author: Comstock, J.

text:
    The Mechanics’ Bank v. The New York and New Haven Rail Road Company.
    The act, which incorporated the defendant, limited its stock to $3,000,000, and divided it into shares of $100 each; certificates for all the stock were issued. Its by-laws prescribed that transfers of stock should be made on its transfer books, and that any outstanding certificate of ownership should be surrendered before such a transfer was made, and a new certificate issued. It established a transfer agency, appointed its president, Schuyler, transfer agent, and he was authorized and accustomed, on a transfer of stock on the hooks under his charge, and the surrender of the certificate therefor, to execute and deliver a new certificate to the transferee, which stated that he was entitled to the number of shares of stock specified in it, transferable on the books of the company by him or his attorney, on the surrender of such certificate.
    The agent fraudulently issued to one Kyle, a certificate, in the usual form, for eighty-five shares of stock, when the latter owned no stock, and none stood on the hooks in his name, and no certificate for such stock had been surrendered. The plaintiffs, in good faith, and relying on the certificate as regularly issued and valid, made a loan to Kyle on the security of and on receiving from him the certificate, with an assignment of the stock, and a power of attorney to transfer it. Kyle failed to repay the money lent and became insolvent. The defendant refused to permit a transfer of the eighty-five shares to be made on its books to the plaintiffs, or to pay to them the value of so much stock. This action was brought thereupon. The Judges delivered opinions seriatim.

    Conclusions of Slosson, J.
    1. Had the certificate in question been issued under a resolution of the Board of Directors, and with the corporate seal affixed, the act, though void as operating to create new stock, or to give to the purchaser the rights of a shareholder, would be valid in so far as to entitle a bond fide holder for value to an indemnity from the corporation. It would have been an act coming within the range of the corporate powers conferred by the charter, and which the corporation had the capacity in fact to do, and though a fraud on the eharter, would not have been a nullity, nor necessarily void, and the defendants would have been estopped as against a bond fide holder of the scrip for value from denying that it was the act of the corporation.

      2. In legal effect, the act differs in no respect by reason of having been done by an agent of the corporation, it being conceded that he had full powers in that particular business, and it being an act ostensibly within the limits, and done in the performance of his legitimate duties.
    5. As transfer clerk, Schuyler stood in the position of a general agent of the corporation, in a particular business; that is, of an agent entrusted with the entire ■ business of that department, under the rules prescribed by the by-laws and regulations of the Board of Directors; within the limits of that employment, the public had the right to regard all acts done by him as rightfully done; so long as they had no reason to suspect the contrary, and his acts, thus done, would be binding on the corporation, without showing its assent or participation, so far as would be necessary to protect innocent parties, who had dealt with him in that capacity.
    4. It forms no exception to this rule, that the act done by the agent may be an act which operates as a fraud upon the rights of his principal, but to entitle a party, dealing with the agent, to the benefit of the rule, he must be neither participant in the fraud, nor have actual notice of it, nor have been put on inquiry by any facts or circumstances calculated to awaken suspicion: in other words, he must have been a party dealing strictly bona fide, and without notice of the fraud, actual or constructive.
    6. The title to the stock in question was not affected in the hands of the plaintiffs, by their omission to inspect the transfer books of the company, and to institute inquiries as to whether the certificate had been issued upon a surrender of a former certificate representing actual stock, in compliance with the regulations and by-laws of the board. These regulations are provisions intended chiefly for the security and benefit of the company itself in the payment of its dividends, and in determining who are the partieB properly entitled to vote at the election of its officers, and liable for assessments on shares, <fco., and a bond fide purchaser has a right to assume that the certificate represents actual stock, and that the company whose business it is, has done its duty, in seeing that the old certificate has been duly surrendered before the issuing of the new. Moreover, no person, other than a stockholder, has a legal right to an inspection of the books, and might properly be denied the privilege, if asked for.
    6. A corporation, equally with an individual, is liable-to third parties for the fraudulent acts of its agents, committed in the course of their employment.
    7. The certificate creates a binding obligation on the defendants, which they are precluded from denying as against the plaintiffs, to be their act, it having been created by their lawfully constituted agent, within the scope of his legitimate powers, and in the very exercise of those powers, though in abuse of them.
    8. Though the defendants may not be able, by reason of the limitation imposed by their charter upon the amount of their capital and number of their shares, to admit the plaintiffs to the rights of stockholders, by permitting a transfer of this stock on their books, they are not at liberty on that account to repudiate the act of the corporation, but must make compensation to the innocent holders of the certificate, equally as an individual would be bound to do, who has undertaken to do an act which he finds himself unable to perform, and whose default has resulted in pecuniary injury to another.

      Conclusions of Hoieman, J.
    1. There can be no view of the case in which the legal relations of the parties will not he indicated and governed by the certificate issued to Kyle.
    2. That certificate contained a representation, and a contract. A representation that Alexander Kyle was entitled to eighty-five shares of stock; a contract that he or his attorney should have the right to a transfer of the same on the books of the company.
    3. The charter, by-laws, and practice of the company conferred an apparent power upon Kohert Schuyler as transfer agent to make and deliver such certificate.
    4. The company was hound to fulfil the contract thus purporting to he entered into, unless the same was attempted to he enforced on behalf of one not a bond fide purchaser or holder; or unless such holder could not claim fulfilment by reason of a statutory prohibition against it, of which he was chargeable with notice.
    6. The legal construction of the contract embodied in the certificate, is, that the holder shall be admitted as a member and shareholder, as participating in the franchises of the company, and as having an interest in its property in the proportion which eighty-five shares bear to the whole capital stock.
    6. This contract can be performed at the expense of the shareholders whose stock is admitted to be genuine, either by a proportionate contribution of the number of shares, or a proportionate diminution of the nominal value of the shares held by them. That in this manner the capital stock of the company would not be ' exceeded.
    1.That by such mode of performance, no provision of the charter, or of public policy would be violated or evaded. That it was for the State of Connecticut only to avail itself of any such supposed violation, and that it was not within the power of the company to repudiate the contract on this ground.
    That the company was bound to have permitted a transfer of such stock when demanded. That a right of action arises on the ground of that refusal only, and that the damages awarded at the Special Term were, upon the facts found, a proper measure of damages.
    That for these reasons the judgment ought to be affirmed.
    Conclusions of Bosworth, J.
    1. In issuing the certificate, Schuyler was acting within the scope of his powers as transfer agent, and the issuing of it, was, in judgment of law, the act of the corporation.
    2. By entrusting to him that department of business, and holding him out to the world as the officer by whom the company would transact it, it represented his official acts to be entitled to credit, and became responsible for his fidelity in that employment.
    3. Any person to whom certificates of stock, issued by such officer, in the usual form, and authenticated by him in the usual manner, are offered for sale, is, through them, assured by the company, that the facts are as they represent them to be, and is as much authorized to purchase, relying on the truth of that representation, as a merchant is to sell, upon the representation of a third person that the vendee is worthy of credit.

      4. A purchaser in good faith, for value, and in the ordinary course of business, of such a certificate, although it proves to have been fraudulently issued, is entitled to recover his damages of the company, if the latter refuse to permit a transfer of the stock, or to reimburse to the purchaser any part of his advance. He cannot be charged with having been negligent, or with a want of due caution, in having trusted to the certificate of the proper officer without further inquiry, when there was nothing in the circumstances under which it was offered to him, or relating to the person offering it, or to the amount of the stock so offered, justly calculated to excite the suspicions of a prudent and cautious man, that the officer of the company had departed from his duty in issuing, or that the holder had been guilty of any improper practice in obtaining it.
    Conclusions of Campbell, J.
    1. The capital stock of the corporation could not be enlarged by any act of the directors or stockholders themselves, much less by any unauthorized act of the agent Schuyler. The corporation is, itself, a creature of law, authorized by the supreme government of the state, and can only be enlarged by the power whieh creates it.
    2. The agent, Schuyler, acted under a general power, but such power was limited to the subject matter merely, which was the stock standing on the transfer books in the city of New York.
    3. The claim of the plaintiffs is not founded directly and exclusively upon any contract to pay money, and is not like the case of a fraudulent over-issue of bank-notes by the officers of a corporation, for the benefit of such officers, and when the suit would be directly upon the notes themselves.
    4. The principal, though liable for the acts of the agent, when within the scopes of his general authority, is not liable for such acts when fraudulently or maliciously done, except in a case in which the action is founded directly upon the instrument or contract put forth by the agent in the name of his principal.

      5. When the agent has practised a fraud on third parties, and when the right to recover is sought to be established substantially, no matter how the pleadings are framed, by the proof of that fraud, and where false bills of lading, false certificates of stock, and other false instruments are given in evidence for that purpose, then, though the agent may have availed himself of his position as master of the vessel, or transfer agent, or in some other post of trust and confidence, to commit such fraud upon third persons, the agent alone, and not the principal, is liable.
    Conclusions of Oakley, Ch. J.
    1. Schuyler’s power as transfer agent of the company, was limited and restricted by the provisions of the by-laws of the company, and could only be rightfully exercised under the circumstances prescribed by these by-laws.
    2. The certificate may be viewed as a declaration or representation to the world that Kyle owned the stock. It must be presumed, under the circumstances, that the company was aware that he was in the constant habit of issuing such certificates in the regular course of the business of the company. This act being done by its authority, the same legal consequences follow, as if it were done directly by the company itself.

      8. The plaintiffs, having acted in good faith, and with due caution, had a right to rely on the certificate. Schuyler betrayed the confidence reposed in him by both parties. The company, which placed him in a position enabling him to commit the fraud, must bear the loss caused by such acts of their dishonest agent, and not third persons who trusted to his representations, made in behalf of the company, and by their clearly implied authority.
    The Court of Appkaib reversed the judgment rendered, and held, as per opinion of Comstock, J.
    1. The certificate was void in the hands of Kyle, the first holder, because it was . fraudulently issued, and he paid nothing for it.
    2. It was also void in'his hands, because issued by an agent without authority, there being no surrender of a previous certificate, and no transfer to him on the books of actual stocks, and this want of authority was known to him.
    3. It was void, because the stocks it professed to represent had no existence, and could not exist under the charter of the company, all the powers of the company in the creation and issue of stock being exhausted. The certificate is void under all possible circumstances, so that no person, in whatever situation, can claim under it the rights of a stockholder, or damages on the ground of a refusal to admit him to such rights.
    4. But, assuming the corporation competent to recognize the certificate, it is not bound to do so, because the plaintiffs could not acquire, by the transfer of the certificate to them, any rights against the company which Kyle, their assignor, did not possess. The certificate is not a negotiable instrument in such sense that a bond fide assignee of it, with power to transfer the stock, can take it exempt from the equities which existed against his assignor.
    6. There is a distinction between the apparent powers of an agent, and his acts apparently, but really within the power. His apparent powers, as those conferred by his appointment, or those with which he is clothed by the character in which he is held out to the world, although not strictly within his commission. "Whatever is done under an authority thus manifested, is actually within the authority, and the principal is bound for that reason. The appearance of the power is one thing, and for that the principal is responsible. The appearance of the act is another, and for that, if responsible, I think the remedy is against the agent only.
    AH that can be said in favor of the plaintiffs is, that the certificate itself implied a representation or assurance that it was issued within the power, or in other words, that the conditions on which the power depended had been fulfilled. The representation or assurance, if such it be called, was the unauthorized act of the agent. The defendants never authorized any such representations.
    The precise difficulty is, that the plaintiffs relied upon the appearance which the agent gave to the act, and by that they were deceived. They were under no . deception as to the power, in its real or apparent scope. Testing the question by any rule of agency, the defendants were not bound by the transaction.
    (Before Oakley, ch. J., Campbell, Boswobth, Hoffman and Slosson, XX)

    Heard May 18; May 25; June 2.
    Decided June 30, 1855.

      This action came before the court, on an appeal from a judgment in favor of tbe plaintiffs, upon a trial bad before Boswortb, J., without a jury.
    The pleadings in the action, omitting its title, and their verification, are as follows:
    The said plaintiffs state that they are a corporation, duly incorporated by the laws of the state of New York, and that their office and banking-house for the transaction of their business is in the city of New York.
    The plaintiffs further state, that the defendants are a corporation duly incorporated by the laws of the state of Connecticut, and recognized as a corporation by the laws of this state; that part of their road is located and established within this state; and that said defendants have other property within this state; and that, from a period shortly after the organization of the defendants’ company, they have had and maintained an office and transfer agency in the city of New York, and still have such office there.
    The plaintiffs further state, that from the time of the establishment of such office and transfer agency in the city of New York, which was, as they are informed, and believe, in the spring or summer of 1846, Robert Schuyler, hereinafter named, was a director and president of said company, and its transfer agent in the city of New York, charged with the keeping of its transfer-books, and the issuing certificates of ownership of its stock at that place, and was, by resolution or appointment, continued in said office until his resignation, on or about the third day of July, 1854.
    The said plaintiffs further state, that being such corporation, on or about the thirteenth day of May, 1854, at said city, they advanced and loaned to one Alexander Kyle, at his request, the sum of twelve thousand dollars, in consideration of his making and delivering to the plaintiffs his certain promissory note, together with certain securities therein mentioned. The said note fully expresses the agreement between said Kyle and these plaintiffs, and is in the words and figures following, that is to say:
    “$12,000. New York, May 18th, 1854.
    “ On demand, I promise to pay to E. W. Edmonds, Cashier, or order, twelve thousand dollars, for value received, with interest, at the rate of 7 per cent, per annum, having deposited with him, as collateral security, witb authority to sell tbe same at tbe Brokers’ Board, or at public or private sale, or otherwise, at bis option, on tbe non-performance of tbis promise, and without notice, one hundred and ten shares Harlem preferred stock, and eighty-five shares New Haven R. R. stock, as per certificates.
    “New Haven 4574 1 Sold.
    “Harlem pref. 1681 ) Nos.
    “ALEX. KYLE.”
    The said plaintiffs further say, that said E. W. Edmonds named in said note, was and is the cashier of these plaintiffs, and acted in said matter as the agent of these plaintiffs, and that said note belongs to, and is the lawful property, of these plaintiffs, and has been duly endorsed over to them by said F. "W. Edmonds.
    The said plaintiffs further say, that said Kyle, together with said note, delivered to these plaintiffs, as collateral security thereto, a certificate for one hundred and ten shares of the preferred stock of the New York and Harlem Railroad Company, in the usual form, and also a certificate for eighty-five shares of the capital stock of the defendants, signed by said Robert Schuyler, who was then the transfer agent of said defendants, and which said last-mentioned certificate was in the words and figures following, that is to say:
    “New York and New Haven Railroad Company.
    “No. 4,574.
    “ Capital, $8,000,000. New York Office. Shares, $100 each.
    “Be it known, that Alexander Kyle, of New York, is entitled to eighty-five (85) shares of the capital stock of the New York and New Haven Railroad Company, transferable on the books of the company, at its office in the city of New York, by the said Alexander Kyle or his attorney, on the surrender of this certificate.
    “ROBERT SCHUYLER,
    “ Transfer Agent.

    “New York, April 20th, 1854.”
    And at the same time said Kyle executed and delivered to these plaintiffs an instrument in writing executed under his hand and seal, and in the words and figures following, that is to say:
    “Ksrow all men BY these presents, That I, Alexander Kyle, for value received, have bargained, sold, assigned, and transferred, and by these presents, do bargain, sell, assign, and transfer unto the president, directors, and company of fhe Mechanics’ Bank in the city of New York, eighty-five shares in the capital stock of the New Haven Railroad Company, standing in my name on the books of said company, and transferable only at its office in the city of New York. And I do hereby constitute and appoint F. W- Edmonds, cashier of said bank, my true and lawful attorney irrevocable, for me and in my name and stead, but to their use, to sell, assign, transfer, and set over all or any part of the 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, hereby ratifying and confirming all that my said attorney or his substitute or substitutes shall lawfully do by virtue hereof.
    “In witness whereof, I hereunto set my hand and seal, the twenty-sixth day of April, one thousand eight hundred and fifty-four.
    “ALEX. KYLE. [l.s.]
    “Justus Earle.”
    These plaintiffs further say, that they supposed said certificate to be, and'received it as, a genuine and valid certificate for what it purported to be, and that the signature thereto is in the proper handwriting of said Robert Schuyler, and that it conforms in every-respect to the defendants’ certificates for said stock, which are admitted to be genuine, and such as they have always been in the habit of using.
    The plaintiffs further say, that the par value of said Stock was one hundred dollars per share; and its market value, at the date of said certificates, was ninety-four per cent.
    These plaintiffs further say, that on or about the seventeenth day of June last, they received from said Kyle on account of his said promissory note, the sum of two thousand dollars, which they caused to be duly endorsed on said note; and the balance of said note, with tbe interest thereon, is still wholly due and unpaid.
    The plaintiffs further say, that they caused said note to be presented to said Kyle for payment, but that he refused to pay the same, and is insolvent, as these plaintiffs on information and belief aver.
    The plaintiffs further say, that they have presented said certificate and power of attorney at the transfer office of said defendants, and demanded leave to transfer said eighty-five shares of stock, but that such leave was refused, and that the said company justify said refusal, and allege and maintain that said stock is spurious, and issued without any authority of said company, whereby said certificate is rendered worthless and unavailable in the hands of these plaintiffs.
    The plaintiffs further aver, that the said New York and Harlem Railroad Company on similar grounds, refuse to permit a transfer of the said one hundred and ten shares represented in the other certificates so received by said plaintiffs from said Kyle. And the said plaintiffs further say, that they have also requested said defendants to repay or reimburse them the amount of the market value of eighty-five shares of their stock at the time of said loan to Kyle, but that said defendants have refused to pay the plaintiffs the said amount, or any part thereof.
    The said plaintiffs, therefore, as holders of said certificate of eighty-five shares of the stock of the said defendants, whereby they certified in due form of law and by their regularly appointed and elected officers, that said Kyle was entitled to eighty-five shares in their preferred capital stock, — whereas, as it appears fry defendants’ present assertions, he was not then entitled to the same, — claim to recover from the said defendants the sum of eighty-five hundred dollars, the par value of said stock, together with interest thereon from said 13th day of May, 1854; and they pray judgment therefor, together with their costs and allowances, or for such other relief as they may be entitled to.
    The defendants in answer to the complaint say:
    First. That they are a corporation duly incorporated under an act of the Legislature of the state of Connecticut, a true copy whereof is hereunto annexed, marked Schedule A, maintaining a portion of their road, and transacting business in the states of New York and Connecticut, under an act of tbe Legislature of New York, recited in another act of tbe Legislature of Connecticut, a copy whereof is hereunto annexed, marked “ Bthat the capital stock of the company consisted, and now consists of three millions of dollars only, to which the same had been increased in pursuance of the act of incorporation, and for which certificates had been issued, and were then held by the owners thereof, all which was then and ever since known.
    Second. That the said capital stock so limited, and in shares of $100 each, could not, as the defendants are informed and believe, at any time, either by the laws of Connecticut, or of New York, or by any act of the directors or officers, be increased beyond the said three millions, nor could the shares, or any of them, be reduced or diminished, or the par value damaged or altered; and that by the laws of Connecticut, the adoption of any act or resolution by the board of directors, for such, or any similar purpose, would be a misdemeanor, subjecting the company to a forfeiture of its charter, and other disabilities, and the directors to fine and imprisonment, and that the said capital could neither be increased, diminished, or reduced, without an act of the Legislature of Connecticut authorizing it, nor even then, without the assent of the corporation.
    Third. That the said company immediately after the granting of its charter, and in pursuance thereof, adopted certain by-laws and rules, in relation to transfers of, and certificates of its stock, which ever since have been, and up to the 5th day of July last, were in full force and effect, and of which the following are copies.
    TRANSFERS AND CERTIFICATES OF STOCK.
    The principal transfer office shall be in the city of New Haven; but transfer agencies may be established in the cities of New York and Boston, by resolution of the board of directors; and all transfers of stock at any office, shall be made under, and in compliance with such rules and regulations, and by such instruments of assignment and transfer, (which need not be under seal,) as may from time to time be made, ordered, and appointed by the board of directors.
    Certificates of stock shall be in such form, and issued under such rules and regulations, as the board of directors may from time to time'appoint and direct; but when a certificate of stock bas been issued to any stockholder, no second or duplicate certificate, unless tbe same shall be lost or mislaid, and then only on special resolution of the board of directors, and the compliance with the rules and regulations, conditions, and stipulations, as to the renewal of certificates lost or mislaid, which may be adopted, imposed, or required from time to time, by the board of directors.
    On motion, Resolved, That the above by-laws be adopted.
    On motion, Resolved, That the president be requested to procure a suitable seal, and submit the same to the board of directors.
    On motion, Resolved, in pursuance of the provisions of the act of incorporation, and of the by-laws of the company, in reference to the transfer of stock, as follows:
    1. All transfers of stock at any of the offices of the company shall be made in the transfer books of the office at which the stock proposed to be transferred shall stand to the credit of the party to make the transfer.
    2. In case a certificate of the stock to be transferred shall have been issued, the same must be surrendered prior to the tranfer being made.
    3. In case any assessment or assessments are due and unpaid on the stock to be transferred, the same must be paid in full, with interest, prior to the transfer being made.
    4. Transfers may be made by the stockholders, in person or by duly authorized attorney, by the execution of the instrument in writing, without seal, in the transfer books as above provided, of the following form and tenor.
    New York and New Haven Railroad Company.
    No.
    Capital, $ . Shares, $ each.
    (New York Office.)
    Eor value received, I hereby assign and transfer unto ■ all right, title, and interest in
    shares in the capital stock of the New York and New Haven Railroad Company.
    New York, 18 .

      5. Tbe execution of this instrument of assignment and transfer shall sell, assign, and convey, from tbe grantor to tbe grantee, all tbe rights, privileges, and appurtenances of tbe shares of stock transferred, and shall divest and discharge tbe grantor and bis representatives from all liability thereafter, for any and every assessment which may be at any subsequent date charged upon said shares and the holder thereof: unless the same shall have been again transferred to the said grantor.
    6. Powers of attorney for the transfer of stock may be in the usual-,form, but they must be under seal, and executed by the holder of the stock in his proper handwriting, or by one of the firm when the stock is in the name of a firm, in which case one seal, as the seal of all the members of the firm, will be deemed in compliance with this resolution.
    On motion,

      Resolved, That the board will at a future day make the necessary rules and regulations-for the issue of certificates of stock in lieu of any which may be lost or mislaid by the parties to whom they may have been originally issued.
    Fourth. These defendants admit that Robert Schuyler named in the complaint was, and ever since the organization of the company up to the third day of July last, has been, its president and its transfer agent, appointed by the company in pursuance of its charter and by-laws, for the city of New York only; that he was charged with the keeping of its transfer books, and the making of the certificates of stock whenever any transfer of the stock thereof should be made by any former owner, and a new certificate therefor be required by the transferee; but these defendants deny that he was ever charged with the issuing of, or that it was his duty to issue, certificates of ownership of its stock in any other manner, for any other purpose, or with any other powers than those conferred by its charter and by-laws.
    Fifth. These defendants say they have no knowledge or information sufficient to form a belief whether on the 13th day of May, 1854, or at any time, the plaintiffs loaned to Alexander Kyle, named in the complaint, the sum of $12,000, or any other sum, upon the consideration in the complaint stated, or upon any other consideration, or whether the said Kyle executed the note or delivered tbe certificate purporting to be signed by Robert Schuyler, transfer agent, dated April 20, 1854, and the power of attorney dated the 26th of April, 1854, set forth in the complaint, or any other certificate, and they therefore deny the same; but they admit that E. W. Edmonds, named in the note, was and still is, the plaintiff’s cashier, and, if he acted in the matter set forth in the said complaint, he so acted as such cashier.
    Sixth. That, as they are informed and believe, the said Robert Schuyler, on or about the said 20th day of April, 1854, without any power or authority from the corporation or its board of directors, and without the surrender of any certificate or certificates of stools, and without being requested or authorized so to do by the corporation, and when there was none of its stock standing in his name or in the name of any other person, which he was authorized to transfer, and while the stock of the said corporation remained at the said sum of three millions, without any power or authority to increase it or to diminish the value of the shares, and when it was all owned by other persons, and the certificates therefor outstanding, the said Robert' Schuyler falsely made, forged, and counterfeited, and caused and procured to be falsely made, forged and counterfeited, the certificate set forth in the complaint, dated on that day, for eighty-five shares of stock, and delivered the same to the said Alexander Kyle, who was not entitled thereto and not the owner of any such stock; he, the said Kyle, then well knowing that the said certificate was fraudulently issued, and so forged and counterfeited, and did not represent any genuine stock of the said company, the said Robert Schuyler so delivering, and the said Alexander Kyle so receiving, the said certificate with intent thereby and therewith, to injure and defraud some person or persons to the defendants unknown; and that if the said Alexander Kyle delivered the same to the plaintiffs, the defendants, upon information and belief, say that such delivery did not take place in any business dealing or transaction with the defendants, nor for their use or benefit, nor by any person acting or professing to act as the transfer agent of the defendants or otherwise, as such agent or otherwise, on their account, or upon their credit, or in their behalf; nor did the defendants or any one in its behalf, or while acting or professing to act in its behalf, receive from the plaintiffs or from any person whatever, any money or any consideration therefor, nor did the said .corporation or its board of directors ever authorize tbe making or delivery thereof, nor did they have any knowledge or information in relation to the delivery thereof, nor in any manner assent to or recognize the same.
    Seventh. These defendants have no knowledge or information sufficient to form a belief whether the plaintiffs, when they received the said certificate, supposed it to be, and received it as, a genuine and valid certificate, or for what if purported to be; but they admit the signature thereto is in the proper handwriting of the said Robert Schuyler, and that it conforms to the defendants’ certificates for stock, such as are admitted to be genuine, and such as they have been in the habit of using; they also admit that the market value of their stock, at the date of the certificate, was ninety-four per cent. They further say, that they have no knowledge or information sufficient to form.a belief, whether the plaintiffs have caused the note mentioned in the complaint to be presented to said Kyle, or whether he has refused payment, nor whether any thing remains due thereon.
    Eighth. On information and belief, the defendants say, that on or about the 3d of July, 1854, they discovered that the said Robert Schuyler, professing to act as their transfer agent, had fraudulently made, counterfeited, and issued, or caused to be made, counterfeited, and issued, false and fraudulent certificates of stock, purporting to represent shares of the company, to an amount exceeding one million five hundred thousand dollars, including the eighty-five shares mentioned in the said certificate, which he had used and circulated in his own private business, or in that of the firm of R. & Gr. L. Schuyler, of which he was a member, and not in the business or on account of the company, some of which certificates he had received, and had attempted to transfer the stock therein represented on the books of the company, and that he had in some instances issued other like false and forged certificates therefor; that, in consequence thereof, the stock accounts of the company became greatly confused and embarrassed, and it had already become difficult, and it was daily becoming more difficult, to distinguish the genuine from the spurious stock; and that it thereby became absolutely necessary, in order to the protection of the interests of the company and its stockholders, the further transfers of the stock thereof should be suspended, in order that an investigation might be made to ascertain the amount of the said fraudulant issue, the circumstances under which the same was made, and by whom the same were held; and that for that purpose, and in pursuance of the charter and by-laws, the directors thereof, at a regular meeting held on the 5th day of July, 1854, took proceedings and passed a resolution closing the transfer books; which proceedings and resolution are in the following words:
    “ A communication from Robert Schuyler was presented, resigning the office of president of this company, and also the appointment of director and transfer agent of this company.
    “ On motion, said Schuyler’s resignation was accepted.
    “ On motion, the letter of said Schuyler, resigning the office of president, &c., was ordered to be entered at length on the records of this company, and is as follows, viz.: .
    “New York:, July Bd, 1854.
    “ Gentlemen : — I beg to resign my seat in the board of directors of the New York and New Haven Railroad Company, and also of the office of president, and of the appointment of transfer agent of the stock of the company. Your attention to the stock ledger of your company is essential, as you -will find there much that is wrong. The details can be furnished you with precision, though I cannot do so. In reference to the connection of these transactions with R. & G. L. Schuyler, I wish to make my solemn assurance that in no way has my brother been concerned in them, nor has he ever known or been informed of them; in fact there was no mode in which he could obtain information, except from myself, and I have ever been quite as careful to keep him in ignorance as any other person. He could not even have ascertained the facts from our own books and accounts, and to those of the New Haven Company in my charge, he had no access.
    “ Your obedient servant,
    Robert Sohuyler.
    “ To the directors of the New York and New Haven R. R. Co.”
    “ On motion, Resolved, That the transfer books of this company be and the same are hereby closed until further orders of the board.”

