The opinion of the Court was delivered by
MANNING, J.On Feb. 24, 1873, the plaintiffs sold to defendant forty shares of the capital stock of the Crescent City National Bank for fifty dollars a share, and delivery was made. The purchase was made through Fcinour a broker. The xdaintiffs transferred the shares by signing tlie transfer on the proper book of the bank, leaving a blank for the name of the transferree.
Eleven days before, Fob. 13th, the London correspondents of the Bank had failed, and it had lost nearly the whole of its capital thereby. This disaster had affected its credit instantly and seriously. Its stock fell, and on March 14th payment of checks drawn .upon it by its depositors was suspended, and on the 17th of the same month its circulating notes went to protest.
On March 15th. the defendant sold these forty shares of stock to Thomas A. Adams for eleven dollars a share, and at his request transferred them on the book of the bank to the porter of Adams, a negro employed by him at small wages. On the bank transfer-hook therefore, the only transaction appearing complete was a transfer from Lesassier & Binder to Morris Dyer, tlie name of Mr. Kennedy in pencil being only on the margin.
The Bank passed into liquidation, and its Receiver disregarded the apparent transfer to the irresponsible negro, and sued Lesassier & Binder for seventy per centum upon these shares as contribution, and *542recovered $3,579.60 which they were compelled to pay. They now sue to recover that sum from the defendant.
Besides this suit at law of the Receiver against Lesassier & Binder, there was a hill in chancery filed by him against Kennedy to enforce liability against him, wherein the defence now set up was also presented there and was sustained, and the bill was dismissed.
The gravamen of the complaint is that the insertion of Dyer’s name was a device of Kennedy to escape the liability which attached to him as actual owner of the stock; and that by his failure to insert Ms own name he caused the Receiver to pursue Lesassier & Binder. TMs assumes that the transfer from Kennedy was fictitious and colourable only, and that his intent in making it was to , avoid responsibility for contributions. The point given to the examination of the defendant as a witness is an effort to extract from him admissions to sustain this assumption.
A mere transfer would not have released him from responsibility. If the purpose of the transfer was merely to avoid liability to the bank or its creditors, it would be deemed fraudulent in law and would be void. When a national bank is in a failing condition, a transfer of its shares, oven though real and ‘out and out,’ but, made to a. person incapable of responding to liability and for the purpose of obtaining personal immunity, is void. National Bank v. Case, 9 Otto, 628. Even though the bank be not then in failing condition, but the stockholder knows there is .good ground to apprehend its failure, and he colludes with an irresponsible person for the purpose of substituting the latter in his stead, and thus leaving no one able to respond to the liability imposed by the statute, such substitution will be void as to the bank, and he will be held liable. Bowden v. Johnson, 17 Otto, 251.
The object of the statute is to get at the real owner of the shares, and the courts in construing it uncover all his disguises, so that if his name has never been on the transfer-book and Ms stock stands in the name of another by Ms procurement, ho will yet be chargeable as a stockholder with the statutory liabilities. Davis v. Stevens, 17 Blatchf. 259.
Now who was the real owner of these shares when the Receiver took charge of the insolvent bank-? Certainly it was not the defendant. His sale to Mr. Adams was not only out and out, but was not made to an irresponsible person, nor for the purpose of escaping liability. He had bought on a falling market, eleven days after the disaster at London had toppled the stock, and it continued to go down until he was glad *543to get rid of it at Mr. Adams’ offer, who bought because lie had confidence that the bauk would recuperate. All the insignia of fraudulent transfer are wanting. There was no collusion, the transfer was for an agreed price which was paid, and the stock was not shuffled on to one less capable of answering calls on account of it than himself. Whatever may have been Mr. Adams’ object in requesting the transfer to be put in the name of his porter, Mr. Kennedy had no thought of liability or design of escaping from it. This transaction was had eleven years ago. This was the first failure of a National Bank, and dealers in stocks of those institutions have since learned more than was then ‘dreamt of in their philosophy.’
But this does not meet the issue in its entirety. It is urged with great force and plausibility that it was a wrongful act of defendant not to have filled the blank left on the transfer-book with his own name, and wrong again to fill it with the name of an irresponsible person, in consequence of which the plaintiffs have been condemned to pay contribution. In a sale of shares of the Hudson River Slate Company, where the New York statute required that transfers of stock must be entered upon the proper book, that court say: — it must be implied in such contract that the seller would execute and deliver a transfer to the buyer, and that he would accept and register such transfer with the further undertaking that he should indemnify the seller against calls which the seller might be called on to pay if, and so long as the transfer was not. registered. Johnson v. Underhill, 52 N. Y. 203.
This obligation is equally binding upon every successive buyer. It is the custom to leave a blank for the name of the transferree, and it was because of this custom that the plaintiffs left the blank as above stated. This can only have been in contemplation of successive transfers and to facilitate them, so that if the final transferree is a responsible person, and the blank is filled with his name, the object is attained of having a stockholder answerable for calls. Kennedy’s sale was to Adams who fulfilled all the requisites. Adams chose not to appear as transferree, but this did not relieve him from a.ny liability which attached to him as transferree. Morris Dyer was his alter ego. It was through his instrumentality that a false name was inserted in the blank, and upon Mm rested the final undertaking to indemnify any one who might be called on to pay.
The proposition, says Dillon sitting as judge, may be considered as established that a shareowner in a.National Bank, while it is a going *544concern, lias tlie absolute right in the absence of fraud to make a bona -fide and actual sale and transfer of liis shares at any time'to any person capable in law of purchasing and holding the same, and of assuming tlie transferror’s liabilities in respect thereto. * * * The seller, for his own protection against creditors of the bank in case of insolvency, may transfer the same on the books to the vendee, and may file a bill to compel the vendee to record the transfer. Thompson’s Nat. Bank Cases, 343-4. The U. S. court in tlie chancery suit protected Kennedy because he had exercised this right of making a sale, which the court found to be bona fide and without taint of fraud.
But the plaintiffs insist that the defendant’s sale lacked one of the elements mentioned in this last quoted authority, for that he sold after the Bank had failed. Payment of checks drawn upon this Bank by its depositors was refused on March 14th. The defendant sold on March 15th. The circulating notes of the Bank went to protest on the 17th. Under the provisions of tlie National Banking Act, aBankis not legally disabled from prosecuting the business of banking until she is protested for failure to redeem her circulating notes. The date of the Bank’s failure is thus fixed as March 17th., and until then it was ‘a going concern,’ and the sale of its shares was made by the defendant prior thereto.
It is the misfortune of the plaintiffs that they have been condemned to pay, in disregard of the principle that under the ruling of the chancery court protected the defendant, but we should only repeat the wrong they have suffered if we should condemn the defendant to suffer in like manner. One infliction of vicarious punishment is too much.
It is therefore ordered and decreed that the judgment of the lower court is avoided and reversed, and that there be now judgment in favor of the defendant rejecting the plaintiffs’ demand and for costs.