Mrs. Maud S. Williams, the plaintiff, who is the wife of Henry Williams, an officer in the United States Navy, purchased on April 19th, 1906, through the New York stock brokerage firm of Buckout, Davis Co. 100 shares of the common capital stock of the Wabash Railroad Company, a body corporate, at twenty-one dollars per share, and paid on account of said shares one thousand dollars. Prior to June 4th, 1907, she made another payment on account thereof of over eight hundred dollars. This stock was represented by a certificate, and that certificate was delivered by Buckout, Davis Co. to her on June 14th, 1907. This stock certificate was in the ordinary form, and was issued to Sternberger, Sinn Co., and certified that they were entitled to one hundred shares of the common capital stock of the Wabash Railroad Company, and that the stock was transferable in person, or by attorney, only on the books of the company in New York upon the surrender of the certificate.
Mrs. Williams owed the New York brokers a balance of two hundred and sixteen dollars and forty-five cents on account *Page 345 of this stock, and on June 4th, 1907, Henry Williams, her husband, who was a customer of Wilson, Colston Co., bankers and brokers of Baltimore, wrote to that firm advising them that Mrs. Williams was carrying this stock and that she desired him to take it over; that it would require between two hundred and two hundred and fifty dollars to do so, and asking if they would be willing to allow him to overdraw his account to the extent required and to carry the stock for him on that margin, stating further that if that was agreeable he would draw his check on them for the necessary amount, and that the securities they held in his name should be amply sufficient to cover the draft, and that as soon as he could obtain the certificate he would forward it to them to hold against his debit account, together with the other securities.
Wilson, Colston Co. agreed to this proposal, and on June 12th, 1907, Mr. Williams drew a check on that firm to the order of the plaintiff for two hundred and sixteen dollars and forty-five cents, being the balance due on the purchase price of the stock, which check she endorsed and delivered to Buckout, Davis Co. This check was paid by Wilson, Colston Co. and charged to the account of Henry Williams. On June 15th, 1907, Mr. Williams sent the stock certificate to Wilson, Colston Co. to be held by them along with other securities belonging to him in pursuance of the understanding and agreement contained in the correspondence to which we have referred. In his letter transmitting the stock he states that it "is the property of Mrs. Maud S. Williams, and should be held subject to her order in case of my absence or demise."
The stock certificate contained the following blank assignment and powers of attorney endorsed on the back thereof:
"For value received have bargained, sold, assigned and transferred, and by these presents do bargain, sell, assign and transfer unto the capital stock named in the within certificate, and do hereby constitute and appoint Henry Sproul Co. true and lawful attorney irrevocable, for and in name and stead, but to use, to *Page 346 sell, transfer, assign and set over all or any part of said stock and for that purpose to make and execute all necessary acts of assignment and transfer, and one or more persons to substitute with like full power.
Dated December 1 1904. STERNBERGER, SINN CO. Signed and acknowledged in the presence of A. GUEST.
* * * * * * * * * * * We hereby irrevocably constitute and appoint Whitehouse Co. our substitute to transfer the within named stock under the foregoing power of attorney, with like power of substitution.
Dated September 28, 1905. HENRY SPROUL CO.
* * * * * * * * * * * We hereby irrevocably constitute and appoint R.J. Montgomery substitute to transfer the within named stock under the foregoing power of attorney, with like power of substitution.
Dated March 2d 1908. WHITEHOUSE CO."
On September 17, 1907, Wilson, Colston Co. borrowed for their own use and benefit ten thousand dollars from the Farmers and Merchants' State Bank of Fredericksburg, Va., which bank acted through the Merchants' National Bank of Baltimore as its agent, and pledged, among other collateral to secure said loan, the Wabash stock belonging to Mrs. Williams, and which had come into their possession under the circumstances mentioned. Wilson, Colston Co. thereafter became insolvent and receivers were appointed to take charge of the affairs of the firm, and on the 29th of February, 1908, the Merchants' Bank acting for the Fredericksburg Bank sold the Wabash stock for seven hundred and eighty-seven dollars and fifty cents, and applied the proceeds to the loan made by the Fredericksburg Bank to Wilson, Colston Co., and on or about the 2nd day of March, 1908, the certificate was cancelled on the books of the Wabash Railroad Company, and new certificates for one hundred shares represented by said certificate were issued by that company, to wit, a certificate of twenty shares to Tracey Co.; and a certificate of eighty *Page 347 shares to DeCopet Doremus. Neither Mr. nor Mrs. Williams had any knowledge of the loan by the Fredericksburg Bank to Wilson, Colston Co. until sometime after the failure of that firm, and believed, until after the failure, that the stock was held by them and was in their actual possession.
