United States v. Bell, 111 U.S. 477

This suit involved the accounts of the Navy Department. The fourth auditor is charged by law with the duty of examining all accounts accruing in that department. Rev. Stat., sec. 277, subdivision fifth. He has certified under his hand that the paper offered in evidence “ is a transcript of the books and proceedings of the Treasury Department in account with ” the purser whose bond is in suit, and the Secretary of the Treasury has certified, under the seal of the department, to the official character of the auditor, “ and that full faith and credit are due to his official attestations.” What more need be done to authenticate the transcript under the seal of the [p. 479] department we are at loss to determine. The certificate of the proper auditor is attached and his certificate attested by the Secretary of the Treasury under the seal of the department. The form of the certificates and the mode of affixing the seal correspond exactly with what appears in Smith v. United States, 5 Pet. 292, where it was held, more than half a century ago, that the seal affixed in this way was sufficient for the purposes of evidence under a statute, of which sec. 886 is a reenactment. The transcript is certified by the auditor, and authenticated under the seal of the Treasury Department affixed by the Secretary, its lawful custodian.

Dividends were paid regularly on this stock to Kern or Blumer & Co. from the time of the original transfer up to and including December, 1876. The Warehouse Company never received any dividends and never acted as a shareholder. Blumer & Co. failed in 1877, largely indebted to the Warehouse Company, which still held as security the stock standing in the name of Ferris. The failure of Blumer & Co. crippled the bank so that it never afterwards paid a dividend, and on the 15th of April, 1878, it was put into insolvency by the Comptroller of the Currency and a receiver appointed. On the 10th of May following the Comptroller assessed the shareholders twenty per cent, of the par value of their shares to pay the debts, and this suit was brought to collect that assessment on the 450 shares in question. The jury, under instructions applicable to the foregoing state of facts, rendered a verdict [p. 483] for the defendant, and to reverse a judgment on that verdict this writ of error was taken..

There is in this case no evidence of actual fraud or bad faith. The Warehouse Company never was the owner of the stock in question, and never held itself out as such. The transfer of Kern and Blumer & Co., was only by way of pledge, and the company was bound to return the stock whenever the debt, for which it was held, should be paid. From the verdict of the jury, under the instructions of the court, it must also be accepted as a fact, that the company never consented to a transfer of the stock to its name on the books, or to that of its president, and it is undisputed that for seven years before the failure of the bank, and at least five years before its embarrassments were known to the company or the public, the stock had been standmg, with the assent of Kern, Blumer & Co. and the officers of’ the bank, in the name of McCloskey or Ferris. During all that time, neither the registered holders nor the Warehouse Company claimed dividends or in any way acted as shareholders. [p. 484] On the contrary, either Kern or Blumer & Co. took the dividends as they were paid, and to all intents and purposes controlled the stock. There was no concealment on the part of the Warehouse Company, and no effort to deceive. It had possession of the certificates which represented the stock, with full power to control them for all the purposes of its security, but there was never a time, from the date of the original transfer by Kern on the books, until the failure of the bank, that it was or pretended to be anything else than a mere pledgee. Those who examined the list of shareholders would have found the name of McCloskey or of Ferris as the registered holder of four hundred and fifty shares. There was nothing on the books of the bank to connect them, or either of them, with the Warehouse Company, and, therefore, no credit could have been given on account of the apparent liability of the company as a shareholder. If inquiries had been made and all the facts ascertained, it would have been found that either Kern or Blumer & Co. were always the real owners of the stock, and that it had been placed in the name of the persons who appeared on the registry, not to shield any owner from liability, but to protect the title of the company as pledgee. Blumer & Co. and the bank were fully advised who McCloskey was, and of his probable responsibility, when they allowed the transfer to be made to him, and they undoubtedly knew who Ferris was when the stock was put in his name after McCloskey’s death. The avowed purpose of both transfers was to give the company the control of the stock for the purposes of its security, without making it liable as a registered shareholder. To our minds there was neither fraud nor illegality in this. The company perfected its security as pledgee, without making itself liable as an apparent owner. Kern or Blumer & Co. still remained the owners of the stock, though registered in the name of others, and pledged as collateral security for their debt. They consented to the transfer, not to escape liability as shareholders, but to save the company from a liability it was unwilling to assume, and at the same time to perfect the security it required for the credit to be given. As between Blumer & Co. and the Warehouse Company, Blumer & Co. or Kern were the owners

I think if in any case between private persons, one of them . ad placed property in the hands of minors, servants, or other irresponsible persons, for the purpose of escaping the responsibility attaching to the ownership of such property, while [p. 486] securing all the advantages of such ownership, it would be held to be a transaction which could not be supported on any legal or equitable principle.