concurring in part, dissenting in part.
The majority opinion concludes that Katharine Ogilvie, in her capacity as a joint owner of stock which was transferred by means of a forgery, may recover that stock from the purchaser, Idaho Bank and Trust. Such is the correct result and I concur therein. In route to this result, however, the majority tacitly approves of what should be recognized to be the bank’s questionable business practice in this transaction, overlooks the controlling portions of the U.C.C., and bases its holding on a quirk of the common law which would not have availed Katharine except for the unfortunate death of her son. Because these portions of the majority opinion undermine sound commercial expectations and uniform legal results, I respectfully dissent.
*3701. The Status of the Bank.
The majority concludes that, under the facts of this case, Idaho Bank & Trust “enjoys the preferred status of a ‘bona fide purchaser.’ ” Nothing is made to hinge on this dictum since the rights of Katharine, as the victim of the forgery, would be identical regardless of whether the bank was merely a “purchaser,” or enjoyed the preferred status of a “bona fide purchaser.” Still, the dictum could have unfortunate results in other contexts and deserves comment.
In order to be a “bona fide purchaser,” one must, among other things, have taken delivery of the security “in good faith and without notice of any adverse claim.” I.C. § 28-8-302. As the majority correctly notes, the controlling Code sections interpret these requirements to
mean that the person extending credit acts honestly in conducting the transaction and has neither actual knowledge, nor, from all the facts and circumstances, should have known that an adverse claimant asserts rights in the pledged collateral.
I.C. § 28-1-201(19), (25). Having stated the standard correctly, the majority then applies it to the facts of this case as follows: “Although IB&T could have protected itself from a forgery, I.C. § 28-8-312, there is no evidence suggesting that IB&T knew or should have known that respondent [Katharine] Ogilvie claimed rights, to the pledged collateral because her signature was forged.” (Emphasis added.) The majority application, it seems to me, misallocates the burden of proof on such a question and settles for too low a standard of commercial behavior. Precisely because the bank could have protected itself from a forgery, yet did not take the care to do so, I would hold that it cannot assert the rights of a “bona fide purchaser.” A pledge of a stock certificate which, on its face, states that it is owned by two persons as joint tenants, is notice to the pledgee that he is dealing with property in which another person who is not the pledgor has an “adverse claim.” The Code defines an “adverse claim” as any
claim that a transfer was or would be wrongful or that a particular adverse person is the owner or has an interest in the security. (Emphasis added.)
I.C. § 28-8-301(1). It will be a rare case in which a bank or stock broker will receive any greater notice than was present here that a potential forgery is afoot. Under the facts of this case, I would hold that IB&T was put on notice, had a duty to inquire, and that its failure to do so constituted lack of “good faith,” regardless of the subjective good intentions of the bank officials.
Sound commercial practice would dictate that the bank have both joint tenants sign the pledge in the presence of a bank official. Where this is not possible, a stock power may be used. Again, sound commercial practice would require that it, too, be signed in the presence of a bank official or other reliable witness. When dealing with nearly $30,000 worth of securities, the Bank should be in some contact with the co-owner. That there was no insuperable obstacle to the Bank making contact with Katharine is evidenced by the fact that it had no trouble notifying her of the pending foreclosure in this suit. The Federal Reserve Board definition of “good faith” requires as much. The Board’s Regulation U governs stock-secured extensions of credit by a bank and
requires that the customer’s statement on this form be accepted by an officer of the bank acting in good faith. Good faith requires that such officer (1) must be alert to the circumstances surrounding the credit, and (2) if he has any information which would cause a prudent man not to accept the statement without inquiry, has investigated and is satisfied that the statement is truthful.
The bank manager who signed the document in this case made the following declaration:
I have supplied the information required of the bank and accept the customer’s statement on this form in good faith as defined below.* [The asterisk leads one to the Regulation U definition.] I am *371familiar with the provisions of Regulation U.
The conduct of the Bank can not be said to have measured up to this objective criteria of “good faith.” No Bank official ever personally witnessed Katharine’s signing on any documents involved in this transaction. The signatures on two of the documents— the note itself and the stock power — are forged in what appear to be two totally different hands. And the space on the stock power for witnesses (“Signed, sealed and delivered in the presence of”) was left blank.
A failure to make inquiry under circumstances which are sufficient to put a prudent businessman on notice is sufficient to establish “bad faith.” The notions of “good faith” and “notice” tend to merge and one’s status as a “bona fide purchaser” can be lost just as easily by negligence as by subjective dishonesty. Hollywood National Bank v. International Business Machine Corp., 14 U.C.C.Rptr. 782, 38 Cal.App.3d 607, 113 Cal.Rptr. 494 (1974). The burden of proving one’s status as a bona fide purchaser rests today, as it did in pre-Code law, on the holder of the security. This is so because the holder is the party who can most easily discharge the burden. It is he alone who had the means to verify the signatures, he alone who had access to the facts of the transaction. Krick v. First National Bank of Blue Island, 11 U.C.C. Rptr. 834, 8 Ill.App.3d 663, 290 N.E.2d 661 (1972); Young v. Kaye, 9 U.C.C.Rptr. 713, 443 Pa. 335, 279 A.2d 759 (1971). Under the facts of this case, I would hold that the Bank did not shoulder the burden of proving its status as a “bona fide purchaser.”
2. Richard’s Right to Transfer the Securities.
The majority opinion recognizes the fact that Katharine, as the true owner of forged stock certificates, has the right to reclaim possession of the securities even from a bona fide purchaser. I.C. § 28-8-315(2). This, according to the majority, does not end the inquiry. Because Richard’s signature was not forged, there is said to remain the issue of
whether IB&T acquired an interest and if so, to what extent, in the securities by virtue of Richard Ogilvie’s delivery, indorsement and pledge of the stock certificates.
