HAVENS v. BANK. be hereto affixed at Tarboro, N. C., this 22d day of November, 1895. JOHN F. SHACKELFORD, JAS. G. MEHEGAN, Cashier. President. That there appeared on the back of said certificate the following entries and endorsements, to-wit: "This certificate is subject to an assessment of 60 per cent., payable on call of Board of Directors. ...... JAS. G. MEHEGAN, Cashier." "For value received... .hereby sell and transfer and assign to........the shares of stock within mentioned, and hereby authorize.. .. to make the necessary trans . fer on the books of the corporation. "Witness...hand and seal, this ... .day of..... 189.. JAS. G. MEHEGAN." 8. That said certificate of stock, assigned as aforesaid, was taken from the stock certificate book of the said bank, and this is the only stock book we had in the bank. 9. That the said loan of five hundred dollars was made by the plaintiff upon the faith and credit of the said certificate of thirteen shares of the capital stock in said bank, and in the full confidence and belief that the said certificate of stock was in all respects genuine and valid, and without notice of any irregularity or fraud in the issuance of the same. 10. That the defendant James G. Mehegan is wholly insolvent. 11. That the plaintiff made demand upon the defendant bank to authorize and effect the transfer of the said certificate of stock upon the proper book of said bank according to its HAVENS v. BANK. by-laws, but said bank refused this demand, insisting that this certificate was spurious and void. 12. That said certificate of stock assigned to the plaintiff by the defendant Mehegan as aforesaid has never been transferred on the books of the bank to the plaintiff. 13. That the amount due the plaintiff on the note of the defendant Mehegan, for which said certificate of stock was assigned as collateral security, was, on October 27, 1902, $538.63, and the cash value of the said certificate of stock at the time it was assigned to the plaintiff, had it been genuine, was more than sufficient to cover that amount. Upon consideration of the foregoing facts, together with such allegations in the pleadings as were admitted therein, which were submitted in evidence, the Court rendered the judgment which appears in the record. The plaintiff excepted to said judgment and appealed, and for error assigns that upon said facts and the pleadings, judgment should have been rendered in her favor against said bank for the value of said stock, to-wit, $538.63 and interest from October 27, 1902. From a judgment for the defendants, the plaintiff appealed. Gilliam & Gilliam, for the plaintiff. John L. Bridgers, for the defendant. WALKER, J., (after stating the case): It appears in this case that the bank was fully authorized by its charter to issue the certificate of stock in question and that, so far as the face of the certificate shows, it was issued in accordance with the provisions of the charter and the by-laws and regulations. The plaintiff loaned the money in the faith and confidence that the certificate of stock which had all the appearances of being genuine would constitute a valid and unimpeachable security in her hands for the money bor HAVENS v. BANK. rowed by Mehegan, and we think that, upon well established principles, she had the right to so regard it, and that the Bank must pay to her the value of the stock not exceeding the amount of the debt, although it was in fact issued without the authority and contrary to the Bank's instructions and in fraud of its rights. The President and Secretary signed several blank certificates and they were then left with the cashier, Mehegan, to be filled out in the name of the purchaser of the stock when called for by them. The fact that they were signed by the President gave Mehegan, the cashier, the power to commit the fraud, but the opportunity to issue the spurious certificate was afforded by the negligent act of the corporation in leaving the blank certificates with Mehegan, who thereby acquired full control over them and the Bank has thus become the author of the fraud and the victim of its own misplaced confidence. But should the plaintiff, an innocent holder, be caused to suffer for what the Bank itself made it possible for him, Mehegan, to do? We think not. The decision of the case must turn upon the application of a simple and just principle of the law to its facts. "Whenever one of the two innocent parties must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it." Lickbarrow v. Mason, 2 T. R., 70. It is well said by Lord Holt in Hearn v. Nichols, 1 Salk., 289, "For seeing somebody must be a loser by this deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser than a stranger." "Where one of two persons must suffer loss by the fraud or misconduct of a third person, he who first reposed a confidence, or by his negligent conduct made it possible for the HAVENS v. BANK. loss to occur, must bear the loss." Railroad v. Kitchen, 91 N. C., 39. The principle has a striking illustration in the case of agency and has been extended to the acts of corporations, as we will presently see. "The rule has been established and may now also be stated as an indisputable principle that a corporation is responsible for the acts and negligence of its agents while engaged in the business of the agency, to the same extent and under the same circumstances that a natural person is chargeable with the acts and negligence of his agent, and 'There can be no doubt,' says Lord Ch. Cranworth in Ranger v. Railroad, 5 H. L. Cases, 86-87, 'that if the agents employed conduct themselves fraudulently so that if they had been acting for private employers the person for whom they were acting would have been affected by their fraud, the same principles must prevail where the principal under whom the agent acts is a corporation."" Railroad v. Schuyler, 34 N. Y., 50. There is no good reason for holding that this bank is not legally responsible for the fraudulent acts of the cashier Mehegan upon the ground that at the time he delivered the certificate to the plaintiff he was not in the performance of his master's business, but was acting for and in behalf of himself and outside the scope of his agency. This would be true as to all fraudulent acts and as to all acts done not strictly within the line of duty. The correct principle is that it will be quite sufficient to charge the employer with the liability, if all the acts of the employee are done within the apparent, though not real, scope of his agency. In the case of Railroad v. Bank, 60 Md., 36, where the question is fully discussed, the court uses this language: "It may be conceded, and was doubtless the case, that the agent had no authority in fact to issue such certificate; he had no real authority as between himself and his principal, or HAVENS v. Bank. other parties conusant of the facts, for doing the particular acts complained of, but the company by its own act and, as it turned out, misplaced confidence, placed the agent in the position to do, and procure to be done, that class of acts to which the particular act in question belongs; and in such case where the particular act in question is done in the name of and apparently in behalf of the principal, the latter must be answerable to innocent parties for the manner in which the agent has conducted himself in doing the business confided to him. Upon no other principle could the public venture to deal with an agent. In such case the apparent authority must stand as and for real authority." And again: "Where he issued such a certificate and delivered it to a third party, who acted without knowledge and in good faith, paying value for it, such party had the right to act upon the presumption that the representations of such certificates were truthful, and not false and fraudulent. Having confided to him the said trust of executing the business, the agent was held out to the public as competent, faithful and worthy of confidence; and though he deceived both his principal and the public, by forging and issuing false certificates, it is but reasonable that the principal, who placed him in the position to perpetrate the wrong should bear the loss." But a decision was made upon substantially the same facts that we have in this case in favor of the holder of such a certificate in the case of Titus v. Railroad, 61 N. Y., 237, in which it was said, "Where the treasurer of a corporation upon the faith and pledge as collateral of spurious certificates, drawn up and executed in the form and manner prescribed by the by-laws, (signature of the president having been negligently affixed), purporting on its face to be of stock owned by the treasurer, obtained a loan of one acting in good faith. and in ignorance of the fraud, there being nothing upon the face of the certificate to notify the lender of any defect in the |