      That immediate and due public notice of tbe said resolution was given, and tbat tbe plaintiffs were informed thereof, and that these defendants declined to assent to any transfer of tbe stock mentioned in tbe certificate set forth in tbe complaint, and to issue a new certificate therefor, and to pay tbe plaintiffs any thing on account thereof, as well for tbe reason tbat tbe said stock was spurious, and tbe said certificate false and forged, as because of tbe said resolution closing tbe said transfer books, and tbat they so informed tbe plaintiff at tbe time; and tbat they in like manner declined to assent to tbe transfer of any and all of tbe shares of tbe company; tbat tbe transfer books have not yet been opened, ■because tbe difficulties which required them .to be closed have not been removed, and because tbe interests and tbe safety of tbe company require tbat tbe transfer books should remain closed until tbe rights and duties of tbe company in regard to tbe fraudulent issue of said stock certificates should be finally adjudicated; and these defendants deny tbat they have ever re&sed to permit or sanction a transfer by tbe plaintiffs of tbe shares mentioned in tbe said certificate, except for tbe reasons and under tbe circumstances herein stated; they also deny tbat such refusal furnishes any cause of action against them, and tbat tbe plaintiff has sustained any damage by reason thereof.
    Ninth. These defendants further say, tbat tbe said Kyle was well known to tbe plaintiffs as a young man without any considerable means, be being then tbe secretary of the Harlem Itailroad Company, at a small salary; and tbat the plaintiffs, by inquiring at tbe office of tbe defendants, and by an examination of their books, could have ascertained whether tbe said certificate was genuine, and whether tbe said Kyle was tbe owner of tbe said shares mentioned therein, and tbat they wholly omitted so to do, and were thereby guilty of culpable neglect and want of care; and tbat tbe defendants are not bable to them, for or on account of tbe said certificates or stock, or in respect of tbe transaction in which they received tbe same.
    schedule a.
    So much of tbe charter of tbe New York and New Haven Kail-road Company as is material, in this action, is as follows:

      Sec. 2. That tbe capital stock of said company shall be two millions of dollars, with tbe privilege of increasing tbe same to three millions of dollars, and to be divided into shares of one hundred dollars each; which shares shall be deemed personal property, and be transferred in such manner and at such places as the by-laws of said company sha.ll direct.
    Sec. §. That the persons named in the first section hereof, or a majority of them, shall open books to receive subscriptions to the capital stock of said company, at such times and places as they or a majority of them may appoint; and shall give such notice of the times and places of opening said books, as they may deem reasonable; and shall receive said subscriptions under such regulations as they may adopt for the purpose; and if more than twenty thousand shares of stock shall be subscribed, they shall have the power to make the shares so subscribed the capital stock of the company — provided, they shall not exceed thirty thousand shares, and in case the subscriptions shall exceed thirty thousand shares, the same shall be reduced and apportioned in such manner as may be deemed most beneficial to the corporation.
    Sec.- 4. That the immediate government and direction of the affairs of the company shall be vested in a board of nine directors, who shall be chosen by the stockholders of said company in the manner hereinafter provided, and shall hold their offices until others are duly elected and qualified to take their places as directors. And the said directors, four of whom, the president being one, shall be a quorum for the transaction of business, shall elect one of their number to be president of the board, who shall also be president of said company; they shall also ehoose a clerk, who shall be sworn to a faithful discharge of his duty, and a treasurer, who shall give bonds, with security, to said company, in such sum as said directors may require, for the faithful discharge of his trust.
    SCHEDULE B.
    So much'of an act to authorize the New York and New Haven Railroad Company to extend their railroad from the Connecticut line to the New York and Harlem Railroad, as has any application, in this case, is as follows:
    Sec. 8. Said company shall be liable to be sued by summons in tbe same manner as corporations created by the laws of this state, and said summons, in case the same cannot be served on the officers of said company, as now provided by law, may be served upon any agent of said company.
    FINDING- AND DECISION OF BOSWORTH, J.
    This cause having been tried before the undersigned, one of the justices of this court, without a jury, at the February Special Term of said court, A. D. 1855, and the evidence therein having been closed, and having heard the counsel of the respective parties, I do, in pursuance of the statute in such cases made and provided, find the following facts:
    That the defendants are incorporated under the acts of the Legislature of the state of Connecticut, set forth in the schedules to defendants’ answer; and are and were transacting business and operating their railroad under said acts, and the act of the Legislature of New York, recited therein.
    That shortly after the organization of the defendants, and in the year one thousand eight hundred and forty-six, they established the rules and regulations set out in their answer, which remained in force until the fifth day of July, one thousand eight hundred and fifty-four; that under said rules and regulations they also established a transfer office in the city of New York, and have ever since maintained the same there, and also established and have since maintained two other transfer offices, one in New Haven and one in Boston. That in 1846, Robert Schuyler was a director in and president of the defendants’ company, and their duly appointed transfer agent in the city of New York, having charge of its office there and of its transfer books, and invested, as such transfer agent, with all the powers conferred by the charter and said rules and regulations, on any transfer agent of the defendants. That said Schuyler continued to be and to act as such director, president, and transfer agent of the defendants, until his resignation, on or about the third day of July, one thousand eight hundred and fifty-four.
    That on or about the thirteenth day of May, one thousand eight hundred and fifty-four, the plaintiffs, a duly incorporated and legally organized banking institution, by and through F. W. Edmonds, wbo was tbeir cashier, on tbe apphcation of one Alexander Kyle, and without any communication previously or then had between the plaintiffs and the defendants, or any of their officers or agents, loaned him the sum of twelve thousand dollars oh his promissory note and collateral securities, being the same which are set out in the complaint; and that their execution and delivery were duly proved. The transfer and power of attorney by Kyle, when delivered to the said Edmonds, was in blank, as to the name of the transferee and the attorney, and the same were subsequently inserted by the. plaintiffs. That the said plaintiffs made said loan in good faith, and had no reason, when they received said certificates, to suppose they were not genuine.
    That the said certificate for eighty-five shares of the defendants’ "stock was signed by Robert Schuyler, and was in the usual form of the certificates issued by tbe defendants, to the holders and owners of the genuine and actual capital stock of the defendants. That the par value of defendants’ stock was one hundred dollars per share, and the market value thereof, at the time of said loan, was ninety-four per cent; on the seventeenth June, one thousand eight hundred and fifty-four, said Kyle paid two thousand dollars on account of said loan; and that the balance of the said note and the interest, is still due and unpaid to the plaintiffs. That -the said note was presented to Kyle for payment, before the commencement of this action; and that he did not pay the same, and is insolvent. The plaintiffs, before the commencement of this action, applied to defendants to have said stock transferred; but the defendants refhsed to permit it, assigning as the reasons and grounds of such refusal, the reasons and the grounds stated in that behalf in their answer. The plaintiffs, before the commencement of this action, also demanded payment or reimbursement from the defendants, of the amount of the market value of eighty-,five shares of their stock; but the defendants refused to pay the same, or any part thereof assigning as the reasons and grounds of such refusal, the reasons and grounds stated in that behalf in their answer.
    It was admitted, and I therefore find, that the certificate of stock of the New York and Harlem Railroad Company, mentioned in the said note, was illegally issued by the said Kyle, as secretary of the said company, and was an excess over and above the limited amount of the preferred stock of that company.
    It was admitted, and I therefore find, that the capital stock of the defendants’ company, prior to January 1, 1850, and to the amount of $8,000,000, the amount limited by their charter, was all paid in and filled up, and certificates issued to bond fide owners thereof, who held them at the time said loan was made, and at the time the said certificate of eighty-five shares was issued.
    It was admitted, that the by-laws and rules of the defendants, in relation to the transfers of their stock, as set out in the answer, were duly passed immediately after the organization of the company, and were in force until after July 5, 1854. But it was not admitted, that proof of such fact was competent or relevant. The plaintiff’s counsel, on the contrary, objected in due time to the introduction of any proof of defendants’ by-laws, rules, or regulations, on the ground that they were incompetent and irrelevant.
    I overruled the objection, and allowed the same to be read in evidence, and the plaintiffs’ counsel excepted.
    It was also admitted, and I therefore find,
    1. That in 1849, the Legislature of the state of Connecticut passed a law, which is still in force, in these words:
    Seo. 289. "When any person or corporation shall usurp the exercise of any office, franchise, or jurisdiction, the Superior Court shall have power to proceed by information, in the nature of quo warranto, to punish such person or corporation for such usurpation, according to the usage and principles of the common law; and also may permit an information in the nature of a quo war-ranto to be filed in the name of the attorney for the state, in the county where the cause of action arises, at the relation of any person desiring to prosecute the same, against any person usurping any corporate franchise or office; and may proceed therein and render judgment according to , the course of the common law.
    2. That Schuyler made and signed this certificate for eighty-five shares of the defendants’ stock, and delivered it to Kyle to borrow money upon it for him, the said Schuyler; and that it did not represent any of the genuine stock of the defendants, being no part of the capital authorized by law. T also find that it was not issued for any lawful purpose whatever, but was a fraud on the part of Schuyler, to raise money for his own private purposes.

      3. That on the fifth of July, one thousand eight hundred and fifty-four, the defendants received from Schuyler the letter in this behalf set out in the answer. That defendants examined their books, and found that Schuyler had fraudulently issued certificates for a large amount of stock, over $1,000,000, for his own private purposes, which in like manner did not represent any genuine stock of the company; and that inasmuch as this introduced great, confusion into their stock accounts, they deemed it necessary to close their books, and to pass, and did pass the resolutions in this behalf stated in the answer, and accepted Schuyler’s resignation as president and transfer agent; and one reason of defendants’ refusal to permit plaintiffs to transfer, was, that their books were thus closed, as well as that the certificate for said eighty-five shares was spurious, and the stock not genuine.
    4. That in 1849, the Legislature of the state of Connecticut passed an act, entitled “ An Act in addition to an Act relating to Railroad Companies,” which is still in force, a part of which reads thus:
    Sec. 7. The shares in the capital stock of any railroad corporation shall be deemed personal estate; and they may be transferred by any conveyance in writing, either by the treasurer, in books to be kept in his office, or by the secretary, clerk, or other officer duly authorized by the directors, in books to be kept at such-other places as they may appoint; and no conveyance of any such shares shall be valid against any other person than the grantors or their representatives, unless so registered.
    I also find that at-the time of the loan by plaintiffs to Kyle, he was secretary to the Harlem Railroad Company, and had been such for six years. Previous to being .secretary, he had been for two or three years register, and signed the certificates of stock with the secretary. That his salary at the time of the loan was two thousand dollars per annum; that the loan was negotiated by him in his own name, but in fact for Schuyler, to whom Kyle paid the proceeds; but the plaintiffs did not know any one but Kyle in the transaction, and dealt only with him. The plaintiffs had previously made loans to him both for himself and for Schuyler : at the time, he was a married man, and had been a housekeeper for six years. He owned a house and lot in Hew York, worth about ten thousand dollars, on which there was a mortgage of four thousand dollars. He was proprietor of a baggage express, for carrying baggage from the Harlem Railroad cars; his name was on the wagons, and his cards nailed up in the Harlem cars. He had been in the habit for five or six years of making loans from parties in Wall street, on different stocks.
    On these facts my conclusions of law are:
    That the defendants are liable to the plaintiffs for the market value of eighty-five shares of the stock of the defendants, on the day the plaintiffs required the defendants to reimburse and pay to the plaintiffs the amount of such value, with interest thereon from that day to this date.
    That such market value and the interest thereon to this date, amounting to the sum of eight thousand and seventy-two dollars and sixty-eight cents, the plaintiffs are entitled to a judgment against the defendants for the sum last named, together with the plaintiffs’ costs of this action. J. S. BOSWORTH.
    New York, Eeb. 22, 1855.
    Judgment was perfected in favor of the plaintiffs, for $8,072,-⅝ and costs of suit.
    The defendants excepted to the decision upon which the above judgment was founded, and to the judgment as follows:
    1. In deciding that Robert Schuyler was the agent of the defendants, in making the said certificate of eighty-five shares.
    2. In deciding that the defendants were bound in any manner for his act in respect of such certificate as such agent, or otherwise.
    3. In deciding that the said certificates constituted the plaintiff,' or any other person, a stockholder of the defendants, or entitled them to any claim against them, or to enforce any duty, or imposed any obligation upon them.
    4. In deciding that the defendants were liable to the plaintiffs for the market value of the said eighty-five shares, on the day the plaintiffs required the defendants to reimburse and pay the plaintiffs the amount of such value, or at any other time, with -, interest or otherwise.
    5. In deciding that the plaintiffs were entitled to judgment t against the defendants for any sum, and in not deciding that the • defendants were entitled to judgment against the plaintiffs, and' dismissing the complaint.

      The defendants appealed from the judgment to the General Term.

      W C. Noyes and G. Wood, -with whom were H 8. Dodge and G. Tracy, for defendants, appellants, insisted, upon the following grounds, that the judgment ought to be reversed:
    I. Schuyler and Kyle well knew, when the first made, and the last passed to the plaintiffs the certificate for the stock, that it was unauthorized and illegal; and the act of Schuyler in making, and of Kyle in uttering it as a true instrument, constituted the crime of forgery: 1. By statute. (2 R. S. 678, § 88, sub. 2; Rev. Repts. pt. 4, ch. 1, § 88, note.) 2. At common law. (Wharton’s Cr. L. 489; Commonwealth v. Chandler Thatcher, C. C. 187; Comb's Case, Hoy, 101, Moore, 759, S. C.; Mead v. Youngs, 4 T. R. 28; Leach’s C. L. 278, note; People v. Peacock, 6 Cow. 72; Bex v. Ashleit, R. and R. C. C. 67, 1 Hew R. 1; Beg. v. Wilson, 2d Oar. & Ker. 527; S. C. 1 Denison, 284; Same v. Hart, 7 C. & Payne,- 652; Same v. Bateman, 1 Cox Cr. Cas. 186; Bolland's Gase, 1 Léach C. L. 78; Wharton’s Cr. L. 492-3; State v. Shurt-liff, 6 Shep. 868; Beg. v. Nash, 12 Law and Eq. 578; S. C. 16 Jurist, 553.)
    II. So, the presentation of this forged certificate as a valid one, representing genuine stock of the company, and obtaining money upon it, was a false token at common law, and a false pretence within the statutes: 1. It was a false token at common law. (Wharton, 617, 619; Commonwealth v. Speer, 2 Virg. Ca. 65; State v. Stroll & Carr, 1 Richardson, 24; Com. v. Hurlburt, 12 Met. 446.) 2. So it was a false pretence under the statute. (2 R. S. 677, § 53; Laws 1851, ch. 144; People v. Haynes, 11 Wend. 557; S. C. 14 id. 559; Adams v. People, 1 Comst. 173; Wharton, 627, 8, 9, 632; Bex y. Jackson, 3d Camp. 370; Same v: Parker, 2 Moo. C. C. 1; 7 C. & P. 825.)
    III. Heither the directors nor stockholders of the company could increase the stock beyond three thousand shares, nor could they diminish the par value of the shares below one hundred dollars each, the amount fixed by the charter. In all cases, a corporation must show 'a grant in express terms, or by necessary implication, for all the powers it attempts to exercise. (Salem

      MUl Dam Corp. v. Ropes, 6 Pick. 32, per Oh. J. Parker; 1 Dane’s Abr. ch. 22, art. 1.)
    IV. Doing so would have been a violation of the charter, and a criminal offence — the usurpation of a franchise; punishable, 1. As a misdemeanor, by fine and imprisonment as to those concerned in it, and, 2. By forfeiture of the charter of the company, and by a fine also upon the company. (3 Black. Com. 263.) For the common law rule, see (Comyn’s Dig. “Franchise,” (Gr. 3,) Cole on Cr. Inf. and quo war. 110, 236; People v. Utica Ins. Go. 15 J. R. 358; Same v. Manhattan Go. 9 Wend. 351; Same v. Joños, 18 id. 603, per. Cowen, J.; Attorney General v. Wilson, Craig & Phil. 1, per Lord Cottenham.) For the law in Conn., as adopting the common law rule, per Bissel, J., in (Kellogg v. Union Go. 12 Conn. R. 20.) For the rule in this state, the statute adopting the common law rule, (2 R. S. 485, §§ 48, 9.)
    V. The acts of directors and agents of a corporation not authorized by its charter, or prohibited by law, are illegal and void; and ho valid claims can be founded upon them by any person. (Miner v. Meéh. Bk. of Alex. 1 Peters, 71, per Story, J.; Bank U. S. v. Dunn, 6 Peters, 51, and per McLean, J. p. 59; Penn. D. & M. Steam Nav. Co. v. Danbridge, 8 Gill and I. 248; Life and Fire Ins. Co. v. Mech. Ins. Co. 7 Wend. 31; Root v. Wallace, 4 McLean, 8; Salem Bk. v. Gloucester Bk. 17 Mass. 28, 30; Wyman v. Hah lowed Bk. 14 id. 58; Broughton v. Salford Water Works, 8 R; and Aid. 1; Hodges v. City of Buffalo, 2 Denio, 110; McCullough v. Moss, 5 Denio, 567; Hoyt v. Thompson, 1 Selden, R. 320; Hal. sted v. Mayor of N. Y. 3 Comst. 430; Talmage v. Pell and State of Ohio, 3 Selden, 328; Hood v. H. Y. and N. H. R. R. Co. 22 Conn. 302; Fast Anglian R. Co. v. F. Counties R. Co. 11 Com; B. 775; MGregor v. Deals and Dover R. W. Co. 16 Law and Eq. 180, S. C. 17 Jurist, 21.)
    VI. It follows, therefore, as a necessary consequence, that upon an act which neither the company itself, nor any of its officers, could lawfully perform, and for the doing of which ;the particular parties concerned were indictable and punishable for a felony, that no valid claim or cause of action could arise against the company, because it was illegal and void, and was a wilful violation of law and duty; in respect of which, a principal is never liable for the act of his agent. (McManus v. Cricket, 1 East. 106; Yanderbilt
      y. Richmond T. Co. 2 Comst. 479. Story on Agency, and Notes, § 456. The Druid, I. W. Rob. 391. Smith on Master and Servant, 160.) The act involved a forfeiture of the company’s charter and two felonies, and no right to a civil remedy ^gainst a corporation can be founded upon such an act; the remedy is against the parties committing the act, not against the innocent company. The certificate being a forgery, affords no ground of action whatever; in order to form such a basis, it must not only be genuine, but represent genuine stock. (Smith, v. Assignees of BaynaU, Chitty & Hull, 261; Hall v. Fuller, 5 B. & 0. 750.) It is an attempt to recover against the company on the ground of the false pretence employed by Schuyler and Kyle to raise money, in which the company had no interest or agency, and for which there is no precedent or authority. (Sherman v. Roch. R. R. Co. 15 Barb. 577, per Welles, J.)
    VII. Schuyler was not the agent, nor was he acting or professing to act as the agent of the company, either when he forged the certificate or delivered it to Kyle to borrow money upon it for his own use. He was not agent of the company. 1. The company did not possess and could not delegate, and never attempted to delegate to him, the power to make a certificate for stock which did not and could not exist. 2. The only authority the company ever possessed, and all he ever had, was, when a transfer of existing shares had been made, to give a certificate of the fact; he could not create a share, nor give a valid certificate of an interest in one not actually existing, nor could the company. 3. Nor had he any authority or power to admit new members into the corporation, or, indeed, to admit any members at all; this could only be done by a shareholder assigning his shares to such new member. The company itself could not admit a new member, except in virtue of Ids ownership of shares. The right of membership attaches to the shares as owner, and not otherwise; and if a person is owner of a share, he is a member, deriving his title as such under the charter, and not by any act of the company; and the company, and all its stockholders combined, cannot exclude him. (Kortright v. Com. BTc. Buffalo, 22 Wend. 348.) 4. Nor could the company confer, nor had he any authority or power to exclude members, who, of course, must have been such in virtue of their ownership of shares, without their consent. 5. Nor could it be done by a direct vote upon good consideration, nor indirectly, by issuing certificates for new shares, receiving the par for them. When the three millions of capital were paid in, the power of the company over it was gone, and its control belonged to the respective shareholders, as owners. 6. From that time Schuyler was only the agent of the company when and as often as existing shares of the stock were transferred and the certificates surrendered to permit and register the transfers. 7. Nor did the company possess or attempt to delegate to him any authority or power to admit new members, as part owners of the original three millions of capital. They could not reduce the capital stock or diminish the old shares, nor affect in any way the rights of the absolute owners of them or their quantum of ownership. As they could not annihilate, they could not partially destroy them, by admitting to the joint ownership of the original limited capital a new set of proprietors. 8. It is a well-settled principle, that no member of a corporation which has a transferable stock, can be disfranchised in respect of it, .-nor can his interest in the shares be divested or affected by any act of the company, except authorized by the charter, or by his consent, and of course the company cannot confer any such power on an agent. (An. and Am. on Cor. 2d ed. 347, §§ 1, 2; 437, § 2. Serjeant v. Franhlin Ins. Co. 8 Pick. 90.) 9. The utter invalidity of such certificates as these, and that they furnish no claim against, or impose any obligations upon the corporation, was determined in an able opinion by Justice Morris of the Supreme Court, in the case of The People, ex rel. Jenkins, v. The Parker Vein Coal Co., Dec. 1854, MS.
    Schuyler did not act or profess to act as the agent of the company, when he forged the certificate and raised money upon it for himself. 1. He was not performing any act on behalf of the company, but one simply for himself, and this the plaintiffs knew. 2. It is not proved to have been done in the office, or apparently or ostensibly in the business of the company, or as its agent. It was a mere criminal act of his own; having no relation to any transfer of its stock, or to any interests of the company, but hostile to, and in fraud of them. 3. The plaintiffs were not dealing with the company or upon its credit, when they received the certificates, nor did they pay to, or the defendants receive, any consideration whatever. 4. Schuyler was not at . all times, and under all circumstances, the agent of the company; he was only such when acting in reference to, and in connection with, a transfer by an owner of stock, of some of the shares, in the ordinary course of its business, and in the usual mode. At all other times, he was a mere private person, having no authority to act for, or to bind the company. (Foster v. Essex Blc. 17 Mass. 407.) 5. Forgery and issuing the certificate, was a fraudulent and wilful act, entirely beyond the scope of any authority he possessed from any quarter. It cannot be that an act extending beyond the subject, and of course beyond the limits of the agent’s authority, can be valid, when it also transcends the power and authority of the principal; and more especially when in thus transcending the authority of the principal, it is at the same time Illegal, and criminal, and against the policy of the law. 6. For acts of this character, it is well settled that the agent is personally-liable to those who suffer by them; the principal is only liable for the misfeasance, and the non-feasances, and omissions of duty of the agent, in the course of his agency, and while executing it; but for acts of misfeasance and for positive wrongs, committed by the agent not in the immediate course of the agency, he alone is responsible. (Story on Agency, §§ 808, 809, 452, 456.) 7. The principal is never liable for the torts of his agent in any matters beyond the agency, unless he has expressly authorized them to be done, of has subsequently adopted them for his own use and benefit, having originally authority to do the act himself. Hence it is, that the principal is never liable for the unauthorized, wilful, or malicious act or trespass of his agent. (1 Black. Com. 429, 431; Story on Agency, §§ 452, 456, and notes 429, 460, 4.61; McManus v. Cricket, 1 East, 106; Croft v. Alison, 4 B. & Ala. 590.) 8. There are modern cases on this point, and also those of great antiquity, and they are uniform in excluding the liability of the principal in cases like the present, on the ground that they are not acts in the course of the agency; these are a few of them: Bro. Abr. “Trespass,” pi. 345. — “If my servant, contrary to my will, chase my beasts into the soil of another, I shall not be punished.” 2 Roll. Ab. 553. — “ If my servant, without my notice, put my beasts into another’s lands, my servant is the trespasser, and not I.” Hoy’s Maxims, Oh. 44. — “ If I command my servant to distrain, and he ride on the distress, he shall be punished, not I.” In Middleton v. Fowler, Salt. 280, Holt, CL J., said: “ No master is chargeable with the acts of his servant, but when he acts in the execution of the authority given him.” In McManus v. Cricket, swpra, Lord. Kenyon said, “ When a servant quits sight of the object for which he is employed, and without having in view his master’s orders, pursues that which his own malice suggests,, he no longer acts in pursuance of the authority given to him, and according to the doctrine of Lord Holt, his master will not be answerable fo:r such act,” and it was held that a master, riding in his own chariot, was not liable for the act of his servant, who wilfully drove it against a chaise on the highway, by which the plaintiff was thrown from it and greatly hurt. Croft v. Alison, decided in 1821, supra, is to the same effect, so that from the time of Brooke’s Abr. in 1568, to the present, the English decisions are all one way. In Wright, v. Wilcox, (19 Wend. 345,) the same doctrine is reiterated and enforced. (Vanderbilt v. Rich. Turnpike Co. 2 Comst. 479, S. P.) Where a quantity of coin was deposited in a bank for safe-keeping, and it was fraudulently taken out by the cashier of the bank, it was held that the latter was not liable for the amount. (Foster v._ Essex Bk. 17 Mass. 479 to 507, pr. Parker, J.)
    VIH. The company cannot be charged with the consequences of any act of Schuyler, unless the authority for it be found in the charter and by-laws of the company; the charter is a public act, accessible to all, and presumed to be known to all, and is, in fact, a part of the plaintiff’s title. Those who deal with agents having limited and conditional powers, cannot charge the principal, because they relied on the agent’s conduct and representations, but must prove that the conditions actually existed, which authorized the exercise of the power, and that the act was done in the business of the principal. (V Y. Life and Trust Co. v. Beebe, 3 Sel-den, 364, 369.) 1. A power to executors to sell, if necessary, to pay debts, cannot be exercised unless the necessity is proved to exist. (Dike v. Rise, Oro. Car. 335; Sugden on Powers, 473; Jackson v. Ferris, 15 J. R. 346; Boséboom v. Mosher, 2 Denio, 61; Allen v. De Witt, 3 Comst. 276.) 2. So a master of aves-sel, who has signed bills of lading for a cargo actually on board, cannot charge the owner by signing other bills of lading, for cargo not on board. They are worthless, even in the hands of a bond

      fide purchaser. (Grant y. Norway, 10 Com. B. 665; S. 0. 15 Lon. Jurist, 296; Nabberlsey y. Ward, 8 Exch’r R. 330; S. C. 18 Law and Eq. 551; Cuerney y. Behrmd, 3 Ellis & Black. 622.) 3. 'A general power to sign notes in tlie business of the principal ’ will not support a recovery upon a note made out of that business, though in the hands of a person who received it 'bond fide, and upon the agent’s representation that it was made in the business of the principal. (Atwood v. Mannings, 7 B. & C. 278; Aymar y. North' River BK Court of Errors, Dec., 1843, reversing S. 0. 3d Hill, 266; Stainer v. Tyson, 3 Hül, 280, 1; Alexander y. Mackenzie, 6 Com. B. 766; Awde v. Dixon, Exch’r R. 869; 1 Am. Lead. Co. 3d ed. 556, note to Batty y. Carswell, Ac.; Stark v. High-gate Archway Co. 5 Taunt. 782.)
    IX. The certificate was not negotiable paper, so as to confer any rights upon the plaintiffs as bond fide holders or purchasers; they took it subject to every defence existing against it in the hands of Kyle and Schuyler. (1 Am. Leading .Cases, 3d ed. 326; Birkhead y. Brown, 5 Hill. 635, 646.)
    X. The defendants are not estopped to deny the validity of the certificate, because, 1. They had no capacity to make it themselves, nor could they give Schuyler any; there is no estoppel by a contract, which there is no authority, and which it is illegal to make. 2. A corporation is never estopped to deny that an act upon which a claim against it is founded was unauthorized and illegal, and this although it has received and retains the consideration; d fortiori when no consideration has been received. (Tdlmage v. Pell and Ohio, 3 Selden, 328; Hood v. N H. R. R. Co. 22 Conn. 302.)
    XT. Even if the certificate was a valid one, the plaintiffs were not entitled to recover. 1. The charter and by-laws conferred upon the company ample power to regulate the transfer of stock, and not to permit any transfers whenever the directors in the exercise of their discretion saw fit so to do. (Charter, § 7.) 2 The answer and the facts found, show a good reason for temporarily closing the books and not permitting any transfer, and that the books were actually closed; and the refusal to transfer was put upon this ground as well as upon the invalidity of the certificate.
    The judgment appealed from should be reversed.

