. 379, and authorities cited in both cases. The distinction above stated is very ably and clearly set forth in Woods’ Appeal, supra, by Trunkey, J., on page 389, et seq. And see, also, the reasoning of the court in Shaw v. The Bank, 37 Leg. Int. 135 (S. C. IJ. S.); Pomeroy, § 710. It is confidently believed that no case can be found, entitled to respect, in which the owner of stock is deprived of it where the representative certificate has been wrongfully taken out of his possession, without his knowledge or consent, and pledged or assigned even to a bona fide purchaser for value.
    “ The master therefore recommends a decree in favor of the plaintiff and against the defendant, ordering and directing the defendant to deliver to the plaintiff the two certificates in suit, and that the defendant pay the costs of these proceedings.”
    The defendant filed exceptions, alleging, inter alia, that the master erred, 6, in not finding that, under all the evidence, the plaintiff’s bill should be dismissed; 7, in finding that the bank had such knowledge as would bring notice of plaintiff’s title.
    The court overruled the exceptions, filing the following opinion:
    “We think the facts in evidence were such as put the defendant upon inquiry, and, under the circumstances of this case, were equivalent to notice that Bichard B. Davis, Avho delivered and pledged the certificates of stock to defendant, was not the owner thereof as he claimed to be at the time of the delivery and transfer, and that the master was right in so finding.”
    The following decree was entered:
    “And now, to wit, June 22d. 1888, this case came on to be heard upon the testimony, master’s report and exceptions thereto, and was argued by counsel, and thereupon, after due consideration, it is ordered, adjudged and decreed that the said exceptions be dismissed, and that the report of the master be approved and confirmed ; and it is further ordered, adjudged and decreed that said defendant do forthwith deliver up to the said complainant the certificates of stock described in the said bill of complaint, to wit: [describing them], and it is further ordered that said defendant pay the costs of this proceeding, including the master’s fee heretofore taxed.”
    
      The assignments of error specified the action of the court, 1, 2, in overruling the 6th and 7th exceptions, quoting them; and, 3, in entering the decree, quoting it.
    
      A. M. Imbrie, of Marshalls & Imbrie, for appellant.
    B. B. Davis possessed all the external indicia of title to the stock, and an apparent unlimited power of disposition over it. Burton’s Ap., 93 Pa. 214; West Branch Canal Co.’s Ap., 81* Pa. 19; McNeil v. Bank, 46 N. Y. 325; 1 Morawetz on Corp., § 190.
    Mrs. Davis made no inquiry. She had confidence in her son. She trusted him to keep the certificates safely for her, knowing the power was signed. He perpetrated a gross fraud upon her and upon the bank. On what principle of equity can she be allowed to throw off from herself on the appellant the loss which has resulted from the dishonesty of her own agent ? Pa. R. R. Co.’s Ap., 86 Pa. 84 Linnard’s Ap., 21 W. N. C. 42.
    The blanks on a certificate may be filled np and transfer made after the death of the transferror. 1 Morawetz on Corp., § 192; Pa. R. R. Co.’s Ap., supra; Cooke on Stocks, § 315, p. 388.
    Certificates of stock indorsed in blank are intended to pass from hand to hand, and the possessor of a certificate can confer a valid title although no title in himself. 1 Morawetz, § 195; Bank v. Kurtz, 99 Pa. 349; Seybert v. Pittsburgh, 1 Wall. 272; Wood’s Ap., 92; Pa. 390.
    
      John S. Ferguson, for appellee.
    On the facts of the case, it seems clear that the bank took no title to the stock as against the-lawful owner. We rely upon the facts and the argument of the master.
    The blank powers of attorney were revoked by the death of W. T. Davis. Pa. R. R. Co.’s Ap., 86 Pa. 84; Frederick’s Ap., 52 Pa. 338; Lightner’s Ap., 82 Pa. 301.
    It must be presumed that if the bank had made proper inquiry the truth would have been elicited. P. R. R. Co.’s Ap., 84 Pa. 83.
    Nov. 5, 1888.
   Per Curiam,

We concur with the court below not only in its decree, but also in its approval of the master’s report.

Decree affirmed at costs of appellant.  