61 Minn. 307 | Minn. | 1895
The plaintiff, as receiver of the Times Company, appointed in proceedings under G. S. 1894, § 5897, brought this action to recover a call on 75 shares of the capital stock of the insolvent corporation alleged to be owned by the defendant. The defendant denied that it was the owner of the stock. When plaintiff rested the court dismissed the action on the ground that the stock had never been transferred to defendant on the books of the corporation, and hence no relation of privity, such as to impose upon it the obligation of a legal stockholder, existed at the time the call was made. The correctness of this ruling is the only question presented by this appeal. The facts are practically undisputed.
The Times Company was organized under G. S. 1894, c. 84, tit. 2, § .2794 et seq. The statute, it will be remembered, provides that the stock of any such corporation shall be transferable only on the books of the company, and that a transfer shall not be valid, except as between the parties, until it is regularly entered on the books of the company, so far as to show the names of the persons by and to whom transferred, the numbers or other designation of the shares, and the date of the transfer; also that the books of the company shall be so kept as to show intelligibly the original stockholders, their respective interests, the amount which has been paid in on the shares, and all transfers thereof. G. S. 1894, §§ 2599, 2796, 2799.
This company kept no regular “stock book.” It kept a “certificate book,” containing printed certificates of stock, which, as occasion required, were filled out, signed by the proper officers, and then delivered to the subscribers. In this certificate book there was a stub opposite each certificate, on which was entered the name of the person to whom issued, the date of issue, and the amount or number of shares. When a certificate was surrendered and canceled, an entry of the fact was usually made on the corresponding stub, and the canceled certificate pasted into the book. It appears that the stock certificates were issued before the stock was paid for in full, and there was nothing in the certificate book to show the amount which had been paid on the shares. The method adopt
One Nimocks having subscribed for 75 shares of the capital stock of the company, a certificate was issued to him, by the terms of which the stock was transferable only on the books of the company on surrender of the certificate. The usual entry or notation was made on the stub, showing the date and amount of the certificate, and the name of Nimocks as the person to whom it was issued. The company also opened in its ledger the usual stock account with him, as a shareholder. Subsequently the company made a “call” on the stock, which Nimocks failed to pay. In this condition of affairs the defendant, the, trust company, upon an execution issued on a judgment in its favor against Nimocks, levied upon and sold the stock, became the purchaser at the execution sale, and received a certificate of sale from the sheriff.
The defendant had been informally advised that the Times Company claimed a lien on the stock for the unpaid call, and would not transfer the stock on its books to the defendant until this call was paid. Nevertheless, on November 15, 1892, the defendant served on the Times Company a notice that it was the owner of stock, as evidenced by the stock certificate indorsed by Nimocks, and by the sheriff’s certificate of sale, and requiring the Times Company to transfer the stock to the defendant, on its books, and to issue to it a new certificate. This notice was accompanied by the stock certificate indorsed by Nimocks, and by the sheriff’s certificate of sale.- The Times Company declined to make the transfer at that time, but the court correctly states in its memorandum that “because of the incumbrance then resting on the stock, arising from the unpaid call theretofore made upon Nimocks, the defendant was not entitled to a compliance with its demand; and this was understood to be the reason^ and the only reason, at the time, by both parties, for the refusal.” The defendant made no offer to pay this call, but left the notice, together with the stock certificate and the sheriff’s certificate of sale, with the defendant.
Matters rested thus until February, 1894, when the Times Com
The next thing done was that on May 28 the directors made a call (the one sued on) of 48-J- per cent, on the stock, and on the same day called a special meeting of the stockholders, for June 4, to consider the financial condition of the company. Notice of the call and notice of this special meeting were both served on defendant at the same time. The only action of the defendant on receipt of these notices was as follows: The president of the defendant executed to its attorney a written authority or proxy to attend the special meeting of the stockholders, and “represent it,” or “represent the interests of the company,” but accompanied, as the president testified, with verbal instructions “not to represent it in a voting capacity, as a stockholder.” The attorney attended the meeting, and, before it convened, made inquiries of the officers of the company, then present, as to its financial condition. The result of these inquiries was such that he decided not to present his proxy, or take any part in the meeting, and thereupon retired. Nothing further was done by either party until the plaintiff brought this action, in September, 1894.
It is generally stated in the books that, until a transfer is recorded in the transfer book of the corporation, the transferee is not chargeable with either corporate debts or unpaid balances on the stock; that, while he is bound to protect and indemnify his transferror, he is not liable to the corporation or corporate creditors or other stockholders; that the transferror is not released from liability' until the transfer is duly registered in the corporate books.
The books of the Times Company were, perhaps, not in the form to constitute a strict and literal compliance with the statute. There was no one book that contained all that the statute required; but, between the certificate book, and the stock account in the ledger, they contained substantially all that was necessary. The certificate book showed nothing as to what had been paid on the stock, but this was shown by the.stock accounts kept with the several shareholders in the ledger. These accounts also showed the names of the stockholders, and the number of shares held by each.
The principal defect in these stock accounts was that they were not in a book that would be readily accessible to inspection by the
Our conclusion is that the acts of the company in making this, entry in the stock account of the transfer of title by execution sale to the defendant was not only a clear recognition of it as a stockholder, but a sufficient, although informal, transfer of the stock on corporate books to bring the defendant in privity with, and make it liable to, the corporation. In purchasing stock, the transferee impliedly agrees with the transferror to pay all future calls. According to the doctrine of this court, the person for whose benefit a promise is made may enforce it, though he be a stranger to the contract and to the consideration. A transfer on the corporate books is designed for the benefit of the corporation itself. In view of these facts, and keeping in mind the distinction between an action against the transferror, where the corporation has never recognized the transferee as a stockholder, and refuses to look to him for payment of the call, and an action against the transferee, where the corporation has elected to accept him as a stockholder, and to look to him for payment, it may be doubtful whether there is any sound principle upon which it can be held that the absence of a
• Order reversed.