As to the liability of the defendants generally, in such cases as this, the arguments of the exceptants, given above, were also advanced.

As to the kind of relief which should be given, it was contended by most of the complainants that money damages should be awarded to the amount that had been lost by the lenders. That the measure of damages should be the value of the stock at the time when the wrong was committed, that is, when the fraudulent representation was made, for it was then that the right of action accrued; or the amount loaned, provided it was less than such value: Surget's Cuse, N. Y. & N. H. R. R. Co. vs. Schuyler, 34 N. Y. 88; Tome vs. R. R. Co., 39 Md. 36.

It was, however, claimed by one of the exceptants, that the holders of the invalid stock ought to be admitted to membership in the corporation. The certificates cannot be made good by any action of the company, because the legal limit has been already passed, but the proportionate share of each holder can be ascertained, and the amount of his interest given to him.

Counsel for the defendants contended that no claim could be founded on the certificates themselves, because the entire amount of the stock had been issued by the "president and directors first chosen," and any subsequent issue would be simply void, being in contravention of the company's charter. The powers of corporations must be strictly construed. If the acts of the officers are ultra vires, the company is not bound, and the only remedy is against the officers themselves, who are the wrong-doers.

The act of 1849 provides that the transfer of the stock shall be made in a suitable book, and does not permit the mere delivery of the certificate to constitute a complete change of ownership: See Bank of Commerce's Appeal, 23 P. F. S. 64.

Nor can a recovery be had against the defendants on the ground of the misrepresentation made by their officers. It is the duty of persons taking certificates of stock to bring them to the notice of the company for transfer, for, if they fail to do this, it is negligence. The maxim omnia præsumuntur rite esse acta has no application to such a case as this: R. R. Co. vs. Clarke, 5 Casey, 150. The misrepresentations of an agent, in order to bind the principal, must be made by him within the scope of his authority: Merchant's Bank vs. State Bank, 10 Wall. 645. It was entirely outside of the duties charged upon Fry to make the transactions out of which these suits have grown; the greatest care on the part of the company could not have prevented them; and it has received no benefit from them; hence the only remedy is against Fry himself.

Negligence cannot be imputed to the defendants. They knew that the only place where a transfer could be made was on the transfer book, and this only was it their duty to guard: See Johnson vs. Credit Lyonnais Co., Law Rep. 3 C. P. Div. 32. No vigilance could have prevented an over-issue of certificates. The reputation of Fry is conceded to have been good, and no blame can be laid upon the company for entrusting the seal to him. The negligence in this case was all on the part of the plaintiffs, who failed to avail themselves of the means provided by the defendants and required by law, of ascertaining at once whether a certificate represented actual stock, and who the real shareholders were: Duranty's Case, 26 Beavan, 271, 273.

The doctrine of liability, advanced by the plaintiffs, would, if established, tempt and encourage officers of corporations to commit such frauds as this, and would place it out of the power of any board of directors, however vigilant, to take any steps to prevent or detect them. The rule contended for by the defendants, on the other hand, is strictly within the act of assembly, and is for the benefit of the public as well as of the corporation.

Opinion delivered January 18, 1879, by

HARE, P. J.-These suits were instituted against the Philadelphia. and Darby Railroad Company, and S. Gross Fry, its former president, to establish the right to certain stock which the complainants had accepted as collateral security for advances which they had made to Fry, and for notes made by him, and in the event of the defendant's inability or refusal to recognize the complainants' title and transfer the stock to them, that the defendant should be decreed to make compensation for the stock thus withheld.

The bills filed by the company "averred the incorporation of the Philadelphia and Darby Railroad Company, with authority to issue ten thousand shares of capital stock of twenty dollars each; that from some time in 1866 to 1875, S. Gross Fry was the president of the company; that to him and the treasurer was entrusted the stock book, with power to issue the same, and to transfer stock issued upon the request of the several holders to such persons as they should appoint, and to affix the corporate seal thereto;" that the complainants had, on given dates, discounted notes for Fry, or otherwise advanced him money, taking as collateral security certificates of stock in the company, in some instances in their own names, in others in the names of Fry or third persons, accompanied by powers of attorney to transfer; that recently it had been alleged by the company that the shares of stock thus held by the plaintiffs were unauthorized; and that discovery was material. The bills further averred that under an act of assembly of February 19, 1870, the company had leased its property to the Philadelphia City Passenger Railway Company. The bills charged that if it should appear that the certificates held by the complainants were in fact unauthorized, then the corporation was liable for the moneys advanced as aforesaid, inasmuch as the officers who issued the certificates had the exclusive charge of the stock-book and seal, and were thus enabled to prejudice strangers without notice. The prayers were,

in substance:

That the plaintiffs be decreed to be stockholders, and that the defendant repay the moneys advanced by the plaintiffs.

