CORPORATIONS - POWER OF ATTORNEY TO TRANSFER STOCK ON THE BOOKS OF THE CORPORATION

Authors

Royal E. Thompson, University of Michigan Law SchoolFollow

Abstract

Although a power of attorney to transfer stock on the books of the corporation is found almost as a matter of course on the reverse side of stock certificates, along with a form for assignment of the certificate, there is surprisingly little to be found in the authorities, as to why it is there. An inquiry into the reasons, if any, for such a provision is the purpose of this discussion. A decision of last summer, by the New York Supreme Court, New York County, lends present emphasis to the query. Three certificates of stock which had been indorsed in blank by the stockholders of record were lost or stolen from the registered mail. Before mailing, the brokers, who were owners, had stamped their name on each certificate in the blank left for insertion of the name of an attorney to transfer the stock on the books of the corporation. In a suit to recover the certificates from a bona fide purchaser, Rosenman, J., held that the presence of a specified firm as attorney to transfer, prevented the certificate from being "indorsed in blank" within the meaning of section 162 of the Personal Property Law, so that the title did not pass by delivery, or at least that such power of attorney would put a prospective purchaser on inquiry. Here at least is a possible e:ff ect of the power of attorney to transfer. We shall refer to it later. The great mass of cases tacitly assume that this power of attorney is necessary, and will be used, and usually it is complied with as a matter of customary form, so no trouble is caused. The few cases where the question is raised usually rest content with pointing out that the articles, by-laws, or certificate provide for transfer of stock only on the books of the corporation by the registered owner thereof in person, or by his attorney, that such is a reasonable regulation, and must be complied with. There is abundant authority that a corporation may make reasonable regulation as to the mode of transfer of its stock, and where by regulation stock is made transferable only on the books in person or by attorney, the corporation may insist on compliance, at least as to being a prerequisite to transfer of the stock on the books.

Recommended Citation

Royal E. Thompson, CORPORATIONS - POWER OF ATTORNEY TO TRANSFER STOCK ON THE BOOKS OF THE CORPORATION, 35 Mich. L. Rev. 1136 (1937).
Available at: https://repository.law.umich.edu/mlr/vol35/iss7/7