AN EXECUTOR HAS IMPLIED POWER TO SELL.—Stock held by a guardian or by an executor is in many respects treated similarly to stock held by a trustee. There is this difference, however, in the executor's position, that as it is his duty to reduce the estate to cash he has in most, but not all States, an implied power to sell; it does not have to be given to him in the will. The will, however, may restrict an executor's right to sell certain stock, and therefore even in the case of an executor it would be proper for a corporation to make sure that the executor's power had not been restricted by the will before allowing the transfer.
TRANSFER BY AN EXECUTOR TO A LEGATEE.—Generally the executor will seek to reduce the property to cash and therefore seek to transfer the stock in the estate to a purchaser, but he may try to transfer it directly to a legatee. He may himself be a legatee and endeavor to transfer to himself. Unless he is a residuary legatee or a legatee of the specific stock in question it is as improper for him to transfer to himself as for a trustee to transfer to himself. Even though the executor is a pecuniary legatee or is entitled to payment for commissions, he would have no right to take stock in lieu of such pecuniary legacy or commission, for he cannot make such a bargain with himself though he might in regard to the legacy of another. If the executor is a specific or residuary legatee the question of a right to transfer to himself is the same as to transfer to any other legatee, and that right is only subject to one qualification. Creditors of an estate have the first right; legatees do not get their legacies paid unless creditors are taken care of first. Creditors have a fixed period from the time when executors or administrators give bonds within which to assert their claims. If they have not asserted their claims in that period the claims are barred. After that time has expired it is generally known whether the assets of the estate are sufficient to pay legacies, and it is usually then proper to allow a transfer to a legatee. Prior to that you run the risk—which may be in a particular case a very small one or it may be a very large one—that the creditors of the estate may exhaust the assets and the legatees not be entitled to anything.
LOST CERTIFICATES.—Occasionally a question arises in regard to a lost certificate. The Uniform Law provides for this case in substantially the same way as the common law would deal with it if there were no statute, namely, the corporation may demand a bond to indemnify it before it issues a new certificate. This bond is essential because should the old certificate turn up and be transferred to a bona fide purchaser for value, the corporation would be liable on the old certificate, and as it would also be liable to a purchaser for value of the new certificate it is necessary that it should have a bond to protect it.
INTERPLEADER OF SEVERAL CLAIMANTS FOR STOCK.—If there are several claimants for stock, as sometimes happens, the corporation should file a bill of interpleader, as it is called, against the several claimants, asking the court to determine which one is rightfully entitled. An instance of that kind would be where A asks a corporation to transfer stock to him, presenting a certificate indorsed by B, but B notifies the corporation that he has been defrauded out of that stock by A, and that he elects to rescind the transfer to A and demands the certificate back. The corporation cannot undertake to determine which of these parties is in the right; it must ask the court to do so. Not infrequently the same situation arises in a bank where money has been lent on stock, and notice is given to the bank not to return that security to the borrower because he obtained it fraudulently or otherwise has acted in violation of the rights of a third person in pledging it to the bank. The bank, if it is a bona fide lender, is, of course, entitled to hold the stock for its own security so far as it may be necessary to repay the loan; but perhaps the bank can get the loan repaid out of other securities unquestionably belonging to the borrower. In that event the bank should do so and then ask the court who is entitled to the disputed stock.
EFFECT OF DELIVERING UNINDORSED CERTIFICATE.—In order to transfer stock, as previously said, it is necessary that the stock should be either indorsed or that on a separate paper an assignment or power to transfer should be written. What is the effect of giving a certificate without either of these formalities? It virtually protects the person who receives the certificate, for though he has not title to the stock and cannot get title without an indorsement, he has the certificate in his possession which prevents any other person from getting title; and, furthermore, he has the right to require an indorsement from the person whose indorsement is needed, provided, of course, that the holder of the certificate took it from the owner, who impliedly or expressly agreed that he should have title. If somebody not an owner of a certificate delivered it without indorsement to a bank, and borrowed money on it, the bank would not be protected. The true owner could say, "That is mine," and take it away.
CHAPTER VIII
Personal Property
PROPERTY DEFINED.—Property in the strict legal sense, is the aggregate of rights which one may lawfully exercise over particular things to the exclusion of others. "If a man were alone in the world," says Kant, "he could properly hold or acquire nothing as his own; because between himself, as Person, and all other outward objects, as Things, there is no relation. The relation is between him and other people, whom he excludes from the thing." All things are not the subject of property, because, the sea, the air, light, and similar things, cannot be appropriated.
ILLUSTRATION.—An illustration that gives us the idea of property will make our definition clear. A takes his shoes to a cobbler to be repaired. When he calls for them, he does not have the price for the work, and the cobbler refuses to give them up. Both A and the cobbler have a property right in the shoes. The right to absolute ownership is in A, that is his property right. The temporary possession, however, is in the cobbler, and he may hold the shoes under the lien for repairs indefinitely and until he receives his compensation. The lien is his property right. When we use the term property in its lowest form we mean by it the right of possession. In our illustration, the cobbler's lien gives him the right of possession. When we use the term in its highest form, we mean the right of exclusive ownership; in our illustration, A's shoes after he has paid the repair bill and secured the shoes again.