rehearing">

*593On Application eoe Rehearing.

Fenner, J.

Further argument and consideration have only served to confirm our conviction of the correctness of our original opinion.

The transfer of the stock on the hooks of the corporation, upon surrender of the old certificate, by an agent of plaintiff fully authorized to transfer the stock, and the issuance of the new certificate by the company to the transferee, who had no notice, express or implied, of any fraud or irregularity, and who in good faith incurred liability upon the strength of the title to the stock thus evidenced, operate together as an impregnable protection to defendants against any claim on the part of the plaintiff.

The transfer of this stock by an agent of plaintiff expressly authorized to transfer, was, under the elementary principles of the law of mandate, the entire equivalent of a transfer by the plaintiff herself, and she has no more right to question the title of the transferee than if she had personally executed the transfer.

It was the corporation which was charged with the duty of determining whether the transfer was authorized or not. If it permitted an unauthorized transfer, it remained liable to the plaintiff for her stock or its value, and would have been equally bound to hold harmless the innocent holder for value of the new certificate. If the transfer was authorized, then the corporation and the holder of the new certificate are alike protected.

It does seem superfluous to point out the difference.between this case and that of Stern Bros. vs. Germania Bank, 34 A. 1119, since they have no conceivable resemblance. The agent in that case was absolutely without authority to transfer or divest in any manner the title of his principal to the property which he assumed to pledge for his own debt. Another case relied on is that of Moores vs. Citizens’ Bank, recently decided by the Supreme Court of the United States, but it has no application here. That was a case where the cashier and transfer agent of 'a bank had fraudulently issued a certificate of stock to his sister, falsely-representing to her that it was a transfer of stock held by himself in the bank, and upon the faith of the certificate had borrowed money from her. He held no stock, transferred none on the books of the bank and surrendered no certificate, which under the by laws of the bank and under the very terms of the certificate issued to the party, were conditions precedent to valid transfer and to the issuance of the new certificate.

*594The Court said: “She relied on his personal representations, as the party with whom she was dealing, that ho had such stock; and she trusted him as her agent to see the proper transfer thereof made on the books of the bank. Having distinct notice that the surrender and transfer of a former certificate were pre-requisites to the lawful issue of a new one, and having accepted a certificate that she owned stock without taking any steps to assure herself that the legal pre-requisites to the validity of her certificate, which were to be fulfilled by the former owner and not by the bank, had been complied with, she does not, as against the bank, stand in the position of one who receives a certificate of stock from the proper officers without notice of any facts impairing its validity.”

To deprive the case of any application to the one in hand, it is sufficient to say that “all the pre-requisites to the validity of the certificate” had here been complied with. The stock did exist; it had been transferred on the books of the bank; the old certificate had been surrendered; and, therefore, the defendant here did “ stand in the position of one who receives a certificate of stock from the proper officers without notice of any facts impairing its validity.” What that position is, the opinion of the Court in the case referred to sufficiently indicates, and is there formulated in the following general proposition: “A certificate of stock in a corporation, under the corporate se'al and signed by the officers authorized to issue certificates, estops the corporation to deny its validity, as against one who takes it for value and with no knowledge or notice of any fact tending to show that it has been irregularly issued.” As it thus estops the corporation, so it estops the former holder of the stock, under whose authority the corporation acted in issuing the certificate.

It is, therefore, ordered that our former decree herein remain undisturbed.

Dissenting- Opinion.

Roché, J.

A second examination of this case, and an exhaustive consideration of the authorities submitted to us on rehearing, and which had not been considered on the first hearing, have led me to the conclusion that there was error in our first opinion.

It is conceded on all sides that the stock in question was the undisputed and lawful property of plaintiff, and it is not contested that she could not be deprived of her property without her consent, or without some act of negligence on her part.

*595It is in full proof tliat slie acquired tlie first; knowledge of the unlawful disposition of her stock only a short time previous to the institution of this suit for its recovery or its value. Hence she cannot bo charged, and it is not even averred, that she has ratified by acquiescence or long silence, preceded by knowledge, the act of her agent in the premises.

The crucial test of the controversy is, therefore, to ascertain whether she is legally bound by the transaction through which her stock was disposed ot.

1. The first inquiry must be directed to a proper construction of the contract between the defendants and Honold & Co., under which her shares of stock went into the possession of the defendants, who subsequently sold the same, and accounted for the proceeds to their debtors, Honold & Co.

Although the transaction, by its terms, purports to be a transfer of the ownership of the stock, it is manifest from defendants’ own pleadings and from the whole record, that it was not a sale; that it vested no ownership in the defendants as ostensible transferees, and that it was purely and simply an act of pledge, under the guise of an apparent transfer.

It is not even alleged or pretended that the defendants paid any money, or gave any consideration for the transfer at the time that it was made. The consideration was avowedly an antecedent debt, originating from the defendants’ purchase of Honold & Co.’s drafts, and the subsequent refusal of the same by the drawees. In their letters to Honold & Co., the defendants in accepting the pretended transfer of tlie stock, used the following language:

“We note that you have transferred to us, on the books of the company, one hundred shares of stock of the St. Charles Street Railroad Company, certificate of which stock you had deposited with us as collateral security to cover margin on the consignment; any dividends which may become payable on said stock, whilst in our possession, to be paid to us and and placed to your credit in the transaction.”

In Ms testimony on the trial of this case, one of the defendants stated: “We placed the dividends which we collected on the St. Charles Street Railroad stock to their credit.” (Honold! & Co.) “The last being received by us in May, 1878.” * * * “ That stock was, in May, 1878, sold by us through our brokers for a price higher than limited' by Honold & Co. and the- proceeds placed to their credit. Honold & Co. were duly notified of the sale and were satisfied and ratified it.”