      F. S. Van Winlch & D. Lord for the plaintiffs,
    respondents, claimed the affirmance of the judgment, and relied npon the following points and authorities.
    I. The defendants are liable to the plaintiffs, because the plaintiffs, acting bona fide, have suffered damage through the fraudulent and deceitful act of an agent of the defendants, in a matter within the course of the employment of that agent, he professing to act as such agent, his act having all the outward indicia of authority, and incapable of being performed except by virtue, and under color of such agency, and intended to induce a trusting to it by all to whom it should come. (Story on Agency, § 452 ; Paley on Agency, by Lloyd, p. 294 and subs. p. 305 and subs.; 1 Parsons on Contracts, 62, also 40, 41; 2 Kent’s Com. 633, n. a.; Smith on Mercantile Law, p. 133, and eases there cited; Smith on Master and Servant, p. 152, in Law Library, vol. 75; Phila. and Heading B. B. Co-, v. Derby, 14 Howard’s IT. S. Sup. C. R. 468, 486; Bidgway v. Farmers' Bh. 12 Serg. and Rawle, 256; Bh. United States v. Davis, 2 Hill, 452, 462; North Biver Bh. v. Aymar, 3 Hill, 262; Fxchange Bh. v. Monteath, 17 Barb. 171.)
    1. A corporation is liable for the wrongful acts of its agents in the same manner as individuals are. (Bh. of Columbia v. Patterson's Administrator, 7 Cranch, 299; Smith v. Birmingham and Staffordshire Gas Light Co. 1 Ad. and El. 526; 2 Kent’s Com. 292, n. a.; Mound v. Monmouthshire Canal Co. 4 M. and G-. 452; Angel and Ames on Corporations, 2d ed. p. 250, 254, § 10; Beach v. Fulton Banh, 7 Cow. 485; Story on Agency, § 808; Life and Fire Ins. Co. v. Merchants' Fire Ins. Co. 7 Wend. 31; Minor et al. v. The Mechanics' Bh. of Alexandria, 1 Peters, 46; National Bh. v. Norton, 1 Hill, 572; Lohman v. N. Y. and Frie B. B. Co. 2 Sand. 39.)
    2. On these general principles, so well established, if the plaintiffs show that in this matter Schuyler acted as defendants’ agent, or was by them clothed with such powers, that acting ostensibly as such agent, third persons could not distinguish his fraudulent from his genuine acts; then the defendants are liable to the plaintiffs for the damages they have suffered in this case; and these facts have been conclusively shown.

      The purchaser of these certificates was not bound to look beyond the genuineness of the certificate, for this does not resemble the case of a special and limited authority.
    It is distinguishable from the case of IF. Y. Life and Trust Co. y. Beebe, 8 Selden, 364, 359, which did not in fact turn on the question of agency at all — but on one of usury. Schermerhorn did not act or profess to act as agent of the defendants in that case.
    It differs also from all those casfes of executors undertaking to sell land cited by defendants, because executors haying by virtue of their office no right to do so, their power, if any, must be a special and limited one, and to be found in the will. See the proper distinction taken in Boseboom y. Mosher, 2 Denio, 61.
    It differs from an authority to sign notes conferred by power of attorney, for the signing “ by procuration” is notice to all parties to look to the procuration or written power: — it resembles, however, notes signed by virtue of a general authority, as bank notes by president and cashier, or certificates of deposit by a cashier.
    Schuyler was acting within the scope of his authority or the course of his employment in the act whereby the plaintiffs were defrauded.
    The defendants had clothed him with the means, — armed him with the power, and placed him- in the position to do the very acts he did.
    In issuing out certificates of spurious stock, no more than of valid stock, did he perform any act or do any thing which he had not the power to perform. Every thing he did was ostensibly in fulfilment of a lawful official duty devolved on him. (Converse v. Mutual Ins. Co. 1 Corns. R. 292-3.)
    What he did was not in excess of his power but in abuse of it. It was a fraudulent use of the powers duly vested in him.
    He abused his trust. The same day he issued perhaps fifty other certificates, all valid.
    If Schuyler had been a faithful or an honest agent, could plaintiffs’ certificate have been spurious ? And does not every principal guarantee the faithfulness and honesty of his agent in the matter of his trust, especially when the principal alone can detect him of misbehaving? (See Story on Agency, § 452'; Smith’s Master and Servant, 125; Munn v. The Commission Co. 15 Jolins. 44; Foster et al. v. The Essex Bank, 17 Mass. R. 496; Williams y. Mitchell, 17 Mass. R. 98.)
    There is nothing exceptional in this case, or that would take it out of the operation of the general principles ahoye declared. The instrument was not a forgery. (See the definition of forgery, 2 Revised Statutes, 672. (It is the falsely making, altering, forging, or counterfeiting any instrument or writing being or purporting to be the act of another party.
    This certainly is not that case. All cases of forgery in the books come under'one or the other of the following classes:—
    1. When the body of the instrument was genuine and the signature false; or, 2d, when the signature was genuine but attached to a false, forged, altered or counterfeited instrument. Whether this constituted a false pretence, it is immaterial to discuss: since it is not a forgery. If in any sense a forgery, it is one which the defendants' want of due caution enabled the party to commit, and in that case the forgery would be no defence. (Orr y. Union Bank, 29 Law and Eq. Repts. 1; Young y. Grote, 4 Bing. 258.) If Schuyler’s act amounted to a felony, that would not take away our rights or merge them in the felony, or affect them in any manner. (2 Revised Statutes, p. 292.) Nor even if the issuing the certificate in this case would have increased the defendants' capital beyond the chartered amount, and rendered the acting parties amenable to fine and imprisonment, and the company to a forfeiture of its charter, does it affect the plaintiffs’ right to redress.
    The question of fine and imprisonment and forfeiture concern the state; but do not take away the remedies of private parties. (See People v. Phenix Bank, 24 Wend. 481.)
    But this act- of Schuyler did not involve any such consequences. A certificate of shares is not capital: a false certificate does not make or enlarge capital. When valid, it is only the evidence of ownership of capital.
    The act of Schuyler did not and could not increase the capital. Nor has this case any analogy to those wherein the directors and agents of a corporation have committed acts ostensibly forbidden by its charter or prohibited by law; but was the fulfilling of an admitted and legal power in a fraudulent manner.

      The act here complained of was not unlawful in itself; the issuing of certificates was a lawful, a necessary and a proper act. The issuing of them in improper cases was a fraud, and as a fraud, illegal, hut the act itself a lawful act.
    It was not the exercise of a power not granted, or of a forbidden one, but an abuse of an admitted power. Acts of directors, which do not bind a corporation, are only such as an inspection of the statutes or the charter will show to be illegal.
    All the cases cited by the defendants in the court below are decisions on this ground.
    In Minor v. The Mechanhs’ Bank of Alexandria; 1 Peters, 46, the corporation was held not liable, because the plaintiff was a particeps crvminis. In Bank of U. S. y. Dunn, 6 Peters, 51, the cashier had usurped the functions of the directors in agreeing that the endorser of a note should not be liable on it. Boot v. Wallace, -4 McLean, 59, was the doing of an act specially prohibited. In Salem Bank v. Gloucester Bank, 17 Mass. 15, the president’s signature was forged. In Broughton v. Salford Water Woiics, 8 B. & Aid. 1, the note sued on was void by express statute.

      Hodges v. City of Buffalo, 2 Den. 110, turned on the fact that the law did. not allow the corporation to contract for a public dinner.

      Halsted y. Mayor of New York, 3 Corns. 430, was a suit on a negotiable note in the hands of an endorsee, but the note was given for an illegal purpose, and this appeared on the face of the note, and so on to the end. Mor does this case fall within the protection of the rule that a principal was not hable, for the unauthorized, wilful or malicious act or trespass of his agent. This rule stands on the reasonable ground that acts of open malice, wilfulness or illegality, are not, either actually or ostensibly, acts of the principal, and cannot be said to be in the course of the agent’s employment, and third persons place no trust in him in these respects; but the rule changes entirely, when the question is concerning the shill, the care, the sobriety, the fidelity or the honesty of the agent, in all matters within the course of his employment.
    It is a mere sophism to say, “ the defendants’ agents were not agents to issue certificates beyond the amount of its capital; that the corporation itself had not the power to do it, therefore its agents could not derive power from them to do it; that Schuyler was their agent to do lawful, not unlawful acts.”
    1. This doctrine, as applied to this case, amounts to this: that no principal can ever be made liable for the torts or deceits of his agent, by acts ostensibly lawful, because he was not appointed to commit torts and deceits, and cannot rightfully do so.
    2. But the act complained of was not unlawful in itself: the issuing of certificates was a lawful, a, necessary, and a proper act. The issuing of them in improper cases was a fraud, but the act in its nature, a lawful act. It was not the exercise of a power not granted or forbidden, but an abuse of an admitted power.
    3. But this argument is a mere fallacy. The use of the word “right,” instead of power, will show it; and power in this argument merely meant “ right.” The corporation had no right to do it, and could not delegate the right to an agent. But they certainly had the power, and such things have been done. Corporations are liable as trespassers and tort feasors. There is no difference in this respect between corporations and individuals. (Beach v. Fulton Bank, 7 Cow. 485; Church of Ascension v. Buck-hart, 3 Bill, 193; Life and, Fire Ins. Co. v. Merchants' Fire Ins. Co. 7 Wend. 31; North River Ins. Co. v. Lawrence, 3 Wend. 482; N. Y. Fire Ins. Co. v. Ely, 2 Cow. 678; Sandford v. Halsey, 23 Wend. 260, 268.) The cases in which principals are liable for the torts of agents is where, under cover of power or authority, the agent commits the tort.
    4. The principal does not become liable because the agent committed an unlawful act, but because in the exercise of a lawful power, the administration of which was committed to him, he was guilty of fraud. If the agent’s dishonest act amounted to a crime, that he must answer to the law; but if it were a fraud also affecting a third party, the principal must answer for it, not criminally, but pecuniarily. (Bank of Kentucky v. The Schuylkill Bank, 1 Parsons’ Select Equity Cases, p. 234; Stoney v. The American Life Ins. Co. et al. 11 Paige, 635; Fulton Bank v. N. Y. Sharon Canal Co. 4 Paige, 127.)
    5. These certificates of stock, although not strictly negotiable paper in the restricted and technical sense, were yet quasi negotiable, and under certain circumstances passed by delivery, and vested a good title in a bond fide transferee for value. {Fortnight
      Y. Buffalo Oom. BJc. 20 Wend. 90; Fatman y. Lobach, 1 Duer, 85⅜ 361; Hussy y. Manuf. and Mech. Bk. of Nantucket, 10 Pick-erni@ 415; Stoney v. The American Life Lis. Go. 11 Paige,,- 685; S. 0. 4 Edwards’ Ch. R. 332; Delafdd v. State of Illinois, 2 Hill, 159, 177.) They were in the nature of general letters of credit, on the faith of which any one may act. (Birkhead v. Brown, 5 Hill, 635. See also Fisher y. Morris Canal and Blcg. Co., decided in Court of Appeals of Hew Jersey, in May, 1855. See also 4 B. & Aid. 1; 3 B. & Cr. 45; 7 Bing. 284.) '
    Eyen deeds may so operate. On the principles of these cases, a certificate of stock differs from a bill of lading, which is also in some respects a quasi negotiable instrument. A bill of lading relates to goods and chattels — all capable of a specific inspection, as well as delivery. A certificate of stock is of certain shares of stock haying no existence — as a separate subject capable of inspection. A bill of lading performs two „ distinct ■offices; that of a receipt for goods and a contract for a safe delivery ; but if a bill of lading contains a receipt for freight paid, which in fact is not paid, the ship owner is estopped from setting •it up against a bond fidé transferee for -value. (Small y. Moates, 9 Bing. 574.)
    A certificate of stock is but a declaration and engagement in the name of the company, by its officers having charge of its records, that A B is entitled to so many shares or units. The cases of Grant and Norway, (10 Oom. B. 665,) and Halbutson v. - Ward, (18 Law and Eq. R. 551,) áre to be reconciled with principle, on the ground of a broad distinction between bills of lading and certificates of stock. They have been so explained in England. {Gladstone v. Allen, ,22 Law and Equity, p. 382.) Therefore the English courts have considered them as different, and that point is abundantly sustained by the English and American ■authorities. {Armigry y. Delamire, 1 Strange, 604; 1 Smith’s Leading Oases, 151; Williams et al. v. Mitchell, 17 Mass. R. 98; Hem v. Nichols, Salkeld, R. p. 289.) The cases of Stoney y. American Ins. Co., and Delafdd and Illinois, cited above, and the great case of the Bank of Kentucky y. The Schuylkill Bank, 1 Parsons’ Select Equity Oases, p. 234. The case of the.Fast India Co., in Knapp’s Privy Council Oases, is not in opposition to this.

      II. The act of Schuyler, whereby the plaintiffs were damaged, having been such an one in its nature and kind, as he was authorized to perform, and as he did constantly perform, as the duly appointed officer of the defendants for such purpose; and the certificate issued by him being correct as to its form, and authentic as to its execution, and its correctness and truth being matters for which defendants were bound to provide, the defendants are precluded in an action by a bona fide recipient of such certificate from setting úp any defence thereto, founded on the secretly fraudulent act of their own officer; for in this matter his act was their act, and “no one shall be allowed to plead his-own turpitude.”
    1. The statute confers on defendants the right to regulate the transfer of their stock. This provision is intended for the security and benefit of the company. (Bank of Utica v. Smalley, 2 Cow. 170; Gilbert Manchester Iron Man. Co. 11 Wend. 627; Kortright v. Buff. Com. Bank, 20 Wend. 91; 1 Parsons’ Select Equity Cases, .247.)
    2. The certificate issued by the defendants is conclusive against them, and the right to issue such certificates they had delegated to Schuyler.
    3. It was not the duty nor in the power of the assignee of the certificate, in the absence of suspicious circumstances, to inquire into the truth of it, because it was the province of the company alone to issue certificates, and the duty of the company to issue only true certificates. Moreover, the purchaser had no means of ascertaining the truth. For the false certificates of these eighty-five 'shares may have started years ago, and been surrendered hundreds of times. Or the books themselves were false. Or the company themselves, owners and keepers of the books, could not know which certificates were good, and which bad, and did not detect any false certificates until they amounted to one million five hundred thousand dollars. Why go to the transfer office to inquire of Schuyler if his certificate was false ? Or to examine these false books ? Did the certificate mean any thing ? If it meant any thing, did it not mean that Kyle was entitled to eighty-five shares ?
    4. The meaning of this certificate was, that the company gave to some one an assurance — 1. That the person named was such stockholder. 2. That on the surrender of the certificate, the stock mentioned in it was transferable on their books. 3. That no transfer would be allowed without the surrender of the certificate ; in effect that the party named in the certificate, or the holder of it, under authority from such party, had the possession and control of the stock therein expressed.
    5. The issuing of such assurances was a lawful and proper exercise of the powers in the charter; it was beneficial to the stockholders, not as giving them proof of title, (which would always appear on the corporation books,) but as giving proof to others of their title, of the transferability of the stock and of .the control which the possession of the certificate conferred.
    6. By the well known course of business, as well as by the terms of the certificate, it was an assurance intended for exhibition to others, and a means of safely dealing on the faith of it. And on each certificate was printed the form of transfer and a power of attorney.
    7. The company were bound to see that these certificates were true; that the party named was so entitled as was expressed; that it was transferable by him, and that the shares to the extent mentioned, should be held until the certificate was cancelled. The obligation clearly rested on the company to this extent, in favor of the stockholder, in consideration of his interest in the company; in favor of one who should act on the faith of it, in consideration of his interest in the company; in favor of one who should act on the faith of it, in consideration of the credit it invited, and the parting with value on the faith of it. It cannot be reasonably denied that these were obligations of the company to be fulfilled by them, if they issued these certificates. ' All persons who might be, or become-concerned, had a right to presume that these legal' duties would be performed. Such certificates were legal documents, sufficient and necessary to legalize stock contracts under the law of stock-jobbing. (1 R. S. 710.)
    8. A refusal to permit a transfer to be made by the party named, or by a party faking the certificate by a power of attorney in blank, would subject the company to liability for the whole value of the stock. {Corn. BJc. of Buffalo v. KortrigJit, 22 Wend. R. 348.)
    9. These certificates being issued with the intent that they should be the basis of a dealing with persons other than stockholders, the company became bound to such persons according to the terms and obligations of the certificates. 1. The certificates were not under seal, so as by any technical principle to be limited to the party named. 2. They were general in their address, as widely so as any general letter of credit or invitation to give trust on the ground of a fund admitted to be in hand. 8. They formed, in intent, and in fact, estoppels, in part to preclude a disputing of the facts they certify, as against any one dealing upon their allegations, or to compel a making good the fact certified. (Welland Canal Co. v. Hathaway, 8 Wend. 480; Desell y. Odell, 3 Hill, 215; Town y. Needham, 3 Paige, 545.) 4. These certificates were idle and of- no use if they were not exactly true, and were explainable. They are not analogous to a bill of lading. By well settled and well known law, the latter doctrine is explainable in its nature, is a mere receipt to facilitate proof of delivery and to evidence the contract for the carriage. As a receipt, it is explainable, and so, well understood by all who take it; as a contract, it is not.
    10. But stock certificates are not analogous to receipts, and if not true on their face, are of no utility whatever, for the purpose of dealing with them. 1. Stock certificates, regular on their face, are not invalid as to innocent parties dealing on the faith of them, by reason of being wrongfully issued by the company. 2. If the company should exceed their franchises, they would be liable therefor to the state; but would no less be liable to strangers, as has been already shown. 3. The fact that the officers had exceeded the charter powers, could be no excuse for their acts, to the state nor to individuals; such acts would be valid as against the company, however inefficacious as against others. 4. Corporations are liable for torts and trespasses, but their charter does not authorize them. (Beach v. Fulton Bank, 7 Cow. R. 485; Life and Fire Ins. Co. v. Merchants' Fire Lis. Co. 7 Wend. R. 31.)
    11. By the charter the company could appoint officers to issue and authenticate these certificates, and to ascertain and certify them to be properly issued.
    12. This right to stock, and to a certificate, was for the company, by their officers, to ascertain, and they assumed the burden of such inquiry, and were bound by its expressed result.

