CORPORATIONS - TRANSFER OF STOCK - LIABILITY TO REMAINDERMAN FOR ABSOLUTE TRANSFER AT INSTANCE OF LIFE TENANT

X, life tenant of certain stock of defendant company under a will, endorsed the certificates as life tenant; Y Company guaranteed his signature and itself endorsed in blank. Defendant, with knowledge of X's limited interest, transferred the stock on the books and issued new certificates to Y Company absolutely. Learning of their interests after X's death, plaintiff-remaindermen demanded certificates for the stock from defendant, which refused. In their action for conversion, held, that defendant breached its fiduciary duty to plaintiffs in making an absolute transfer with knowledge that the transferee had only a life interest and no power to sell or consume.

Biddle, J., dissenting, interpreted the will as making the life tenant a quasi-trustee with power to sell and buy securities, so that defendant could properly transfer the stock at his direction. Seymour v. National Biscuit Company, (C. C. A. 3d, 1939) 107 F. (2d) 58.