Hambleton v. Central Ohio Railroad

Bartol, C. J., delivered the opinion of the Court. It being conceded that the stock belonging to Denson, had been transferred without his knowledge or consent, by means of the forgery of his name upon the powers of attorney, it is clear that his title was not divested thereby, and therefore the decree of the Circuit Court was right in so far as it required the Railroad Co. to issue and deliver to the complainant new certificates of stock Of the same dates and amounts as those held by Denson, and to pay over the dividends which had accrued thereon. Hildyard vs. South Sea Co., et al., 2 Peere Wms., 76 ; Brown, Lancaster & Co. vs. Howard F. Ins. Co., 42 Md., 384.

From that part of the decree no appeal has been taken. The only question we have to decide is whether the loss resulting from the forgery, should be borne by the appellants or by the Railroad Company. Each of these parties .are alike innocent, the former loaned their money upon the pledge of the stock, in good faith, believing the signature of Denson to be genuine ; and the latter, in like good faith, upon receiving the original certificates from the appellants, cancelled them and issued new ones in the name of the appellants. The question appears to be identical with that which arose between Brown, Lancaster & Co. and The Howard Fire Insurance Co. reported in 42 Md., 384 .

In that case certain stock of the Fire Ins. Co. belonging to Denson, had been pledged, by one Magruder, to Brown, Lancaster & Co. as collateral security for a loan, by means of powers of attorney purporting to be executed ⁵⁵⁹ by Denson, but upon which his name had been forged, by the same person who committed the forgeries in the present case. « The original certificates being returned by Brown, Lancaster & Co. to the Ins. Co. were cancelled, and new ones in lieu thereof were issued to Brown, Lancaster & Co. The forgery being afterwards discovered, it was decreed that Denson’s assignee was entitled to have the stock restored to him, and as between Brown, Lancaster & Co. and the Ins. Co. it was held, that the former, having received the transfer of the stock, upon forged powers of attorney, were not entitled to hold the same as against the company not having given any consideration therefor, and the transfer having been made, through a mutual mistake of facts.

And it was further held that the loss must be borne by Brown, Lancaster & Co. the same being the result of their own error, in advancing their money upon forged and fraudulent powers of attorney, and not having been caused by any negligence on the part of the company. That decision, unless it is to be overruled, and we have seen no reason to doubt its correctness, is conclusive of the present case. We discover nothing in the facts and circumstances of this case, as disclosed by the record, which distinguishes it in principle from the,other. In each of them, the question arises between the original parties, — ■ between the corporation and the parties who took the certificates in the first instance, upon the faith of the forged powers of attorney.

The rights of third persons are not involved, claiming as bona fide purchasers from the appellants upon the faith of the stock having been subsequently transferred to them, and being registered in the names of the company. “That,” as was said in Brown, Lancaster & Go’s case, “would present a different question.” The sales made by the appellants to Whitridge and Cohen, do not affect the rights of the parties, because it appears by the proof in the cause, that they were made after the appellants ⁵⁶⁰ were notified of the forgery. This notice was given on the 28th day of August 1873, and the sales were made on the 29th and 30th of the same month. There is some conflict in the testimony on this subject, Mr. John A. Hambleton, states that he had no knowledge or notice of the forgery at the time of the sales; but he must be in error in this ; for it is conclusively proved by the testimony of William A. Boyd that he was told of the, forgery on the 28th day of August, and this testimony is confirmed by that of David Fowler, and Isaac M. Denson ; and by the fact that the telegram to Wing, the secretary of the Bailroad Co. which was sent to him after the interview of these witnesses with Mr. Hambleton, was received on the 29th at 8^ A. M. It is evident from the account of the interview, given by the witnesses that Mr. Hambleton, paid but little attention to what they said to him, considering that they had no right to intrude upon him with reference to the transaction, and in this way we may account for his omission to notice their statements, and his failure to recollect them. That the notice was given on the 28th we think is satisfactorily established by the proof.

The payment of the dividends on the stock, to the appellants