The action was brought in equity, the relief asked being that the defendants be required to deliver to the plaintiff bonds and coupons of like kind and value as those described in the complaint, or. that the defendants be required to account to plaintiff for the value of said bonds and coupons, and for other and further relief. The defendant the Chesapeake and Ohio Railway Company answered, denying liability, demanding that the complaint be dismissed and asking that the ultimate rights of the defendant railway company and the defendant Gibson as between themselves be determined *494and. that the Chesapeake andt ©hio, Railway Company have such affirmative relief against said Gibson as it maybe’entitlhdhb receive,, and'that it may have such other or further or different' relief’ ih the premises as such, defendant may be. entitled, to,. This, ansaraen was s.env,e:d upomthe. defandantiGnbsom. Gabsomanswereffiandidemanded judgmentthatitlie-oomplaint be dismissedi. ©ht these3 pleadings-'the action was1 brought1 on-for trial at Special Térnr.
Rb objection to- the form, of" the action was-1 at" any time, taken, by either o£ these. defendants,, nor. did. either off'them.insist that the action was not properly triable as one in equity or that: either- party was entitled to a trial by a. jury. The questions presented by the pleadings so far as the record, shows were-submitted1 to the , trial court and a determination as to the ultimate, liability off the defendant's to the plaintiff and of the defendant Gibson, to the. railway company was asked'.for. At. the end" of the plaintiff’s case and again at" the end of"the3 whole, case, the defendants severally moved to dismiss, the complaint" upon the ground"that neither of."the defend; ants was liable to the plaintiff; and the defendant-Gibson also, moved to dismiss the cause of action set out in. the answer of the railway company upon the ground"that Be was not liable' to it. The railway company asked" for judgment, against Gibson. These.motions were taken under consideration By the court, the parties submitting the questions as to their liability 'without objecting, to the form, of action. Upon appeal it is too late for dither of the parties to the action-.to.-insist t-ha-ti the. qjroabiom of tibe habilityefc thetdefendanthito the plaintiff, or of the defendant Gibson to the Chesapeake and! ©hio Railway Company, was a legal liability which could only be enforced in an action at law. By't'his' submission, the court was justified" in determining the question between the parties to the action,, irrespeo Uve off the.form,i-mwhinh.it. was- brought!;; and, the-, extent-, off the liability, of. the. defendants will he,- the.-only question considered'on this.-appeal',.
After the submission] of, the,case,, the court.found! the., facts-asi to which there- was no> substantial dispute; and/ the, questions, resolve themselves, into- questions- of law upon the; facts! thus found-.,. Itt was found, that.- the - plaintiff, was* a. domestic eeipoiteMom organized! far charitable purp.oseBj.and-thesd’efemlant the,Chesapeake,-and ©,kio¡ Railway Company. wasnforeigp-eorporatiómhaving;a-regis.try ortrans--
*495f'er office, in the city of Hew York; that its transfer agents were- J. E. Morgan &r Co,, a member of whose firm was a member of the Hew York Stock Exchange j that the defendant' Gibson was the general' partner of the limited copartnership of Eniekerba-eker & Co., stockbrokers doing business in the city of Hew York, the defendant Gibson being a. member of' the Hew York Stock Exchange. In April, 1898, the plaintiff purchased and caused to-be registered in its name; on the books of the- defendant the, Chesapeake and Ohio Railway Company three bonds issued by the railway company, of the par value of $1,000 each, due in 1992 to secure the payment of which a. mortgage- was executed by the defendant railway company. These bonds, when registered could onl-y be transferred on the books of the company by the registered holder thereof or by his attorney duly authorized. At the time of the purchase, Charles J. Townsend was treasurer- of the plaintiff corporation, and he reported the purchase and registration of these bonds to the directors of the.plaintiff, and their purchase and registration in the name of the plaintiff' corporation was approved; these registered' bonds were kept in- a safe hired by the plaintiff corporation in the vaults of a bank in the city of Hew York. To this box both the president and treasurer of the corporation had access, On March 12,1900- one Lessells was elected treasurer of the plaintiff corporation and continued in that' office until March 21,. 