Wilson, Colston Co., from a date prior to June 14th, 1907, had in their possession a certificate, or certificates for thirteen shares of the common capital stock of the Baltimore and Ohio Railroad Company belonging to Henry Williams, but standing in the name of Wilson, Colston Co., until November 7th, 1907, at or about which time that firm, pledged said stock, with other securities, as collateral for loans made to that firm for their own benefit by other banks other than the defendant, and after the receivership of the firm of Wilson, Colston Co., the banks with which said stock had been pledged, sold the same. The market value of the Wabash stock was from 11 1/2 to 11 3/4 dollars per share on September 17th, 1907, when it was pledged with the defendant, and on February 29th, 1908, when it was sold by it the stock was worth 7 5/8 dollars per share.
It is a universal custom among banks and bankers in the city of Baltimore to require, from stock brokers offering stock as collateral for loans made to them, an express power of rehypothication properly executed by the owner of such stock, whenever it appears on the face of the certificate that the stock was originally issued, or was at any time transferred, to any individual, firm or corporation, other than a bank, or broker; but "street certificates," that is to say, certificates issued in the name of bankers or brokers, are customarily transferred, sold or pledged by endorsement in blank and delivered, as in the case of the certificate above set forth, and without an express power of hypothecation or rehypothecation. This custom has grown out of the usual manner of conducting the stock brokerage business in accordance with which certificates of stock issued to, or standing in the name of bankers or brokers are treated as the property of such bankers or brokers so far as the power to sell, pledge or hypothecate *Page 348 the same is concerned, and certificates of stock standing in the names of persons other than brokers or bankers are treated as the property of such persons and subject to their direction and control.
Neither the Farmers Merchants' State Bank, nor the Merchants' National Bank at the time of the pledge of the stock by Wilson, Colston Co. had any actual knowledge of the existence of either Mr. or Mrs. Williams, or any right, interest or claim of either in or to the 100 shares of the Wabash stock, or any part thereof. It is contended by the plaintiff that, excluding the value of the Wabash stock in question, the firm of Wilson, Colston Co. at the date of its failure, was upon a correct accounting in Mr. Williams' debt.
On March 12th, 1908, Mrs. Williams sued out a non-resident attachment against the Farmers Merchants' State Bank of Fredericksburg and laid the same in the hands of the Merchants' National Bank of Baltimore. The Virginia Bank did not appear to the short note case; but the Merchants' Bank, as garnishee, appeared and filed a plea of nulla bona in its own behalf, and the general issue pleas in behalf of the Fredericksburg Bank, and issue was joined. It was subsequently agreed that the garnishee bank, at the time the attachment was laid, had and still has in its possession funds, or property belonging to the Virginia Bank and subject to attachment of at least thirteen hundred dollars. All errors of pleading were waived. The case was tried before the Court, without a jury, and resulted in a verdict and judgment for the plaintiff, and both parties have appealed.
These appeals present two questions: first, can the plaintiff, upon the facts stated, recover against the Merchants' Bank the value of the 100 shares of Wabash stock which belonged to her and which were pledged by her husband to Wilson, Colston Co. under the circumstances stated, and by that firm repledged for their own account to the Fredericksburg Bank? If she can recover, what is the true measure of damage? The Court below held that she could recover, and it *Page 349 also held that the 29th of February, 1908, being the date on which the stock was sold, should be treated as the time at which the value of the stock could be ascertained. It is these rulings that form the subjects of the respective appeals.
It is contended by the Merchants' National Bank, as garnishee, that Mrs. Williams cannot maintain this suit because, upon the facts stated, she is equitably estopped to assert her claim to the stock. It is argued that by the delivery of the certificate of stock to Wilson, Colston Co., with the blank assignment and powers of attorney in the form set forth, she thereby clothed them with the indicia of ownership, and that having by that act enabled them, as apparent owners, to obtain money thereon, in the usual course of business from a holder for value without notice of her interest in the stock, she is estopped to show that the apparent owner is not its real owner. This proposition, which constitutes the main ground upon which the bank relies to defeat a recovery, is predicated upon two assumptions: first, that Wilson, Colston Co. was clothed by the plaintiff with an absolute prima facie ownership of the stock; and secondly, that it took the same as security without notice of her rights therein.
The soundness of this proposition depends upon the nature and legal effect of the blank assignment and powers of attorney endorsed upon the certificate. It is definitely settled in this State that such an assignment and such powers of attorney do not clothe the broker with whom the stock has been pledged with theindicia of absolute ownership, and further that such endorsements give no right to the broker to pledge the security for his own debt, and that anyone who accepts the stock as security for a loan to the pledging broker is chargeable with full notice of the rights of the real owner, or original pledgor.
In the case of the First National Bank v. Taliaferro,71 Md. 200, in which the Court considered the legal effect of a blank assignment and power of attorney substantially like the one in this case, it was held that by no possible construction could it be regarded as conferring authority upon one to *Page 350 whom they were delivered to hypothecate the securities for his own debt, and that the bank was chargeable with notice of the limited authority imposed by the power of attorney, and consequently did not acquire any title to the securities against the rightful owner.