      13. The authority committed to their officers, in this respect, •was subject to limits, only capable of being known by the com-. pany, and not by strangers dealing with it. It was, therefore, as to the latter, a general authority.
    14. The act done, the certificate itself was, on its face, lawful, and such as the company could lawfully perform; and no unwarranted exercise of the power by the officer, as to the occasion of its exercise, would render it invalid as to innocent third persons. (Stoney v. Am. Life Ins. Co. 11 Paige R. 635.)
    15. To require^ those who acted on the certificate to ascertain, at .their peril, from the books of the company, subject to the possibility of false, entries by officers of the company, in those books, whether the certificates were correct, is repugnant to the face of the certificate, to the purpose of it, and to the duties committed to the officers of the company. It would defeat the transferability of stock.
    16. The performing of acts ostensibly and in themselves lawful. by agents, acting fraudulently or illegally, is not analogous to the performing of acts ostensibly fraudulent, wrongful, or criminal. Such latter cannot be supposed to be done by order of the .principal. The former must be so supposed.
    17. The principal who has conferred on his agent the power to do an act by which innocent parties can be injured, without the means on the part of the latter to avoid the injury, must take the pecuniary consequences of the act, however criminal.
    18. It is no hardship, nor contrary to any rule of honesty, policy, or law, to hold principals liable for the acts of agents whom they appoint, control and trust. It is contrary to honesty, policy and law, to throw upon innocent strangers the consequences of the misconduct of such agents in doing acts ostensibly lawful.
    19. The gross negligence of the officers of the defendants for a series of years, through means whereof their officer, was enabled to commit this fraud, precludes the defendants from denying the acts of such officers as against innocent third parties. (Orr v. Union Bank, 29 Eng. Law & Eq. R. 2.; Thompson v. Blanchard, 4 Cow. 303, 309; Converse v. Mutual Ins. Co. 1 Corns. 290, 292, 293; Gregg v. Wells, 10 Adolp. & Ellis, 90.)
    HI. The defendants having refused to recognize the certificate, or to redeem it by reimbursing tbe plaintiffs tbeir outlay, are liable to tbem in this suit for damages. They are liable to respond in damages. A mandamus is not the proper remedy. (The King v. the Bank of England, Doug. 523; approved in Kortright v. Buffalo Commercial Bank, 20 Wend. 91; McCullough v. The Mayor of Brooklyn, 23 Wend. 48; In re Morris et al. v. The Mechanics’ Bank, 10 Johns. 484.)
    1. Plaintiffs are not to be paid by a like number of shares, reduced in value by the fraud of the agents, but are entitled to a compensation in money for their loss. (Pollock et al. v. National Bank, 3 Seld. 274; Deny et al. v. Manhattan Co. 2 Hill, 220; The King v. The Bank of England, Doug. 523; Kortright v. Buff. Com. Bank, 20 Wend. 91; S. C. affirmed, 22 Wend. 348; Ashby v. Blackwell, 2 Eden. R. 229; Bank of Kentucky v. The Schuylkill Bank, 1 Parsons’ Select Eq. Cases, p. 234.)
    IY. 1. The claim in this case is not for a transfer or for stock, but for damages resulting from a fraud of defendants’ agent in the course of his employment, (which act the defendants are estopped to deny,) 'whereby the plaintiffs were deceived. The rules and laws of Connecticut regulating transfers of stock, were, therefore irrelevant.
    2. They were irrelevant, also, for this reason, that plaintiffs were not stockholders before the purchase, and therefore not subject to the by-laws, or bound to know them. (Angelí & Ames on Corp. 2d ed. p. 301; Mechanics' Bk. v. Smith, 19 Johns. 115.)
    3. The inconvenience, the damage, the public disadvantage of a rule requiring purchasers of stock to investigate the title of every share of the stock they buy, offer arguments against it that courts will notice and enforce. (Davis v. Bk. of Eng. 2 Bing. 293; Ram. on Legal Judgments, p. 53, vol. 9 of Law Library.)
    Eor these reasons the judgment should be affirmed, with costs.
    Judgment was pronounced, by the court at general term, on the 30th of June, 1856. The Justices, before whom the Appeal was argued, delivered opinions, seriatim, as follows:
    Slossom, J. — The plaintiffs claim to recover, as the holders of the certificate pledged with them by Kyle, the par value of the stock represented, or purporting to be represented by the certificate, with interest from the date of the loan, as damages for the refusal of the defendants to permit a transfer of it in their hooks, whereby, as they allege, the certificate is rendered unavailable and valueless in their hands.
    That the certificate did not represent genuine stock, but that the stock limited by the charter, was full, and in the hands of bond fide holders, is conceded, and it is also conceded that it was issued for an unlawful purpose, and that the act of issuing it, was a fraud on the part of Schuyler, and that it was so issued for his own private benefit.
    The plaintiffs do not claim 'that it was competent for the defendants by their own act, or by the act of their transfer agent, to increase the amount of their original capital or the number of shares into which it was divided, nor do they ascribe to this certificate any such effect, nor claim that the defendants were bound to, or had a right to issue, a genuine certificate in exchange for this spurious one, if doing so would cause the stock to exceed the legal limits, and they therefore concede that the defendants had a right to refuse to do this, and were not bound to admit them as partners, to change the statute provision as to capital or the par value of shares, and in the view which I have taken of this case, I shall assume that this position is the sound one; but they claim that for this refusal, the defendants have become liable- to make to them pecuniary compensation for their loss, precisely as they would have been obliged to do, had the stock been genuine. (Deny v. Manhattan Go. 2 Hill, 220; Com. Banlc of Buffalo v. Kortright, 22 Wend. 848.)
    The theory of the action is, that the defendants are bound by the act of Schuyler in issuing this certificate, though it was an abuse of power, and a pure fraud on his part, and that the plaintiffs are entitled as holders thereof, and by virtue of its terms, to be admitted as shareholders, or if that be impracticable as creating an excess of capital, that they are entitled to pecuniary indemnity from the defendants, for being deprived of a right which the certificate on its face, confers upon them.
    It is not, in form, an action to recover damages against the company on the alleged ground that their agent, in the course of his business as such, had committed a fraud by which the plaintiffs have been injured, and for the commission of which fraud the defendants ought to respond, but it rests on the assumption that the company is, under the circumstances, bound in law by the act, as though it had been their own, notwithstanding it was an act in abuse of the powers of the agent, and which the company itself could not rightfully have done — and the question presented by the action is, whether the defendants can be bound in favor of a party dealing honá fide with their transfer agent, (which the plaintiffs confessedly were,) by an act of his, which they themselves could not rightfully have performed, nor rightfully have deputed to him the power to perform, but which he has in fact performed, while acting in the discharge of his office as transfer agent, and for the performance of which he had general powers, and within the apparent limits of his duties.
    To make out a right of recovery in this action, it is incumbent on the plaintiffs to establish the affirmative of this proposition. It is a question the solution of which depends, after all, on the correct application of a few simple and familiar principles, and were it not for the adventitious importance attached to it, from the stupendous magnitude of the general fraud, of which the case at bar forms but an inconsiderable' part, and from the vast pecuniary interests to be affected by the decision, it would not, in my apprehension, be considered by the profession as a question of very extraordinary difficulty.
    That the corporation itself, could not, without the sanction of the Legislature, have, under the circumstances, rightfully issued this certificate, treating it as the representative of stock — that is, could not have issued it without an abuse of their lawful powers under their charter, may be conceded, but it is nevertheless true, that they had the power in fact to do the act, as one coming within the range of their corporate powers, though in the particular instance, it may be unlawful in itself, as contravening the intent of the charter.
    It is its capacity in fact, to do the act under the powers conferred upon it by the charter, which in its relation to third parties, becomes of essential importance in determining the obligation of the corporation.
    Let it be supposed that this company had never employed a transfer agent at all, but that all its certificates were issued by the direct action of the board itself, and that the one in question had been issued under a resolution of tbe board, and with tbe corporate seal affixed, tbougb tbe act in so far as it could operate to create new stock, or to give to tbe purchaser tbe rights of a shareholder, might be a clear abuse of tbe corporate powers of tbe company, and void, can it be doubted that in favor of a bona fide bolder of tbe-scrip, who has parted with value on tbe credit of it, tbe act would be binding on tbe corporation, and entitle tbe bolder at least to an indemnity at their bands ? Tbe act tbougb a fraud on the charter, would not be a nullity, nor necessarily void.- It would still be a corporate act, which tbe defendants would be estopped from denying as against an innocent party who bad dealt on tbe faith of it;
    It is true, that in certain cases a corporation is not' estopped from denying that an act upon which a claim against it is founded was unauthorized and illegal; but tbe rule has no application to a case like tbe present. {Talmage v. Pell, 8 Selden, 828.)
    It applies where tbe coloration has done an act in clear excess, or in violation of its charter, or legal powers, and that, in a transaction in which tbe party with whom it has dealt has notice or knowledge of tbe illegahty of tbe act
    If this be true, I do not perceive in what respect tbe act differs by being done by tbe agents of tbe corporation, it being conceded that such agent bad lull powers in that particular business, and that tbe act was done while ostensibly within tbe limits and in tbe performance of bis legitimate duties.
    As transfer agent, tbe powers of Schuyler were as large in respect to tbe keeping of tbe books, and tbe issuing of stock certificates in tbe city of New York, as were those of tbe board of directors itself. (Tbe whole duty was devolved upon him, and every act done by him within tbe scope of that duty, was, in judgment of law, an act of tbe board itself.
    Nor does this conflict with tbe rule, that where tbe agent ex-needs, or abuses bis powers, tbe principal has tbe right to repudiate bis acts, and hold him responsible for tbe consequences of bis conduct, since that is a right which exists as between himself and bis servant only, and which in no way affects tbe rights of strangers as against either.
    «' As transfer clerk, Schuyler stood in tbe position of a general agent, that is, of an agent entrusted with tbe entire business of that department under the rules prescribed by the by-laws and regulations of the board of directors. He was held out in this capacity to the world, and in the business of the transfer of the stock of the company, the public dealt with him, and him only.
    Within the limits of that employment, the public had the right to regard all acts done by him as rightfully done, so long as they had no reason to suspect the contrary. While acting within those limits, and in his character of transfer agent, and in the performance of that very business, his acts were binding on the company, without showing their assent or participation. (Parsons on Con. pp. 41, 62; Story Ag. § 452 15 East. Rep. p. 42.)
    There would be no safety otherwise in dealing with corporations, or private individuals acting by the agency of others. This rule applies as well to acts done in fraud of the rights of the principal, as to those rightfully done, otherwise there would be no benefit in the rule itself.
    It is a rule founded in the common sense of right in mankind, and adopted as fundamental, because in itself right, and necessary for the protection of the innocent.
    It is true, the party who claims the benefit of it, must himself be, not only in fact, but in contemplation of law, free from any participation in the fraud of the agent — that is, he must neither be a party directly participant in the fraud, nor have actual notice of it, nor be put upon inquiry by the suspicious character of the transaction; "but these conditions being found, his security is perfect.
    There is no pretence that the plaintiffs here had actual knowl-; edge of the fraudulent conduct of Schuyler, nor was there any thing in the transaction to put them on inquiry. It was the ordinary transaction of a loan upon stock security, with the usual assignment and power to effect a transfer, and in no respect different, either in the character of the papers or of the transaction itself, from probably a hundred similar ones transacted in the street in the same stock, and on that very day.
    But it is said, the plaintiffs should have investigated the title to the stock before they advanced their money — that they should have ascertained by a resort to the books, or by inquiry at the office, whether the statement in the certificate was true, and whether this certificate had been issued upon a surrender of a former certificate, representing actual stock, in compliance with, the regulations and by-laws of the board; and it is contended-that they were invited to this investigation by the certificate itself, and that they had the means of informing themselves of the truth of the case, and are therefore not in the position of parties entitled to the benefit of the rule in question.
    It is a sufiieient answer to this objection to say, that the finding at the Special Term establishes, that “ the plaintiffs made the loan in good faith, and had no reason when they received the certificate, to suppose it was not genuine;” but it may be added that regulations in respect to the transfer of shares upon the books of the company, made by the board under the authority of the charter, are provisions for the security and benefit of the company itself, in the payment of its dividends, and in determining who are entitled to vote at the- election of its officers, and for the purpose of ascertaining the parties liable for assessments imposed on shares.
    The title to the stock, as between the seller and buyer, is not affected by these provisions, and the purchaser has a right to assume that the certificates represent actual stock, and that the company, whose business it is, has done its duty in seeing that the old certificate has been duly surrendered before the issuing of the new. (Case of Bank of Kentucky, 1 Parsons’ Select Eq. Oases,'247; Bank of Utica v. Smalley, 2 Oowen, 770; Com. Bk. of Buff. v. Kortright, 22 Wendell,p. 862.)
    Moreover, no person other than a stockholder, has any legal right to an inspection of the books, and might properly be denied the privilege, if asked for.
    Neither would the books be higher evidence of title, than the certificate itself, since both are under the control and supervision of the same officer, and if the purchaser has no rights, unless the stock be in fact genuine,' it would be necessary to trace it to 'its source, a matter of great difficulty, if not in many instances impracticable.
    It may be conceded, for the purpose of; this argument, though thevcase does not find that fact, that the books would have shown eighty-five shares of the stock to be standing in the name of Kyle. Had the plaintiffs been permitted to inspect the books, .and have discovered this fact, would they have been more protected than they are now ?
    What higher authenticity, as evidence of title, would the entry on the boohs, made by the same agent who made the certificate, and under the same authority, have, .than the certificate itself? and if the company would be estopped by an entry in the books, which it has been held they would be, why is it not equally so by the certificate itself?
    To require such an investigation in every instance of the transfer of stock, would be introducing a rule of inconvenience utterly at war with the necessities of business, and destructive of 'all transactions in stock, as well as ruinous to the value of that species of property.
    I have spoken of Schuyler as having authority to make these certificates. The judgment of the Special Term does not find this as a fact — the by-laws being silent on this point; but the an-' swer of the defendants admits that he was the duly appointed transfer agent of the company, and as such had charge of the transfer books, and the right to issue certificates upon a transfer made by a real owner of the stock.
    This admission is all that is necessary to the present question, the qualification thus put upon the right, being only the construction given by the defendants themselves, as to the cases in which it might be rightfully exercised.
    There is no distinction, in the application of the principles to which I have referred, between the case of a corporation and that of an individual. Both are equally liable for the frauds of their agents committed in the course of their employment. (Ang. & Ames on Corp. § 382; 22 Conn. R. 520; Goodyear v. A. Hadden Bank, Story on Ag. § 308.)
    By holding him out to the world as clothed with a certain authority, and inviting the trust and confidence of the community to him, in such capacity, the principal, in effect, undertakes, with all who deal with him in good faith, that his abts are rightfully done, and that he will stand by the innocent dealer anid see him protected. (1 Parsons, Select Eq. Cases, p. 248.)
    The act of the agent shall be treated, at the election of the injured party, as the act of the principal, for which he is liable, and not as that of the agent individuallj, for which he alone would he responsible.
    The fact that the fraud is one which defrauds the principal himself, and is a gross abuse of the agent’s powers, and is done without the assent of the principal, or even his knowledge, or against his express commands, not communicated to the party dealing with him, makes no difference in the application of the principle, which has its foundation in the very necessities of justice as between men. (Story on Agency, § 452; Fisher v. Essex M. 17 Mass. 507.)
    It is true that this act of Schuyler was one never contemplated in his appointment, nor was he appointed to do what his principals could not rightfully do; but that makes no difference in the application of the principle. He was employed to do lawfül and proper acts, as all agents are in contemplation of law, and it was in the execution of the powers of that lawful employment, and in doing an act, which, upon its face, in itself was lawful, and within the express limits of his power, and an act of the very description of those which he was appointed to do, that he committed the fraud.
    To allow the principal to escape responsibility upon a distinction of this kind, would be effectually to shield him in every instance of an abuse of power on the part of his agent. The case is totally unlike that class of cases in which a corporation undertakes to do what it is prohibited from doing by law, or by its charter, and has, therefore, no legal capacity to do; or to that class of cases in which an agent, though acting at the time in the master’s employment, undertakes to do an act wholly unconnected with .that employment, or the business of his agency, and for which he alone is responsible, but it is the case of an abuse of -lawful' power by- án agent, lawfully appointed by a principal authorized so to appoint, and in the exercise of this very lawful authority, and in the very terms, and within the very limits of his powers, and according to the custom of his office.
    A case cannot be conceived, in which it would be more difficult for parties dealing with the agent to discover a fraud, or in which they would be less put upon inquiry by any thing calculated to excite suspicion.
    I consider the action as virtually upon the certificate, and that that instrument creates a binding obligation on the defendants •which they are precluded from denying as against these plaintiffs to be their act, the same having been created by their lawfully constituted agent, within the scope of his legitimate powers, and in the very exercise of them, though in abuse of them; and that though the defendants may not be able, by reason of the limitation imposed by their charter upon the amount of their capital and number of their shares, to admit the plaintiffs to the rights of stockholders, by permitting a transfer of this stock upon their books, they are not, on that account, at liberty to repudiate the act as the act of the corporation, but must make compensation to the innocent holders of the certificate, equally as an individual would be bound to do who has undertaken to do an act which he finds himself unable to perform, and whose default has been the cause of pecuniary injury to another. ,
    The rule of damages in such a case, is the damage actually sustained by the fraudulent act, which, in this instance, would be the amount loaned on the credit of certificate, and as that largely exceeds even the par value of the stocks, the rule adopted by the Special Term cannot be objected to.
    The judgment at the Special Term should be affirmed.
    Hoffman, J. — It is unnecessary for me to state the facts of this case, for the purposes of explaining the views I have taken. They are sufficiently detailed in the opinions of Justices Bosworth and Slosson.
    I deem it only material to transcribe the certificate delivered by Kyle, to the plaintiffs at the time of the loan, which was as follows:
    “New York and New Haven Railroad Company.
    No. 4,574.
    “ Capital, $8,000,000. New York Office. Shares, $100 each.
    “ Be it known, that Alexander Kyle, of New York, is entitled to eighty-five (85) shares of the capital stock of the New York and New Haven Railroad Company, transferable on the books of the company, at its office in tlie city of New York, by the said Alexander Kyle or his attorney, on the surrender of this certificate.
    “ROBERT SCHUYLER,
    “ Transfer Agent.

    “ New York, April 20, 1854.”
    The usual power of attorney to transfer stock, made in fayor of E. W. Edmonds, cashier of .the plaintiffs, accompanied this certificate.
    The plaintiffs applied before the commencement of this action to have the stock transferred, which was refused upon the ground stated in the answer.- This application, as appears from a comparison of statements in the answer, must have been made after the 5th of July, 1854.
    Judgment has been rendered for the sum ascertained to have been the market value of the stock, being at ninety-four and a fraction per cent.
    If this company can be held at all responsible for stock thus fraudulently issued, it must be in one of the following modes.
    First. — By considering that there was a contract under which it was bound to admit the holders of the certificate to be members of the incorporation — to allow a transfer on the books — concede to them a share in all corporate privileges, and award to them a represented value in the property of the company equivalent either to the advance of the plaintiffs upon it, or to its par value, if the advance exceeds such value.
    Second.-^-If this was the contract, and this the obligation of the company under it, and they have refused to fulfil it, then that the plaintiffs must be relieved either by decreeing performance of the contract, or by awarding damages for this refusal, but for this refusal alone. Or,
    Third. — By holding, that although the company was absolutely and legally incompetent to create such an obligation, yet it is bound to make good the representation contained in the certificate, that the stock expressed in it was part of the true capital; and then the market value of such genuine stock affords the just general rule of damages in the case.
    It is stated in the answer that the amount of the fraudulent issue is oue million five hundred thousand dollars. If this sum or any other sum near it should pass into judgments, with executions over the properly, and a race of competition among the creditors to realize their demands, utter and irretrievable loss to all the stockholders must ensue. If these claimants are admitted upon the basis of a community of interest, something may be saved from the ruin.
    Such considerations, if inadmissible, and I trust not admitted, to influence a judicial decision, must prevail to teach a more than usual caution in stating the principles which have led a Judge to this result.
    I. There is no possible ground, in my opinion, upon which a liability of any kind can be fixed upon the company, which must not depend upon, or arise out of, the certificate issued to Kyle, and deposited with the plaintiffs. That certificate may be treated as a contract of the company itself, authenticated by its officer; or as the representation of an agent, sufficiently authorized in the particular matter, that the facts stated in it are true, and an implied promise that the engagement contained in it shall be fulfilled ; or a guaranty by the company that Schuyler’s representations are correct, and an undertaking to perform what is stipulated in it. Interpret the certificate in any manner which legal criticism can devise, and it will be found that the essential elements of a contract pertain to it.
    H. What is that contract? It contains four material particulars. 1st. That Kyle was entitled to eighty-five shares of the capital stock of the company. 2d. That such capital stock was three millions of dollars. 3d. That the shares were one hundred dollars each; and 4th. That upon production of the certificate the company would allow a transfer and registration of the shares to Kyle, or his assigns.
    Assume, then, for the present, that the original stockholders had professedly entered into this contract, the questions are, — could they legally make it; and can they legally satisfy it; and in what manner.
    These questions are to be considered as between the company and the holders of the certificates themselves, irrespective of the charter and the state; and next, as affected by the provisions of the former and the policy of the latter.

