US SUPREME COURT DECISIONS

1. The statute of Pennsylvania (infra, p. 105 U. S. 220), declaring that the stock of a bank shall be transferable only on the books in such manner as the bylaws shall ordain and that no stockholder shall be authorized to transfer his stock until his debt is discharged or secured to the satisfaction of the directors, does not prohibit the bank from waiving its right, nor the cashier from acting for them, by an authority either express or implied.

2. A. borrowed money of B., to whom he assigned and delivered his certificate of stock as collateral security with authority to sell in case of default in payment. On A.'s default, B. sent the certificate to the cashier of the bank, who made the requisite entries on the stock ledger which he kept, it being the only book, except the book of certificates, showing the transfers of stock, and it was his practice to keep the account of such transfers without consulting in each case the directors. The latter had adopted no bylaw on the subject. On B.'s instructing the cashier to sell the stock, the latter informed him that it would not be necessary to send him a certificate, but to forward a power of attorney, which B. did. Part of the stock was sold, the proceeds were remitted, and the proper entries made on the stock ledger. A. subsequently became insolvent. He was indebted to the bank, and on the directors refusing to approve the transfer, B. brought suit to compel the issue to him of the customary certificate of stock.

Held:

1. That as between A. and B., the title to the stock passed by A.'s delivery of the certificate with the accompanying power of attorney. 2. That the acts of the cashier were binding on the bank, and the transfer by him made on the stock ledger vested in B. a complete and unencumbered title to the stock, and a right to the usual certificate as evidence of his ownership. 3. That had B. acquired merely an equity based on his contract, the legal right of the bank to assert its lien was lost by its own laches, and the enforcement of it would, under the circumstances, operate as a fraud.

The facts are stated in the opinion of the Court. chanrobles.com-redchanrobles.com-red

Page 105 U. S. 218