CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 595. them. 1 And if A. in good faith purchases shares from a share- holder who himself has bought on the faith of forged transfers which the company had registered, and the company registers A. as a shareholder, but, subsequently, discovering the forgery, erases his name, he will be entitled as against the company to be placed in as good a position — by award of damages or delivery of other shares — as he would have been in had the transfers been valid. 2 But the simple fact that the company has registered a forged transfer, using due care, does not estop it from contesting the validity of the certificate which it has forwarded to the purchaser, 3 for in such a case the purchaser did not act on the faith of the company's action. 4 § 594. A corporation will also be liable to the holder of a stock certificate for damages arising from a transfer which it permits to be made in violation of it own oFby-^aVs! 11 regulations. Thus, where stock is transferable on the books of the company only on surrender of the certificates, and a by-law further provides that no new certificate shall be issued until the previous certificate shall have been cancelled, if the corporation issues new certificates to a former holder w r ho represents that he has lost his certificates, but who has really transferred them for a valuable consideration, the cor- poration will be liable to the transferee for the value of the stock, but not for dividends, as a production of certificates was not required for their collection. 5 § 595. If, however, a corporation using proper care and vio- lating none of its regulations, transfers shares un- i n( ji Sr6 _ wittino-ly in disregard of rights with notice of which g. ar . d ° f . m o j o o rights of it is in no way affected, it will not be liable. 6 Thus, winch cor- where shares standing on the books of the corpora- has no tion in the name of a judgment debtor, are sold by T10tlce- 1 Pollock v. National Bank, 7 N. Y. 274; Blaisdell v. Bohr, 6* Ga. 56; Penna. Co. v. Ins. Co., 181 Pa. St. 40. 2 In re Bahia, etc., R'y Co., 37 L. J. Q. B. 176. See Savings Bank v. Baltimore, 63 Md. 6. 3 Waterhouse v. London and S. W. R. Co., 41 L. T. N. S. 553; see, also, Si mm o. Anglo-American Telegraph Co., 5 Q. B. Div. 188. 4 Simm ». Anglo-American Tele- graph Co., supra ; see §§ 507, 508. 6 Cleveland and Mahoning R. R. Co. v. Robbins, 35 Ohio St. 483; Bank v. Lanier, 11 Wall. 360; Conk- lin v. Second Nat. Bk., 45 N. Y. 655; 6 For note 6 see page 600. 599