1902. Ob March 12, 190-2, Lessells went, to the. office of the defendant Gibson with these three bonds of the Chesapeake and Ohio. Railway Company, registered in the name of the plaintiff corporation, and told John E. Busch, the cashier of the defendant, Gibson,, that the plaintiff desired to- sel these- bonds. Busch told Lessells that before- the bonds could be-sold they must be-registered as payable to bearer; and instructed Lessells to- take the bonds, to the transfer agent-of the defendant corporation and ascertain how the change to bearer could be effected, whereupon Lessells called upon- the transfer agent of the defendant corporation- and was informed by such transfer agent that it was necessary to- furnish to the defendant corporation" a po-wer of attorney executed by the plaintiff corporation and the signature thereon guaranteed by a firm, one of whose- members was a member of the- Hew York Stock-Exchange, and also a copy- of the- resolution of the board of directors of the- plaintiff corporation authorizing the ' transfer. Lessells *496returned to Gibson’s office and told Busch that the transfer agents, required a copy of the minutes of the directors authorizing the transfer and a power of attorney. Busch, therefore, filled out a power of ■attorney, authorizing the transfer of the bonds of the Chesapeake and Ohio Railway Company to bearer, which was signed by Lessells, “The Jennie Clarkson Home for Children, George W. Lessells, Treas.,” and witnessed by Busch, and Gibson signed the power of attorney with the firm name of Knickerbacker & Co. Lessells also produced what purported to be a resolution of the board of directors •of the plaintiff corporation authorizing the transfer of the bonds, to which there was forged the name of the secretary of the plaintiff corporation, and to which there was affixed a forged seal of the plaintiff •corporation. No such resolution was ever adopted by the plaintiff •corporation, nor did the defendant corporation or any of its officers •or members, except Lessells, have any knowledge of the transaction. Lessells procured the bonds from the safe deposit box of the plaintiff corporation without the knowledge of its officers or directors, .and had no authority whatever, either under its by-laws or from its directors or officers to dispose of them in any way. This power ■of attorney transferring the bonds and the forged copy of the spurious resolution were taken to the transfer agent of the railway company, and thereupon the bonds were transferred to bearer; and the bonds, so transferred were delivered to the defendant Gibson, who ' sold the same and received the proceeds thereof. Gibson thereupon •drew a check to the order of G-eorge W. Lessells, treasurer, who indorsed it, whereupon Knickerbacker & Co. cashed the check and paid the amount in cash to Lessells and took his receipt therefor. Lessells appropriated the money to his own use, and the plaintiff never received the proceeds of the sale of the bonds. Immediately upon the discovery of Lessells’ acts the plaintiff made a claim against the railway company and against Knickerbacker & Co. for the value •bf the bonds, and liability therefor having been denied, this action ■was brought.
The court having found these facts, directed judgment that “ the ■defendants, Chesapeake and Ohio Railway Company and Robert Gibson, as general partner of the limited partnership of H. Knickerbacker & Co., replace and pay over to the plaintiff three certain, /bonds issued by the defendant Chesapeake and Ohio Railway Com*497pany * * * or bonds of like kind and value; or in default thereof, that the said defendants pay to the said plaintiff the sum of three thousand two hundred and sixty-two and 50/100 dollars ($3,262.50), the value of said bonds and of said coupons that matured between March 12, 1902, and June 5, 1903, together with interest thereon from the 5th day of June, 1903;” and it was further “ ordered, adjudged and decreed, that in case the defendant Chesapeake and Ohio Railway Company shall be required to pay the within judgment or any part thereof, ^the defendant Robert Gibson, as general partner as aforesaid, shall repay to the said defendant Chesapeake and Ohio Railway Company the amount so paid by it on said judgment as aforesaid,” and in pursuance of this direction judgment was entered.
There are three questions presented on this appeal: First, as to the liability of the Chesapeake and Ohio Railway Company to the plaintiff; second, as to the liability of the defendant Gibson to the plaintiff, and third, as to the liability of the defendant Gibson to the railway company for the amount that it should be required, to pay to the plaintiff. We will first discuss the right of the plaintiff to recover from the Chesapeake and Ohio Railway Company the value of the bonds.
