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place of the first Christian names, or in the use of pet household or nick-names-for instance, Molly for Mary, Emma for Emeline, Harry for Henry, etc. It is not a good plan, either, to insert the shareholder's place of residence in the body of the certificates. Certificates live long; residences are often changed.

In issuing stock certificates to trustees, administrators, or executors, some description of the trust or the names of the parties or estate for whom they are acting should be inserted in the certificate.

No certificate should read in this way: "Robert Burns, trustee, is the owner of 100 shares in the company"; it should read: "Robert Burns, trustee under the will of Dr. P. Thayer," etc.

In delivering to the new holder certificates of shares, it is always very desirable that they should be passed over direct to the owner, or his duly authorized representative, and take a receipt for the same on the stub of the Stock Certificate Book. When they are transmitted, let it be by express, and affix the receipt obtained from him to the stub. It is not safe to send stocks and bonds through the mails, even though they may be registered.

tures.

In cancelling the old-the retired-certificates, it is well to draw across their face emphatic ink lines or a rubber stamp printing the date of cancellation, and then cut from them a portion of their signaThese retired certificates should be pasted to their original stubs, showing that they are void, and the page upon the Transfer Book recording it. In spoiling the signature on stocks do not cut it entirely out, but cut clearly into it, allowing it to show that it was original.

In transferring the stock the transfer officer must first of all have the old certificate surrendered into his hands. Then be positive that the person who presents it for transfer and who claims to be the stockholder named in the certificate is the bona fide owner.

The simple fact that he may have possession of a certificate does not warrant the transfer officer in making a transfer without an identification of the holder, for in case it should afterwards prove that the certificate had been stolen by the bearer, the company making the transfer, without taking precautions to require an identification, would have reason to regret its careless action.

The certificate holder may, perhaps, only represent the stockholder through a power of attorney executed by the real owner of the certificate, and may refer the transfer clerk to signatures on its dividend book as a verification of his identity, or the identity of the signatures on his power of attorney. They may be identical, and they

may be forged, too. Insist upon a positive identification.

In transferring certificates, in many cases, the transfer clerks feel great uncertainty whether they are doing just the right thing or are taking risks which they ought not to take, for the variety of forms of ownership of stock result in many questions which have to be settled when transfers are made. Let us look at some of these questions :—

First. The powers of attorney which are so common an accompaniment to the certificate.

Be sure, if at all possible, that the power is not a forgery. A company in Philadelphia not long ago was victimized by a plausible scoundrel, who presented himself to the secretary holding in his hands a certificate of stock which he had stolen, accompanied by a power of attorney, which he had forged, signatures of witnesses and all, and requested a transfer, which was unsuspectingly made by one of the most experienced secretaries.

It is not safe to accept a power of attorney or probate certificates and similar instruments if they are old. I have known of instances where transfers have been made under documents of this sort which had become valueless by various kinds of natural deaths. Powers of recent date are more desirable, and in some cases indispensable.

Let us consider the duties and responsibilities which are to be met with in making transfers of stock to guardians, executors, administrators and others representing the deceased owner. It is from errors or negligence in such transfers that trouble has generally come.

In transferring shares standing in the name of a trustee, be very careful that he does not leave the channels to which he may have been confined by the instrument which gives him his authority. See that he makes no transfer not in harmony with the common law or statute law governing action of trustee, etc.

An administrator is an official appointed by the Probate Court, and it is in the regular line of his duties to transfer any shares belonging to the estate which he is settling. The transfer clerk should demand of the administrator the probate certificate of his appointment; the date should be recent, to guard against authority that might have been revoked. Letters of administration are always sufficient evidence of an administrator's authority to make transfers.

Executors stand in nearly the same position. It is only necessary to see the probate certificate of the executor's appointment. An executor always has the right to sell and transfer property to pay debts of the estate in his charge. If there are any doubts as to the

necessity of transfers, the company should consult the will or be otherwise properly informed as to the circumstances.

In transferring for guardians, the corporation should have good proof that the parties representing themselves as guardians are really so, and having probate proof of that fact, persons dealing with them in good faith will be protected.

Should an executor show the probate certificate, and the original certificate of stock be surrendered, and a transfer is made with parties. with whom you are well acquainted, and it should be discovered that a will had been made of later date, the transfer made under authority of the first would be void, and if there is much difference in the two wills the situation would be an embarrassing one.

