7. Importance Of Making Correct Transfers

The proper transfer of the shares of a bank or other corporation is a matter of great importance, as will soon appear. Suppose A has sold his shares to B and given him the certificate. B takes it to the bank and asks the cashier to complete the transfer and issue to him a new certificate for the shares. The cashier neglects to do this, and A is sued by some one to whom he owes a debt, and the shares are attached as belonging to A, because the stock book contains no entry of any sale or transfer. Can B hold the shares against the attaching creditor of A? He can, for the reason that the neglect of the cashier to make the transfer can not he imputed to B. But suppose B should neglect to surrender the certificate and demand a new one; in such a ease he might have difficulty in keeping A's creditors from taking the stock. The law looks with a suspicious eye on any other owner than the one disclosed by the record, and therefore it is of the highest importance that this should be correct.

8. Bank Is Responsible If Certificate Is Not Genuine

A bank officer must assure himself that the certificate presented for surrender is genuine. It is possible for a knave to get hold of a certificate, fill up the transfer, sign the name of the owner, and present it to the cashier and request a new one. A knave in New York did this, the new Certificate was issued, which he immediately sold, and received the money. The hank had the satisfaction, however, of catching him and putting him in prison.

9. Issue Of Certificates To Trustees

Certificates are sometimes issued to persons as trustees. When this is done the certificate ought to show the nature of the trust, and not simply the name of the trustee with the designation, "Trustee." Banks are sometimes careless in this matter; yet the need of specifying the trust relation ought to be evident to any bank officer. Suppose the trustee should the, what shall the bank do concerning the transfer of the stock? Another person appears who claims to be appointed in place of the deceased trustee, how can he be identified? He brings letters showing his appointment in place of John Smith, the former trustee; but John Smith may have been trustee of many things; the bunk has not a scrap of evidence that he was trustee of any stock of the bank belonging to any particular person or estate. Surely the bank ought to have some evidence of the beneficiary.

10. Transfers By Trustees

Frequently executors, administrators, and other trustees request the cashier to transfer the stock of which they have the management to donors or purchasers. Before making the transfer requested the cashier should carefully examine the trustee's authority. If he is an executor, the cashier should request him to present the will under which he is acting, or a copy; if he is an administrator, the cashier should request him to present a certificate from a proper court, showing that he has authority to act in this manner; if he is a guardian, the cashier should likewise request him to present the proper evidence of his authority. A trustee has no right to complain of this requirement; for, as the bank is liable for any error in the transfer, the cashier is entitled to the highest proof of the authority of any one who appears claiming to act in a representative manner. And even if the cashier knows an executor or other trustee, by reason of his relationship to the bank, as a depositor or director, nevertheless the evidence should be required and put on file, showing the trustee's authority to act, for the security of the bank, of the trustee himself, and of all others who may be interested in the matter.

Some banks require an administrator or executor who is appointed in another state to go to the proper court in the state where the bank is located, and qualify and bring a certificate of his authority. In other words, some banks will not receive the certificates granted by courts outside their own states. This is asking too much, for any bank is protected in accepting the certificate of a court having proper jurisdiction in another state.

Finally, it may be added, it is not an unusual practice to require such a trustee to give a bond of indemnity to secure the bank should a loss occur in consequence of any mistake made in transferring stock by his direction. This is most frequently done in the case of a foreign executor or administrator. His certificate of authority to act may be correct, but the bank assures itself against all danger by taking a bond from him of this nature