When these bonds were issued they were what are ordinarily known as coupon bonds, payable to bearer, and in this form they were negotiable and' passed by delivery to a holder for value without notice of any defect in the title of the transferrer. In the bonds and the mortgage to secure their payment there was a provision which authorized the holder of the bonds to register them in his name so that their negotiability was destroyed. Each bond contains this provision: “ This bond may be registered on the books of the Railway Company, at its office or agency in the city of New York, and if so registered it will thereafter be transferable only upon the books of the Company by the owner in person, or by attorney, duly authorized, unless the last preceding transfer shall have been to bearer, and transferability by delivery thereby restored.” And the mortgage to secure these bonds contained the following provision: “And it is further mutually agreed that the said Chesapeake and Ohio Railway Company shall and will keep a register or *498registers of bonds issued hereunder at its office or agency in the city of New York * ** * and that any holder or. holders of any of the coupon bonds issued under the provisions hereof may register his or their bond or bonds upon presenting the .same, and that when a bond shall be so-registered the person or persons in whose name ■or names the same shall be registered shall be deemed and regarded as the owner or owners thereof for all purposes, and payment, of or on account of the principal .s.um in such registered bond mentioned shall thereafter be made .to such person or persons, Ms or their order ■ only, and all such payments so made shall be valid .and effectual to satisfy and discharge the liability' upon such bond to the extent of the sum or sums so paid, provided that such registry may be changed, and the bond so registered be transferred, upon presentation, with the written order of the person or persons in whose name or names the - same shall stand registered, properly authenticated, to the person or persons whose name or names shall in such written order be -contained to that .end.; and thereafter the person or persons to whom such bond shall have been so transferred as aforesaid shall be held to be the owner or owners thereof with all the incidental rights and powers, and such transfers may be made from time to time -as -the registered owner or owners of any such bond for the time being may direct as aforesaid; and the registered owner or owners shall also have the right to register any of the bonds registered in Ms or their names as payable to bearer, in which ease the transferability by delivery shall be restored and the principal thereof be payable to the person presenting the .same.”
■ Thus when these bonds were registered as the property of the plaintiff, -they became payable to the plaintiff only, and could be transferred -only upon the hooks of the company by the plaintiff or its authorized agent. The railway company became thus an'obligor.. indebted to the plaintiff in the amount represented by these bonds, upon whieh indebtedness it agreed to pay interest .as therein provided and the principal upon maturity. Until the plaintiff assigned or transferred the bonds, that relation between it and the 1 Chesapeake and Ohio Railway -Company' continued. The provision authorizing the bonds to be retransferred to bearer had no effect upon this obligation of the defendant until such transfer was actually made by the plaintiff -or its authorized agent. The discussion *499by the railway company as to the effect of this provision for registration and for the transfer of title by the registered owner of the bonds seems to me to leave ont of view the formal legal relations that exist between the owner of the bonds in whose name they have been registered and the corporation. There was nothing unusual in that relation; the railway company simply owed the registered owner of the bonds a sum of money which it had agreed to pay as in the bond provided, which was not negotiable. The transfer of this obligation was restricted by the provision in the obligation itself and the mortgage executed to secure it. The responsibility upon such an obligation is not at all different from that upon a bond secured by a mortgage, or other non-negotiable obligation, and it; was evidently the intention to assimilate the right of transfer and retransfer of the bonds when registered to the transfer of shards of stock in an incorporated company, and the effect, I think, of this-arrangement was to place registered bonds and shares of stock of a corporation upon a similar footing as to the requisites necessary for a transfer, so that the owner of the bonds when registered should, be protected from loss, theft or embezzlement.
