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signatures purporting to be signed by or on behalf of any stockholders, officer, or agent, or other person or persons, or by any party in a representative capacity, nor for the regularity, validity, or propriety of any instrument of transfer or of title. Neither does the agent assume any responsibility for, or liability by reason of, any unauthorized issue of stock; nor shall it be assumed to guarantee, represent, or be in anywise responsible for, nor shall it be so responsible for, the validity, legality, or regularity of the stock now or hereafter issued by your company, or any assignment or transfer thereof."

The clause in an agency contract is but an indirect protection, for if the agent has been held liable on an implied obligation to the public, it must bring an action against its principal for indemnity and is put to the delay of litigation and the possibility of having an uncollectible claim against an insolvent corporation. As a practical matter, however, it has been pointed out, that only stock of responsible concerns are dealt in to any great extent and the risk of mistake and consequent liability is in direct ratio to the number of transfers.

A more recent suggestion is made by F. Winchester Dennio (Trust Companies Magazine for September, 1915, p. 209-210). He proposes that the following provision be inserted in all stock certificates:

"This certificate is not valid until countersigned and registered by the agents of the company for transfer and registration and the holder hereof and his representatives and assigns by the acceptance hereof agree that the said agents shall have no liability to them in connection with the issue, transfer and registration hereof, if acting in good faith and with reasonable care."

§ 85. Precautionary Requirements and Rules as

Protection against Improper Transfers. Several transfer agents and their counsel after careful consideration, made a report in 1912 of proper precautionary requirements preceding transfers by executors, administrators, trustees, guardians and life tenants. This report is set forth in the appendix of this book together with general precautionary rules and suggestions for the issue and transfer of stock. Compliance with these rules affords protection to transfer agents, as well as to security holders and the corporations represented.

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§ 86. Liability as Affected by Sub-Agency of Employees. The liability of an incorporated transfer agent is not affected by the fact that duties are performed by employees who are themselves agents of the agency. Argument on this point was thus disposed of in the Kentucky Bank Case:32

"First, it is contended, that the contract for this agency being made by the president and directors of an incorporated bank, it became, from a necessity, equally known to both parties, requisite to employ the assistance of sub-agents in its execution. That the cashier of the Schuylkill Bank was the sub-agent, so chosen by that corporation with the assent and approbation of the complainants; that all the frauds charged in the bill were perpetrated by him without the connivance of the President or Director of the bank; and that under such circumstances the bank is no farther responsible for his acts than arises from the general obligation of every principal agent to act with good faith and ordinary care in the selection of a secondary agent. The principle on

31. Appendix, page 500.

32. Bank of Kentucky v. Schuylkill Bank (1846), 1 Pars. Eq. Cas. (Pa.) 180, 239.

which this position rests, is the familiar one, that when it is usual and necessary for a principal agent to employ a sub-agent, as for example, a broker or an auctioneer, to transact the business, in such a case, the principal agent will not ordinarily be responsible for the negligence or misconduct of the sub-agent, if he has used reasonable diligence in his choice as to the skill and ability of the sub-agent. But, indisputable as is this principle, it has no relevancy to an agency like the present. The cashier of a bank, while carrying into execution, under the orders of the directors, a lawful contract, such as the contract creating this agency is shown to have been, is in no sense of the word a sub-agent of the board of directors. He is a statute officer, not of the directory, but of the corporation lawfully empowered to carry the contracts of the corporation into execution, as the directors are lawfully authorized to make them, when acting within the sphere of their authority derived from the corporation."

§ 87. Printing of Fiduciary's Name on Instruments Does not Constitute Signature until Blank for Signature of Officer is Filled. For convenience the name of the company acting as registrar, transfer or countersigning agent is generally printed upon stock certificates and bonds. The regularity and safety of this practice is upheld in a case" wherein a corporation was sued for negligent issue of a stock certificate. It was alleged that the signature of James S. Carr, an officer of the countersigning trust company, was forged. In the course of its opinion the Court said:

"We cannot fall in with plaintiff's contention that the name, 'The Union Trust Company of Pittsburgh,' printed in the forms with a blank for the signature of the

33. Dollar Savings Fund & Trust Co. v. Pittsburgh Plate Glass Co. (1906), 213 Pa. St. 307, 62 Atl. 916, 5 Am. & Eng. Anno. Cas. 248.

proper officer, is a signature by the trust company without having the blank filled. We take it that the necessity for the signature of some officer is well known in such cases, and plaintiff certainly never looked upon the Carr signature as surplusage."

§ 88. Inspection of Books of Transfer AgentsMandamus and Penalties. Before amendment in 1916, Sections 32 and 33 of the Stock Corporation Law of New York were frequently applied to secure lists of stockholders and their addresses from the transfer agents. Compliance with the law was often resisted because the motive of the application was unfriendly to the principal corporation or because the list was desired. for advertising purposes. The amendment provides that: "It shall be a defense to any action for penalties under this section that the person suing therefor has within two years sold or offered for sale any list of stockholders of such corporation, or any other corporation or has aided or abetted any person in procuring any stock list for any such person."

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Criminal liability is provided by Sec. 665 of the New York Penal Code, wherein it is made a misdemeanor for "A director, officer, agent or employer of any corporation or joint-stock association who:

having the custody or control of its books, willfully refuses or neglects to make any proper entry in the stock book of such corporation as required by law, or to exhibit or allow the same to be inspected, and extracts to be taken therefrom by any person entitled by law to inspect the same, or take extracts thereform.”

Right of mandamus to enforce inspection of books and papers in the hands of transfer agents, where the

332. Laws of 1916, Chapter 127.

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principal corporation has some other business office in the state or is otherwise doing business therein is clear and unquestioned, but where the foreign corporation merely has a transfer agent, this relief was denied by the majority in a lower court." The dissenting Judge relied, in part, upon an earlier case."

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A recent decision of the Appellate Division (First Department), in an action to recover the $250.00 penalty, also denied relief because the maintenance by a corporation "of a transfer office in New York City was for the convenience of stockholders and facilitated the sale of its stock, but did not constitute 'doing business' or the 'transaction of business' within the meaning of the statute." The penalty cannot be avoided because the books demanded do not contain "every particular item required by the statute.

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In this case the Judge would include registrars within the same rules. He said: (p. 451.)

"I have had in my remarks upon this subject of the books, particular reference to the Knickerbocker Trust Company (transfer agent), but I am of opinion that if the books kept by the other trust company (Atlantic Trust Company, registrar) contain similar information, they come within the same category."

34. People ex rel. Singer v. Knickerbocker Trust Co. (1902), 38 Misc. 446, 77 N. Y. Supp. 1000.

35. Althouse v. Guaranty Trust Co. (1912), 78 Misc. (N. Y.) 181, 137 N. Y. Supp. 945.

36. Miles v. Montreal Copper Co. (1903), 40 Misc. (N. Y.) 282, 81 N. Y. Supp. 974.

37. Wadsworth v. Equitable Trust Co. (1912), 153 N. Y. App. Div. 737, 138 N. Y. Supp. 842.

38. Tyng v. Corporation Trust Co. (1905), 104 N. Y. App. Div. 486, 93 N. Y. Supp. 928.

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