      1st. The admission of the plaintiffs, as stockholders of the company, representing eighty-five additional shares, so far as to confer a right of voting and to participate in all corporate privileges, seems clearly to be a matter of mere compact and arrangement, if it is not expressly prohibited. It is simply the increase of the members of a partnership, for the purposes of management.
    2d. The increase of the capital stock of a corporation, if such capital is not fixed by the charter and no other statutory prohibition is in force, would not be illegal. The joint stock companies of England, organized under various acts of Parliament, are under no such limitation, and increase their capital indefinitely. (Wordsworth, Law of Joint Stock Companies, p. 37.)
    3d. The third particular, or representation, in the certificate, viz., that the shares are one hundred dollars each, is of more importance. It is undeniable that in this the certificates do no more than state that the nominal value of each share when full is $100. They do not represent that this is the actual value. The settled rule of damages in ordinary cases, and adopted in the present instance, proves this. The market value of the stock at the time of a demand for a transfer, or at any time prior to the commencement of the suit, governs the amount of the recovery. (Commercial Banlc of Buffalo v. Kortright, 22 Wendell, 348.) Had the market value been twenly per cent., instead of ninety-four in the present instance, that would have been all that the plaintiffs could have obtained, upon their own theory.
    But the agreement on behalf of the holder of the spurious stock, may then be presented in this, its strongest form. I adopt, as probably nearest the fact, the statement of the answer as to the amount of the spurious issue, viz. $1,500,000. The company has represented in this certificate, that the capital is three millions, and the shares $100 each. The shares, then, are thirty thousand; and hence it is represented that the eighty-five shares in question are a component part of thirty thousand shares, not of forty-five thousand.
    If, then, fifteen thousand of undoubted shares were displaced and these substituted, absolute justice would be done, and the contract in its utmost latitude of construction be entirely fulfilled. .If, again, the holders of the thirty thousand shares abate the nominal value of what they hold one-half, and the spurious shareholders are admitted at the full value, how could it be possible to say that every portion of the engagement of the company was not performed ?
    Assume the agreement to be, that the holder shall have his share of stock, at $100, so that his dividend upon and interest in the property shall be upon that amount. These holders then represent in the company fifteen thousand shares, or $1,500,000; and by treating the other shares as reduced to $50, the same sum is produced upon thirty thousand shares.
    And thus there would be fifteen thousand shares at $100 each, and thirty thousand at $50 each, keeping the capital at three millions.
    Suppose in this case, the company had permitted a transfer of these shares. It- may be easily conjectured, and by statements in other cases in this court it is shown, that a great mass of the spurious stock is held by parties registered on the books and possessed of certificates. How are the rights of these parties to be adjusted? In the most favorable view for them, these holders will displace an equal amount of the unquestioned stock.
    I consider that the cases of J. It. Hasinger, (2 Ashmead’s -Rep. 287, April, 1840,) and the Bank of Kentucky case, as involving the decision, that if the limitation of the capital does not present an insuperable difficulty, the relief to be given upon such certificate would be that I have indicated, and the company would not be bound to give any other.
    It is to be noticed, that in Hasinger’s case, by admitting the holders of spurious stock to a community with all others, although the authorized capital was not exceeded, yet the genuine stockholders would have suffered the same diminution in the value of their shares as if it had been exceeded. The company received nothing of the money raised. Their property and profits would have been divided upon a body of fourteen thousand shares, instead of ten thousand. The value of each share was lessened in proportion; and it was as much a robbery by a criminal act, as if the issue had produced an excess of the capital fixed in the charter.
    The case of the Bank of Kentucky, so often referred' to,.may perhaps be subject to the remarks of counsel, that it was the same as if Schuyler was here sued for the fraudulent issue. Nevertheless, the question of the liability of the bank to the holders of the spurious issue, was made a prominent point in the argument, and was distinctly and carefully examined and passed upon by the court. The result was an opinion that the bona fide holder of every certificate issued by either of the transfer agents, had a pecuniary and valid claim against the corporation, either to be admitted as- a corporator, or, if that was impracticable from the excessive issue of stock, to be compensated by the bank, for the fraud practiced upon him.
    I cannot discern a reason to doubt that, irrespective of statutory prohibitions or provisions, such a contract could have been made by the body of the stockholders, of the import and extent thus ’ defined, and would have been enforced against them.
    4th. The next point in this part- of the case, is as to the effect of such an act or contract made by the body of the stockholders, in connection with the charter and the state. The more deliberate examination which I have given to this point, confirms into conviction the views expressed in the case of the JBanlc of Commerce, which were as follows:
    It may be fully admitted, that when the Legislature has prescribed a limit to the capital of a corporation, a direct increase of the amount would be a violation of the compact, and a ground of forfeiture. In granting corporate privileges, the regulation of the capital is governed by two considerations: the necessity of raising an amount sufficient to accomplish the public object; and the forbidding a larger accumulation of money or property in the hands of one body, than is essential for that purpose. For a company, then, to transcend the fixed amount, is to usurp a right to increase the great element of corporate power, contrary to a fundamental policy of the state.
    But it is not seen how this line of reasoning applies with the like, or with any force, to the increase by a company of the number of its shares in any manner which leaves the capital precisely as it was before. If the charter of a company had fixed a capital, but was silent as to the number or par value of the shares, the company (or its agents if entrusted with the power) might adjust and readjust such number or value. If, again, where the charter as in this case, directs that there shall be- a defined number of shares of $100 each, the associates agree to increase the shares by reducing the par value of what they hold by a given per centage, would that be a violation of the charter such as to work a forfeiture, or would it be a matter only affecting the individual members as to their pecuniary interests in the stock ? We find that under the present charter there might have been thirty thousand members of the company. It is not easy to see what great rule of public policy is invaded, if this number was voluntarily increased to forty-five thousand, the limited capital remaining the same. The effect in the case suggested would be that each stockholder would reduce his share, for which he has paid $100, to $50, and receive his part of future profits upon the latter sum.
    But it is here necessary to examine with care a decision of the Supreme Court of Massachusetts, pronounced by its late distinguished Chief Justice, bearing upon this point. The case is that of the Salem Mill-Dam v. Hopes, (6 Pickering, 32,) reaffirmed in 9 Pickering, 187, and confirmed in another case in 10 Pickering, 147. It must be noticed that the first case arose upon an action against a subscriber for payment of a call, which was resisted on the ground that his subscription was conditional, and that such condition had not been fulfilled. The charter was that the capital should be $500,000, and the shares five thousand, of $100 each. The directors had attempted to go on with the business of the company when only 2,687 shares had been subscribed. The court held the defendant not responsible for the call.
    Now, it appears to me inaccurate'to say, that these cases prove,, that a reduction of the number of shares expressed in a charter, is a violation of that charter. It is correct to say, that they prove it to be a violation or non-fulfilment of a contract, the terms of which are found in that charter. If so, the condition of the contract may be waived, modified, or insisted upon at the will of the subscriber, with the assent of the company.
    And, hence, we are in each particular case to ascertain whether such was a condition of the contract, and whether, if it was, it has been waived.
    In this point of view the question was regarded by the court, in the case of The Lexington and West Cambridge Co. v. Chambers, (13 Metcalf, 311,) and in the Kennebec JR. JR. Co., (34 Maine Rep. 360.) In the last case, the court say, “that the contract there could not have had reference to any certain number of shares, or certain amount of capital, as fixed by the charter; and there is no language used in the contract prescribing the number of the shares, or the amount of the capital.”
    It may be admitted that an increase of the number of shares by a reduction of the value of those already issued, by affecting the amount of the profits of the holders as well as the actual sum represented, stands upon a similar footing as a reduction of shares. But the question is still, in each instance, one of contract and authorization, and a question between him and third persons, Hot the state.
    Upon the question of forfeiture of the charter, I have examined the following cases; and the result, in my judgment, is, that it is at least doubtful whether the tribunals of Connecticut would determine this charter to be forfeited by the adoption of this stock as part of the stock of the company, by reducing the value of the genuine shares in the manner pointed out. (Kellog v. The Union Co., 12 Conn. Rep. 7; The State v. The Essex Bank, 8 Yerm. Rep. 489; Planters' Bk. v. The Bank of Alexandria, 10 Gill. & Johns. 846; Attorney General v. The Petersburg R. R. Co. 6 Iredell, 456; The People v. The Oakland County Bk. 1 Douglass, 282; State of Mississippi v. The Commercial Bank of Man. 6 Smedes & Marshall, 288; and other cases cited in Angelí & Ames, § 776, note.)
    I cannot, therefore, conclude that the increase of the number of shares would be a violation of the charter. I consider that the reduction of the nominal value of the old shares and admitting the new ones, leaving the aggregate of capital identically the same, could not work a forfeiture; and that if either or both of these could have that effect, it is a question for the courts or state of Connecticut alone to determine. The latter can repeal the charter, or could ratify an act of the company adopting the stock. The former alone can adjudge a forfeiture. If this court should decide the case upon such a ground, it would be an intrusion upon the province of the only competent power. (See Hamilton v. Annapolis R. R. Co. 1 Maryland Oh. Dec. 107.)
    My conclusion is, that the majority of the stockholders could have legally sanctioned the issue of this stock, so as to entitle the holders to be admitted as members in the manner before briefly noticed, and hereafter more particularly stated.
    The argument which is presented and acceded to by one or two of my brethren is, that the company could not fulfil the compact. It could say, and Rad a right to say, the stock is full, and the holder cannot be admitted. We have no stock to give you without violating the limits of our charter; perhaps incurring a forfeiture. But the question is, where is the prohibition or legal disability which prevents the company from saying, We can ful-fil the agreement according to its true import,' — and offering to do so ? I present a very simple case, which involves, the principle, and, I think, the answer. Suppose one hundred shares were held by ten persons, ten shares each'; should there be ten shares fraudulently issued, why could not the stockholders surrender each one share, and perform the engagement? They would retain nine shares apiece. In what way this would be illegal, I am unable to comprehend. If they could voluntarily do this, the question is, have they not a right to say, This is all we were bound to do; and this, when you demand more, we ask may be adjudged to be the extent and limit of your right ? My brother Campbell admits, that if he could agree that this action was on a contract which the company could perform, his difficulties would be removed. He contends that the action is not brought upon the certificate, nor, hence, upon any contract. My brother Slosson admits that the suit is virtually upon the certificate, which created an obligation upon the company. His difficulty appears to be that it cannot be performed in the manner I have attempted to prove it can be.
    TTT. The next inquiry is, has the company conferred a power upon Robert Schuyler, apparently sufficient to authorize him to do what they could have done themselves.
    1st. The first section of the charter constituted Joseph E. Sheffield and others, with such persons as shall associate with them for that purpose, a body politic and corporate by the name of the New York and New Haven Railroad Company. The second section provided that the shares should be personal property, and should be transferred in such manner and at such places as the by-laws of the company should direct.
    Under the fourth section, the immediate government and direction of the affairs of the company was vested in a board of nine directors, to be chosen by the stockholders. By the seventh, the directors were empowered to make such by-laws and regulations as they should deem proper, touching the disposition and management of the stock, property, and effects of the company, not contrary to the charter, &o.; the transfer of shares; the duties and conduct of their officers and servants; and all matters whatever which appertain to the concerns of the company.
    In the exercise of the powers conferred by the charter, a resolution was adopted by the stockholders, to the following effect:—
    TRANSFER AND CERTIFICATES OF STOCK.
    The principal transfer offices shall be in the city of New Haven; but transfer agencies may be established in the cities of New York and Boston, by resolution of the board of directors; and all transfers of stock at any office, shall be made in compliance with such rules and regulations, and by such instruments of assignment and transfer, (which need not be under seal,) as may from time to time be made, ordered, and appointed by the board of directors.
    Certificates of stock shall be in such form, and issued under such rules and regulations as the board of directors may from time to time appoint and direct.
    The directors did adopt the forms of transfers, of powers to transfer, and of certificates of stock.
    It is stated in the complaint that Robert Schuyler was the transfer agent of the company in the city of New York, charged with the keeping of its transfer books, and the issuing certificates of ownership of its stock at that place; and so continued until his resignation.
    The answer admits that he was charged with the keeping of its transfer books, and the making of the certificates of stock, whenever any transfer of the stock thereof should be made by any former owner, and a new certificate thereof be required by the transferee; but it is denied that he was, ever charged with the issuing of certificates of ownership of its stock, in any other manner or with any other powers than those conferred by the charter and by-laws. ' ⅛
    The certificate in this ease has been before set forth; and it is found by the Judge that it was signed by Robert Schuyler, and was in the usual form of the certificates issued by the defendants to the holders and owners of the genuine and actual stock of the defendants. The answer also admits that the signature to the certificate is in the proper writing of Robert Schuyler — that it conforms to such certificates of stock as are' admitted to be genuine, and such as they bad- been in the babit of using.
    Robert Scbuyler, then, was, in my opinion, vested with all the power in relation to the issuing certificates of stock which the company possessed. That power was exercised by a fraudulent issue in the present case, but it was an exercise of an apparently unlimited power. And the case, then, is one of an abuse of a general agency in a particular business.
    The certificate is a written declaration that the party in whose favor it is given is entitled to the shares expressed in it, and an admission that he is a member of the company, and has a right to its privileges, and a participation in its property.
    Robert Schuyler had a power delegated to him which enabled him, as to innocent third persons, to fix this obligation upon the company. Suppose the stockholders- had formally resolved that such certificates should be issued for the use of the company to the amount of $10,000, and left the certificates signed by them with Schuyler, under such instructions. If he had filled them up with $100,000, the company would have been responsible. The powers they have actually devolved upon him are equally sufficient to bind them.
    I do not propose to enter upon the extensive inquiry as to the authority and obligations of principal and agent. It appears to me that the rule adopted by the Supreme Court in The North River JBanJc v. Aymar, (3 Hill, 270,) covers this case. “Whenever the very act of the agent is authorized by the terms of the power — that is, whenever by comparing the act done by the agent with the words of the power, the act is in itself warranted by the terms used — such act is binding on the constituent as to all persons dealing in good faith with the agent. Such persons are not bound to inquire into facts aliunde. The apparent authority is the real authority.”
    I consider that there is no substantial distinction between the cases of promissory notes, as to which this language was used, and certificates of stock in corporations. This point is more particularly examined under the next head of my opinion.
    IY. A point was made and strongly pressed by the defendants’ counsel, that the certificate was absolutely void in the hands of Kyle, and that no one claiming by a transfer under him could be in a better situation.
    In relation to Kyle’s position as to this certificate, we have no right to assume, under the evidence, that Kyle had not this amount of stock standing in his name on the books of the company.
    It is not found that Kyle knew that the certificate was fraudulently issued, and did not represent genuine stock, as is averred in the answer. All that is found bearing upon this point is, that Schuyler delivered the certificate to Kyle, to borrow money upon for his, Schuyler’s, use; that it was not issued for any lawful purpose, but was a fraud on the part of Schuyler, to raise money for his own private purposes.
    How, Kyle borrowed the money and gave his note, paying the proceeds to Schuyler. Had he taken up the.note himself, he would probably have stood, upon the facts of the present case, in as good a situation as the plaintiffs stand. It would have been necessary to have raised, at least, a reasonable presumption, that he knew of the fraud.
    Hence it cannot be correctly said, that the certificate was utterly, void in the hands of Kyle. He had a lien upon it as security for his own note discounted for Schuyler’s use. He would have had a full right to it, had he paid such note.
    It was, indeed, before such payment, voidable as against the company, because without consideration; and any defence available as to Schuyler, would have served as to Kyle. The proposition cannot be carried further than this.
    But suppose it was utterly void in Kyle’s hands, we have then-another and an important question to meet. Would it not still be available in the hands of a bona fide holder ?
    If it was a negotiable instrument, it would be so beyond a doubt. The opinion of the Supreme Court in the North River Bank v. Aymar, (3 Hill, 269,) settles that point:
    “ The paper being issued without consideration was indeed void as between the original parties, but there being a power to issue paper valid in form, it cannot be impeached in the hands of a bond fide holder.”
    In the case of Raiman v. Lobadh, (1 Duer, 354,) this court adopted the proposition, that certificates of stock in the hands of a bona fide holder, so far partook of the character of negotiable paper, as that no equities between the previous parties could defeat his right.
    The case of Fortnight v. The Commercial Bank of Buffalo, (22 Wendell, 360,) settled, among other things, the same principle. Thé delivery, by an agent, though against his instructions, of the certificate and power, though in blank, it was held, gave a right to the innocent holder.
    A special action of assumpsit will lie on behalf of the holder of a certificate against a corporation, for refusing to permit a transfer. {Kortright v. The Commercial Bank of Buffalo, 22 Wend. 348; Morgan v. The Bank of North America, 8 Serg. & Rawle, 87; Matter of Shipley, 10 John. Rep. 485; Catchpole v. The AmbersgoM B. B. Co. 16 L. & Eq. Rep. 163.)
    The last case arose on demurrer. The declaration stated as a ground of action that the plaintiff was prevented from appearing to be a member on the books of the company, and the second count alleged special damages.
    In the case of Bement v. The Bank of Commerce, I cited several authorities to show, that a bill in equity will lie for the specific performance of a contract to deliver certificates of stock, and how fully the possession of certificates or scrip invests the holder with 'an equitable interest in, and right to the stock represented in them. To these cases may be added, Fyfe v. Swaby, (8 Eng. L. & Eq. Rep. 184;) Bagshaw v. The Eastern B. B. Co., (7 Hare, 114;) Bunaft v. Albrecht, (12 Simon’s Rep. 189;) Sloman v. The Bank of England, (14 Simon’s Rep. 475.)
    It appears to me that through this line of authorities, and many which might be added to it, we find the predominant spirit of commerce tending to confer upon these evidences of debt or interest, the character and attributes of negotiable paper, whenever the rights of honest purchasers are brought in question. But within a few hours I have met with an authority which seems to me sufficient to dispense with further reasoning from myself.
    In the case of Fisher v. The Morris Canal and Banking Co., (November, 1854, Court of Appeals of New Jersey; Com. Law Register, May, 1855, p. 423,) the question was, whether a Iona fide holder of railroad bonds under seal, having no notice of a defect of title in the seller, would not have a perfect title to them, free from all equities between tbe seller and the company. The Master who heard the case, (the Chancellor being interested,) reported in his favor, and also upon certain objections as to the illegality and fraudulent issue of the bonds, the particulars of which do not appear, but in which conclusions the court coincided.
    The Court of Appeals unanimously affirmed the decision of the Master. Justice Elmer adverted to the settled rule as to promissory notes, &c., and observes, that by analogy to this class of cases, the exigencies of business have from-time to time introduced other securities into the same category. He notices the cases of Exchequer Bills, (4 B. & Aid. 1;) of Bonds of the King of Prussia, (3 B. & Or. 45,) and of Instruments issued by the goven'n-mmt of Naples, (7 Bing. 284.) He says that, “ as between third parties, we suppose the common usage to transfer them by delivering, without inquiry as to the title of the transferee (query, transferor ?) would justify us in holding these securities to differ from common obligations in being so far negotiable that the bona fide possessor shall be held to have a good title. The obvious interest of such companies is, that the bonds should be saleable, free from all questions of equity. To declare them subject to the equities existing in the case of ordinary bonds, upon every transfer of them, would be to strike a blow at the credit of the great mass of these securities now in the market, the consequences of which it would be impossible to predict.”
    I cannot perceive a valid distinction between the case of railroad bonds and railroad certificates of stock, in the application of the principles declared in this judgment; and the distinguished counsel of the defendants, whose professional learning was imbibed at the feet of the eminent jurists of New Jersey, may find an answer to a portion of his argument in the judgment of a tribunal of a state, whose courts have long been marked, as well for their conservatism as to the doctrines of the common law, as for their learning and ability.
    I shall close this branch of the case by referring to some of the leading cases cited on the argument. A very large number of the authorities of the defendants rest upon a principle very distinct from that which must govern us here. They are cases in which an asserted right to property of a corporation or a demand upon it, could only be sustained by tracing a title through charters or statutes, which led to the disclosure of the want of power,, or other illegality. This comparison showed the invalidity of the act, or proved the absence of authority; and this comparison the party dealing with the company was bound to make.
    The leading case of The Bank of Bengal v. The East India Company, (2 Knapp’s Pr. 0. 0. Reports, 245,) depends upon a similar rule. The authorization given to Mr. Oxborough was contained in a series of instructions and documents issuing from the accountant-general, the proper officer. These were insufficient to warrant his checking the notes as genuine; 'and these, the holder of those which were forged, was bound to examine. It amounts, then, to the case of one acting under a special written power, when another cannot safely deal with him without inspecting the extent of that power.
    The class of cases of which Davis v. The Bank of England; Lowery v. The Commercial Bank of Baltimore, (3 Merchants’ Magazine, 351,) and Pollock v. The National Bank, (3 Selden, 274,) are examples, involve this principle. A bank is responsible where, by the negligence or fraud of its agents, stock is transferred, as well to the innocent transferee, as to the original owner of the stock. In the case of Pollock in the Court of Appeals, it appears from the opinion of Justice Welles, that a decree had been made in favor of the Bank of America, the innocent holder of the shares fraudulently transferred. Justice Gardiner, delivering the opinion of the court, declared, that the National Bank was bound to issue new certificates and account for the devidends to the then plaintiffs; or, if it should be ascertained that it had no stock which could be transferred, then it should pay the value of the shares according to the prayer of the bill.
    Here, then, is the principle of responsibility to hand fide holders, and the continuance of responsibility to former owners in relation to the same parcel of stock, distinctly sustained. The method of carrying out this principle, in a new and complicated case like the present, is left open, to be governed by the contracts of the parties in their true and legal meaning, and by the rules which justice and equity may prescribe.
    The result of this series of propositions and this line of reasoning is this, that the company was bound to admit the plaintiffs, as stockholders, to the registration of the eighty-five shares; that they would have then become entitled to all the privileges of members; that they would have had an interest in the property of the company, to the amount of eight thousand five hundred dollars, and to dividends upon that amount; and that the nominal value of the shares of the genuine stock should be reduced by a rate or per centage sufficient to meet this sum.
    This was the import, the extent, and the character of the obligation fixed by the company by the certificate transferred to the plaintiffs, and of the contracts embodied in it.
    Had the defendants fulfilled such contract, and admitted the plaintiffs to a transfer on the books as demanded, it would have been the duty of the directors to have ascertained the shares of genuine stock and its holders, and to have adjusted the proportions of the interests of the latter in the stock of the company, by abating from each share a rate or per centage which would amount to the sum of eight thousand five hundred dollars, and which, if this were the only case, would be about twenty-eight cents and a fraction upon each share.
    If the directors refused or negleeted this, the plaintiffs could have filed a complaint (and, as the facts exist, on behalf of themselves and all others similarly situated) to compel it. If the proportion of the spurious stock to three millions admitted it — if, for example, there was one million five hundred thousand dollars of • such stock as stated in the answer — a surrender of one half of the shares of each genuine holder, and taking new certificates for half, would effect the object. But if this method should not be practicable, or be inconvenient, then an abatement of the nominal value of each share by a rate or per centage sufiicient to cover the amount of the spurious stock, would be practical and effectual.
    It is true that the result of these views presents this anomaly, that the holders of genuine stock are in a worse position than the claimants upon that which is spurious. But the answer is this: They have involved themselves in responsibilities which must be redeemed; and justice wifi be appeased by the least costly of the sacrifices which they are compelled to offer.
    Difficulties have been suggested in carrying out the principle I have advocated. The chief of them is that attending the discrimination of the stock. The minute examination which this matter received before me, in the case of the Bank of Commerce, has led me to the conclusion that this difficulty is far from being insuperable.
    All the other objections springing from the arrangement of voting and a share in the management, seem to me chimerical; and practical common sense and ordinary rules of law would dissipate them the moment they arose. The adjustment of the relative interests in the stock or property is a matter of the simplest arithmetic when the discrimination is made. Some difficulties might exist in calling in the holders, and some embarrassing questions might arise. But, in my humble opinion, obstacles like these should be compelled to yield to the administration of a great principle of justice, which will, as far as the commands of law permit, reconcile this conflict of equally honest sufferers. The rule I have stated is, I am sure, sanctioned by a comprehensive spirit of enlightened equity; and is not, as I believe, condemned by imperative law, nor subject to insuperable difficulties in applying it.
    V. The last point to be considered is, what the consequence of the refusal to permit the transfer, and what is the measure of damage? In the view which I have taken of the responsibility of the company, the right to any damage depends exclusively • upon the refusal to perform the contract — that is, to permit the transfer. I consider that, without the allegation (which is in this complaint) of a demand and refusal to transfer, there would be no ground of action whatever. This proposition is of material importance, and this proposition is a fundamental ground of my judgment. The defendants were bound to admit these holders of certificates as members. Had they done so, and in the man--ner as to the amount before stated,, they would have fulfilled every imaginable obligation resting upon them. Eor this refusal they are to make compensation, and for nothing else. The market value of the stock of the company at the time of a demand of transfer, forms the general rule of measuring the damages upon a refusal {Koririgld v. Commercial Bank,. 22 Wendell, 348.) That market value has been found to be ninety-four per cent. This was the value at the date of the certificates, in April; and it is somewhat singular that the value should have been the same after the 5th of July, when tlie transfer books were closed by tbe resolution of that day. The counsel, however, it is understood, agreed to take this as the rate. Among the points of the defendant is this — that the answer and facts found show good reason for the directors closing the books, and not permitting any transfer; and that the books were actually closed, and the refusal to transfer was put upon this ground, as well as upon the invalidity of. the certificate. If this proposition is tenable, the result is, that the only proper relief in this case would be to give the plaintiffs a judgment compelling a transfer, and declaring his interest in the property as above stated. It seems reasonable that, in a case so novel and embarrassing, the trustees might refuse to act until a judicial decision, without necessarily preventing their cestui que trust from submitting to the performance of the contract, in the manner really binding upon them. But at the hearing, the discussion of-this point was passed over by the defendants’ counsel, though not waived, and perhaps partly in consequence of a suggestion of one of the Judges. It was but glanced at by the plaintiffs’ counsel. I shall consider that the point is open for argument, if it arises in other cases. Upon the facts, as proven in this case, I find myself compelled to say, that the market value of good stock at the time of the demand was ninety-four per cent.; and, as the principles of this opinion show that the plaintiffs would have been admitted upon the basis of one hundred dollars a share, I see no alternative but to adopt that rate as the measure of damages.
    I have purposely avoided discussing this case upon the hypothesis that the holders of spurious stock could only be admitted upon a common footing with those of genuine stock. That would be a grave question. It is very unimportant to consider it here; it could only vary the amount of damages in a trifling sum, if it is well founded. That amount would be about 27 cents, or give the damages at 98.73. I have treated the case as if he was entitled to an interest in the company equivalent to the market value, for the purpose of fixing the damages. The principle of a common participation and common loss, would, in the facts alleged, reduce the value of each share to 66.66 per cent; that is, fifty-five thousand shares of a capital of three millions.
    It will be ^observed that the view which I have taken does not accord with, the main propositions of either party. The plaintiffs are not content with a rule of decision which will admit them as mere participants in the property. They seek a judgment as creditors, with its attendant process of execution. The defendants may well suppose, that in overthrowing the position I have assumed, they make no slight advance in defeating the claim of the defendants, on any and every ground. But the question is raised upon the points of each party; and I consider the court to be at liberty to say, that, if it were not for the demand and refusal to transfer the stock, the plaintiffs must have been content to take the relief I have suggested, or none, and to show that the point of the defendants is not tenable.
    Upon these grounds, I am of opinion that the judgment at Special Term should be affirmed.
    Boswobth, J. — By the defendants’ charter, their capital stock was limited to $8,000,000, and was to be divided into shares of $100 each. It declared that the shares should be deemed personal property, and be transferred in such manner and at such places as the by-laws of the company should direct. (§ 2.)
    It gives to the directors “full power to make and prescribe such by-laws, rules, and regulations as they shall deem needful and proper, touching the disposition and management of the stock, property, estate, and effects of said company,” &c., “and the transfer of shares, the duties and conduct of their officers and their servants,” &c. (§ 7.)
    Soon after the charter was granted, and in pursuance of it, bylaws and rules in relation to transfers and certificates of its stock, were adopted by the company; and they continued in force until after the 5th of July, 1854. They provided that the principal transfer office should be in the city of New Haven, but that transfer agencies might be established, by resolution of the board of directors, in New York.and Boston; and that all transfers of stock, at any office, should be made under, and in compliance with such rules and regulations, and by such instruments of assignment and transfer, as might, from time to time, be made, ordered, and appointed by the'board of directors.
    They provide that “ certificates of stock shall be in such form, and issued under such rules and regulations, as the board of directors may, from time to time, direct;” but, that after a certificate, of. stock has been issued to a stockholder, no second or duplicate •certificate shall be issued, unless the same shall be lost or mislaid, and then only on a special resolution of the board of directors that all transfers of stock at any of the offices of the company, shall be made' in the transfer books of the office at which the stock proposed to be transferred shall stand to the credit of the party to make the transfer. That if a certificate of the stock to be transferred had been issued, it must be surrendered before any transfer be made. That transfers might be made by the stockholders in person, or by an attorney appointed by a power of attorney, in the usual form. Soqn after the organization of the company, and in 1846, Robert Schuyler was duly appointed its president, and transfer agent at the city of Hew York, where a transfer agency was duly established, and he continued-such president and transfer agent up to the 3d of July, 1854. He was charged by the company “ with the keeping of its transfer books at Hew York, and the making of the certificates of stock whenever any transfer thereof should be made by any former owner, and a new certificate therefor, should be required by the transferee; and he was invested as such transfer agent, with all the powers conferred by the charter, and said rules and regulations, on any transfer agent of the defendants. Such certificates were of a uniform character, and were authenticated by no signature except that of “Robert Schuyler, Transfer Agent.”
    On the 20th of April, 1854, Schuyler issued to Kyle the certificate in question, which conforms to the defendants’ certificates for stock, such as are admitted to be genuine, and such as they have been in the habit of using.
    On the 13th of May, 1854, the plaintiffs loaned Kyle $12,000, on his promissory note, and this certificate of stock, ¿nd an assignment of the stock named in the certificate, and a power to transfer it as collateral security. There was other collateral security, but it requires no comment. Kyle paid $2,000 of the sum loaned to him, and no more, and is insolvent. Prior to the first of January, 1850, the whole $3,000,000 of stock had been paid in, and certificates therefor issued to the Iona fide owners thereof, *who held them when the plaintiffs made their loan, and the certificate in question was issued. This certificate did not represent any of the genuine stock of the company, was not issued for any lawful purpose whatever, but was a fraud on the part of Schuyler, to raise money for his own private purposes. But the plaintiffs had no knowledge or notice of this, but on the contrary, made the loan in good faith, without having any reason, when they received the certificate, to suppose that it did not represent genuine stock, or that it was not properly issued.
    On the 5th of July, 1854, the defendants discovered, that Schuyler had issued, fraudulently, for his own private purposes, certificates of stock amounting to over $1,000,000.
    The plaintiffs, before bringing this action, applied to the defendants, and presented at their transfer office in New York, this certificate, and the power of attorney annexed to it, and demanded permission to transfer the stock on the defendants’ books, which was refused, on the ground, among others, that the stock was spurious, and the certificate was false and forged. The plaintiffs further required the defendants to reimburse, and to pay to them the market value of 85 shares of their stock, which the .defendants refused to do, or to pay any part thereof.
    Judgment was given at Special Term, in favor of the plaintiffs, for $8,072 ⅛⅜, the market value of eighty-five shares of defendants’ stock, at the time the demand for reimbursement was made, and which is less than the amount due from Kyle to the plaintiffs on account of the said loan. Prom that judgment the defendants have appealed. There are other facts admitted by the pleadings, and specially found, but not necessary to be stated, in order to present intelligibly the questions, upon the proper decision of which the affirmance or reversal of the judgment depends.
    It must be conceded, as I think, that this certificate was utterly void in the hands of Kyle.
    The power of attorney annexed to it, and which is also an instrument of transfer, and which, by its terms, assigned to the plaintiffs eighty-five shares of the stock of the company, recited in it to be standing in Kyle’s name on the books of the company, was ineffectual, to vest in the plaintiffs title to any stock of the company, for the reason that Kyle owned none. He could not, by the mere execution and delivery of an instrument of transfer, convey stock, or a right to stock, when he had no right to any, either legal or equitable.

      Whether the defendants are hable in this action, depends upon the question, whether the issuing of such a certificate by their transfer agent, under the circumstances under which this was issued, can create any liability against the company in favor of a Iona fide purchaser and holder of the certificate and of the stock which it declares is owned by the person named in it, and who transferred it to such purchaser.-
    The charter authorized as well the transfer of shares as the creation of stock, and made the latter personal property.
    In providing for-issuing to stockholders certificates of their ownership of stock, the company would seem to have had in view the adoption of rules and regulations, the observance of which by their transfer agent, would enable every stockholder to have manual possession of authentic evidence of his title and perfect security that his title could not be affected by any entries upon the transfer book, until he had surrendered this authentic evidence, or certificate of stock, at the office at which it had been issued.
    The creation of such evidences of title, and the observance by the transfer agent of the rules and regulations of the company in relation to the transfer of the stock, which it identified or individualized, would enable the world to purchase, in perfect security of acquiring a title to the stock of which any stockholder named in a certificate was declared by it to be the owner.
    A transfer upon the books, and only such evidence of ownership as the entries upon the books would furnish, were all that the company needed, for any purpose connected with the' easy, safe, or profitable management of its affairs, unless it was deemed essential, in order to make its stock valuable, and an inducement to capitalists to become stockholders, that a system should be adopted for the easy transfer of such property, and under which purchasers or dealers might buy or‘advance, upon evidence of-title, to be furnished and authenticated by the company, upon which they might rely, and in which it was expected by the company that they would confide.
    In 1846, the president of the company, and its highest officer in the eye of the law, was duly appointed its transfer agent at the city of Hew York, and continued to act in both capacities until after the transaction in question. He was the only officer authorized to issue certificates of the ownership of stock transferable at that office. The company’s capital and property and its income were represented by 30,000 shares, all of which, for aught that appears, and a large portion of which it was reasonable to presume, were transferable only at that office. Of the stock transferable there only, no certificate of ownership could be issued, if the officer of the company to whom that business was confided, did his duty, except to an' owner of a part of the capital stock, and upon an actual transfer of it to him upon the books of the company.
    The appointment of Schuyler as transfer agent, and devolving upon him the superintendence of the whole of this business, was notice to the public that the company through this officer, would see that the rules and regulations which it had adopted for the security of dealers, as well as of the stockholders, whom it represented, were observed.
    Did the company thereby undertake that no certificate should be issued, except upon a full compliance with these rules and regulations ; or did some existing rule of law notify the world, that if any one purchased upon a transfer of one of these certificates in good faith, relying upon the facts being as it represented them to be, and without any knowledge or notice calculated to excite a suspicion to the contrary, he would buy at his peril, and must take the risk of the company having done its duty, and having acted in conformity with its by-laws ?
    The corporation could act only through the agency of its officers. It is unlike a natural person, who can transact his business in person or through the agency of others, according to his volition. All the acts in behalf of a corporation done by its proper officers are its acts — if they are done within the scope of their actual authority, or are apparently within the limits of their actual authority. The case is, I apprehend, the same in principle, as if the by-laws required every certificate of ownership to be issued upon a special resolution of the board of directors, and this appeared upon its face to have been, and had been in fact so issued. If in the latter case, a Iona fide purchaser would acquire any rights against the company, had the same frauds been practiced by the board, the same rights have been acquired by the present plaintiff.

      The transfer agent could properly have issued to Kyle the certificate in question, if the facts existed which the certificate states. He was the only officer who could issue and authenticate it. He was the officer delegated to superintend and manage this department of business, to issue' such certificates to those entitled to them, and to deny them to all others. To issue certificates declaring who was an owner of shares, and the number owned, was an important part of the ordinary duties of that office. There were 30,000 shares, with respect to most of which, it is not unreasonable to presume, he was the only officer having any such power.
    In issuing such certificates, he was acting, apparently, within the limits of the authority conferred upon him by the company, under its charter, by-laws, rules, and regulations. In so acting, so far as the certificate itself speaks in relation to the matter, he was acting, ostensibly and avowedly, as such officer. On its face it is the act of the corporation, and. not of Schuyler. The plaintiffs took the certificate and loaned their money upon the security of it, in good faith, without any reason at the time to suppose that the certificate did not state the truth, or had been fraudulently issued. In point of fact the certificate states a falsehood, and was fraudulently issued by the transfer agent. Who must bear the ■ loss resulting from ordinary dealings and transactions‘entered into relying upon his fidelity? third persons who have parted with their money in this confidence, or those who appointed him, and held him and his official acts out to the world, as worthy of credit and confidence ?
    It is urged, that the defendant is itself a person of limited powers, that every one knows it has no powers except such as its charter confers, that it had no capacity to create more than thirty thousand shares of stock, or to make any share of a less nominal value than $100, and that the transfer agent, in issuing this certificate, transcended his powers, and did what his principal was incompetent to do, and that the act was fraudulent and criminal and void.
    It is obvious that the company could not in the proper discharge of duty, or in the honest exercise of its powers, by means of any agency it was competent to create, issue a certificate declaring Kyle to be the owner of shares of its stock when he owned no stock. That its duly appointed officers Rad the actual capacity to do it, cannot now admit of any doubt; and having done it, the question is, does any liability attach to the company in consequence of it ? Holding the company liable will not have the effect, upon such a state of facts as this case presents, to increase the number of shares of the stock of the company, or diminish their nominal value. There is no question that the certificate does not represent any genuine stock; and there is no judgment that the plaintiffs had any right to be admitted or treated as stockholders.
    Compelling the defendants to pay the judgment, may affect the actual, but not the nominal value of the shares, any more than a loss of the like amount by fire or other casualty; and the company is competent to diminish the actual value of the shares through such means, or by any negligence of its officers or servants while attempting to discharge their appropriate duties.
    Whether the company could have satisfied its liability to the plaintiffs by allowing a transfer to be made to them, on its books, of the eighty-five shares, when permission to make the transfer was demanded, is a point which was mooted, but not attempted to be discussed, on the present appeal.
    As it is wholly unnecessary to determine that question, in order to decide whether the judgment appealed from should be affirmed or reversed, I do not purpose to examine it in this action.
    The principles applicable in this case, are quite distinct from those which controlled the decision of Wright v. Wilcox, (19 Wend. 845,) Vanderbilt v. Rich. Turnpike Co. (2 Corns. 479,) and many others of the same class, to which we were referred.
    Those were brought to charge the principal or master for tor-tious or negligent acts of the agent or servant, by which a direct and immediate injury was ’ caused to the person or property of the plaintiff. The actual wrong done was visible, and known to the injured party at the moment the wrong was done. The effect was to charge a party known at the time of the wrong to have had no actual participation in it, and, presumptively, to have never authorized it.
    In this case the act caused no immediate or direct injury. The act itself was one which he was, apparently, authorized to perform: it was performed in the name of the principal, and was one of a class or series of acts precisely such in kind and the manner of performing it, as lie was appointed to do with the expectation that others would give credit to them, as being the authorized acts of the principal, and in consequence of giving such credit, would incur liabilities, and part with their money and property. The plaintiffs have lost by giving to the acts of the transfer agent, apparently performed in transacting the very business with which he was entrusted, the credit and confidence it was designed and expected they should secure, and by dealing on the strength of that confidence and according to the usual course of business, as it was designed and expected that the public, in consequence of them, and in reliance upon them, would deal. They treated it and advanced their money, believing it to be, as it purported to be, the act of the company.
    In the other class of cases the injured party was not influenced in his conduct by any act. done, or representation, made, by the agent in the name of, or professedly or ostensibly on behalf of, his principal. He was not injured by being influenced in his dealings by any apparent authority of an agent. He was injured directly and immediately by his wrongful act, and without having done any thing himself, except to use ordinary care and caution to avoid him, and keep beyond the reach of his acts or their consequences.
    The acts of a general agent will bind his principal, so long as he keeps within the general scope of his authority. The principal is concluded by them. In judgment of law they are his acts. As long as the agent acts apparently within the limits of the authority actually conferred, and a third person in parting with his property, does so, relying upon the honesty and propriety of such acts, and under circumstances not calculated to excite suspicion that the agent has departed from the instructions he received, the acts bind the principal; and the party injured by confiding in them, and acting upon them, as he would have' been authorized to confide in and act upon the credit of them if the agent had been faithful.to his principal, may recover of the latter the damages suffered. This rule is applied and enforced to prevent fraud and encourage confidence in dealing. Within the meaning of this rule, any agent is a general agent, whom one appoints to transact all of his business of a particular kind.

