A stock certificate is an instrument issued by a corporation reciting that the bearer or person named therein is the owner of the number of shares in the corporation as therein stated. It is freely transferable, but not negotiable.
One of the objects of incorporation is to secure a free transfer of shares without affecting in any way the existing order of affairs in the corporation. This transfer is accomplished by means of the certificate of stock which is issued to every stockholder. Yet it cannot be said that a stock certificate is negotiable; it is simply assignable. It is not subject to the rules governing commercial paper. A further consideration of such instruments should be sought in the law of corporations.
Mortgages are assignable by the mortgagee, but not negotiable, being securities for debts, and not the evidences thereof. But the notes which accompany mortgages are negotiable if correctly drawn, and indorsement of such notes operates to transfer the mortgage. In some states, statutes have been passed to the effect that if a mortgage secures and refers to a negotiable promissory note, it shall also be negotiable in the sense that the defenses shall not be set up to defeat foreclosure proceedings which could not be set up in a suit on the note on account of the note's negotiable character.