The answer of the Philadelphia and Darby Railroad Company was as follows: It admitted the incorporation of the company, and its authority to issue ten thousand shares of capital stock of twenty dollars each; that Fry had been its president for the time stated; and that to him had been entrusted the stock certificate book and transfer books, but with no authority to issue certificates of stock to any but bona fide holders for value, and with no other authority in the premises. It also admitted the letting to the Philadelphia City Passenger Railway Company. As to the transactions of the plaintiffs with Fry, in their bill narrated, it denied knowledge, save in certain subsidiary particulars, and demanded proof. It proceeded to aver:

"That S. Gross Fry did at various times, and for a long period of time, the duration of which is unknown to us, issue without any authority and in violation of his duty, false and fraudulent certificates in excess of the number of shares which our corporation was entitled by law to issue, and for which no consideration was ever received by us, and in thus issuing said false and fraudulent certificates he acted in direct violation of the authority conferred upon him by us, and ultra vires as regards the corporate rights, powers and privileges of our company.

"We are unable to ascertain absolutely the whole number of shares purporting to be represented by the false and fraudulent certificates thus issued by S. Gross Fry now outstanding, because he has not left any book, document, or writing containing a full account of such overissue, the stock ledger and transfer books, for which we have made a careful search, having been mislaid, lost or destroyed, and the certificato books have been so mutilated, by tearing out certificates without making any memorandum on the stubs thereof, and tearing out whole pages both of stubs and certificates, without any memorandum in any place to explain their absence, that it is impossible to ascertain exactly anything from them."

Replications having been filed by the complainants, the causes were referred to a master, who has since filed a report which substantiates the main allegations of the bills, to wit, that the complainants made. advances on the faith of certificates of stock which had been issued by the president and treasurer of the Darby and Philadelphia Railroad Company. That some of the said certificates were valid, but the greater number spurious, as having been fraudulently issued contrary to the charter, and without the knowledge of the board of directors, and that the complainants received them in good faith and without notice of the fraud.

The master also reports that the whole of the aforesaid fraudulent issue, amounting to more than 40,000 shares, was in excess of the 10,000 shares which the charter authorized, and which the company had no power to increase, and that if the complainants were entitled to relief it must consequently, so far as these certificates were concerned, be afforded in the shape of compensation, and not in that of a decree for specific performance.

The report then proceeds to range the certificates held by the complainants under the following heads:

1. Certificates held in names other than those of their owners, and accompanied with powers of attorney to transfer, in cases in which no transfer has been demanded of the company.

2. Certificates held in names other than those of their owners, and accompanied with powers of attorney to transfer, in cases in which a transfer has been demanded of the company and refused.

3. Certificates illegally issued upon the surrender of certificates issued originally without warrant.

4. Certificates illegally made originally to their present owners, founded on no actual transfer, and, in fact, not brought to the notice of the company for transfer.

5. Valid certificates, representing actual stock of the company, but not transferred to present owners.

The master finally arrives at the following result: That the holders of the fifth class of certificates are entitled to have the stock transferred to them subject to "the indebtedness, if such exists, of the stockholders in whose names the certificates stand on the books," and that such would also be the rule as to the third class, were it not that the company is precluded by the charter from increasing the original number of shares, and that it should consequently be decreed to pay the market price of the stock at the time when these complainants acquired their title. That the parties of the first, second and fourth classes, not having completed their title by obtaining new certificates in their own names, or having the stock transferred to them on the books, are in default, and the bills which they filed should consequently be dismissed.

