Ehrich v. Guaranty Trust Co.

Headnote

Stocks and stockholders — transfer agents — negligence — stock certificates signed in Hank by officers of corporation and bearing corporate seal stolen by employee of transfer agent, with whom they had been deposited, who forged signatures of transfer agent and registrar ctnd negotiated same — when transfer agent not chargeable with negligence.

Ehrich v. Guaranty Trust Co., 194 App. Div. 658 , affirmed.

Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered February 4, 1921, unanimously affirming a judgment in favor of defendant entered upon a dismissal of the complaint by the court at a Trial Term. The action was for damages alleged to have been suffered by plaintiffs by reason of the fact that ten certificates of 100 shares each of common stock of the Laclede Gas Light Company, accepted by them as collateral, were spurious. Plaintiffs claim that this damage was the result of the negligence of the Standard Trust Company and. of the defendant Guaranty Trust Company of New York. The Standard Trust Company was transfer agent and had custody of the stock certificate books of the Laclede Gas Light Company containing certificates of stock signed by its officers and bearing the corporate seal, at a time when the ten certificates in question were abstracted from one of the books by an employee in the transfer department of the Standard Trust Company, who thereafter forged the signatures of the transfer agent and registrar. The certificates subsequently came into the hands of one George H. Lowden who opened an account with Ehrich & Co. in the name of “ Frank A. Weston,” a fictitious name appearing on the certificates as the name of the owner, and deposited the ten certificates as collateral security. After the theft of the certificates and shortly before the opening of this account with Ehrich & Co., the Standard Trust Company was merged in the Guaranty Trust Company,

the latter company taking over the assets and assuming* the liabilities of the Standard Trust Company and succeeding it as transfer agent of the Laclede Gas Light Company.