(dissenting) .
I dissent. The only question to be considered is whether a corporation, without knowledge that original stock certificates are owned by one other than the record owner may reissue stock upon proof that the stock is lost and pay dividends on that stock to an apparent transferee of the record owner, one Leary, without incurring liability to the true owner, Mrs. Lindner, for the dividends paid. There is no question that the corporation is under a duty to Mrs. Lindner to recognize the validity of the original certificates or that the dividends declared belong to the true owner, but merely whether our statutes, U.C.A. 1953, 16-2-34 and U.C.A. 1953, 16-3-3, allowing the corporation to pay the dividends to the owner of record, are broad enough to permit the payment of dividends to an apparent transferee of the record owner with the same immunity from suit by the true .owner.
It is agreed that Leary did not take any title to the shares of the corporation either by the assignment from the record owner’s heir, who at that time had no interest to transfer, or by the issuance of new stock certificates by the corporation,' which issued them in the belief that the original certificates were lost or destroyed. Thus, Mrs. Lindner could have brought suit on conversion against Leary to recover the moneys paid to him as dividends but which, assuming he was properly a record owner, he could only receive in trust for her, the true owner, absent her consent. Richmond Hill Realty Co. v. East Richmond Hill Land Co., 246 App.Div. 301, 285 N.Y.S. 424. The Utah cases cited by respondent Lindner as being discordant with the original opinion written in this case stand merely for the proposition that dividends declared- belong to the true owner of the stock of the corporation. With this' contention we agree, but it does not answer the fundamental question of whether Mrs. Lindner may take her election to recover against the corporation in lieu of the one who received the money for her benefit.
*308The corporation, in this instance, recognized its duty to Mrs. Lindner in purchasing 800 shares of its stock on the open market for cancellation to prevent an over-issue when it was unable to regain possession of the certificates in Leary’s hands. The relation a corporation sustains toward its stockholders is in its nature fiduciary and it is accordingly held that where certificates are outstanding representing shares of stock, it is the legal duty of the corporation to refuse to transfer such shares on its books without the production of the certificates; and any act done, or suffered to be done by it, which confers title to the shares upon one without possession and one who does not surrender the certificate, renders the corporation liable to the true owner for the conversion of his stock. Cushman v. Thayer Mfg. Jewelry Co., 76 N.Y. 365; Strange v. Houston & T. C. Railway Co., 53 Tex. 162. The duty imposed upon the corporation is weighty and it cannot excuse itself on the grounds of mistake or lack of knowledge that the representations made by the wrongdoer were false. Telegraph Co. v. Davenport, 97 U.S. 369, 24 L.Ed. 1047.
Whether the company is liable for the dividends paid on the stock, before it had notice of Mrs. Lindner’s claim, depends upon other considerations. Even before the adoption of the Uniform Stock Transfer Act, various jurisdictions had held, in recognition of necessary policies of business expediency, that the corporation could pay dividends to the record owner. In this case, however,.the mistake in the payment of dividends was occasioned by the fact of the wrongful transfer for which the corporation is absolutely liable. The only cases which have been discovered where there were no allegations of negligence or misconduct on the part of the corporation in making the transfer, as here, were briefed and discussed in the majority opinion in the prior report of this case, 269 P.2d 847, and these cases hold that the corporation is justified in paying to the order of the record owner. Cleveland & Mahoning R. Co., v. Robbins, 35 Ohio St. 483; Brisbane v. Delaware, L. & W. R. Co., 94 N.Y. 204. The case of Holly Sugar Corp. v. Wilson, 101 Colo. 511, 75 P.2d 149 is not in point since the wrongful payment was brought about through the negligence of the corporation.
U.C.A.1953, 16-3-17 provides a means for forcing the issuance of a lost or destroyed certificate through court procedure where the corporation refuses to recognize the rights of the person applying for a replacement certificate. It is claimed that this statute is conclusive of the corporation’s liability where it reissues stock under court order and, hence, a fortiori in a case such as the instant one' where the issuance was a voluntary act of the corporation. After describing the necessity of service of process, notice, proof of loss, and a means of protection by *309bond that the corporation may require, the statute concludes:
“ * * * The issue of a new certificate under an order of the court as provided in this section shall not relieve the corporation from liability in damages to a person to whom the original certificate has been or shall be transferred for value without notice of the proceedings or of the issuance of the new certificate.”
This view begs the question as to whether ■damages claimed by the true owner can include the loss of dividends as against the corporation when it has acted in good faith and in the exercise of appropriate diligence. It is agreed that the corporation would not be liable for the payment of dividends to the record owner if he were the person securing a new certificate; likewise, it is conceded that where the corporation accepts a forged certificate, makes a transfer on its books, and pays dividends to the forger, it is negligent toward its stockholder and must pay to him his entire loss, including the dividends. 12 Fletcher on Corporations, Sec. SSS1.
We have not been directed to any cases •determined under the Uniform Stock Transfer Act and recognize that under that Act, two views are possible. Under the view that the corporation’s original breach of its duty continues or is renewed upon each payment of dividends to the person who was made record owner by its wrongful transfer of title, the corporation would be able to pay with impunity only an owner of record who had once been a true owner. This would place an insurer’s burden upon the corporation where the stock was lost or destroyed, for it could not make a transferee a record owner even under court order, U.C.A.1953, 16-3-17, without incurring a double liability. Further, the present case illustrates how snarled the functions of the corporation might become were this strict rule adhered to. Leary presented better proof, probably,' than could have Mrs. Lindner had her stock been lost, that he was the true owner of the stock. The company could not have paid the record owner or the estate of the record owner the dividend declared in December, 1948, for very shortly thereafter, it had actual knowledge that Leary claimed to be the true owner and hence would have been liable to him for the payment if his claim were valid. Steel v. Island City Mercantile & Milling Co., 47 Or. 293, 83 P. 783. The company had no notice of Mrs. Lindner until 1952 and could not have paid the dividend to her. Further, it could not have held the dividend in trust until such time as the certificates were surrendered, for a court order could have forced payment to Leary upon his proof ' that he was entitled to issuance of a new certificate.
Under the other view, in the absence of negligence on the part of the corporation, no investigation is required of the corpo*310ration when it pays dividends, unlike the situation of the transfer of title, for the statutes allow the corporation to pay the record owner. Therefore, there is but a single breach of its duty and the corporation may pay the record owner or another upon his order.
In the fields of personal and real property, the various states have enacted recording and registration statutes to apprise innocent third persons of their rights and obligations in dealing with property which has been wrongfully transferred unbeknown to them. The policy behind these statutes has proved beneficial and a similar policy was intended in the Uniform Stock Transfer Act wherein the corporation is allowed to pay dividends to the record owner. Mrs. Lindner, by failing to have the certificates transferred to her on the company’s books, ran a risk of having the dividends paid to the owner of record. Although her. ownership of the certificates was secure because of the higher duty owed by the corporation to her than in situations of a seller and buyer of real estate, it should be held that the corporation may pay dividends to the record owner in accordance with U.C.A.1953, 16-3-3 if the payee became a record owner through no negligence of malfeasance of the corporation.
CROCKETT, J., concurs in the dissenting opinion of Mr. Chief Justice Mc-DONOUGH.