The assignment and power of attorney in the German SavingsBank v. Renshaw, 78 Md. 475, were identical in form with those contained in this record. In that case Renshaw sued the bank introver to recover the value of 200 shares of second preferred stock of The East Tennessee, Virginia, and Georgia Railroad which had been pledged as collateral with Nicholson Sons, and which they had repledged to the bank, together with other securities, for a loan of fifteen thousand dollars made by the bank to them. In the course of the opinion in that case, it is said: "The nature of assignment and powers of attorney, such as exist here, were fully considered in the case of Taliaferro v. The FirstNational Bank of Baltimore, 71 Md. 209. There Miss Taliaferro intrusted her bonds to Veazey for sale, with assignments and powers of attorney executed in blank, in all respects like those under which the appellant now claims, and it was held, that by no possible construction could such powers be regarded as conferring authority upon Veazey to hypothecate the bonds as security for his own debt; that the bank took them "with no better title than Veazey himself possessed, and was charged with notice of such facts and matters as made it reasonable that inquiry should be made into such titles." See also First National Bank ofBaltimore v. Taliaferro, 72 Md. 169. Applying this rule to this case, it follows, that having received this stock under these assignments, executed in blank and conferring only a power to sell, the appellant was put upon its inquiry as to the right of the Nicholsons to pledge it for their own debt, and must therefore be charged with full notice of the contract by which they held it."
The cases relied upon by the Merchants' Bank in support of the doctrine of equitable estoppel, among which are the cases ofMcNeil v. The Tenth National Bank, 46 N.Y. 325, *Page 351 and Shattuck v. The American Cement Company, 205 Pa. St. 197, are quite distinguishable in their facts from the case in hand. They all rest upon a familiar principle that where the real owner invests another with all the indicia of absolute ownership, and thus induces an innocent third person, without actual or constructive notice, of the want of power in the possessor to sell or pledge, he cannot against such bona fide purchaser for value without notice assert a claim to the property. Lester v.Allen, 31 Md. 548; Eversole v. Maull, 50 Md. 106; Levi v.Booth, 58 Md. 312. In the McNeil and Shattuck Cases, supra, the blank assignments and powers of attorney were absolute and unrestricted, and the principle of equitable estoppel, upon the facts of those cases, might have been well applied. We find nothing in the New York Cases in conflict with the doctrine declared in the Taliaferro and Renshaw Cases, supra.
The certificate of stock by its terms was "transferable in person, or by attorney only on the books of the company in the City of New York," upon the surrender of the certificate. Mrs. Williams, is conceded by the defendant to be the equitable owner of the certificate of stock, but she never in fact had the transfer made upon the company's books, and because of this omission, it is contended that she cannot maintain this suit. This Court in the case of the Bloede Company v. Bloede,84 Md. 141, said that: "The entry of the transfer on the books of the company is required, not for the translation of the title, but for the protection of the parties and others dealing with the company; and to enable it to know who are its stock holders entitled to vote at meetings and to receive dividends when declared." As against everybody but the corporation itself, and those who have a superior right to have the corporation make the transfer to them, Mrs. Williams was the real owner of the stock, and entitled to sue at law for its possession. 10 Cyc., 599.
The remaining question relates to the rule of damages to be applied. Conversion, in the sense of the law of trover, consists either in the appropriation of the property of another, *Page 352 or in its destruction, or in exercising dominion over it in defiance of the owner's rights, or in withholding the possession from him under an adverse claim of title, and all who aid, command, assist, or participate in the commission of such unlawful acts are liable. In this case the bank, accepting for its own benefit, the stock from Wilson Colston Co., with notice of their want of authority to hypothecate, became by that act jointly liable with that firm for the conversion of the plaintiff's goods, which took place on the 17th of September, 1907. The general rule is that in an action of trover the plaintiff is entitled to recover the value of the converted chattels at the time of the conversion, with interest thereon to the date of the verdict. Sterling v. Garritee, 18 Md. 468;Bonaparte v. Claggett, 78 Md. 105.
We see no good reason why a date different from that whereon the actual conversion took place should be selected as the time for ascertaining the value of the stock.
This stock was pledged not for $216.45 only, the amount required by Mrs. Williams to complete her purchase, but also for the general debit account of Mr. Williams with the firm of Wilson, Colston Co., and therefore, the defendant is entitled to have deducted such amount, with interest, to date of trial as Mr. Williams may owe that firm. If Mrs. Williams has accepted the dividend mentioned in the evidence this also should be deducted from her claim.
We agree with the rulings of the learned Judge in the lower Court, except as to the measure of damage which he applied to the case. He held, in granting the defendant's fifth prayer, that the 29th of February, 1908, should be treated as the date at which the value of the stock should be ascertained, and against that value with interest to the date of trial he allowed a credit of $216.45 with interest thereon from June 12th, 1907, to February 29th, 1908. If neither Mr. nor Mrs. Williams was indebted at the time of trial to Wilson, Colston Co. it was a manifest error to deduct any sum from her claim. *Page 353
For this error the judgment will be reversed, and the case remanded for a new trial.
Judgment reversed, and the case remanded for a new trial, theMerchants' National Bank, Garnishee, to pay the costs.