The majority holds, that Richard acquired a joint tenant’s interest at the time Katharine had the stock issued to herself and Richard as joint tenants, and that Richard’s half interest could thereafter be validly pledged by forging his cotenant’s signature. The majority proceeds immediately from this crucial holding to an analysis of the common law to determine whether Richard’s pledge of the stock to IB&T served to sever his joint tenancy. According to the majority, if a pledge of stock does not sever the joint tenancy, then Katharine can reclaim possession of the entire value of the stock by virtue of her right of survivorship. If a pledge does sever the joint tenancy, then the stock will be returned to Katharine subject to the Bank’s claim on Richard’s interest therein.
The majority’s common law analysis is sound but it need not have been undertaken. One need not reach the common law question of the quantum of interest transferred by a joint tenant’s pledge of forged securities if one first resolves the logically prior Code question of the validity of a joint tenant’s transfer of forged securities.
The majority’s sole consideration of the question of whether or not Richard could validly transfer his interest by forging his cotenant’s signature is handled with the observation that when Katharine had the stock issued to herself and Richard as joint tenants, she thereby
gave Richard Ogilvie some interest in the stock certificates. This interest could thereafter be conveyed to a bona fide purchaser accepting a pledge of the securities.
No analysis of the Code is provided nor is any authority cited in defense of this holding. The holding is all the more remarkable in light of the majority’s statement, only one sentence earlier,
*372Unquestionably, respondent [Katharine] Ogilvie could not have transferred the shares to a third party during Richard Ogilvie’s lifetime without obtaining his indorsement of the jointly owned stock certificates. I.C. § 28-8-308(3)(c).1
The principle announced in this latter passage is correct and must bind, Richard as well as Katharine.
In order to transfer any interest at all in securities, one must be authorized to indorse the securities in question. The governing statute is I.C. § 28-8-308, which reads:
(1) An indorsement of a security in registered form is made when an appropriate person signs on it or on a separate document an assignment or transfer of the security or a power to assign or transfer it or when the signature of such person is written without more upon the back of the security. (Emphasis added.)
Thus the question of Richard’s ability to indorse the securities and transfer his half interest therein, hinges upon the question of whether one joint tenant can ever be “an appropriate person" to make such an indorsement. The Code’s guidance on this point is somewhat indirect:
(3) “An appropriate person” in subsection (1) means
(a) the person specified by the security or by special indorsement to be entitled to the security; or
(e) where the security or indorsement so specifies more than one person as tenants by the entirety or with right of survivorship and by reason of death all cannot sign, — the survivor or survivors
The general rule, therefore, is that where the security specifies more than one person as joint tenants with a right of survivor-ship, the language requiring “an appropriate person” to indorse the security must be construed so as to require all the specified cotenants to sign. Subsection (e) creates a narrow exception to this general rule: if, “by reason of death all cannot sign,” then in this limited situation, “the survivor or survivors” may do so.
Such a reading of I.C. § 28-8-308(3) is in line with the construction placed upon that section by the foremost authority on the Investment Securities chapter of the U.C.C.:
Section 5.08 Appropriate Person; Aggregates.
Aggregates include
(a) joint tenants, tenants by the entire-ties or tenants in common;
Where the form of registration specifies more than one person as joint tenants or tenants by the entireties (with or without reference to rights of survivorship) or as tenants in common, the presumption is that all must sign.
Israels & Guttman, Modern Securities Transfers, § 5.08 at 75-76 (1971). In short, those who are most familiar with the brokerage business know that a single signature is totally ineffective to transfer stock held in joint name. The Massachusetts Supreme Judicial Court lamented the naivete of a plaintiff who thought otherwise:
[T]he son did not understand the legal effect of the joint ownership of stock and intended that his mother during her lifetime should have the right to dispose of the stock any time she wished. He did not then know that his mother could not use the stock without his signature.
White v. White, 346 Mass. 76, 78, 190 N.E.2d 102, 103 (1963). Richard was not so naive. That is why he had to forge his mother’s signature. It will come as a shock to the investment community to discover, as the majority apparently holds today, that because Richard was listed on the certificates as joint tenant, he was authorized under Article 8 of the U.C.C. to transfer or pledge his interest therein by foregoing his cotenant’s indorsement.
*373Such a conclusion, it seems to me, is untenable. For one thing, it creates a lack of symmetry in the law between Richard who can transfer to a third party on the strength of his own signature and the forged signature of his co-tenant, and Katharine who, by the majority’s own admission, had no such power. Moreover, the result hinges upon the happenstance of Richard’s death. The majority holds that Richard was authorized to pledge his interest but that the Bank runs the risk of being cut off by Katharine’s right of survivorship in the event Richard dies. Making the result hinge upon such a fortuitous occurrence runs counter to the very nature of negotiable securities and wreaks havoc with the Code’s system of guarantees whereby the victim of a forgery is always entitled to be made whole — either by the purchaser (even a bona fide purchaser) if the selfsame security is still in his possession, I.C. § 28-8-315, or by the issuer if a bona fide purchaser has received a new security upon registration of transfer, I.C. § 28-8-311. Finally, the rationale adopted upon by the majority introduces a note of uncertainty into the important position occupied by joint tenancies in estate planning and other contexts. For these reasons, I dissent.
. The section quoted from the Code deals with •the right of one or more fiduciaries to transfer stock without the signature of a party who had been named as a co-fiduciary but is no longer serving in that capacity. It is not clear how it serves as authority for the majority’s holding.