      Schuyler was authorized to manage and superintend the transfers of all shares of the stock of the company, transferable at the office in New York.
    It is true that no by-law or resolution has been proved, which, by its terms, authorized the transfer agent to issue certificates of stock.
    But the answer, in reply to averments contained in the complaint, admits that Schuyler was appointed transfer agent soon after the company was organized, that he was charged with the keeping of its transfer books at New York, and the making of the certificates of stock whenever any transfer thereof should be made by any former owner, and a new certificate therefor should be required by the transferee; and that he had all the powers which any transfer agent possessed under the charter, by-laws, and regulations of the company.
    By charging him with these duties, and by transacting this branch of business m this manner, without any interruption or variation, from 1846 to 1854, the company is as much bound by the acts of Schuyler, as if he had done the same business, in the same manner, in pursuance of a formal resolution.
    By this mode of doing its business, the company held him out as the person authorized to transact it, and worthy to be trusted, and, in effect, became responsible for his fidelity and good conduct in all matters of the agency.
    In Foster et al. v. The Fssex Bh. (17 Mass. 479-511,) in which it was decided, that where a cask, containing gold, was deposited in a bank for safe-keeping, and the cashier fraudulently took the gold out of the cask, the bank was not liable to the depositor, Parker, Ch. J., in delivering the opinion of the court, remarks: “ If it be asked for what acts, then, of a cashier or clerk, the bank would be answerable, I should answer, for any which pertain to their official duty; for correct entries in their books, and for a proper account of general deposits, so that, if by any mistake, or by fraud, in these particulars, any person be injured, he would have a remedy.” * * * * “ The undertaking of banking corporations, with respect to their officers, is, that they shall be skilful and faithful in their employment; they do not warrant their general honesty and uprightness.”
    Corporations are liable for the acts and frauds of their agents, while acting in the business entrusted to them, and apparently within the limits of the authority delegated to them, in the same manner as individuals.
    But it is insisted, that the plaintiffs, before loaning their money on the credit of the certificate,,should have gone to the office of the company and examined the transfer books, and then they might, or ought to have discovered that Kyle was not the owner of any genuine stock. Suppose the plaintiffs had gone there, and found, under the date of -the 19th óf April, 1854, a transfer in the proper book, to Kyle, and in proper form, of eighty-five shares of stock, and had inquired for, and been shown, a certificate surrendered at the time of the transfer, stating that the person making the transfer, owned that number of shares, would the plaintiffs then have had a right of action if the event disclosed that the entry in the proper book, and the surrendered certificate, were equally fraudulent as the present certificate ?
    The answer does not allege that Kyle did not appear, by the books of the company, to be the owner of any stock, or that there was no stock of the company standing in Kyle’s name, on the transfer book, but it avers that “there was none of its stock standing in his name, or in the name of any other person which he was authorized to transfer.” If on inquiry, and being shown the transfer books, he appeared by them to be an owner of eighty-five shares of stock, transferred to him in proper form, on or before the day this certificate was issued, were the plaintiffs bound to prosecute their' inquiries farther, and if they were, and had done so, and had discovered no defect of title, would the plaintiffs, by reason of having loaned on the security of the certificate, and after exercising such caution, and in good faith, have acquired any rights against the company, if it should be established, as it has been now, that the certificate was fraudulently issued, and represented no genuine stock ? If in such a case the company would be liable, and in the present case it is not, then its exemption from liability depends upon the want of proper caution on the part of a third person, in purchasing such a- certificate, and does not rest upon the principle that it cannot be made liable when it appears that its agent was guilty of- such a fraud, as is shown to have been committed by him in the present instance.
    There is no pretence in the pleadings, nor is there any fact found to justify the inference, that, according to the ordinary course of business, purchasers of stock or those who loan on its credit, ever look beyond a certificate of ownership, in the prescribed form of the company, and duly authenticated by its proper officer. A delivery of that is taken, with an instrument in writing, duly executed by the certified owner, whieh instrument is, in terms, both an assignment of the stock and a power of attorney, authorizing any one with whose name a blank, left in the power of attorney, may be filled, to transfer the stock to himselfj on the books of the company.
    Business of this kind has been transacted so long, and transfers of stock have been made in this manner so extensively and uniformly, that the court cannot but take notice of it, as being a part of the business of the country, as well as of the manner in which it is conducted.
    It has long been an object of the Legislature to give facility to the transfer of shares in government stocks, and of those of incorporated companies. This facility of transfer is one of the advantages belonging to this species of property, and certainly adds something to the value which a commercial community would attach to it. This advantage would be destroyed, if a purchaser was required to look at the regularity of the transfer, to all the several persons through whose hands such stock may have passed.
    When there is nothing in the circumstances attending the sale of a certificate, held by a person declared by it to be a stockholder, to induce a suspicion that it does not state the truth, or was wrongfully issued, a purchaser in good faith, and in the usual course of trade, has a right, as between himself and the company by whose officer it was issued, to rely upon the latter having done his duty, and having issued it in conformity with the rules and regulations which he was bound to obey. It was the company’s duty alike to its stockholders and the public, to see that the business of transferring shares was conducted in accordance with the provisions of the charter and the by-laws, rules, and regulations, which it had adopted. By appointing one of its own officers to take personal charge of and superintend that branch of its business, it represented him to the public, and his official acts, as entitled to credit, and undertook to be responsible for them, to those who might act on the faith of them, according to the-customary mode of doing business.
    The idea that this is an action to recover damages against the defendant, merely, or substantially, on the ground that its agent has been guilty of a fraud, is not warranted by the allegations of the complaint. In an action seeking to charge a party merely on the ground of fraud, if there be no proof of fraud, the plaintiff cannot recover. In this case, the right to recover depends upon the question, whether the issuing of the certificate to Kyle is to be treated as a corporate act, and whether the defendant is to be concluded by it, notwithstanding the proof given of Schuyler’s fraudulent conduct in transacting the business of his principal.
    This certificate, so far as any inferences can be drawn from its terms, or appearance, purports to be and is, as much the act of the defendant, as any certificate that has been issued by the company, representing genuine stock. The plaintiffs took it, believing it to be what it purports to be, and their action is based upon the theory, that as between them and the defendant, it is, in judgment of law, the act of the defendant, and that the defendant is estopped from asserting the contrary, so far as the question of its liability for refusing to reimburse to the plaintiffs the amount of their loan, to the extent of the value of the stock, is concerned.
    If this certificate represented genuine stock, and the defendant had refused permission to the plaintiffs to have it transferred to themselves on the books of the company, an action of assumpsit Would have lain against the company for the refusal, at the suit of the plaintiffs, if actions had such names now as they had prior to the Code. {Commercial Bank of Buffalo v. Koririghi, 22 Wend. 348.)
    Such an action is based on the' contract, or implied promise raised by law, that the company will perform all duties which are imposed on it by law.
    In this case the action is based on the assumption, so far as the right to be compensated in damages is concerned, that the company has given an assurance that Kyle owned the stock which the certificate represents stood to his credit oh its books. The complaint states that the defendant refused either to permit a transfer of it on' its books, or to pay the plaintiffs the advance, or any part of the advance made by them on the faith of this certi* ficate of Kyle’s ownership, alleging that it was fraudulently issued, and represented no genuine stock.
    The plaintiffs, if they recover at all, do not recover nakedly on the ground that such a fraud has been committed, but in spite of it. They recover, if at all, not because the certificate does not represent genuine stock, but because, although it does not represent genuine stock, the defendant is concluded, under all the facts and circumstances of the case, by the act of its transfer agent, and what was done by him.
    This action is not affected by the principle which controlled the decision in Hodges v. The city of Buffalo, 2 Denio, 110; Mc-Gregor v. The Official Managers of the Deal and Dover Railway Company, 16 Eng. L. & Eq. R. 180, and in other kindred cases. In those actions, the plaintiff was party to a contract which the defendant had no power to make. The act of incorporation being a public act, the plaintiff was presumed to know the extent of the defendants’ powers, and that the contract to which he was a party was beyond the scope of the defendants’ authority, and therefore illegal and void.
    Neither is it affected by the rule applied to that class of cases in which the assignee of a contract sues a corporation, and the contract, though negotiable in its character, is, upon its face, one which the corporation is incompetent to make.
    In all cases of the former character, the contracting party, and in cases of the latter, every party into whose hands the contract may come, in judgment of law, has notice that it is illegal and invalid.
    In the present case, there is nothing on the face of the certificate, or in the circumstances under which the plaintiffs took it, to induce a suspicion that the agent had been unfaithful to his principal, or that it was not a proper corporate act of the defendant, performed in the rightful discharge of its duty.
    One taking a bank-note in the ordinary course of business, which had been fraudulently issued by a cashier after the whole amount limited by law had been issued and was in circulation, would have as much ground to suspect that the issuing of it was not an honest corporate act, as the plaintiffs had to suppose the issuing of the certificate in question was not such an act.
    Can there be any doubt of the right of the holder of such a bill to recover upon it, if tie bank refused to redeem it ? Is there any more doubt of the right of the plaintiffs to recover in this 'case?
    But it is urged that a master of a vessel', by signing and issuing a bill of lading in the usual form, stating that specified goods have been received on board, to be carried and delivered, cannot subject the owners of the vessel to an action at the suit of a bond fide endorsee of the bill of lading, if, in point of fact, no goods had been put on board. Grant v. Norway, 10 Com.' B. 665; Nab-bertsey v. Ward,-8 Exch. R. 330; and Gurney v. Behrend, 3 Ellis & Black, 666, were cited as authorities supporting that proposition. And it was also urged, that there can be no discrimination made between such a case and the one before us, by which, in the former, the principal can be exempted from liability, and, in the latter, made responsible.

      Nabbertsey v: Ward, (18 Eng. L. & Eq. R. 551,) was an action of trover, to recover the value of one hundred and forty-five quarters of wheat, shipped by one Potterill, on defendant’s vessel, for which the .master issued to Potterill two bills of lading, one for seventy-five quarters, and the other for seventy quarters, deliverable to order at Antwerp, and which two bills Potterill endorsed to the plaintiff to secure the payment of moneys advanced on their credit. Subsequently, and after the whole cargo had been put on board, Marcher & Co., who had also shipped wheat on the same vessel, for the same voyage, requested the master to issue to them a second bill of lading for 145 quarters of wheat. This he at first refused to do, but ultimately, as the case states, “ in the presence of, and at the request of Pottc-rill, and upon the latter appearing to tear in pieces the bill of lading for seventy-five quarters, the master signed the bill of lading for one hundred and forty-five quarters, as shipped by Messrs. Marcher & Co., deliverable at Antwerp, to Messrs. Kinney Fréres.”
    On the arrival of the vessel at Antwerp the one hundred and forty-five quarters were delivered to Messrs. Kinney Fréres, under the bill of lading last issued. Subsequently the plaintiffs presented the two bills of lading for seventy-five and seventy quarters, and demanded a delivery, but were informed that the wheat had been delivered to Messrs. Kinney Fréres. The plaintiff bad a verdict, and a motion for a new trial was denied.
    It cannot escape observation, that if an assignee cannot have any greater rights under a bill of lading against the owner of a vessel, than the shipper of the goods to whom it was issued, the plaintiff ought not to have had a verdict on that case, unless it is to be inferred from the facts stated, that the plaintiff advanced upon the two bills of lading, and was possessed of them before the one for one hundred and forty-five quarters was issued to Marcher & Oo. If Potterill held them when the latter bill of lading was issued at his own request, he should have been estopped from claiming any thing under those first delivered to himself.
    If the plaintiff’s possession of the two, and his advance upon them, was prior to issuing the bill for one hundred and forty-five quarters, the case merely decides that a person shipping goods, and receiving a bill of lading making them deliverable to his own order, cannot, nor can his bona fide endorsee of the bill of lading, be divested of his title, by the act of the master on issuing a second bill of lading for the same goods, to a stranger; no matter into whose hands it may have come. The same principle was adjudged in Sallus v. Everett, 20 Wend. 267.
    The court said, “We think that when a captain has signed bills of lading for a cargo, that is actually on board his vessel, his power is exhausted, he has no right or power, by signing other bills of lading for goods that are not on board, to charge his owner.”
    In the case before us, the power of the transfer agent was not exhausted by the stock being all subscribed for, and certificates of ownership being issued to those to whom the stock belonged. The office of transfer agent had no connection with the filling up, or original subscriptions for the stock. Its duties related to the business of future transfers, and issuing new certificates of ownership.
    What 'rights might have been acquired by the bona fide assignee of the bill of lading for one hundred and forty-five quarters, as against the owner of the vessel, is a point which did not arise. He had, in fact, received the wheat, and was not a party to the action.

      Gurney et al. v. Béhrend, (25 Eng. L. & Eq. Rep. 128,) only decided, “ that the bond fide transferee for value of a bill of lading, endorsed by the shipper or his consignee, and put into circulation by authority of the shipper or consignee, has an absolute title to the goods, freed from the equitable right of the unpaid vendor to stop in transitu as against the purchaser.”
    In Grant ei al. v. Norway et al, (2 Eng. L. & Eq. Rep. 337,) it was decided by the Common Pleas of England, that the owners of a vessel are not- responsible to parties taking a bill of lading which has been signed by the master without receiving the goods on board, though taken and held by a bond fide endorsee for value.
    The decision was put on the ground that the nature of the master’s employment and the general usage in relation to the business, give “ notice to all people that the authority of the captain to give bills of lading is limited to such goods as have been put on board; and the party taking the bill of lading, either originally or by endorsement, of the goods which have never been put on board, is bound to show some particular authority to the master to sign in that form.” (Id. 341.)
    What is meant by the expression “ to sign in that form,” might not be accurately conjectured, if an attempt to express it should be made. In the present case, so far as the form of the certificate is concerned, it is conceded to be in the precise form of all the certificates issued by the corporation.
    If it be meant that the owners of the vessel cannot be charged, without proof that the master to their knowledge had issued bills of lading when no goods had been received, and that the owners had ratified such acts, and if that principle be sound, it may have an important bearing .upon this case.
    In Grant v. Norway no notice is taken by the court, ,of the effect of the act of issuing a bill of lading as one calculated and designed in part to induce credit and confidence in its statements on the part of those who might naturally, and according to the known course of business, be induced, in consequence of such confidence, to incur liabilities, or part with their money or other, property.
    The effect of a bill of lading between the original parties, in what sense it is negotiable, and what rights may be acquired by a bond fide assignee of it for value, are points which have been much discussed, and on which much learning has been expended. It has been held to be so far negotiable that an endorsee, in good faith for value, acquires a title to the property which it covers, but does not become an assignee of the contract which it contains, with a right to sue upon it in his own name. (Thompson v. Doming, 14 Mees & Wells, 408; Berkley v. Matting, 7 Ad. & Ellis, 29.)
    Viewing it in this aspect alone, it has no greater effect than a bill of sale executed and delivered by the owner of chattels. It would pass, by the endorsement of it, such rights as the shipper or consignee endorsing it possessed, and no others.
    As between the shipper of the goods and the owner of the vessel, so much of it as acknowledges that goods have been delivered on board, has been treated as a mere receipt, open to explanation and contradiction. It is a little remarkable, that the bill of lading in Grant v. Norway, though stating that twelve bales of silk had been received, had on it an endorsement, “ contents unknown.” When that endorsement was made, whether at the time of signing the bill of lading, or at the time it was endorsed by the shippers of the goods, does not clearly appear. In either case, I do not see that it is clearly an unimportant fact.
    In Howard et al. v. Tucker et al., (1 Barn & Aid. 712,) it was held that an owner of a vessel was concluded by a bill of lading, as between himself and an assignee of it for value, from alleging that the freight of the goods had not been paid in advance, that signed by the master stating, that it had been so paid. The court so held, upon the ground that by sanctioning a contrary doctrine, “ a door would be opened to many frauds.” (Vide Portland Bank v. Stubbs, 6 Mass. 422.)
    If the bond fide assignee of'a bill of lading for value, who made advances, relying on the truth of its statements, acquired as such no greater rights than the shipper of the goods possessed, it is not easy to perceive on what principle the decision in Howard v. Tucker can be sustained.
    If that was correctly decided, it seems impossible to deny that an owner of a vessel is not at liberty, as against an assignee for value, to assert and prove that there was not as much shipped, as the bill of lading specifies. If in the latter case the owner is concluded, it is a very refined distinction to say that he is concluded when something has been shipped, but is exempt from all liability if, nothing has been shipped.
    I had supposed it to be a clear rule of law that, if one by his words, whether oral or written, or by his conduct, had caused another to believe the. existence of a certain state of facts, and thus induced him to act on that belief, so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the time; and if such words or conduct are such that the latter would have acquired any rights against the former, if the facts were as he induced the latter to believe them to be, the latter is entitled to be put in the enjoyment of such rights, or if that be impossible in the nature of things, to an indemnity in damages, to the extent of the loss to which he has been subjected.
    The acts by which the conduct of the plaintiffs in the present case have been influenced and their position altered, I regard as acts authorized to be done almost exclusively with a view to influence the conduct of parties who might be disposed to buy or to loan on the security of the stock of the company. .
    The fact has been so often proved, and formed the basis in part of reported decisions, that stocks are bought and sold by a delivery of a certificate of stock, with a power of attorney to transfer tt annexed or endorsed upon it, executed by the certified owner, with a blank left, in which to insert the name of a transferee, and in this form pass from hand to hand like an endorsed note, by mere delivery, — that a court is bound to take notice of it, as being a part of the established business of the country, and also of the mode in which it is conducted, {Com. Bank of Buffalo v. Kort-right, 22 Wend. 349, 350; Fátman v. Lobach, 1 Duer, 354; Fussy v. Manuf. and Mech. Bank of Nantucket, 10 Pickering, 415.)
    These purchases and advances aré made entirely in consequence of the confidence reposed in the certificate. The certificate, in my judgment, is to be deemed to be the act of the corporation, and so far as it is designed to influence the conduct and dealings of individuals, the design is to be treated as being that of the corporation, and it is to.be held responsible to the same extent that an individual would, for the consequences of acts of a similar ¿character.
    I think the judgment should be affirmed on the grounds:

      Eirst. In issuing the certificate, Schuyler was acting within the scope of his powers as transfer agent, and the issuing of it, was, in judgment of law, the act of the corporation.
    Second. By entrusting to him that department of business, and holding him out to the world as the officer by whom the company would transact it, it represented his official acts to be entitled to credit, and became responsible for his fidelity in that employment.
    Third. Any person to whom certificates of stock, issued by such officer, in the usual form, and authenticated by him in the usual manner, are offered for sale, is, through them, assured by the company, that the facts are as they represent them to be, and is as much authorized to purchase, relying on the truth of that representation, as a merchant is to sell upon the representation of a third person, that the Tendee is worthy of credit.
    Fourth. A purchaser in good faith, for value, and in the ordinary course of business, of such a certificate, although it proves to have been fraudulently issued, is entitled to recover his damages of the company, if the latter refuse to permit a transfer of the stock, or to reimburse to the purchaser any part of his advance. He cannot be charged with having been negligent, or with a want of due caution, in having trusted to the certificate of the proper officer without further inquiry, when there was nothing in the circumstances under which it was offered to him, or relating to the person offering it, or to the amount of the stock so offered, justly calculated to excite the suspicion of a prudent and cautious man, that the officer of the company had departed from his duty in issuing, or that the holder had been guilty of any improper practice in obtaining it.
    Campbell, J. — Differing with my brethren in the result at which they have arrived, I shall proceed, not without diffidence, but at the same time with a strong conviction of their correctness, to state, though very briefly, the conclusions to which my mind has arrived.
    My conclusions are as follows:
    1st. The capital stock of the corporation could not be enlarged by any act of the directors or stockholders, themselves; much less by any unauthorized act of the agent, Schuyler. The corporation is, itself, a creature of law, authorized by the supreme government of the state, and can only be enlarged by the power which creates it.
    2. The agent, Schuyler, acted under a general power, but such power was limited to the subject matter, namely: the stock standing on the transfer books in the city of Hew York.
    3d. 'The claim of the plaintiffs is not founded directly and exclusively upon any contract to pay money, and is not like the case of a fraudulent over-issue of bank-notes by the officers of a corporation, for the benefit of such officers, and when the suit would be directly upon the notes themselves.
    4th. This action, if maintainable, must be so on the ground of fraud, not the fraud of the agent, but the fraud of the principal. The principal, though liable for the acts of the agent, when within the scope of his general authority, is not liable for such acts when fraudulently or maliciously done, except in the case where the action is founded, as in that of an over-issue of bank-notes, directly upon the instrument or contract, put forth by the agent, in the name of his principal, or in cases where the agent is entrusted with blank endorsements, or signatures of the principal, and issues promissory notes fraudulently, for his own use.
    In that class of cases, the principal, when defrauded by his agent, such agent acting within the scope of his general authority, cannot be permitted to set up, by way of defence to the contract which the agent has made, the fraud which such agent has committed against the principal. In cases where the action is founded directly upon the instrument or contract which the agent has made in the name of his principal, the fraud is committed against the principal, and he must suffer from his misplaced confidence.
    Under this head come in the exceptional cases to the general rule, that the principal is not liable, in any way, for the crimes and frauds of his agent.
    When, however, the action is not directly upon the contract which the agent has made for his principal, when the principal can only be reached by establishing the fraud of the agent, then, I apprehend, the general rule applies.
    The action at law, I respectfully submit, is not brought upon the certificate of stock — that is, to recover what the certificate calls for. Kyle was not tbe owner of any such stock, nor bad tbe defendant, at tbe date of tbe certificate, nor bas it now, any sncb stock to band over to tbe plaintiffs.
    The certificate bad tbe genuine name of tbe transfer agent affixed, but it was, notwithstanding, a cheat and a be.
    Tbe action is not brought to recover what tbe certificate calls for, namely: so many shares of stock, but is brought to recover tbe money obtained from tbe plaintiff, by tbe use of this false token. Tbe certificate was, itself, tbe fraudulent representation which tbe agent made, and by means of which be procured tbe money. For tbe money procured by tbe agent by those false representations, tbe agent, himself, is personally responsible.
    To make tbe principal bable, also, tbe fraud of tbe agent must be brought borne, and charged directly upon tbe principal.
    Under tbe old system of pleading, if a special action on tbe case bad been brought against these defendants to recover tbe money claimed in this suit, it seems to me, it would have been necessary to have averred direct fraud against tbe. defendants in order to sustain tbe declaration. It would have been necessary to have averred that tbe defendants, not tbe agent, obtained tbe money by a false token or false representation.
    It bas been repeatedly held, that tbe owner of a vessel is not responsible under false bills of lading, which are instruments, to a certain extent, negotiable and transferable.
    When tbe bolder of such false bill of lading cabs upon tbe owners for tbe goods — as in this case, tbe bolder of tbe certificate calls for tbe stock — tbe owner of tbe vessel may say: True, tbe captain was my general agent to manage tbe affairs of tbe vessel; it was bis right, and bis duty, to give bibs of lading for ab goods shipped onboard; tbe instrument you present bas bis genuine signature affixed; but there were no such goods ever put on board my ship; your bbl of lading is a cheat and a lie.
    In those cases tbe principal was not held bable for tbe fraudulent acts of bis agent.
    It seems to me, therefore, as before shown, that tbe principle to be fairly deduced from ab tbe leading cases is this: that where tbe action is founded directly and exclusively upon tbe contract or instrument which tbe agent bas made or executed in tbe name of bis principal, acting within tbe scope of bis general authority^ tbe contract being one which it is competent for the principal to fulfil, that the principal may be bound even though the agent has exceeded his authority, and, as regards his principal, has been guilty of a fraud. That, on the other hand, when the agent has practiced a fraud upon third parties, and when the right to recover is sought to be established substantially, no matter how the pleadings are framed, by the proof of that fraud, and where false bills of lading, false certificates of stock, and other false instruments, are given in evidence for that purpose, then, though the agent may have availed himself of his position as master of the vessel, or transfer agent, or in some other post of trust and confidence, to commit such fraud upon third parties, the agent alone, and not the principal, is liable. 1
    In my opinion the plaintiff is not entitled to recover, and the judgment of the Special Term should be reversed.
    Oakley, Ch. J. — The plaintiffs in this case seek to hold the defendants responsible in damages, on the ground of the fraudulent acts of their agent Schuyler.
    It seems important, therefore, in the outset, to consider the nature and extent of that agency.
    By the charter of .the railroad company, the directors had the power to make rules and regulations for the management and transfer of their stock; and, in pursuance of such power they adopted a system of by-laws, which, among other things, provided for the transfer of stock, and directed that such transfers should be made only in the books of the company and on the surrender of the outstanding certificate of such stock. Schuyler was appointed the transfer agent of the company in New. York. Bis power as such agent, in my opinion, was confined to the superintendence of the transfer of stock on the books of the company, and to renewing and cancelling the outstanding certificates which might be surrendered on such transfers, he not having any power to permit a transfer, without a corresponding surrender. As transfer agent merely, I cannot see that he had authority to issue a certificate, or to furnish any evidence of title to stock, that title depending solely on a transfer on the books of the company. The agency of Schuyler, therefore, seems to me to have been not of a general, but of a special character. His power as transfer agent was limited and restricted by the provisions of the by-laws of the company, and could only be rightfully exercised under the circumstances prescribed by those by-laws. It is conceded that, in the present case, there was no surrender of stock by any person, when this certificate to Kyle was issued; nor was there any stock, as far as it appears, even nominally placed in his name on the Company’s transfer books. The issuing of the certificate to Kyle, was, therefore, without any authority, and clearly void and inoperative in itself, being made by Schuyler in violation of his special instructions, even if he could be considered as having the right, under any circumstances, to issue such certificates.
    If this case, therefore, depended upon the question whether this certificate creates a contract binding on the defendants, and obliging them to transfer the stock to the plaintiffs on their books, and subjecting them to an action in case of refusal, the claim of the plaintiffs might be considered at least doubtful, and as calling for the solution of the following questions:
    1st. Whether, as it is quite clear that the certificate was utterly void in the hands of Kyle, he could transfer any right under it to the plaintiffs, the Iona fide holders of it ?
    2d. Whether, under the circumstances, the plaintiffs can be considered as bond fide holders?
    As to the last point, it may be more particularly remarked that if the plaintiffs knew, or were bound to know, (as I should be inclined to think,) the provisions of the charter of the company, and of the by-laws made under it, relative to the transfer of stock, they could not be considered as bond fide holders of the certificates, as they were bound to see that Schuyler had not exceeded his special powers as transfer agent; and if they chose to deal in the stock of the company, without inquiring as to that fact, it might be contended with some show of reason, that they took the certificate from Kyle at their peril.
    But, waiving these questions, it seems to me that the act of Schuyler in issuing this certificate to Kyle, may be viewed in another light, more favorable to the claim of the plaintiffs. This company, under its general power as to the management of its stock, had the right (and perhaps it was their duty) to adopt some means by which the ownership of stock, in those who might offer it for sale, might be made known to the business world. Certificates, like tbe one now in question, seem to bare been intended for that purpose. These certificates simply declare that the persons to whom they are issued are entitled to stock, and that there is stock standing to their names on the books of the company.
    The certificate to Kyle does not pretend on its face to transfer any stock, nor can it operate as such, as that can only take place on the company’s books.
    It may, then, be viewed simply as a declaration or representation to the world, that Kyle was the owner of stock.
    Now, it does not appear that Schuyler had any express authority from the company to make such a declaration or representation ; yet it does appear that he had been in the constant habit of issuing such certificates in the regular course of the business of the company. It must be presumed that the company was aware of this; and thus Schuyler’s authority may be implied.
    Now, what is the effect of this certificate viewed in this light ? If application had been made directly by the plaintiffs to the defendants, and they had declared that Kyle was the owner of the stock, as appeared on their books, it can scarcely be doubted that the plaintiffs would have had a right to rely on the truth of such a declaration.
    The act of Schuyler in making such a representation, being done by the implied authority of the defendants, must be followed, I think, by the same legal consequences.
    The plaintiffs, acting in good faith in the matter, and in the absence of any circumstances to put them on inquiry, had a right to rely on the truth of Schuyler’s certificate. They did so, advanced their money, and were cheated. Schuyler betrayed the confidence reposed in him by both parties. Who shall bear the loss ? They who placed Schuyler in a position to enable 'him to commit the fraud, or they who trusted to his representations, made in behalf of the company and by their clearly implied authority ? It seems to me that there can be but one answer to this question. The defendants must suffer by the acts of their dishonest agent.
    The only doubt that has existed in my mind of the soundness of the conclusion to which I have thus come, has arisen from the view of this case taken by my brother Campbell, in his opinion just delivered. He considers that a principal cannot be made liable for tbe frauds of an agent where it is necessary to reach the principal through such fraud; but that where the case turns solely on the contract entered into by the agent in the name of the principal, the only inquiry is whether the agent, in making the contract, acted within the scope of his authority; and if he did so, the principal cannot repudiate the contract because the agent acted fraudulently in making it; but that in all other cases, where damages resulting from the act of the agent are claimed on the ground of fraud, the principal is not responsible. This view of my brother Campbell is strongly supported by the decision of the Court of Common Pleas in England, in the case, cited by him, of Grant v. Norway, Eng. L. and Eq. Rep. 337. In that case it appears to have been held that the owner of a ship is not responsible to a party claiming to be the owner of goods certified by a bill of lading to have been shipped, when in fact no goods had ever been put on board, and when the bill of lading had been falsely issued. The master of a ship is undoubtedly the agent of the shipowner, to receive goods on board and to issue bills of lading; but he can, of course, rightfully do it only where goods are actually shipped. The case seems to be analogous to the one now before us. The master was in fact authorized to sign bills of lading only in case of the actual shipment of goods; Schuyler was authorized to issue certificates of the transfer of stock only in case of the actual surrender of outstanding certificates.
    If the case of Grant v. Norway could be' considered as the law of our courts, I should feel great difficulty in finding any sound distinction between the two cases. ’’ I am not, however, at present prepared to go the length of holding that the doctrine of that case is a sound one.
    On the whole, I have come to the conclusion, on the ground before stated, that the defendants are liable for the damages sustained by the fraudulent act of their agent; and I therefore concur with my brethren who hold that the judgment of the Special Term must be affirmed.
    An appeal was taken from the judgment of affirmance to the Court of Appeals. The appeal was argued in that court, at its April term, 1856, before Denio, Ch. J., and Johnson, Comstock, Wright, Mitchell, and Hubbard, J.J.