If this is a correct view of the relation that existed, the solution, of the right of the plaintiff to a judgment against the railroad company is clear. The plaintiff has never authorized the transfer of these bonds. Its treasurer had no express power to transfer them.. By. article 1 of the by-laws of the corporation, the duties and power® of the treasurer are defined. It was directed that he should “ have charge of and be responsible for all deeds, contracts and securities, and all moneys belonging to the corporation, from whatever source derived,” and by article 8 it is provided that “ the finance committee shall aid the treasurer in managing the funds of the corporation. No bill shall be paid without their approval, unless otherwise ordered by the board.” Charge of the securities of the corporation is given to the treasurer, and he is responsible for them; but they are given in his charge to be preserved, not to be sold or disposed of. The obligation to- keep is distinct from a right to sell, and imposing upon a trustee or agent charge of and responsibility for; securities implies the duty to protect and cave for them, inconsistent, with a right to sell and dispose of them. The treasurer of such an. institution has none of the powers of the active manager of a cor*500poratión whose business it is to purchase and sell securities .ór to transact a general banking business, as in the case of the president or cashier of a bank. Such a corporation is not engaged in business requiring the active interference of its officers, and the cases wliich refer to the implied power of an executive officer of a ba-nk or trading corporation have no relation to the officers of such a corporation as the plaintiff. There is nothing in this by-law that could possibly be construed as giving to the treasurer or any of its officers a power to sell or dispose, of its securities. There was no evidence that the plaintiff had given any implied authority to sell or dispose of its securities to Lessells. It was not proved that the treasurer had ever sold any of the plaintiff’s securities without authority from the corporation and that such an act had been ratified by the corporation or its directors. None of the facts which ■ justify a finding that the corporation had vested its treasurer with any apparent authority over these securities were proved, nor did the railroad company rely upon any apparent authority that had been conferred upon the treasurer by virtue of his position, for the railroad company required Of the treasurer that he produce a resolution of the board of directors authorizing a transfer of the bonds. This was a recognition by the railroad /company or its transfer agents of .the necessity of an act of the corporation to authorize the transfer of the securities. That the railroad company accepted a forged copy of a resolution does not "affect this question. The transfer agent correctly assumed that the treasurer as such had no power to make the transfer, and required proof that such transfer was authorized by the corporation. The proof that it accepted was spurious and not sufficient for the purpose, but, in the face of. this requirement, it certainly cannot be said that the corporation relied in any way upon the authority of the treasurer to make a transfer without corporate action. The plaintiff, therefore, never authorized the transfer of these bonds, and the power of attorney authorizing the transfer was never executed by the plaintiff corporation. It purported to be signed with the name of the corporation by Lessells as treasurer, but the signature was unauthorized. The railroad company or its transfer agent, however, having no knowledge of the treasurer or his authority, required, in addition to the presentation to it of the corporate act authorizing the transfer, that *501the power of attorney should be guaranteed by a banking house, a member of , which was a member of the New York Stock Exchange, and upon that power of attorney being thus guaranteed, they made the transfer.
As between the railroad company and the plaintiff all of this was without authority from the plaintiff, and the, railroad company, acting upon these instruments to which the name of the plaintiff had been forged and which was not binding upon the plaintiff, the result was that there never was as between the plaintiff and the railroad company any change of ownership or title to the obligation of the railroad company. The plaintiff is still the owner of the obligations and still entitled to enforce them against the railway company; that the railroad company has placed itself in a position that it is required to recognize others as the owner of bonds that it had issued is no concern of the plaintiff, and the plaintiff is entitled to recover from the railway company either the bonds or their value. It is hardly necessary to cite authorities to sustain this proposition, as it seems to me that it only requires a statement of the relation that exists between the plaintiff and the railway company to determine the legal obligations of the railway company to the plaintiff. The railway company was indebted to the plaintiff for the sum of money represented by the bonds; the plaintiff has never transferred that indebtedness, and the railroad company is still indebted to ■ the plaintiff for the amount due on the bonds and interest.