It is well settled that one who, as a purchaser or lender, gives value on the faith of a certificate of stock authenticated by the seal of the corporation and the signatures of the proper officers, acquires an equitable title and may require the corporation to transfer the stock to him, or respond in damages for the default. It is not a sufficient answer to such a demand that the certificate was fraudulently issued, because corporations are not less than natural persons answerable for the conduct of their agents in the business entrusted to their care. Nor is it necessarily conclusive against such a purchaser that the party from whom he bought was cognizant of or participated in the fraud. If a certificate of stock is not a negotiable instrument, it is a written declaration that the holder has a definite share in the capital or profits of the concern, which, though delivered to him, is intended for circulation and virtually addressed to all the world, and third persons who are misled by such an instrument, may justly require that the loss shall fall on the corporation and not on them: The New York and New Haven Railroad Co. vs. Schuyler, 34 New York, 30, 52, 80; The Bank of Kentucky vs. The Schuylkill Bank, 1 Pars. 180; In re Bahia and San Francisco Railroad Co., 3 Law R., Q. B., 595. The case in hand might seem so clearly within these principles as to leave no room for controversy. It is not denied that the president and treasurer of the Darby Railway Company were authorized to issue certificates of stock, nor that the complainants parted with their money in the belief that the right which the certificates purported to confer was real. They consequently stand in the position of bona fide purchasers, and may come into equity for a specific performance, or for a pecuniary compensation if relief cannot be give in kind.

1

Such being the complainants' case, the defendants answer that, however sound the argument might be under other circumstances, it is inapplicable here, because the railway company was limited by its charter to 10,000 shares. When that number was reached the power was exhausted, and any subsequent proceeding under it merely void. The barrier thus set was insuperable, and could not have been surmounted by a vote of the directors or stockholders, or by both conjoined. To hold that the president and treasurer could by a fraudulent and unauthorized over issue, bind the company to that which the company was powerless to perform, was to hold that an agent might acquire a power through fraud which the principal did not possess and could not have conferred.

This argument might be unanswerable if the power to give certificates was identical with the power to create stock, or if a certificate could not legitimately be issued to any one who claimed under a derivative title. because it would then be incumbent on third persons to take notice of the limited nature of the power and ascertain whether it had been strictly pursued. It is, however, plain that the legislature did not intend to impose a rule contrary to the ordinary course of business, and that would have impaired the market value of the stock. Although the company could not issue a larger number of shares than that prescribed by its charter, it might well give a new certificate to a purchaser in lieu of that surrendered by the vendor, and repeat the act as often as the occasion required. This was virtually conceded during the argument, but it was at the same time strenuously urged that to render such a substitution valid, the pre-existing certificate must be given up and the stock duly transferred on the corporate books. If this method was observed, the public and stockholders would both be safe, and a departure from it involved an excess of power, which rendered the transaction void, not only between the original parties, but as it regarded purchasers claiming under them.

The cogency of this reasoning should not render us unmindful of a consideration by which it is controlled. That which a corporation is not authorized to do under any circumstances, or which is absolutely forbidden by its charter, is so entirely void that nothing short of an act of assembly can render it valid, but that which it may do for certain purposes and not for others, or on the happening of a particular event, is not necessarily within this rule, and may take effect although the prerequisites were not fulfilled: The N. Y. & N. H. R. R. Co. vs. Schuyler, 34 N. Y. 30, 68. The case in hand apparently belongs to the latter category. We have seen that although the railway company could not create new stock, it might properly give a certificate to a purchaser as evidence that he had acquired a title regularly deduced on the books, and the legal as well as natural presumption in every such case is, that the power has been exercised for a legitimate end, and not in a way to render it invalid: The N. Y. & N. H. R. R. Co. vs. Schuyler, 34 New York, pp. 30, 63. "Acts of Corporations," says Judge King in Bank of Kentucky vs. Schuylkill Bank, 1 Pars. 251, "which presuppose" the existence of other acts to make them legally operative are presumptive proof of the latter. In short, the acts of artificial persons afford the same presumptions as the acts of natural persons. Each affords presumption from acts done, of what preceded. A vote of a corporation may be presumed from other acts, though there is no proof of such vote on the corporate record." "The source from which these principles have been drawn is the judgment of Justice Story in Bank vs. Dandridge, 12 Wheaton, 64."

This citation would seem to be a conclusive answer to the argument that the production of a certificate of stock is not prima facie evidence of title, and that a purchaser must examine the records of the corporation, and ascertain from them whether the vendor has the right which the certificate avers. Such an investigation is obviously superfluous where the officers of the corporation have done their duty, and will generally be unavailing when they are engaged in the perpetration of a