26 Colo. App. 454 | Colo. Ct. App. | 1914
On petition for rehearing. Petition denied.
The facts necessary to an understanding of this case are substantially as follows:
Mrs. Ellis (formerly Mrs. Prince), plaintiff in error, made a loan to Mr. and Mrs. Gibbons, taking as security therefor a trust deed on real estate. On default of payment, foreclosure proceedings were had, the trust deed being treated as a mortgage, resulting in a deficiency judgment against the Gibbonses for $9,500, dated February, 1905. At and subsequent to the time of the foreclosure proceedings aforesaid, Joseph Gibbons claimed to be the owner of 3,333 shares of the capital stock of The Joseph Gibbons Mining & Milling Company, which stood on the books of that corporation in the name of one John F. O’Connor.- Gibbons had brought legal proceedings against O’Connor to recover the stock, which resulted in a decree against Gibbons, but, upon appeal to the Supreme Court, said, judgment was reyersed and the cause remanded to the District Court for a new trial, the Supreme Court holding that Gibbons had a right to show that the bill of sale of said stock, which appeared to be absolute, was in fact a mortgage or a pledge — Gibbons v. O'Connor et al., 37 Colo. 96, 86 Pac. 94, 11 Ann. Cas. 323. Upon the second trial, the District Court, on Juné 6 or 7, 1907, rendered judgment in favor of Gibbons — finding that the transfer of stock to O’Connor was a pledge to secure payment of an indebtedness for money borrowed; that Gibbons was the owner of said stock, subject to the lien of O’Connor — and gave Gibbons .ninety days in which to redeem the shares of stock by payment of -said indebtedness, amounting at that time to' about $5,000, payment to be made to O’Connor or into' the registry of the court. The decree required O’Connor to transfer the
1. Prior to the transfer of this cause by the Supreme Court to this court, defendants in error filed a motion, the purpose of which was to dismiss and recall the writ of error, for the reason, as therein alleged, that the- Supreme Court was without jurisdiction to hear and determine the matters brought
From what has already been said, it will be seen that neither Mr. nor Mrs. Gibbons had any apparent interest in the stock at the time they filed their motion to quash or recall the levy, as théy had parted with their interest therein by sale to Bordeleau. Bordeleau was not a party to the Bllis-Gibbons foreclosure proceeding, nor to the Gibbons-O’Connor, litigation, relative to the mining stock, and was not made a party thereto, unless considered a party by virtue of the proceedings taken herein to quash the levy. His appearance is in the nature, though not in the form-, of an intervention. But in -as much as no< objection was made in the court below to- his joining with Gibbons in the motion to quash the levy, we shall assume, for the purposes of this 'case,.that he was a proper party to the proceedings — as he was, in fact, the real party in interest, and the only moving party ostensibly having a pe-cuniary interest in the stock. Notwithstanding the form in which this proceeding is brought, it is obvious that the judgment or order quashing the levy, for all practical purposes, meant to Bordeleau precisely what a judgment in his favor as intervenor, or in an equity proceeding brought to restrain the sale of the stock would have meant, and-from suidhi a suppositious judgment, clearly, an.appeal would lie. If it be
As was said in Balfe v. Rvmsey, et al., 55 Colo. 97, 133, Pac. 417, 419, Ann. Cas. 1914C 692: “The motion which plaintiff in error did file must be treated as equivalent to', and a substitute for, a bill in equity, and the judgment of the court * * * reviewable here.”
Furthermore, the record shows that in connection with the usual statutory proceedings, incident to levy upon stock in a corporation, garnishment writs in aid of the execution were served upon The Gibbons Consolidated Mining & Milling Company, O’ Connor (the pledgee), and others., to which answer was made by the president of the corporation, in which, in response to the interrogatories, as well as to the request made by the sheriff for information as to. any stock held by Gibbons, or in trust for him, the president of the company stated that there was no- stock standing on the books of the company in the name of Gibbons, nor of anyone else to his use or in trust for him, but further stated! that a decree of court had been rendered in the Gibbons-O’Connor suit aforesaid, and the substance of the decree, to-wit, that it was there decided that Gibbons was the owner of stock standing on the books in the name of O’Connor; that O’Connor was pledgee; that the officers of the company were by said decree required to reissue the stock to Gibbons-, or as he might direct, upon redemption as provided, and asserted the willingness of the company to comply -with the decree. Upon this, showing, the final order of the court quashing the levy, prima facie, at least, operated as a discharge of the garnishees, and such an order is made reviewable by the special provisions of section 141, Mills’. Ann. Code. That provision of the code is not relied on by plaintiff in error, but, without expressly holding that of itself it is sufficient to sustain the writ, we think it may well be considered in connection with all other matters in aiding to resolve, in favor of the plaintiff in error, the
The following additional authorities support our conclusion that the ruling of the trial court here under consideration is so far a final judgment as to be reviewable: Corning v. Ryan, 3 Colo. 525; Daniels v. Daniels, 9 Colo. 133, 140, 10 Pac. 657; Hutchinson v. McLaughlin, 15 Colo. 492, 25 Pac. 317, 11 L. R. A. 287; Martin v. Simpkins, 20 Colo. 438, 38 Pac. 1092; Tomboy v. Dist. Ct., 23 Colo. 441, 445, 48 Pac. 537; Standley v. Mfg. Co., 25 Colo. 376, 379, 55 Pac. 723; State Bank v. Plummer, 46 Colo. 71, 102 Pac. 1082; Smith v. McCourt, 8 Colo. App. 146, 157, 45 Pac. 239; McKercher v. Green, 13 Colo. App. 271, 58 Pac. 406; Mackaness v. Long, 85 Pa. 158, 162; Ins. Co. v. Sturges, 33 N. J. Eq. 330; Baker v. Pierson, 5 Mich. 458; Bristol v. Brent, 35 Utah 213, 99 Pac. 1000. We are aware that some of the decisions are based on code provisions not altogether like our code.
