I am unable to agree with my associates in the disposition of the motion for rehearing by appellee the Shear Company.
This court reversed and remanded this cause as between Mrs. Wilson and the Shear Company upon the ground that the trial court erred in rendering judgment for said company without requiring the jury to answer special issue No. 11 and specially requested issue No. 7, thereby holding that the ultimate controlling issue on this phase of the case was whether the Shear Company, at the time it canceled and reissued said stock to C. W. Wilson, had notice or was chargeable with notice, of Mrs. Wilson's rights in said stock. After a further examination of the question, the writer is of the opinion that in this we erred — that the controlling issue is not one of notice, but that it is one of negligence or no negligence under all the facts and circumstances, and also of proximate cause. While, as stated in the original opinion, Mrs. Wilson sought to recover on the ground that the two corporations converted her stock, at the same time, as to the transaction of 1916, she also sufficiently pleaded negligence on the part of the Shear Company as a basis for recovery, as follows:
"(b) The corporation, with knowledge and notice that this defendant was owner of a certificate of 50 shares of the capital stock of the corporation, wrongfully transferred said stock to C. W. Wilson, and failed to use reasonable care and diligence in protecting said shares from unauthorized transfer to C. W. Wilson. * * * This defendant shows that the acts and omissions of the Rotan Grocery Company and its successor, the Shear Company, each and all were the direct and proximate cause of this defendant's loss of her stock," etc.
Appellee the Shear Company, among other things, pleaded a general denial, and also pleaded, in substance, that Mrs. Wilson was negligent, in that she authorized, suffered, permitted, and acquiesced in C. W. Wilson having the possession, control, management, and disposition of said stock indorsed in blank, and thereby clothed him with all the indicia of ownership, and that such negligence was the proximate cause of the loss of said stock, etc. So the pleadings were sufficient to raise the issue of negligence on the part of both the Shear Company and also on the part of Mrs. Wilson, and were also sufficient to raise the issue as to whose negligence was the proximate cause of the loss.
A corporation is, in a sense, a trustee for its stockholders for the purpose of protecting their shares from unauthorized transfers, and, as such trustee, the measure of its duty is to exercise reasonable care and diligence to protect such stock from unlawful transfers, and, if by reason of its negligent failure to perform such duty such stock is lost, it is liable. U.S. Fidelity Guaranty Co. v. Ramey (Tex.Civ.App.)261 S.W. 503; Strange v. H. T. C. R. R. Co., 53 Tex. 162; Seeligson v. Brown, 61 Tex. 119; Spencer v. James (Tex.Civ.App.) 31 S.W. 543; 30 Ann.Cas. 1174, 1175; 53 L.R.A. 684; 6 Fletcher Cyc. Corps. *Page 663 § 3830; 14 C.J. 772, §§ 1174, 1175; St. Romes v. Levee Steam Cotton Press Co., 127 U.S. 614, 8 S. Ct. 1335, 32 L. Ed. 289; Western Union Tel. Co. v. Davenport, 97 U.S. 369, 24 L. Ed. 1047. Again, the rule seems to be well settled that, when the party offering said certificate for cancellation and reissue has some authority with reference to said certificate, the measure of the duty of such corporation in reissuing is ordinary care and diligence under all the circumstances, and a want of such care will render it liable. See note, "Nature of Liability," 30 Ann.Cas. 1174, and cases cited. In this case, it is thought, it is peculiarly proper, appropriate, and right that the basis of the liability of the Shear Company should be negligence, or what one of ordinary care and diligence would have done under the same or similar circumstances — in other words, was the Shear Company guilty of negligence under all the circumstances in canceling and reissuing certificate No. 112 to C. W. Wilson in October, 1916? The record fails to show any suspicion of fraud or collusion on the part of the Shear Company with any one, or that said company sought to reap any benefit whatever by said transaction. Mrs. Wilson and C. W. Wilson were husband and wife, and had been for many years, and so continued until after this suit was filed in 1923, enjoying that trust and confidence in each other that is usual, and should always exist, between husband and wife. C. W. Wilson at this time was a man of good standing. Mrs. Wilson had committed to him the possession and the full control and management of said stock, the collection of dividends, etc. She had clothed him with all the indicia of ownership. His possession of said certificate, indorsed in blank by H. H. Shear, the record owner, evidenced perfect title in him. There was no record anywhere in any form to indicate that Mrs. Wilson had an interest in said certificate, and, if she had any title, her title was purely an equitable one. Said certificate had indorsed upon its face: "Transferable only on the books of the company in person or by attorney upon the surrender of this certificate properly indorsed," which constituted a part of the contract between the company and the holder of said indorsed in blank certificate, and created a legal obligation on the part of the Shear Company, when C. W. Wilson presented same therefor, to cancel and reissue to him. Dooley v. Milling Co., 134 Iowa 468, 109 N.W. 864,13 Ann.Cas. 297, and cases cited. This certificate indorsed in blank was negotiable, and title to same passed from hand to hand by delivery. There is no evidence that either the Rotan Grocery Company or its successor, the Shear Company, acquired any notice of Mrs. Wilson's interest in said certificate after February, 1913. If, by reason of some verbal statement, H. H. Shear did in 1913 acquire notice of Mrs. Wilson's interest in said certificate, as it was indorsed in blank by the record owner, was negotiable, and title passed from hand to hand by delivery, this could not be actual notice to him or the Shear Company of her interest in 1916. As said by our own Supreme Court in Strange v. H. T. C. Railway Co., supra:
"A provision for the record of the transfers of certificates, to be made upon the books of the company, as required by the Act of December 19, 1857 (Pasch. Dig. art. 4909 [now article 1168], was intended for the benefit of the company, so that it might know, by ready reference, who were legal shareholders, * * * and to whom it could safely issue new stock," etc.