It is not safe to allow stock to remain in the name of the dead stockholder in the hands of executors and administrators, because they are drawing dividends, and the heirs not wishing to transfer. There are various reasons why it is not well to move along in this careless and indefinite way, and if transfers of this sort are delayed. complications are apt to arise.

Suppose an executor has a certificate of stock for 100 shares, and in making settlement for the estate sells 50 of these shares, the transfer should be made to their purchaser for the number bought and issue a certificate to the executor for the remaining shares. I have known an executor to make a transfer of this kind and ask to have the remaining shares issued in the name of the deceased holder, the same as the original surrendered. It is not good practice to re-issue stock in the names of dead men.

Companies are frequently requested to reissue or transfer stock when the persons owning shares lose or mislay them or they are destroyed by fire. Stock should not be reissued or transferred under these circumstances unless the parties will furnish the company with a satisfactory bond guaranteeing them from any loss which may come from the presentation of the original certificate.

Shareholders should notify the company in which they are owners, of any change in their names. They should go to the company in person, or by attorney, with their certificate in hand, and make a transfer of their stock to the new name they have adopted. Such cases are very frequent, especially among women holding shares of stock in their maiden names and taking new names by marriage. Transfers of this sort should be made in this way: The old certificate was written Susan Crane; in transferring Susan Crane should sign "Susan Crane-Thomas, formerly Susan Crane." The transfer

should be made to herself, Susan Crane-Thomas.

It is clearly established that a married woman making a transfer of stock standing in her maiden name should add the statement, "formerly Miss ; and in transferring stock for married women the

approval of the husband must be obtained.

In transferring certificates of stock much trouble, time and money can be saved by bearing these points in mind. Too great care cannot be taken.

Gas Company Consolidation.

Ex. 310. Jan. 1, 1894, The Cleveland Gas Company, The West Side Gas Company and The Citizens' Gas Company consolidated, with a Capital Stock of $2,500,000. The corporate name is The City Gas Company. The new company is to purchase the plants, etc., of the old companies at an appraised value, and issue one and one-fourth shares of full paid stock in the new company for each share in the old companies. The liabilities and accounts due the old companies are to be liquidated by themselves. The total appraised value of the old companies is $1,900,000, as shown in the following statement, for which Common Stock is issued. The balance of $600,000 Preferred Stock was placed in the market for sale.

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$1,450,000 $49,100 $3,191 $53,500 $24,600 $5,271 $314,338 $1,900,000.00

A. What entry to close the books of each of the old companies?
B. What entry to open the books of the consolidated company?

CHAPTER TWENTY-THREE.

AUDITOR AND AUDITING.

Ex. 311. Auditor is derived from the Latin Audire, to hear; it is the name given to an official appointed by competent authority for the purpose of examining, on behalf of the government, courts of law, corporations, associations or individuals, the accounts of persons to whom have been lawfully entrusted the receipt and disbursement of money or other property. The government may appoint such officials by virtue of Acts of Congress passed April 3, 1817 and Feb. 24, 1819. In general practice an Auditor is an officer of the court assigned to state items of debit and credit between parties in suits when accounts are in question, and exhibit balances. Auditors may be appointed by courts either of law or equity, at common law in actions of accounts, and in many states by special statute in other actions. They have authority to take testimony, to examine books and other vouchers, and in some states to examine witnesses under oath. Their report must embrace a special account, giving items allowed and disallowed, and the exceptions, if any, taken by either party, to their decisions.

An Auditor's report is final as to facts in some jurisdictions, unless vitiated by fraud or gross error, but is subject to examination as to points of law contained in it. Elsewhere it is prima facie jury evidence, and rebuttal testimony may be introduced to prove incorrectness; in still other states it has no effect until sanctioned by the court.

Corporation Auditors.

It is customary with many corporations for the Directors or Stockholders to elect or appoint a person or persons to examine and audit the accounts and financial affairs of the Company; and sometimes a Finance Committee is appointed to approve and order paid all bills, and to examine and attest the correctness of the books and balance sheet before declaring a dividend.

Many large corporations, like Railroads, Manufacturing, Mining and Insurance Companies, employ an Auditor permanently to make

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