It is very clear from the findings of the learned referee, that at the time the nine bonds in question were stolen, they were of no force as obligations against the Tébo and Neosho Railway Company. They were in course of preparation by that company, with the design to issue them as bonds when they should be completed. The corporate seal had not been affixed, nor had the certificate of the Union Trust Company, which was a prerequisite of their validity, been made.
In that condition no person could have enforced them against the railroad company, for there is no possible ground or reason for asserting that they had become its valid obligations, and their invalidity clearly appeared upon their face. At the time they were taken from the possession of the company they were mere waste paper, into whosesoever hands they might come. The learned referee finds that after the bonds were stolen, the seal of the company was forged by *13some person, and affixed in apparent due form to each of the bonds, and tbat tbe signature of tbe president of tbe Union Trust Company was also forged to each of the certificates. This made tbem apparently vahd instruments upon then face, and tbe plaintiffs became purchasers of tbem while in tbat condition, in good faith and for value. They now seek to compel tbe defendants, tbe Missouri, Kansas and Texas Railroad Conqpany, to issue other bonds in place of tbe nine bonds in question, in pursuance of a contract of consolidation between tbat company and tbe Tebo and Neosho company,, by which they were to take up tbe outstanding bonds of tbe Tebo and Neosho company and replace tbem with their own. Tbe question is precisely as though tbe action was brought upon tbe nine bonds against tbe Tebo and Neosho Railway Company.
It is well settled law, tbat where tbe bonds of a railway company have come into tbe bands of a bona fide purchaser, for value, they may be enforced by such purchaser against tbe company, notwithstanding they have, in fact, been stolen from some former bolder, or from tbe. company itself. But we think, in no case has it been held tbat instruments, purporting to be bonds of a raüroad company, but which are in fact forgeries, and never bad any legal inception as obligations of tbe company, can be enforced as vahd bonds, because tbe forgery has been so skillfully performed as to deceive an innocent purchaser.
It seems to us unnecessary to enter upon an examination of tbe numerous cases bearing more or less nearly or remotely upon tbe question. It is enough, we think, to constitute a perfect defense, tbat tbe corporation is able to say, “ these are not bonds, ever made, or issued by us, but are forgeries, upon which no hability ever existed or arose against us.”
It is not shown or claimed in this case, tbat tbe bonds in question were ever issued by tbe railway company in any form, or were ever completed so as to have tbe form of apparent obligations, and while in tbat condition lost or stolen ; or tbat any consideration whatever, bad ever been received by such company for tbem, or tbat tbe company bad ever ratified or confirmed tbe instruments, or done any act to induce tbe purchase of tbem by tbe plaintiffs, which can estop tbem from asserting tbat tbe instruments are forgeries. It is not a case where a person has stolen tbe completed *14bonds of a company, which, have been issued or are ready to be issued as perfect obligations; but one in which papers inchoate and incomplete, bearing upon their face the evidence of that condition and nothing more, and which can have the semblance of perfected obligations only by means of forgery, have been stolen and by some person made to bear the appearance of validity and genuineness by criminal acts of forgery.
In such a case there is no reason, either on authority or in principle, for holding that the victim of the theft of the incomplete and valueless instruments shall compensate persons, who may have been deceived and defrauded by means of the subsequent forgery. If that shall be held, there is no reason why all forged paper shall not be adjudged valid in the hands of bona fide purchasers for value, against all persons whose names shall be simulated upon it. We are of opinion that the learned referee ought, upon the facts found by him, to have directed judgment for the defendants instead of for the plaintiffs.
The referee erred also, we thiuk, in awarding the- measure of damages given to the plaintiffs, and for which judgment has been entered.
The judgment requires that the defendants, the Missouri, Kansas and Texas Railway Company, deliver to the plaintiff nine bonds of $1,000 each, with semi-annual interest coupons attached thereto, payable on the first day of June, 1903, in gold, and in addition, that the company pay $3,870 — being the difference between the amount the plaintiff paid for the nine bonds of the Tebo and Neosho company on the 12th of July, 1872, and the value of the Missouri, Kansas and Texas Railway Company bonds, at the date of the referee’s decision. That this measure of damages is incorrect seems, to us, clearly apparent from a statement of its effect upon the defendants. The Missouri, Kansas and Texas Railway Company, are presumed, in the absence of evidence, to be perfectly responsible and able to pay the interest on the bonds issued, as it shall mature, and the principal when it falls due. But in addition to the $9j000 in gold and interest, which they will covenant to pay 'by the delivery of their bonds, they are required to pay presently the additional sum of $3,870, as a depreciation of the net market value between the date of the demand made by the plaintiffs for *15such bonds and the date of their delivery. This is upon the assumption that the plaintiffs will dispose of the bonds at present market value, and thereby themselves suffer that amount of loss. The assumption may be trae or false; but its truth is established by no evidence in the case. But if it were, it is still apparent that the defendants will be required to pay the full amount of these bonds at maturity, as well as the accruing interest up to that time, either to the plaintiffs or to whomsoever may then be holders of the bonds. Discharging that obligation is the performance of their whole duty, and will put the holders of the bonds in possession of all that could ever have been claimed or enforced upon them, had no question been raised as to the validity of the bonds, and all that could ever have been collected upon the original instruments in any event. But the result of the judgment is, that in addition to their paying their obligations in full, the defendants shall, also' pay the amount above named. If the market value of the bonds shall be increased to par' by a change in the market within a month or a year, no provision whatever is made by which the defendants shall have any benefit of this sum of $3,8Y0 ; nor if they are ready to pay the obligations in full at their maturity, as they will be bound to do, is any provision made by which this large amount now paid can inure to any extent to their benefit. It might well be, that if the plaintiffs were entitled to recover at all in the case, they could elect whether to have bonds actually issued to them or their market value, with damages by reason of the diminution, from the time of the demand until the time of the decision. But that they can do both, to witj be placed in a position in which they are entitled to the full par value of the bonds and all present and accruing interest, and at the same time to a purely imaginary loss, which they have not in fact sustained, but may sustain if they choose not to keep the bonds, but put them upon the present market is, we think, going beyond the measure of damages that would do exact and equal justice between the parties.
Under the rule adopted by the learned referee, if the bonds had ceased to have anypresent market value, the plaintiffs could recover $9,000 in gold and all the interest that has accrued thereon, and have delivered to them in addition to such recovery, nine bonds of $1,000 each, payable in gold, with semi-annual interest coupons, *16and be entitled to tbe whole amount thereof at tbe maturity of tbe bonds. Such a result could not be sound either in law or morals.
For these reasons, also, we think tbe decision of tbe learned referee cannot be upheld. Tbe judgment should be reversed and a new trial granted, with costs to abide tbe event.
Beady and Daniels, JJ., concurred.Judgment reversed, new trial granted, costs to abide event.