Brown, Lancaster & Co. v. Howard Fire Insurance

Stewart, J., delivered the opinion of the Court. Brown, Lancaster & Co. loaned to one McGruder, as agent of the firm of Denson & Quincy, one thousand dollars, to he returned in thirty days, and took McGruder’s note therefor, and as collateral security for its payment, two hundred shares of the capital stock of the Howard Eire Insurance Company, belonging to Denson, whose name endorsed on the certificate thereof, was supposed by them to be genuine. Soon thereafter, they sent the certificate to the Insurance Co., and requested the stock to he transferred to them, and accordingly the certificates were cancelled, and others in lieu thereof were issued to them. In about a month afterwards Denson & Quincy failed, and notice was given to the Insurance Company and to Brown, Lancaster & Co. that Denson’s name on the certificates was a forgery.

Brown, Lancaster & Co. sold the certificates, and requested the Company to issue new ones to the purchasers, which it declined. ³⁹⁰ Denson’s assignee in' bankruptcy filed the bill against the Insurance Company and Brown, Lancaster & Co., to compel the latter to deliver up the certificates issued to them, and that new ones should be issued by the Companjr to the complainant. Brown, Lancaster & Co. filed a cross-bill against their co-defendants. The Circuit Court decreed in favor of the complainant, and we think the decree must be affirmed. It was conceded, and there can be no doubt of the right of Denson’s assignee to have recovery of his certificates, or new certificates of his stock issued by the Insurance Company, in the place of those cancelled.

Denson’s title to the stock could not be affected by the forgery practiced upon him, his right to the same was not divested by the fraud. The only question about which there can be any dispute, is, whether the Insurance Company or Brown, Lancaster & Co. shall sustain the loss. They are both innocent or unfortunate parties, and one or the other must lose; the latter having first advanced their money, without knowledge of the frauds ; and the former having cancelled the old certificates of stock and issued a.new one to Brown, Lancaster & Co., supposing Denson’s signature to be genuine. Brown, Lancaster & Co., for the fraud perpetrated upon them, still have their remedy against Quincy, or McGrruder, who gave his note and received their check.

The Insurance Company have their remedy against Brown, Lancaster & Co., who have upon the forged name, and without consideration, received the certificate belonging to Denson, to whom, or his assignee, they are responsible. Brown, Lancaster & Co. have no right to withhold the certificates they obtained from the Insurance Company, unless they could prove that they had, in some way, lost through its negligence. If, ■ by the issue of certificates in ³⁹¹ their name, Brown, Lancaster & Co. lost the opportunity of making the money