The record further discloses that C. W. Wilson was a man of some means, and at the time he presented certificate No. 112 for cancellation and reissue he bought and paid cash for 150 shares in the Shear Company. Mrs. Wilson could have effectually protected her rights in said stock by taking possession of said certificate, or by having it canceled and reissued to her, or by inserting her name in the blank indorsement, but she failed to take any such precaution, and, having clothed her husband with all the indicia of ownership, because, as she said, she had confidence in him, and he having abused her confidence by appropriating her property, it would seem inequitable that the Shear Company under the facts of this case should bear the loss. At any rate, clearly, it is thought, the controlling issues in this case were negligence and proximate cause.
It is thought article 4621, Vernon's Sayles' Statutes, providing for conveyances of stock, the separate property of the wife, has no application to the facts of this case. If Mrs. Wilson had taken possession of said certificate indorsed in blank, and presented it to the corporation, and had it canceled, and a new certificate issued to her, she thus becoming the record owner, then, if she had sold said certificate, and desired to transfer same, she would have to be joined by her husband in the execution of such transfer as provided by statute. But certificate No. 112 had been indorsed in blank by H. H. Shear, the record owner, and was transferable by delivery, and it was no more necessary for Mrs. Wilson and husband to execute a transfer in order to convey title to it than if it had been a promissory note indorsed in blank, and so payable to bearer.
So the liability of the Shear Company should be determined, not by whether or not it was charged with notice of the equitable claim of title in Mrs. Wilson, but by whether or not it was negligent under all the circumstances in canceling and reissuing the stock in question to C. W. Wilson (Geyser-Marian Gold Co. v. Stark, 106 F. 558, 53 L.R.A. 684; 30 Ann.Cas. pp. 1174 and 1175; also cases *Page 664 cited above), and by the further question as to whether or not such negligence, if any, was the proximate cause of the loss or injury (Brown v. Insurance Co., 42 Md. 384, 20 Am.Rep. 90; Smith v. Railway Co.,91 Tenn. 221, 18 S.W. 546; 14 C.J. 772, § 1174); and the burden of proof was upon appellant Mrs. Wilson to show not only that the Shear Company, under all the circumstances, was guilty of negligence in canceling and reissuing said stock to C. W. Wilson, but also to show that such negligence was the proximate cause of the loss or injury. In response to special issue No. 9 requested by the Shear Company, the jury found that Mrs. Wilson was negligent in the exercise of control and possession of said certificate No. 112, and also that such negligence was the proximate cause of the issuance of new certificates in lieu of No. 112 to C. W. Wilson. The issue of negligence on the part of the Shear Company in reissuing said stock to C. W. Wilson was not submitted, and not requested by either side to be submitted. This being true, and there being evidence in the record to authorize such finding, it would be the duty of this court, if such finding were necessary to support the judgment, to presume that the trial court resolved said issue in support of the judgment. However, the jury having found that Mrs. Wilson was negligent in the control of the stock, and that such negligence was the proximate cause of its loss, required the rendition of judgment in favor of the Shear Company in any event, whether it was negligent or not. The controlling issues in this case, it is thought, were: (1) Was the Shear Company guilty of negligence under all the circumstances in issuing said stock to C. W. Wilson, and, if so, was such negligence the proximate cause of the loss? (2) Was Mrs. Wilson guilty of negligence in her control of said certificate, and, if so, was such negligence the proximate cause of the loss? The latter question, having been answered against Mrs. Wilson, required the judgment rendered against her. The matters presented in special issue No. 11 and in specially requested issue No. 7 are not ultimate controlling issues, but are only evidentiary in their nature, proper to be considered by the jury in determining the ultimate controlling issues above referred to. The court did not err in failing to require said special issues to be answered, because they did not present controlling issues, and, in view of the answer of the jury to special issue No. 9, the answers to issue No. 11 and specially requested issue No. 7 would have been unimportant and immaterial.
The motion of appellee the Shear Company ought to be granted, and the assignments here discussed overruled, and the judgment of the trial court as between Mrs. Wilson and the Shear Company, as well as to other parties, ought to be affirmed.