*596It is, therefore, too plain for argument that defendants’ possession of the stock was not that of owners, hut that of pledgees, not for the debt of plaintiff, hut that of Honold & Co.

2. The next inquiry is, whether plaintiff’s agent had power to pledge her stock.

The suggestion at once arises that lie did not make the pledge, hut his Arm did. Blit conceding, for the sake of argument, that the pledge was his act, the inquiry is, whether the mandate to sell movable property includes the power to pledge the same.

The proposition is answered in the negative by the text of the Code. Article 2997 reads : “Thus the power must be express and special for the following purposes:

To sell or to buy.

To encumber or hypothecate.”

Hence it follows that the power to pledge, which is an incumbrance and which to movable property, stands as a mortgage to immovable property, must be express and special and cannot be included in a mandate to sell stock and collect dividends.

In the case of Woodhouse vs. Insurance Company, 35 A. 242, this Court held that the power to pledge did not include the power to sell. The same rule prevails in the common law. Booth vs. Farmers and Mechanics’ National Bank, 74 N. Y. Reports 228.

In support of their contention to the contrary, defendants’ counsel cite the two following cases: Clark & Brisbin vs. Bouvain, 20 A. 71, Davidson & Hill vs. Bodley, 27 A. 150. In the first of these cases the fsale complained of had been made by a pledgee under an act of pledge, and not by an agent under a power of attorney. The complaint was that the pledgee had sold other and more property of the pledgor than had been pledged to him. In the second case the agent for the sale of machinery had pledged it for his own debts to a third party, who had no knowledge that Ms debtor’s possession was that of an agent. Hence it is clear that neither is in point on the question under consideration.

3. The last inquiry is, whether the defendants, under the circumstances of this case, are protected from plaintiff’s attack, by the certificate of the company that the stock had been transferred to them.

If they had purchased the stock, for valuable consideration at the time of the transfer, they worild unquestionably be entitled -to that protection.

*597But, as tlie record shows, they were not the purchasers hut merely the pledgees of the stock. It was not pledged as the property of plaintiff, hut as that of Honold & Co. Throughout the whole transactions they treated, handled and finally sold the stock as the property of that firm, their debtors.

In their letter of May 18, 1877, which was the incipient step to the transaction, Honold & Co. stated to the defendants: “We, to this effect, have transferred to your name on the hooks of the St. Charles Street Railroad Company and handed to you the certificate for one hundred shares of the said company’s stock, which you will please consider as a margin deposited by us on this consignment.” * *

Hence it is clear that the stock was offered on the one hand, and accepted as a margin or collateral security on the other, as the property of Honold & Co., without any reference to, or concern about, the power of the agent, a member of the firm, but entirely distinct from it. Honold & Co. were not the agents of plaintiff, and she had never clothed them with the 'insignia of ownership of her stock.

True, the transfer on the books of the company was made by plaintiff’s agent and in her name, and quoad the company, the transfer may have been correct. But defendants cannot invoke the legality of the transfer under the power of attorney, because they had no knowledge of its existence and had no concern about its utility in the premises. They did not pretend to deal with an agent, or bargain for the property of a third party. They took the word of Honold & Co. to the effect that they were the owners of the stock, and they must take the risk of their truthfulness.

They are in the attitude of a pledgee who receives valuable property in the possession and apparent ownership of his debtor, without inquiring into the latter’s title or right of ownership.

Knowing that they had bought no stock in the-company, they accept and quietly rely upon a certificate that they have become owners of one hundred shares of its stock, without making any inquiry into the title of their ostensible transferrors. They cannot invoke the rule which protects an innocent transferee of stock, without notice of its invalidity.

They are clearly amenable to the rule laid down by the Supreme Court of the United States in the case of Moore vs. Citizens’ National Bank of Piqua, Federal Reporter, vol. 4, part 7, p. 345. In a decision rejecting plaintiff’s claim to certain shares of bank stock, of which she held a certificate issued in her name, the Court said: “The certificate *598which be delivered to tlic plaintiff was not in his name, but in hers; stating that she was entitled to so much stock. * * * The very form of the certificate was such as to put her ou her guard. She was not applying to the hank to take stock, as an original subscriber or otherwise, but she was bargaining with R. B. Moore for stock’ which she supposed him to hold as his own. She knew that she had not held or surrendered any certificate, and never asked to see his certificate, or a transfer thereof to her. * * * She relied upon his personal representation, as the party with whom she was dealing, that he had such stock.” * * »

In our case there is no question as to the transfer of the stock on the company’s book. But had the defendants inquired, as it was their bounden duty to do, into the transfer on the books of the company, they would inevitably have discovered that they were dealing with stock as the property of Honold & Co., but which was the property of this plaintiff.

In that particular the circumstances of this case are not as favorable to the defendants as were those in the case of Stern Bros. vs. Germania Bank, 34 A. 1120. In that case the defendant bank had no means of ascertaining the nature of Bader’s possession of coupons which were payable to bearer, and which Bader held for collection.

The omission by these defendants to make necessary inquiries into the alleged title of their debtor, which were so easy to make, is fatal to the defense, and places them in the attitude of agents who have sold property belonging to third parties and not to their principal.

4. The plea of prescription of three years cannot avail them, because their possession was not as owners, but as pledgees. This is shown by their own-pleadings.

The possession of three years contemplated by Art. 3506, Civil Code, must be as owner.

“The creditor cannot acquire the pledge by possession, whatever may be the time of his possession.” C. C. Art. 3175.

I, therefore, conclude that plaintiff was entitled to recover, and I dissent from the opinion of the majority.

Bermudez, C. J. concurs in this opinion.

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