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Page:Harvard Law Review Volume 2.djvu/173

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recognized that there were rights and obligations not incident to an ordinary trust.

The practice of keeping books to record the transfer of stock was adopted by the East India Company, perhaps from its inception, and transfer on the books was regarded as essential for passing the title. Thus in 1679, in a suit for an account against a fraudulent assignee of East India stock, the company being joined,^ the court decree that the company "do, upon application made to them, according to their custom, transfer back the said ^150 stock to the plaintiff ; " and it was customary to insert in the early charters incorporating business associations, a provision that the shares might be assigned by entry in a book kept for that purpose.^ Therefore, one of the earliest well-recognized rights of a shareholder was to have his name kept upon the transfer book so long as he held stock ; ^ and, in consequence of the assignability of shares, to have the name of his assignee substituted, if he parted with his interest.* It follows that if the company trans- ferred stock, however innocently, without due authority from the owner, it was liable. Several cases arose of such transfers, where the company acted in compliance with a forged power of attorney.

In all these cases,^ it seems to have been decided or assumed that the company was bound to reinstate the original owner on its books, as well as to pay him the dividends that had accrued, though the reasoning on which these decisions were based was influenced by the notion previously adverted to, that the share- holder occupied the position of a cestui que trust.

When shares were held in trust, of course, it was the name of the trustee which appeared upon the books ; he and not the bene- ficial owner was entitled to all the rights of a shareholder.^ This was fully recognized by the courts ; and not only this, but it was laid down that the company, after express notice that stock was held in trust, was at liberty to ignore the fact, even so far as

' Cas. temp. Finch, 430.

  • See, e, g,, in the case of the Greenland Company, 4 and 5 Wm. & M. c. 1 7, s. xxiv., in

the case of the Bank of England, 5 and 6 Wm. & M. c. 20, s. xxv., in the case of the Nat. Land Bank, 7 and 8 Wm. III., c. 31, s. xvii.

  • Bank of Eng. v, Moffatt, 3 Bro. C. C. 160; Johnson z'. E. I. Co., Cas. temp. Finch,


  • Cock V, Goodfellow, 10 Mod. 489, 498, 20 Vin. Abr. 5, pi. 16.
  • See SHpra,
  • Stockdale v. South Sea Co. I Atk. 140 ; s. c. Barnard. Ch. 363 ; Hartga v. Bank of

England, 3 Ves. 55; Bank of England v. Parsons, 5 Yes. 664.