This case comes before the court upon exceptions to the report of the Auditor, but the agreement of counsel filed on the 12th inst., reduces the questions in controversy to two.
The first of these, and the only one which has been argued, has respect to the ownership of the two shares of stock in the Holliday Street Theatre, the proceeds of the sales of which, made under a decree of this court, are now to be distributed. The shares in controversy are designated by the numbers 44 and 76, and were together with thirty-three other shares of like stock transferred to Mendez I. Cohen, by J. I. Cohen, Jr. & Brothers, on the 14th of June, 1841.
It appears by the transfer book that shares numbered 44 and 76, were transferred to B. I. Cohen, who was a partner in the *360Banking House of J. I. Cohen & Brothers, in the year 1839, by the then proprietors thereof, and that no transfer of these shares was ever made by B. I. Cohen individually.
It also appears, that in the year 1827, six gentlemen were appointed trustees of the theatre, under an agreement between the stockholders and William Warren, the terms of which are stated by Mr. Meredith, in his deposition. The trustees were Messrs. Grwynn, Lucas, Stewart, Prick, B. I. Cohen and Meredith.
By an arrangement, the details of which are given in the deposition of the same gentleman, certain shares of stock which stood in the name of B. I. Cohen were transferred by him to individual members of the trustees in extinguishment of a debt due by Cohen to the trust fund, with an understanding that each of the trustees to whom transfers were thus made should give bond for the same, and should also, as a further security, retransfer the stock to the treasurer of the board of trustees, retaining, however, the use of the shares until they should be called upon to surrender them. Bonds were accordingly given by all the parties, including B. I. Cohen, who retained four shares under the arrangement, and in November, 1842, all the parties except Cohen, retransferred to the treasurer the shares placed in their respective names, with a memorandum opposite each transfer, in the transfer book, that the same was made as collateral security for the bonds given by them as above mentioned.
On the 11th of April, 1843, Mendez I. Cohen transferred to Johnson & Lee, the same thirty-five shares which on the 14th of June, 1841, had been transferred to him by J. I. Cohen & Brothers, and on the 23d of May, 1843, Johnson & Lee retransferred the same thirty-five shares to him.
B. I. Cohen having died indebted to the trust fund in the amount of the bond so given by him, being $426 50, and having but one share of stock now standing in his name, certain parties, having an interest in the fund for distribution, object to the allowance to Mendez I. Cohen, of the dividend due upon shares numbered 44 and 76, because as they allege, these shares constituted a part of the trust fund, and were known to be such *361when he acquired them. The objection which was presented by petition and exception to the report of the Auditor, extended originally to four shares, parcel of the 35 shares transferred to Mendez I. Oohen, in 1841, but by the agreement before spoken of, has been narrowed down to the two shares numbered 44 and 76.
Mr. Cohen, by his answer, upon oath, takes the ground that he was a bona fide purchaser, for value of these shares, without notice of the arrangement between B. I. Cohen and the other trustees, and it appears by the evidence that he did purchase, and pay a valuable consideration for them, to the Banking House of J. I. Cohen & Brothers. He gave one hundred and forty dollars per share for them, and the Banking House being indebted to him in a larger amount at the time of the purchase they were paid for by debiting his account on the hooks with the amount.
The transfer book kept by the trustees of the theatre, which has been offered-in evidence, shows that the shares in dispute were in fact transferred to Mendez I. Cohen by J. I. Cohen & Brothers, in June, 1841, and as the transfers made by the trustees of the shares of stock which they received of B. I. Cohen, under the arrangement spoken of by Mr. Meredith, were not made until 1842, and as the memorandum placed opposite to these transfers is the only evidence relied upon to bring home to Mendez I. Cohen notice of the nature of that arrangement, it seems very clear that he cannot be affected with notice.
Mr. Cohen does not deny that he had notice from the transfer books, that the trustees (other than B. I. Cohen) had stock in their names, but there is nothing to show that in June, 1841, when he received from J. I. Cohen & Brothers, for a valuable consideration paid them, a transfer of the shares in question, he knew of the arrangement between B. I. Oohen and the trustees. The entry in the transfer book relied upon to affect him with notice, was made at a subsequent period.
But it is said, that the transfer of these two shares by Cohen & Brothers to Mendez I. Cohen is void, because they belonged not to those parties but to B. I. Oohen individually.
*362E. I. Cohen, however, was a member of that firm, and it no where appears that he made any objection to their authority to make the transfer. This transfer was made in 1841, and it is not until 1848, that the power under which it was made is questioned. On the contrary, in 1843, Mendez I. Cohen’s right to deal with these shares as his property is recognized by the transfer made by him in April of that year to Johnson & Lee, and by their retransfer to him in May following.
The question to be decided is between a bona fide purchaser for value and without notice, on the one side, and the general mass of the stockholders on the other. The transfer book which appears to have been very carefully kept, was of course at all times open to the inspection of'the trustees, and was, in fact, kept by one of them. It contains the evidence of the title of the shareholders to their stock, and a purchaser might well suppose that his title was good to shares transferred to him upon the boob, and-permitted to remain in his name without objection for a number of years. It seems .to me, that in a question affecting the validity of a transfer under the circumstances of this case, between a bona fide purchaser, without notice, and the stockholders generally, that the latter must be concluded by the conduct of the trustees, active or permissive, in suffering the transfer to be made and to stand. It is true, this was a private association and not a corporation, but still trustees were appointed by the agreement, and for the benefit of the stockholders, and I cannot bring myself to think that it would be just to permit the mass of stockholders to exclude an individual stockholder from participation in the fund upon the ground that his title to shares standing in his name was defective when the trustees permitted that title to pass to him, and to remain in his name upon books kept by them for the purpose, this book being the only evidence of title.
The case in some respects is very like the case of the Farmers and Mechanics Bank of Frederick and others vs. Wayman and Stockett, decided by the Court of Appeals in December, 1847, 1? Grill, 336. In that case the bank had permitted certain shares of stock, held in trust, to be transferred by persons not *363having authority to do so, to a bona fide purchaser without notice, and the court recognizing the validity of the title of the purchaser, decided that the banks should make good the trust fund, provided, it was not reimbursed by the parties who received the money from the purchasers. It was suggested in the argument that that case differed from this, because, in that, the question was supposed to be between the trustees and the purchaser, whilst in this it is between the purchaser and the stockholders. But the decision that the banks should make good the trust fund in that case, was of course, a decision that the stockholders should make it good, the latter being in effect the banks.
Tiros. G. Pratt, for Exceptants. R. W. Gill, for Cohen.The ground of the decision was, that the banks having notice of the trusts with which the stock w'as clothed, and its officers being the trustees of the stockholders, could not, without making the bank responsible, by negligence or mistake, allow the title to pass by a transfer by any others than by those having competent authority to do so.
So in this case, the trustees were the trustees of the stockholders, and if they suffer stock to be transferred to a bona fide purchaser, without notice, by a person not having authority to make the transfer, the loss, in a contest between such purchaser and the stockholders ought to fall upon the latter. This appears to me the clear equity of the case, and I shall so order.
The petitions and exceptions also object to the allowance to the administrator of B. I. Oolien, and as by the agreement it is admitted, that this exception is well taken, the costs of the petition and exceptions will be allowed.