The only case in this State to which our attention has been called which discussed the legal effect of the registration of coupon bonds is Cooper v. Illinois Central R. R. Co. (38 App. Div. 22), where the judgment was affirmed by this court upon the opinion of Mr. Hamilton Odell as referee. The action was brought on twelve bonds of the Illinois Central Railroad Company, which contained substantially the same provisions as those contained in the bonds in question. The bonds had been registered by the executor of the estate of Mary T. Wood. There were two trustees of the estate, who held these bonds and other property in trust. One of the trustees obtained possession of the bonds without the knowledge of his cotrustee, presented them to the railroad company and caused them to be transferred to bearer, sold them and misappropriated the proceeds ; and it was held that the railroad company was liable to the *502■owners of the bonds: This, decision which, we, approved, on. appeal ' ■sustains that ■ view before expressed, as . to the relation that'existed between the holders of the registered bonds and the corporation, that has issued them, and so far as it goes is an authority for the plaintiff.. The railroad company had knowledge of the fact that these bonds were- owned by and registered in. the name of: the- plaintiff, and a person representing himself as treasurer of. the plaintiff, 'sought to have-the bonds transferred; the railroad Company accepted the proof submitted as to his actual authority to make the- transfer, and upon the well-recognized rules of agency the right to make the transfer must stand or1 fall upon the sufficiency of his authority to make such transfer.1 If it turned out that the .agent has no actual authority and there was no act of the owner-that estopped it from disputing his- authority, it would seem to, follow that the railroad corporation was responsible- ior. the unauthorized transfer:
It is contended by the railroad company that, the removal -of the registry was not the. proximate cause of the plaintiff’s loss. But this, I think, begs the. question. The plaintiff was; the legal owner of these bonds; and the railroad company was indebted to- it for the amount of the bond's., The plaintiff has never assigned or transferred these bonds or the obligations, of the- railroad company to. it,, and that relation still exists: The railroad company in transferring-the-bonds
upon its books to the bearer, who was the person who presented them for transfer; without the. authority of the;-plaintiff, has in effect' placed itself in such a- position that it is liable to, the- holder of the bonds to- whom-they have- been transferred., But the plaintiff has not authorized that transfer, and as to the plaintiff "it was an illegal and unauthorized act, and the plaintiff has the- right to insist, upon the railway company’s performing its obligations ;- and’upon, its inability to perform its obligation, in consequence of its own act. in having transferred the bonds: to third parties, then the plaintiff, is. entitled to recover the value of the bonds.
The next question presented is the right; of the plaintiff against Gibson as general partner of the firm of Knickerbaeker & Co. In this-action the plaintiff has based its right to-recover upon the fact that ' Lessells had rio authority to transfer these, bonds of to sell them and no- authority to receive the- proceeds thereof when sold. He, therefore;, never acted as the authorized agent of -the plaintiff in. his deal-, *503ing with either the railroad company or Gibson. To impose such a liability there must be either a contract relation between plaintiff and Gibson or Gibson must be in such a position that he owes a duty to'the plaintiff which he has violated. If the plaintiff had ratified Lessells’ act in assuming authority to. sell the bonds Gibson would then be the plaintiff’s agent and responsible to it as such. The plaintiff, however, bases its right to recover against the railroad company upon the fact that Lessells had no authority to sell the bonds- or to transfer them upon the books of the railroad company and that the railroad company is liable because it acted upon the authority that Lessells assumed when he represented that he had authority to act for the plaintiff in transferring the bonds. This latter position is inconsistent with a claim that Gibson is liable to the plaintiff for his subsequent act in selling the bonds. There was no relation between Gibson and the plaintiff. He had no authority from the plaintiff to act as a broker or to sell the bonds to third parties and was under no obligation to the plaintiff to protect it. He received certain bonds issued by the railroad company to bearer and sold them, received the proceeds and paid them to Lessells. The transfer of the plaintiff’s bonds was void as between it and the railroad company and plaintiff was never divested of its title to them. It was not plaintiff’s bonds that Gibson sold as plaintiff still owned the obligations of the railroad company. The railroad company issued bonds payable to bearer to Lessells. These Gibson sold for" account of Lessells and accounted to him for the proceeds, but with this transaction I do not see that the plaintiff has anything to do.