      William Qwrtis Noyes, George Wood, and N. Hill, for defendants and appellants.

      M JS. Van Winkle and Danid Lord, for plaintiffs and respondents.

       Duer, J., declined sitting, some of his near relatives being interested in the questions to be decided.

   Tbe case was kept under advisement until tbe 17tb of June, 1856, wben tbe following opinion was delivered, in wbicb, it is understood, all tbe justices of tbe Court of Appeals, wbo beard tbe argument, concurred.

Comstock, J.

Tbis is an action for damages founded on a certificate for eighty-five shares of stock in tbe defendants’ corporation, issued to Alexander Kyle, upon tbe security of wbicb tbe plaintiffs loaned to tbat person a sum of money; and tbe first inquiry naturally is, wbat was tbe force and effect of tbe certificate in bis bands ? Tbe mode of presenting tbis inquiry most favorable to tbe plaintiffs, is to consider it as free from tbe difficulty tbat there was no power in tbe corporation, its board of directors, or any of its agents, to create the shares of stock in question. Assuming tbat tbe corporation bad stock at its own disposal, and that Robert Schuyler, as agent, bad full power to sell it in market, and issue tbe proper certificates therefor, it is clear tbat any person dealing with him in good faith, and paying value, would become entitled to all tbe rights and privileges of a stockholder, although tbe agent, by a secret fraud, intended tbe transaction to be for bis own benefit, and used tbe funds wbicb be received for his own private purposes. In such a case, tbe acts of tbe agent being such as tbe corporation was competent to perform, and strictly within tbe powers delegated to him, upon tbe principles entirely familiar, tbe law would not permit third persons to suffer by a secret abuse of tbe trust.

But it is equally clear tbat no rights would be acquired by a party not dealing with tbe agent in good faith, and receiving a certificate of stock without paying any value therefor. To say tbat tbe original bolder of such a certificate could not be admitted to a participation with tbe genuine and bond fide stockholders in tbe property, franchises, and revenues of tbe corporation, is a proposition so plain that it needs only to be stated. Such was tbe situation of Alexander Kyle, tbe original bolder of tbe certificate now in question. To wbat extent be was implicated in tbe frauds of Scbuyler is not material. Tbe certificate is admitted to bave been issued fraudulently, and be paid nothing for it. On tbis ground, it was in bis bands, spurious and void; and tbis is a conclusion wbicb is reached without calling in question tbe power of tbe corporation to create tbe stock, or of Scbuyler as agent, to issue tbe proper evidence thereof to a purchaser in good faith.

Tbe certificate in tbe bands of Kyle was also void, for tbe reasons wbicb will now be mentioned. 1. Scbuyler, as tbe agent of tbe company bad no power to issue a certificate for shares of stock, except upon tbe conditions precedent of a transfer on tbe books by some previous owner, and tbe surrender of that owner’s certificate. He was tbe transfer agent merely, and bis powers were expressly limited to that department of tbe business of tbe corporation. He bad no general certifying power, nor any power at all to certify, except .as incidental, to a transfer of stock by its owner to some one else, and as an incidental power it could only be exércised upon tbe conditions named. 2. Neither tbe board of directors by whom Scbuyler was appointed agent, nor tbe whole body of tbe corporation, had power to create tbe stock wbicb tbe certificate issued to Kyle professed to represent ,• and if tbe stock itself could not be brought into existence by tbe whole power of tbe corporation, tbe certificate issued as tbe evidence of its existence, and tbe right of tbe bolder thereto, was necessarily void. Upon tbe premises last stated, tbe conclusion would be tbe same, even if Kyle bad paid to'the transfer agent tbe full value of tbe stock. He could purchase stock of any person who owned it, but be could not under any conditions obtain it from tbe corporation, or its agents, because there was none to be bad, and none could be created.

Thus far I do not understand that my conclusions differ essentially from tbe views of counsel who bave argued tbe cause for tbe plaintiffs; and if I was not mistaken in regard to tbe general scope of tbis argument, they conceded tbe further result, that tbe plaintiffs, bolding tbe certificate by transfer from Kyle, bave no rights as stockholders, merely for tbe particular reason that tbe . stock cannot exist under tbe charter, tbe essential ground of tbe action in tbe view of tbe counsel, being tbe injury sustained by dealing upon tbe faitb of tbe false representation of stock wbicb tbe certificate contains. Tbe opinions, however, of tbe Judges in tbe court below are before us for examination, as well as those of eminent lawyers who have not appeared upon tbe argument, and I think it is proper to refer to these opinions for tbe purpose of bringing into view all tbe theories upon wbicb it has been supposed tbe plaintiffs’ rights depend.

Mr. Justice Hoffman, in tbe opinion pronounced by him, bolds that tbe certificate was not void, as transcending tbe powers of tbe corporation in tbe creation of stock and issuing certificates therefor, _ or those delegated to Schuyler as tbe transfer agent. He, therefore, considers tbe obligation to be one wbicb tbe defendants can perform, and ought • to perform, according to its terms. He admits that tbe effect of an over-issue is to increase tbe number of shares, but not tbe actual capital; and, according to bis view, tbe spurious certificates are to be made good by a reduction in tbe actual value of those that are now genuine. He bolds, therefore, that tbe defendants were bound to admit tbe plaintiffs as stockholders, and to register their shares on tbe books accordingly; and that this suit depends purely and simply on tbe non-performance of that duty, after being requested to perform it. “Without a demand,” be says, “and refusal to transfer, there would be no ground of action whatever.”

Directly opposed to these views are those of Chief Justice Oakley. He bolds tbe certificate utterly void, because it transcended tbe powers of tbe transfer agent, whose commission, be thinks, was special, and not general; and if tbe action depended on tbe vabdity of tbe certificate, be says, the following questions would have to be answered: 1. Whether tbe plaintiffs, as bond fide holders, could acquire any rights under it superior to those of Kyle, in whose bands it was .void? And, 2. Whether tbe plaintiffs can be considered as bond fide holders ?

As to tbe last point, be indines to think that tbe plaintiffs were bound to see that Schuyler, as agent, did not exceed bis special powers, and, therefore, if they chose to deal in tbe stock without inquiring as to that fact, they took tbe certificate from Kyle' at their peril. But tbe learned Chief Justice, nevertheless, bolds tbe .defendants bable, on tbe ground that tbe certificate was a false representation tbat Kyle beld stock, wben, in truth, be did not. He thinks that Schuyler, the agent, had an implied authority from the company to make such a representation — an authority resulting frota his constant habit of issuing certificates in the same form, in the course of the regular business of the corporation. If, as he assumes, the certificate was void, tested simply by the authority given to the agent, and if, as he also assumes, the plaintiffs were bound to take notice of the want of authority, with deference, it appears to me, that they are affected by the same considerations when they change the grounds of complaint to misrepresentation and fraud. Can an agent’s authority to misrepresent in the course of a dealing, be inferred, when it is admitted he has no authority to enter into the dealings at all?

Justices Bosworth and Slosson, if I do not misunderstand them, both admit that there was no power in the corporation to create the shares which the certificate professes to represent, and that the instrument, considered as a real representative of the stock, was void for that reason; thus discarding the only ground upon which, in the opinion of one of their brethren, the action can be maintained. They, nevertheless, held that fhe suit is not founded upon the notion of misrepresentation and fraud, thus as distinctly rejecting the theory of the other. They appear to me to have found a middle ground of liability, which is, perhaps, fairly expressed in the following language of Justice Bosworth; “The certificate,” he says, “ so far as any inferences can be drawn from its terms or appearances, purports to be, and is, as much the act of the defendants as any certificate that has been issued by the company representing genuine stock. The plaintiff took it believing it to be what it purports to be, and their action is based on the theory, that, as between them and the defendants, it is, in judgment of law, the act of the defendants; and that the defendants are estopped from asserting the contrary, so far as the question of their liability for refusing to reimburse to the plaintiff the amount of their loan to the extent of the value of the stock is concerned.” And again, he says: “ The action is based on the assumption, so far as the right to be compensated in damages, is concerned, that the company has given an assurance that Kyle owned the stock which the certificate represents stood to his credit on its books.” The reasoning by which these results are reached is, in substance, tbat tbe act of Schuyler in issuing tbe certificate was witbin tbe apparent scope of bis powers, and, therefore, although tbe contract was void, because it transcended all tbe powers of tbe corporation, and it was impossible to be performed, for tbe same reason, tbe defendant must, nevertheless, make it good in damages, upon an assurance tbat it was valid, tbe assurance being a part of tbe contract itself. I confess my own impression to be tbat this reasoning is too refined. Admitting tbat tbe agent acted witbin tbe scope of tbe power delegated to him by tbe board of directors, I do not clearly see bow certificates .of stock which they, themselves, bad no authority to issue, void in their origin and under all circumstances, can be made tbe basis of a liability ruinous to tbe genuine stockholders, by turning tbe spurious instruments into a promise or understanding tbat tbe stock, in fact, existed.

Tbe extreme difficulty which has been encountered in endeavoring to find a principle on which to rest tbe action, may be further illustrated by reference to tbe professional opinions which have been submitted to our examination. In one of them — certainly' entitled to tbe very highest respect, tbe reasoning of which, I think, must have been, in substance, approved by Mr. Justice Hoffman — it is claimed, tbat all tbe over-issued certificates are valid, so far as the question of corporate power is concerned; tbat tbe multiphcation of shares did not increase tbe capital stock, but merely reduced tbe value of tbe shares; tbat tbe acts of Scbuyler, in issuing such certificates, were done witbin tbe scope'of bis authority as agent; and, as a conclusion from these premises, tbat all tbe holders in good faith, who bad not already received new certificates in their own names, were entitled to receive them, and so to be admitted to all tbe rights and privileges of stockholders. In another of these opinions, distinguished by .great acuteness and force of reasoning, tbe clear and emphatic concession is made, tbat tbe defendants have no corporate right to create a valid title to a single share of stock beyond tbe prescribed number ; that tbe corporation, being prohibited from issuing more than thirty thousand shares, was, by necessary .consequence, forbidden to recognize, as a part of its stock, any .share known to have been issued contrary to tbat prohibition, and consequently, tbat tbe directors might refuse to recognize all shares wbicb could be clearly traced to an origin in tbe over-issue. In respect to all sucb shares, it is claimed, however, that compensation in damages must be made by tbe corporation to tbe innocent holders, who, by dealing in them, have suffered pecuniary loss. Tbe issue of false certificates, it is insisted, was a failure of corporate duty, an act of negligence, by tbe corporation, for wbicb it is bable to tbe party injured. Tbe company, it is also said, is bound by an estoppel in favor of tbe innocent shareholder, and must either recognize him as a stockholder, or respond in damages, as a wrong doer, for withholding bis apparent right.

If those who assert that this action can be maintained, bad been able to agree upon a reason for that opinion, there would be fewer propositions to discuss than I shall feel obbged to examine.

I have already stated, in general terms, my own conclusion to be on tbe side of tbe invalidity of tbe so-called spurious shares, upon tbe ground of a want of corporate power to create them, and I will now give some further expression to my views on that question. By' tbe charter of this railroad company its capital stock was limited to $8,000,000, to be divided into shares of $100 each. It is admitted that tbe whole capital was subscribed and paid in, and that certificates of stock were issued representing tbe 30,000 shares actually subscribed and paid for. Now, if it is plain, as all concede, that tbe capital could not be increased beyond $3,000,000, it seems to me equally plain that no more than 30,000 shares could be created. Both are unalterably fixed by tbe charter; tbe capital, by expressing tbe aggregate amount, and tbe number of shares, by expressing tbe amount of each. Tbe whole capital is divided into shares of $100 each, and tbe mathematical result is 30,000 in all. Viewing tbe question, therefore, as one of abstract power, nothing appears to be wanting to a complete demonstration that additional shares could not be created. There is, under tbe charter, no more capacity to increase tbe nominal capital by multiplying tbe shares to an indefinite extent, than to increase tbe real capital by an actual subscription, indefinitely beyond tbe specified limit.

But it is important to observe, that tbe question has other relations than those wbicb belong to it as one of simple capacity and power. Tbe 30,000 shares of original stock subscribed and paid for by tbe persons to wbom .the genuine certificates were issued, belonged to them in their individual right, and were as much their separate and individual property, as any other possession which they could acquire. The entire capital was'represented in the property and franchises of the corporation, and the owner of each share was entitled to a fixed and unalterable proportion of that capital. And from this it follows, that any attempt to create a greater number of shares by the issue of additional certificates, is not only a violation of the organic law of the corporation, but a direct invasion of the contract between it and each holder of its original stock. Now, while it cannot be denied that the value of every share may be reduced by misfortune or accident in the management of the business of the corporation, or by the neglect and misconduct of its agents, acting within their acknowledged powers, it is equally plain, that this result cannot be affected by a change in the fixed proportion which each share bears to the aggregate number. It has been said, that the limitation of the capital and the number of shares was imposed from considerations of public policy alone. This is not so. Those who asked for the charter, and proposed to invest their private capital in the enterprise which it contemplated, required such a limitation for their own protection; and every individual who subscribed and paid for shares of stock, must be deemed to have done so relying upon the charter for the safety of bis investment.

The conclusion to which I am brought upon the question, is not impeached by the consideration, (if such is the fact,) that there are shares and certificates of stock beyond the original limit, which cannot be traced to an over-issue by the fraudulent agent of the company. I know not how the facts may be in this respect, nor is it material to the argument. The corporation may be compelled to respond to the holders of certificates, amounting in the aggregate to more than its capital, because it cannot distinguish those which are spurious and those which are genuine. Thus the number of shares to be recognized may be practically increased, not for the reason that all over-issues are not void, but because, in a given instance, the corporation cannot show that the shares claimed are of that character. No question of this kind arises in the ease before us.

I have also stated in general terms, as one of my conclusions, tbat tbe certificate issued to Kyle, was void in bis bands, upon tbe more special ground tbat tbe agent could not certify, except upon conditions wbicb did not exist in respect to tbat transaction. I observe now, further, tbat a third person, dealing with Kyle, and taking from him a transfer of tbe certificate, doubtless bad reason to suppose tbat it bad been duly issued. Whether a dealing with him under tbat belief created new rights against tbe corporation I shall presently examine. But Kyle himself dealt directly with tbe agent of tbe company, and be knew tbe conditions bad not arisen in wbicb tbe power to certify depended. He knew this, because be surrendered no previous certificate, and bad no transfer on tbe books or otherwise from any actual shareholder. Now, I do not understand it to be claimed, on tbe part of tbe plaintiffs, tbat tbe acts of tbe agent in issuing tbe spurious certificates were within any actual power wbicb tbe corporation ever attempted to confer upon him, nor tbat all persons proposing to deal in tbe stock were not chargeable with a knowledge of tbe extent and limit of bis authority. He was known to be a transfer agent merely of existing and genuine shares, and in tbat character bis name was signed to tbe certificate in question, and all others. What is claimed I understand to be precisely this: Tbat tbe false certificates being regular on their face, and tbe same in form as those which were genuine, presented to third parties dealing in them all tbe appearances of having been duly issued, although in fact tbe agent bad no authority to issue them, and although tbe exact extent of bis authority was known. But these appearances were known to be false by those who dealt directly with tbe agent; and with tbat knowledge it is not pretended tbat they can assert any claim against tbe corporation. Such was tbe situation of Kyle.

It is as well in this connection as any other, to notice a special feature of tbe transaction, wbicb I think imparts neither strength nor weakness to tbe plaintiffs’ case. Tbe facts, as they appear in tbe finding of tbe Judge, axe, tbat Kyle received tbe certificate not for bis own but tbe agent’s use, and having negotiated with tbe plaintiffs a loan by pledging it as security, paid tbe proceeds of the transaction over to tbe agent. But these facts were not known to tbe plaintiffs. They dealt with Kyle as tbe owner. Upon tbat theory they have a right now to rely, and I understand them to do so. It is tbe best tbe case will admit of. If tbey cbose to take tbe facts as tbey actually are, and to regard Kyle as a negotiator merely between them and tbe fraudulent agent of tbe corporation, tbey would tben stand in tbe position of an immediate dealer witb tbe agent, receiving from bim a certificate of stock issued without authority • and tbis position, as I bave shown, would be fatal to their claim.' Tbey justly prefer to be regarded, and I do regard them, as third parties, dealing witb Kyle as tbe apparent owner of stock.

In order to keep in view tbe exact conditions of tbe general question, I think it proper to state tbe conclusions which I consider thus far established. Tbey are as follows: 1. Tbe certificate was void in tbe bands of Kyle, tbe first bolder, because it was fraudulently issued, and be paid nothing for it. 2. It was also void in bis bands, because issued by an agent without authority, there being no surrender of a previous certificate, and no transfer to bim, on tbe books, of actual stock, and tbis want of authority was known to him, S. It was void, because tbe stock it professed to represent bad no existence, and could not exist under tbe charter of tbe company, all tbe powers of tbe corporation in tbe creation and issue of stock being exhausted. In respect to tbe conclusion last mentioned, it must be, and I think is conceded, that as a further result tbe certificate is void under all possible circumstances, so that no person, in whatever situation, can claim under it tbe rights of a stockholder, or damages, on tbe ground of a refusal to admit bim .to such rights. As tbe law will not require tbe defendants to violate their charter by creating an excess of stock to supply tbis spurious certificate, so it will not punish them in damages, .for refusing simply to be guilty of such violation. I .consider this result so necessary and so evident as not to require further discussion.

I will proceed, however, to a more particular examination of tbe plaintiffs’ rights as tbe transferees of Kyle, and, giving them tbe most favorable view of tbe case, will consider tbe certificate as void in bis bands only on tbe grounds that it was issued fraudulently, without 'consideration, and without any authority contained in tbe terms of Schuyler’s appointment as transfer agent. ,In tbis view, tbe defendants’ corporation is regarded as competent to recognize tbe certificate, and if tbey are bound to do so, tbey must respond in damages upon tbeir refusal. The question, therefore, will be, Are they so bound ? or, to state it in another form, Are the plaintiffs in a situation to assert any rights against the company which Kyle, their assignor, did not possess?

By the charter of this corporation, the shares of its capital stock were made transferable in such manner and in such places as the by-laws should direct, and the by-laws declared that all transfers should be made in the transfer-book, kept at the proper office, and where a certificate of the stock had been issued, that the same should be surrendered prior to the transfer being made. The certificate now in question, as all others, declared on its face the same conditions. This certificate has in fact never been surrendered, and. no such transfer ever has been made. The plaintiffs, on making their loan to Kyle, took from him an assignment and power of attorney in blank, but paid no regard to the fundamental conditions on which alone a legal title to the stock could be transferred. Of these conditions of course they had notice. ■

I am aware it is common to deal in this manner in the stock of corporate companies, and I do not say that any rule of law or of public policy is violated by it. The dealer undoubtedly acquires an equitable title to the stock of his vendor, and if the vendor’s title is open to no impeachment, he has a right to call upon the corporation to clothe him also with the legal title, by permitting a transfer to himself on its books, and to demand a new certificate in his own name. But the question here is, not whether the purchaser is clothed in equity with all the rights of the seller, but whether by a transfer not made according to the laws of the corporation, he acquires new and superior rights as against the corporation itself; in short, whether his title is good when that of his vendor was good for nothing.

So, too, it is common to deal in this manner with respect to obligations of every description. If extreme caution is exercised, the purchaser will inquire of the maker of the obligation, and procure his admission of its validity and his assent to the transfer ; and having done so an estoppel will arise in his favor, not because he has invested his money in the purchase, but because he purchased after procuring such admission or consent, and upon the faith thereof. Where there is no estoppel of this sort to rely upon, then the question whether the transferee of an obligation, apparently sound, and from tbe apparent owner, acquires any better right to enforce it than bis assignor bad, depends on tbe nature of tbe obligation itself. Tbe general and familiar rule is, tbat be does not. If tbe instrument bas negotiable qualities, then be may. In tbe case of negotiable instruments tbe legal title passes by mere endorsement or delivery. When tbey are not negotiable, an equitable title is all tbat can be acquired; and tbis suggests tbe further observation tbat, as between equities merely, tbe prior one, as a general rule, prevails. Tbe prior equity, as well as tbe law, is in favor of tbe party who made tbe obligation, if for any good and valid reason be ought not to be bound by it. Tbe principle is so familiar tbat authorities need not be cited.

It seems to me, therefore, tbat we are'brought directly to tbe question, whether certificates of stock in tbe defendants’ corporation are to be regarded as negotiable instruments, in tbe sense of tbe commercial law, so tbat by their endorsement and delivery to a purchaser in good faith, a title to tbe stock tbey profess to represent may be acquired, although in tbe band of tbe vendor they are spurious and void, and although the company itself bas never recognized tbe transfer. Tbis question, I think, must be answered in tbe negative. Tbey contain, in tbe first place, no words of negotiability. Tbey declare simply tbat tbe person named is entitled to certain shares of stock. Tbey do not, like negotiable instruments, run to tbe bearer, or to tbe order of tbe party to whom tbey are given. They commence, it is true, with tbe words, be it known,” but such words have no tendency to show tbat tbey possess tbe quality claimed for them. A phraseology quite similar may be found in bonds and other instruments, which no one ever thought to be negotiable.

But aside from tbe absence of any language of these certificates, which can impart to them a negotiable character, both tbe laws of tbe corporation and tbe certificates themselves contain special restrictions, which seem to me to put tbis question at rest. I do not suppose tbat a corporation, without something very extraordinary in its charter, can place such restraints upon tbe sale of its stock, tbat tbe individual bolder may not transfer as good a title in equity as be himself possesses, by any mode of assurance good upon general principles of law. But if a natural person bas an undoubted right so to express the terms of his obligation that it shall not be negotiable in the commercial sense, or in any sense which can give to the purchaser a title superior to that of his vendor, I see no reason to doubt that corporations possess the same right. Have the defendants so expressed themselves in these certificates of stock ? I think they have. They have distinctly declared, both in their by-laws and on the face of the certificates, that shares can be transferred only on the books, and on the surrender of the evidence of the previous owner’s title. If an illustration were wanting of the value of such a restriction, it is furnished in the present case. But whatever its value, the restraint is lawful in itself, and one which the corporation had an undoubted right to impose. I do not say that it prevents the owner of stock from selling his shares by an outside transfer, so that his vendee will acquire in equity his own rights; but to say that the holder of a false and fraudulent certificate, by endorsing and delivering it to another person, can create a title hostile to the corporation itself, would be to deny to the restriction any meaning or effect whatever.

