
    Warner Van Orden, Resp’t, v. James R. Keene, App’lt.
    
      (New York Superior Court, General Term,
    
    
      Filed June 23, 1887.)
    
    1. Contract—Stock privileges—Meaning of word “bearer” in privilege.
    On January 10, 1884, the defendant signed an instrument of the following tenor: “For value received the hearer may deliver me, or call on me, on one day’s notice, except last day when notice is not required, 500 shares of the Union Pacific Railroad Company at sixty-seven per cent if put, or at eighty-seven per cent if called at any time in six months from date.’’ Held. that the term “ bearer in the contract does not mean simply a person having the paper in his individual custody. It meant a person apparently exercising individual dominion of the paper as owner.
    3. Same—When party bound to know the bearer was a special
    AGENT.
    The defendant stopped business on account of losses about April BO. He published in the newspaper a card that his hooks were very much confused; that he was unaware of the extent of the privileges which he had outstanding, having failed to keep a memorandum of them as they were issued, and that it would be a favor to him to present the same for registry, so that he might know the extent of his liabilities. In accordance with this request the plaintiff handed four contracts like the above to one Ransom to be taken by him to defendant’s office to he registered Ransom handed them,to Heath, and Heath took them and made a settlement as claimed. Under such circumstances, the defendant having asked owners generally to present their contracts only for registry, he was bound to those owners who acted on his request, not to turn a special agency by the owner to a third person into a general transfer of ownership
    3. Same—When not justified in considering bearer a transferee.
    The defendant was not justified in thinking that every one taking a contract to h:s office was a transferee of the chose in action. He was hound to consider that he might only he the representative of the true bearer, for the special purpose of registry.
    Appeal by defendant from judgment entered upon report of referee.
    
      B. F. Dos Passos, for app’lt; Algernon 8. Sullivan, tor resp’t.
   Sedgwick, J.

The action was for damages for the breach, by the defendant, of his contract to pay certain moneys for shares of stock under four agreements in writing made by him. These had similar terms, and it is not necessary to describe more than one of them. On January 10,1884, the defendant signed the instrument of the following tenor: “For value received, the hearer may deliver me, or call on me, on one day’s notice, except last day, when notice is not required, 500 shares of the Union Pacific Railroad Company at sixty-seven per cent if put, or at eighty-seven per cent if called at any time in six months from date.”

Before April 30, 1884, the plaintiff, for value paid by him, became the holder and owner of t-he four agreements, and remained such during the time in controversy.

About the 20th of June, 1884, having elected to deliver, the plaintiff in due time tendered to the defendant, the shares named in the agreements, and demanded the sums of money agreed to be paid according to the terms of those agreements. The defendant refused to receive the shares, or pay the money. The action was brought to recover this money, less the proceeds of the shares which were duly sold. The difference for which the plaintiff recovered judgment, was about the sum of $49,000.

One defense was that before the time (for which the contracts might run at the option of the bearer of them) had ended, and on May second the bearer of the contracts, one Heath, had settled with the defendant the rights of the bearer, that is, had agreed with the defendant to ascertain and liquidate the amount due by the defendant, at the sum of $4,762.50.

If Heath were the owner of the contracts there is no reason to deny that the settlement made discharged the defendant from further liability. The facts would have been that the owner had made his election, the parties had waived a tender or delivery of the stock, had agreed that it should be deemed to have been tendered or delivered, and the defendant had promised to pay a fixed sum, which promise the owner had received in satisfaction of his demand. The owner could not make another election, or another tender.

The referee found, in accordance with the testimony, that Heath was not the owner, but that, in fact, the plaintiff was; nevertheless, as the contract ran to bearer, Heath, although not owner, was, if he were the bearer within the meaning of the contract, competent to deal with the defendant so as to discharge the latter from the contract.

In my judgment, the term “bearer,” in the contract, does not mean simply a person having the paper in his individual custody. It means a person apparently exercising individual dominion of the paper as owner. This would be proved in most cases by showing individual custody of the paper. If it co-temporaneously appeared that he who had the paper, procured it wrongfully from the owner, he would not be the bearer. The “bearer,” in the legal sense is, as against the owner supposed to have become possessed by transfer from the owner. In case there has been no transfer, the party bound by the instrument ought not to suffer from the negligence of the owner or his misfortune, after it has passed from his control to the apparent ownership of another.

But in fact, the settlement referred to, was not made in open market, or under usual circumstances so far as the defendant was concerned. It was made in his office under peculiar circumstances. He had stopped business on account of losses, about April thirtieth. He published in the newspapers a card that his books were very much confused; that he was unaware of the extent of the privileges which he had outstanding, having failed to keep a memorandum of them as they were issued, and that it would be a favor to him to present the same for registry, so that he might know the extent of his liabilities.” In accordance with this request the plaintiff handed the contracts to one Ransom, to be taken by Mm to defendant’s office to be registered. Ransom handed them to Heath, and Heath took took them then, and made the settlement as claimed.

Under such circumstances, the defendant having asked owners generally to present their contracts, only for registry as he called it, he was bound to those owners, who acted on Ms request, not to turn a special agency by the owner to a third person, into a general transfer of ownership. Such a transaction as his card called for, in the ordinary course of business, might competently be done through an employee, without a transfer of ownership to the employee. The defendant was not justified in thinking that every one taking a contract to his office was a transferee of the chose in action. He was bound to consider that he might only be the representative of the true bearer, for the special purpose of registry, The consequence of the card, and the plaintiff’s action upon it, was, that the defendant was held to the risk of the person having in charge the contract, not being the transferee of the contract. For these reasons, my opinion is that the settlement did not bind the plaintiff.

The other defenses have been examined. Their validity depends upon proof of facts, as to which the referee had found upon sufficient evidence against the defendant.

The judgment should be affirmed, with costs.

Freedman and Truax, JJ., concur.  