The fact that Gibson guaranteed the genuineness of the plaintiff’s signature to the railroad company has an important bearing upon Gibson’s responsibility to the company for any damage that it sustained by reason of a lack of authority of Lessells to sign the power of attorney on behalf of the plaintiff; but that act can have no bearing upon the liability of Gibson to the plaintiff, as that guaranty was one to the railroad company, not to the plaintiff. Gibson guaranteed the genuineness of the plaintiff’s signature to the power of attorney and in consequence of that guaranty the railroad company acted in relation to the bonds registered in plaintiff’s name so as to render it liable to the plaintiff, but as Gibson was -under no duty or obligation to the plaintiff that act it seems to me can impose'no *504obligation upon Gibson in favor of the plaintiff. The complaint. does not allege,, nor does the court find any facts to justify the. judgment against Gibson in favor of the plaintiff, either upon the.ground-of negligence or conversion or in replevin, and the failure to allege either a contractual relation between the plaintiff and Gibson or any neglect of Gibson to perform any duty that he was. under to the plaintiff, or that Gibson has received, converted or detains the plaintiff’s property seem to me to preclude the plaintiff from recovering, against Gibson. '
The third question presented is as to the right of the railroad company to recover the amount that it is compelled, to pay to satisfy the claim of the plaintiff against it. The fact that the railroad company or its transfer agent refused to transfer these bonds unless the '■ genuineness of the plaintiff’s signature to the power of attorney was guaranteed by a member of the New York Stock •Exchange,’and that in compliance with this condition imposed by the transfer agent of. the railroad company and in accordance with the rules of the New York Stock Exchange, Knickerbacker & Go. signed the p.ower of attorney to transfer the bonds, is not disputed;. and these facts are found by the court. The defendant. does not claim that the signature of his firm was placed upon this power of attorney for any other reason than to comply with the conditions imposed by the transfer agent of the railroad company and . the rule of the Stock Exchange. Lessells’ signature to the power of attorney was wit7 . nessed by Busch, the cashier of Knickerbacker & Co.; but the sig7. nature. of Knickerbacker & Co. to the power of attorney was not placed upon that instrument merely as a witness.to Lessells’ signature. It is not disputed but that Gibson understood that the sig7 nature of his firm was necessary before the bonds would be transa ferred. Busch testified ‘that he knew that Knickerbacker & Co.’s signature to the power of attorney would have to be. there before the bonds, would be transferred, and that the signature of a firm who had a member in the Stock - Exchange was required before a transfer Would be made. . Gibson testified that he signed the name of his firm to the power of attorney, but when asked whether he ■understood that it was the custom of the street that the signature of his house upon the power of attorney guaranteed its validity,, his counsel objected and that objection was sustained. It is.in evidence • *505that Busch procured the signature of Knickerbacker & Co. upon this power of attorney from. Gibson and did it for the purpose testified to by him, and relying xipon that signature the railroad company transferred the bonds to bearer, having refused to make such transfer without such a guaranty. The rule of the Stock Exchange is: “ An indorsement by a member of the Exchange or a firm represented at the Exchange on a certificate is considered a guarantee of the correctness of the signature of the party in whose name the stock stands.” The transfer agents and Knickerbacker & Co. were members of the exchange and the transfer agents refused to transfer the bonds without the signature of a Stock Exchange house. This was, I think, an express guaranty of the genuineness of the plaintiff’s signature to the power of attorney by Knickerbacker & Co., not the genuineness of Lessells’ signature, but the signature of the plaintiff, the owner of the bonds; as it was placed upon this power of attorney for the purpose of. guaranteeing to the transfer agent of the railroad company the genuineness of the plaintiff’s signature, which involved a guaranty of the authority of Lessells to sign the power of attorney on behalf of the plaintiff, and as the railroad company, acting upon that guaranty, Gibson was liable to the railroad company for any damages that it sustained in consequence of the signature of the plaintiff to the power of attorney being unauthorized. (Boston & Albany Railroad v. Richardson, 135 Mass. 473.) The case of Starkey v. Bank of England (App. Cas. [1903] 114) is directly in point. It would seem to follow, therefore-, that Gibson was responsible to the railroad company for any loss that it sustained in consequence of a lack of authority of Lessells to transfer the bonds, and that the railroad company is entitled to judgment against Gibson for the amount that it is required to pay to the plaintiff.
I think, therefore, the judgment appealed from should be modified by requiring the Chesapeake and Ohio 'Railway Company to restore to the plaintiff the three bonds which it had illegally transferred, or in default of the delivery of such bonds to the plaintiff, the plaintiff should have judgment for the value of the bonds as found by the court, with interest, and that the Chesapeake and Ohio Railway Company is entitled to judgment against the defendant Gibson for the amount that it is required to pay to the plaintiff as *506the value of the; boncls,, with interest, thereon, and. as modified the. judgment should he affirmed!,; with costs to- the plaintiff ..
Tan Brunt, P. J., concurred in- result.