I have examined attentively the authorities cited upon the question, but do not find that the doctrine contended for has in them the least support. In the case of Kortright v. The Commercial Bank of Buffalo, (20 Wend. 91, S. C. in error, 22 Wend. 348,) it was held, that an action of assumpsit will he against the corporation in favor of the assignee of a stock certificate, for refusing to permit a transfer on the books. This and the class of'cases to which it belongs, prove that a transfer not made according to the charter or by-laws of a corporation, confers upon the transferee, in an equitable sense, the title of the previous owner; that, being thus clothed with the equitable title, it is the duty of the corporation to permit him to take a legal transfer on the books-;- and that the law will imply an assumpsit for the performance of'that duty; For a breach of this duty, actions of assumpsit and'case have been-indifferently maintained. In principle, the remedy-should' have been a special action on the case. Such was the opinion of Chief Justice Nelson in the case referred to; but he-adds,-. “It'being once settled, (that assumpsit will lie,) there is no occasion for disturbing it.” It is only material to observe, that the assumpsit ⅛⅝ not in the certificate itself, and so passing by endorsement and’ delivery to tbe transferee, but is implied after tbe transfer, from tbe duty of tbe corporation to clotbe tbe equitable owner witb tbe legal title. Sucb cases, so far from tending to show that a dealer in certificates acquires rights better tban those of tbe person witb whom be deals, seem to me to justify quite an opposite conclusion. They necessarily assume that the change of title is incomplete, until tbe proper transfer is made on tbe books.

In tbe case of Fatman v. Lobach, (1 Duer, 354,) no question arose involving tbe rights of tbe corporation. The decision is directly opposed to that of Chancellor Walworth in Stebbins v. Phœnix Bank, (3 Paige, 350,) and my own impression is, that it cannot be sustained. I find in it, however, nothing which can affect tbe question I am considering. Tbe case was disposed of upon principles which were not asserted as having any peculiar application to dealing in stocks or negotiable securities. Tbe case of Stoney v. The American Life Insurance and Trust Company, (11 Paige, 635,) only held that tbe negotiable security of a corporation, appearing on its face to have been duly issued, was valid in tbe bands of a bond fide bolder, although, in fact, issued contrary to law. The case of Delafield v. The State of Illinois, (2d Hill, 159,) related to state bonds, payable to bearer, and strictly negotiable. Sucb securities are sometimes called stocks, but a confusion of terms should not involve principles in obscurity.

In tbe case of Fisher v. The Morris Canal and Banking Company, (3 Am. Law Reg. 423,) tbe question-was whether tbe bonds of a railroad corporation, payable to bearer, issued for tbe purpose .of raising money, witb interest coupons attached, also payable 'to bearer, were negotiable in sucb sense that a purchaser for value- took them free from any equities between tbe company and . tbe seller. Tbe decision was in favor of tbe purchaser, and I fully concur in tbe doctrine. Tbe distinction between sucb a security and a stock certificate, which by its very terms is not negotiable, and which is not a security for money at all, it seems to me is too plain to escape observation.

These are tbe only authorities cited in favor of tbe doctrine contended for. It is quite evident that they have no tendency in that direction. I will now mention some which are decisively ¡the other way. In tbe case of tbe Union Bk. of Georgetown v. Laird, (2 Wheaton, 390,) tbe stock was transferable, only on tbe books of tbe corporation. Tbe precise propositions decided, were, tbat no legal title to shares could be acquired except by a transfer made according to tbe requirement, and tbat tbe equitable title of tbe transferee was subject to all tbe rights of tbe corporation against bis assignor. Tbe same doctrine was held by Chancellor Walworth in Stebbins v. Phœnix Fire Ins. Co. (3 Paige 350.)

In tbe state of Connecticut there bare been a series of cases going still further. Tbe registry on tbe books, when required by tbe charter or by-laws of a corporation, is deemed tbe originating act in tbe change of title to stock, and a transfer not so made, is regarded as ineffectual for any purpose. (2 Conn. 528; S ib. 544; 5 ib. 246; 6 ib. 552.) So rigorous a doctrine has not been followed elsewhere, and, I think, tbe established rule now is, tbat a transfer of stock not made in tbe manner prescribed, is, nevertheless, vahd so as to pass in equity all tbe rights of tbe seller, but no greater. See further, (Angelí and Ames on Corporations, 352, 352, 3d ed.) where tbe rule is stated and tbe cases cited.

Looking at tbe question upon principle, I am not aware of any thing in tbe nature or uses of this kind of property, which requires an application of tbe rules which belong to negotiable securities. Stocks are not like bank bills, tbe immediate representative of money, and intended for circulation. Tbe distinction between a bank bill and a share of bank stock, it is not difficult to appreciate. Nor are they, like notes and bills of exchange, less adapted to circulation, but invented to supply tbe exigencies of commerce, and governed by tbe peculiar code of tbe commercial law. They are not like exchequer bills, and government securities, which are made negotiable either for circulation or to find a market. Nor are they like corporation bonds, which are issued in negotiable form for sale, and as a means of raising money for corporate uses. Tbe distinction between all these and corporate stocks is marked and striking. They are all, in some form, tbe representative of money, and may be satisfied by payment in money at a time specified. Certificates of stock are not securities for money, in any sense, much less are they negotiable securities. They are simply tbe muniments and evidence of tbe holder’s title to a given share in tbe property and franchise of tbe corporation of which be is a member. The primary use and design, I must be allowed to say, of this species of property, is to afford a steady investment for capital, rather than to feed the spirit of speculation. I am aware that people will speculate in stocks as they sometimes do in lands, and there is no law which absolutely forbids it; but such, I am persuaded, is not the use for which we should hold them chiefly intended.

The question is capable of some further elucidation, by attending to the rules'which have been settled in regard to the transferability of other instruments, and the effect of transfer. A certificate of stock is in some respects like a bill of lading, or a wárehouse or wharfinger’s receipt. Each is the representation of property existing under certain conditions, and the documentary evidence of title thereto. They are all alike transferable by endorsement and delivery, and the title to the property thus represented passes by such transfer. So far they resemble each other, but there are distinctions to be noted. Bills of lading and wharfingers’ receipts are commercial instruments, and their transferability, or, as it is sometimes termed, their quasi negotiability,” depends on the custom of merchants, and the conveniences of trade. Certificates of stock are not commercial instruments, and the title to the property they represent, passes in equity, only by endorsement and delivery, where, by any law or rule of the corporation, the transfer is required to be made on the books.. With these resemblances and these distinctions, if a bill of lading is not negotiable in the sense which must be contended for in the present case, there is much greater difficulty in affirming that such a quality belongs to a stock certificate.

In the great case of Lickbarrow v. Mason, (2 Term Rep. 63; 5 ib. 367,) it was held that the consignor of goods had lost his right of stoppage in transitu, when the consignee, holding the bill of lading, endorsed in blank by the consignor, delivered it to a third person, who received it in good faith, and made advances upon it. This has been the settled rule ever since; but, in such cases, it is to be observed, the legal title to the goods has vested, by the sale and consignment, in the consignee, subject only to the peculiar and anomalous right of arresting their delivery in the event of insolvency. If, therefore, before this right is exercised, the consignee transfers the bill of lading to another person, who takes it in good faith and for value, the latter acquires the title which his vendor had at the time of the transfer, and which the consignor cannot afterwards take from him by stopping the goods before they have reached their destination. In this doctrine, which was settled after a very remarkable contest in the courts of England, is contained all the negotiable quality that belongs to a bill of lading, and it requires but little discrimination to see that this is not negotiability in any just sense of that term. On the other hand, it has been held by the Supreme Court and the late Court of Errors of this state, (Saltus v. Everett, 15 Wend. 475 ; 20 ib. 257,) that a bill of lading covering goods shipped, but made without the owner’s authority, cannot affect the owner’s title, into whatsoever hands the instrument may come. So it has been lately held in the English Queen’s Bench, (Gurney v. Behrend, 3 Ellis & Black. 622,) that if a bill of lading is misappropriated, as if it be endorsed in blank by the consignor and sent to his correspondent, but not intending thereby to have it transferred, and the person receiving the bill transfers it for value, the title to the goods is not affected by the transaction. Lord Campbell, in delivering the judgment in that case, very explicitly denied the negotiability of such instruments. In Corill v. Hill, (4 Denio, 323,) Chief Justice Bronson had occasion to say: “ If the master of a vessel, after signing a bill of lading to the owner of the goods, should give one to another person, it would confer no rights upon those who were misled by the false and fraudulent paper.” (See also Thompson v. Dominey, 14 Mees & W. 402; Zachrison v. Ahman, 2 Sand. 68; Com. Bk. of Roch. v. Cole, 15 Barb. 506.)

It is conceded that Kyle, the first holder of the certificate in question, could assert no title to the stock it appears to represent, and that in his hands it was spurious and void for all the reasons which have been mentioned. Before its transfer to the plaintiffs can be admitted to confer any better title upon them, it must be shown to have not only all the negotiable qualities of a bill of lading, but others, also, which that instrument does not possess.

• Testing this question, therefore, in any conceivable mode, whether by the express terms of these certificates, by their general nature and character, by the authority of adjudged cases, or by the most favorable analogies, I bave no hesitation in saying, that the doctrine contended for. is entirely without foundation. It is mainly by assuming for these instruments the possession, in a greater or less degree, of the peculiar qualities of negotiable securities, that the plaintiffs claim to have acquired, by transfer, better rights than their assignor had; and as that assumption fails, this claim falls to the ground.

It.was also said on the argument, that these certificates of stock are in the nature of renewal letters of credit, oh the faith of which any one might act; and upon this idea it was insisted that the defendants are, in some way, bound by the obligation in the hands of the plaintiff. I am unable to see the analogy suggested. By attending to the mere definition of a letter of credit it will be seen there is no resemblance. Thus, in McCulloch’s Commercial Dictionary, it is defined to be a letter written by one merchant or correspondent, to another, requesting him to credit the bearer with a sum of money.” Or, to take the further definition of another author, it is “ an open or sealed letter from one merchant in one place, directed to another in another place, requiring him, if the person therein named, or the bearer of the letter, shall have occasion to buy commodities or want moneys, that he will procure the same or pass his promise, bill, or other engagement for it, on the writer of the letter undertaking that he will provide him the money for- the goods, or repay him by exchange, or give him such satisfaction as he shall require.” (3 Chitty, Com. Law, 336; Bouvier’s Law Dictionary.)

Now, while it may be the effect of a stock certificate to give the holder a credit, its terms do not request, invite, or guarantee it. So the possession of property of any description, or of the evidence and muniments of title thereto, in their effect, give to the possessor a credit with other men. In this sense, every chose in action invites a credit in favor of him who holds it, and so do the title-deeds of his real estate. Innocent parties may deal with him and be deceived. They may lend their money and lose it. Nothing more than this can be said of a certificate of the ownership of stock in a corporation. Regarded as a promissory instrument, imposing obligations to be performed by the artificial person which makes it, it is like any other chose in action, except as greater restrictions may be placed upon its transfer and sale. Regarded as a muniment of title, merely, it is like any other instrument by which title is manifested. But to say that, like a letter of credit, it contains a request express or implied, addressed to aüy one in' particular, or to the community in general, to deal with or advance money to the holder, or that it contains any assurance or guarantee addressed to the dealer, of the safety of the transaction, is, in my judgment, to confound plain and long settled distinctions.

I will now briefly examine the validity of the plaintiffs’ title in another aspect, still keeping out of view, however, the absolute want of power in the corporation to create the stock in question. It has been mentioned as one of the reasons why the certificate was void in the hands of Kyle, that Schuyler, the agent, was not acting within the scope., of his powers when he issued it. The full effect of this particular objection upon the plaintiffs’ rights as the transferees of Kyle, has not been considered. And I observe now, in the first place, that if, upon a vague theory of negotiability, (already examined,) they could overcome the difficulties arising out of the fraud of the agent toward the company as his principal, and out of the want of consideration, this objection would still have to be removed. It is obvious, upon a moment’s reflection, that negotiability can impart no vitality to an instrument executed under a power where the agent has exceeded his actual or presumptive authority. Whoever proposes to deal with a security of any kind, appearing on its face to be given by one man for another, is bound to inquire whether it has been given by due authority, and if he omits that inquiry he deals at his peril.

It is not denied that the plaintiffs, in taking the certificate in question, were chargeable with notice of the extent and limit of the powers of Schuyler as transfer agent. All that is claimed in their behalf is, that his act in issuing it was apparently and presumptively, although not actually, within his authority. Upon this ground it is urged that, according to the rules which govern the relation of principal and agent, the defendants are bound in some way to make the obligation good. The extent of the authority, it is admitted, the plaintiffs knew, or were bound to know; but it was not known, they say, that the act done was not within súch authority.

There are in the books many loose expressions concerning the distinction between a general and special agency. The distinction itself is highly unsatisfactory, and will be found quite insufficient to solve the great variety of cases. It is not profitable to dwell upon that distinction. Underlying the whole subject there is this fundamental proposition, that a principal is bound only by the authorized acts of his agent. This authority may be proved by the instrument which creates it; and beyond the terms of the instrument, or of the verbal commission, it may be shown that the principal has held the agent out to the world, in other instances, as having an authority, which will embrace the particular act in question. I know of no other mode in which a controverted power can be established. But in whichever way this is done it cannot be limited by secret instructions of the principal on the one hand, nor can it be enlarged by the unauthorized representation of the agent on the other. These principles, I think, are elementary.

But suppose an agent is authorized by the terms of his appointment to enter into an engagement, or series of engagements, on behalf of his principal, and while the appointment is in force he fraudulently makes one in his own, or a stranger’s business, but in the form contemplated by the power, and which he asserts to be in the business of his employer, by using his name in the contract, can the dealer rely upon that assertion and hold the princi.pal, or is he bound to inquire and to ascertain, at his peril, whether the transaction is not only, in appearance, but in fact, within the authority ? According to the authority of the Supreme Court of this state, in the case of The North River Bank v. Aymer, (3 Hill, 362,) he can. There the agent was authorized to draw and endorse notes in the name and for the benéfit of his principal. He drew various notes, which in their appearance were within the power, but really had no connection with the business of his principal. The plaintiff bank, which had the letter of attorney in its custody, discounted them, and it was held they could be recovered against the principal. Justice Cowen and Chief Justice Kelson delivered opposing opinions, in which the question is very elaborately discussed. The decision was reversed in the Court of Errors, but the case is not reported in that court. If the reversal proceeded, as I suppose it must have done, upon a doctrine directly opposite to that held by the Supreme Court, then the case certainly suggests a limit of great importance to tlie liability of principals, tbe recognition of which would be decisive of tbe present controversy. So in Grant v. Norway, (10 Com. Bench,) it was beld, after full discussion, that tbe master of a ship signing a bill of lading for goods, not actually shipped, was not to be considered tbe agent of tbe owner of tbe vessel, so as to make him responsible to one who made advances upon faith of tbe bill. That is a strong case. Tbe master is tbe general agent of the owners, as to all matters within tbe scope of bis duty and employment, and has unquestionable power to sign bills of lading for goods shipped; and every bill asserts, as it did in that case, that the goods are received on board. Tbe act, therefore, judged by its appearance and tbe representation of tbe agent, was strictly within tbe power. But tbe principal was beld not to be liable, because it was not so in fact. Tbe doctrine of that case was affirmed by tbe English Court of Exchequer in Hubertsey v. Ward, (3 Exchequer Rep. 330, S. C. 18 Eng. Law and Eq. Rep. 551,) and again with great debberation by tbe Common Pleas in Coleman v. Riches, (29 Eng. Law and Eq. Rep. 323.)

Tbe distinction is not always attended to between tbe apparent powers of an agent, and bis acts apparently, but not really, within, tbe power. An agent’s apparent powers are those wbicb are confirmed by tbe terms of bis appointment, notwithstanding secret instructions, or those with wbicb be is clothed by tbe character in wbicb be is beld out to tbe world, although not strictly within bis commission. Whatever is done under an authority thus manifested is actually within tbe authority, and tbe principal is bound for that reason. But it is obvious that an agent may clothe bis act with all tbe indicia of authority, and yet tbe act itself may not be within tbe real or apparent power. Tbe appearance of tbe power is one thing, and for that tbe principal is responsible. Tbe appearance of tbe act is another, and for that, if responsible, I think tbe remedy is against tbe agent only. Tbe fundamental proposition, I repeat, that one man can be bound only by tbe authorized acts of another. He cannot be charged because another bolds a commission from bbn, and falsely asserts that bis acts are within it.

Gases may often arise wbicb to a casual observation might appear to be within tbe principles stated, but wbicb really are not. Thus, an agent may be authorized to give notes for his principal in order to raise money to he used in the business of the latter. A third person may inspect the power, advance the money in good faith, and the agent appropriate it to his own use. In such a case, I should hold the principal responsible, not because the act of the agent appeared to be within the authority, but because the authority actually included the transaction. A power given to an agent to borrow money upon notes or otherwise, implies that the money may be paid to him, and so the whole transaction is strictly and literally authorized. But suppose the power to give the note is on its face conditional. It then has no existence until the condition has been fulfilled. To a confiding dealer, who believes that the agent would not do an improper act, the note will certainly carry the appearance of due authority, but if it turns out that the conditions had not occurred on which the exercise of the power depended, then he was trusting to the representation of the agent, and, I think, must look to him alone. As the principal never authorized the transaction at all, he is bound neither by the contract, nor by the representation. If not by the former, then it is extremely plain he is not by the latter.

Connected with the observations last made, it is proper, though perhaps scarcely necessary, to notice another doctrine which has been much urged, under some disguise, it is true, but in effect that the very employment of an agent in situations of trust and confidence is a recommendation and certificate of his character, so that if he deceives’ others to their injury, the principal must make compensation. If by this it were only meant that where the agent is guilty of fraud or deceit, in doing his employer’s business, the latter is responsible, the doctrine is entirely true. (Story’s Agency, § 482, and cases cited.) But'm all its other aspects and forms of statement, the doctrine is unsound. If the agent, in dealing for his principal, and within the power, commits a fraud, the principal is liable: not upon the ground that he holds the agent out to the world as an honest man, but because the fraud enters into and is a part of the authorized transaction. If the agent deals dishonestly for his principal, it is in a just sense a wrong done by the principal himself although unknown and unauthorized. But the dealing itself must be authorized. If the transaction is not within the power, then as the dealing is imputed to the agent personally, so, necessarily, are all the circumstances attending it, and all the means and instrumentalities by which the fraud is consummated. The power of the agent to charge his principal by doing a wrong, must be traced directly to his authority, and it cannot be referred to an increased facility for imposing on the credulity of others, derived incidentally from his appointment to a situation of trust. If the fraud consists in an over representation of his power to act, by which others are drawn into dealing with him, then it is a self-evident proposition, that a man can no more enlarge than he can create a power, by such a representation.

Applying the principles which have been stated in this branch of the discussion, they are decisive against the plaintiffs. If the corporation had held stock, and Schuyler had been the agent to sell it, and issued certificates therefor, a sale and a certificate issued by him would have been valid against his principals, although by a private fraud he appropriated the proceeds to his own use. The transaction with the purchaser, in all its branches, the sale, the certificate, and the payments to him of the money, would have been not only apparently, but actually, within the powers. His misappropriation of the proceeds would have been a mere breach of trust relating to money in his hands, and upon the principles of trust, his intention to misappropriate would not affect an innocent party.

But such were not the relations between Schuyler and the corporation, nor was he held out to the world as standing in such relations. He had no power to sell stock at all, and none to issue certificates, except as incidental to a sale between existing stockholders ; and then it depended on the conditions precedent to a transfer on the books, and a surrender of a previous certificate for the same stock. The authority which he assumed to exercise, therefore, confessedly, never had an actual existence, and within the principles which have been stated, it never had an apparent existence. His appointment, in its very terms, which all dealers are supposed to have been acquainted with, did not include his acts, and there is no pretence that the authority it conferred was ever enlarged by any holding out or recognition of such acts. All that can be said in behalf of the plaintiffs is, that the certificate itself implied a representation or assurance that it was issued within the power; in other words, that the conditions on which the power depended had been fulfilled. Even this representation when closely scanned, was no more than an inference of the dealer that, as the agent had no authority to certify, except under conditions, those had been in fact performed. But the conclusive' answer is, that the defendants never authorized any such representations. To say that they had, would be simply saying that they authorized the certificate, because the representation was contained in that and existed nowhere else, and this would be assuming the very point in dispute. The representation or assurance, therefore, if such we call it, was the unauthorized act of the agent. Upon this the plaintiffs naturally,, no doubt relied, and so doubtless the dealer did, upon the bill of lading, in Norway v. Grant, (supra,) which contained an express declaration that the goods wei’e shipped. The precise difficulty is, that they relied upon the appearance which the agent gave to the act, and by that they were deceived. They were under no deception as to the power in its real or apparent scope. Testing the question by any rule of agency with which I am acquainted, the defendants were not bound by the transaction.

If any one of the main conclusions at which I have arrived in this discussion is sound, there is no remaining ground on which the action can be sustained. Viewing the certificate in question as unaffected by the want of power in the corporation to create or recognize the stock it appears to represent, we have seen, that it was void in its origin, because issued without consideration, and in fraud of the defendants’ rights. "We have also seen, that those objections were equally fatal to its validity in the hands of the plaintiffs, as the assignees of the first holder. It has been further shown that the instrument imposed no obligation or duty on the defendants, upon the more special ground that the act of Schuyler, in issuing it, was not within any authority which they ever, in fact or in pretence, conferred upon him as their agent; and, if this objection is sound, the further observation has been made, and I doubt not, assented to, that it cannot be overcome by allowing to the certificate the transferable quality and immunity which belong to negotiable paper. Unless these conclusions can be overthrown, they are subversive of the entire ground of action.

The notion of estoppel, which has been advanced in the -argument, not as a distinct ground of liability, but blended with other principles, deserves by itself very little consideration. Every corporate, as well as private, obligation or instrument, undoubtedly, contains an express or implied representation of facts, upon the faith of which innocent parties may deal. If it be a promissory note, value received is a fact expressed or implied, and, although the fact may not be so, the maker is bound to pay the obligation in the hands of an innocent third party, not upon any theory of estoppel, but upon principles peculiar to that species of security. Where the instrument is not negotiable, the maker may, as I have heretofore observed, be affected by an estoppel in pais, if it be transferred upon his representation of its validity, and the dealer acts upon that representation. But to say that he is es-topped by the instrument itself, simply because he made it, and a third party has dealt with it, is only asserting in another form, that fraud, mistake, duress, illegality, want of consideration, or want of authority, when the act is one of pretended agency, is not denied. This would subvert the settled maxim, that the assignee or purchaser takes subject to all equities between the original parties. It would also subvert another maxim which belongs to the doctrine of estoppel itself. That maxim is, that an admission or representation is no estoppel in favor of a stranger to whom it is not made, and whose conduct it was not expressly designed to influence. (3 John’s cases, 101; 6 Hill, 534; 3 id. 215; 7 Barb. 644.) The result is, that before the principles of estoppel can be applied to this controversy, it must be asserted and proved, that a certificate of stock, differing from all other modes and forms of obligations used in the transactions of men, contains within itself a representation or admission of facts, which any dealer, however remote from the original parties, may accept as addressed to himself, and intended to influence Ms conduct. Eor such a doctrine no authority has been cited, and it had no foundation in any principle Mtberto recognized.

As I have once mentioned, a theory of the action prominently urged upon the argument assumed that the corporation had no power to create more than the original three millions of stock, or to issue certificates for a greater amount. That this is so I think I have demonstrated. But, assuming these premises, it was then insisted that the certificate in question was therefore false, and that the action would lie on this ground. The essential principle of the case, in this view, would be, that, as the defendants, for want .of corporate powers, cannot recognize the certificate as the true representation of stock, and so respond to the engagement which it implies, they must make compensation in damages for the injury sustained, in consequence of the representation regarded as false. .

Now, by presenting the falsehood alleged in the certificate, and the consequent injury as the ground of the action, a plausible appearance is given to this view of the case. But it is essentially illogical. The falsehood, viewed in this aspect alone, really consists in a want of corporate power to enter into the engagement, and that, instead of being a cause of the action, is a serious difficulty to be removed. If an agent, irrespective of all questions arising out of the special limitations of his own authority as derived from the board of directors, cannot bind a corporation, or affect the rights of its genuine stockholders, by the terms of an over-issued certificate, there is great difficulty in affirming that the result may be indirectly reached by thus changing the ground of liabiliiy. If a corporation has received the benefit of its agent’s misrepresentation or fraud, in a transaction unauthorized by its charter, I will not say there is no mode of redress. I am not an advocate of the doctrine that a corporation cannot be responsible' for a wrong, or may not in some form be liable, when its agents enter into engagements which its charter forbids, and the benefits of the transactions can be traced to its stockholders, or are held for their benefit. But such is not the case before us. The stockholders of this corporation are in nowise connected with the misconduct of their agent, nor have they been benefited by it. It is true they trusted him, but it is not alleged that they had not ample reasons for so doing. Conceding that Schuyler’s authority, derived from his appointment as transfer agent, by the board of directors, might apparently include his fraudulent acts, the difficulty is only removed one step further back. The directors themselves were not the corporation, but its agents only. It may be granted that they wielded all the corporate powers, but among those powers the one in question is nowhere to be found. It did not even have an apparent existence. The argument concedes this absolute want of power, and I have yet to discover the principle on which the genuine stockholders can be made liable in any form, for an attempt to exercise it by any of their agents for their own individual benefit.

But such a point need not be determined. Before reaching this hltimate question thé action fails, upon the special grounds which have been examined at large. Conceding to the defendants the power, if they so elect, to recognize and perform the obligation under which their agent attempted to place them, then, if they are not liable upon their refusal to do so, for the reasons which have been stated, it is extremely plain they are not if the power to do so is wanting. To say that their agent’s false representation of stock, which did not, and could not exist, can render them liable to dealers in the spurious certificates, when they would not be bound to recognize the same dealers, if the stock, in fact, existed, and the representations were therefore true, involves a fallacy so evident that it needs only to be suggested. This is the error in the argument which places the defendants’ liability on the simple ground that the certificate is a fraudulent representation of non-existing stock, the alleged fraud consisting in the statement of that falsehood alone. In this view of the controversy, the other fatal objections to the actions are overlooked. If I have been successful in showing that the plaintiffs can have no title to the shares of stock mentioned in the certificate, for the particular reasons which have been given, then, manifestly, the non-existence of the shares, or the false assertion of their existence, is no ground of complaint.

In concluding, it is proper to say, that the case of The Bk. of Kentucky v. The Schuylkill Bk., (Parsons’ Select Eq. Cases, 180,) has not been overlooked. That case has been much relied on as an authority in point, upon the general question before us, and it is certainly true that, in the opinion delivered on pronouncing the judgment, some principles were stated scarcely reconcilable with the conclusion to which we have come. In that case, however, the suit was brought by the corporation against its own fraudulent agent, after it had recognized the spurious issue under an enabling act of the Legislature; and in many essential circumstances the controversy differed from the present one. After a careful consideration, we are unable to yield to that decision any controlling influence upon tRe question now to Re determined. We are all of opinion, tRat tRe judgment sRould be reversed and a n.ew. trial granted. Ordered accordingly.