2. Another point raised on behalf of defendants in error is that the interest of Gibbons in the stock was not subject to levy and sale on execution. This contention seems to be predicated upon the assertion that the only right which Gibbons had in the stock was an “equity of redemption” or “the equitable right to redeem the stock” from the pledge to O’Connor; that Gibbons was not the owner of the stock; that his rights were inchoate only. The latter position can best be stated by quoting from the brief of defendants in error:
“The rights of Gibbons were inchoate; they began with- and by reason of the facts stated in the opinion in 37th Colo., but they were not in full existence or operation during the-time the battle pending between him and O’Connor waged,.*461 and the decree did not, of itself, restore them to such full existence or operation until and unless its terms were complied with.”
We cannot yield to the statement contained in the foregoing quotation. The actual ownership of the stock at all times by Gibbons, notwithstanding the pledge thereof to O’Connor, did not arise from nor begin with the decree or judgment of the court. Whatever right Gibbons had, the law gave. The court simply declared it. Gibbons prevailed in his action because of the fact, as found and determined by the court, that the transfer of the stock from Gibbons to O’Connor, although absolute in form, and so appearing upon the books of the corporation, was, nevertheless, a pledge, and to be SO' construed. In effect, the decree declares that while the legal title passed to the pledgee, it was held by him for the benefit of the pledgor, in whom the general property still remains — Wilson v. Little, 2 N. Y. 443, 51 Am. Dec. 307; Irving Park Ass’n. v. Watson, 41 Or. 95, 67 Pac. 945; Mitchell v. Roberts (C. C.), 17 Fed. 776, 5 McCreary 425; Gay v. Moss, 34 Cal. 125, 132; Dungan v. N. J. Mut. Ben. L. Ins. Co., 38 Md. 242, 252; 31 Cyc. 791, and cases cited.
Nor do we agree with counsel’s contention that because corporate stock is a chose in action, and Gibbons’ interest therein a mere right to redeem it from the pledge which is also' a chose in action, a levy under execution could, not be made thereon. Under the provisions of our statute — section 993, Mills’ Ann. Stats. — shares of stock in a corporation are deemed to be personal property. This doubtless applies to the shares or interest which the stockholder has in the assets of the corporation, and not only to the certificates, which are held tO' be mere tokens or evidence of the shares or interest.— Mountain Water Works v. Holme, 49 Colo. 412, 428, 113 Pac. 50; City and County of Denver v. Estate of Charles M. Hobbs, et al., — Colo. —, 144 Pac. 874, handed down December 7, 1914; People ex rel. v. Goss & Phillips Mfg. Co., 99 lb. 355, 363. The statute also provides that such rights
“The maintenance of the second proposition depends upon whether an equity of redemption'in personalty is subject toi levy and sale under execution. It is not subject thereto at common law.”
It is there shown that an equity of redemption in personalty may be subjected to levy and sale under execution, by the use of the appropriate provisions of the statute and code. We think that case is ample support for our conclusion that the equity of redemption of Gibbons as pledgor of the stock was subject to levy and sale under execution. If plaintiff in error failed in any respect to follow the course pointed out, that failure is not in evidence, nor does it appear that she is barred from still pursuing the necessary course. The stock, however, not being capable of manual delivery, it was not necessary, nor possible, for the sheriff to' take physical possession thereof. It was not necessary for him to' disturb the actual possession of the pledgee of the certificates of stock. Such possession as was possible, and as the law contemplates, was secured by the sheriff by virtue of compliance with the provisions of the statute and the code. In this connection, we quote the language of Mr. Justice Dickey in People ex rel. v. Goss & Phillips Mfg. Co., 99 Ill. 355, 363, having under consideration a levy upon capital stock under execution:
“The property of a stockholder consists of his right to a share in the net.assets of the corporation, proportionate to the number of shares to- which he has title. He has not, personally, a right as such shareholder, to' the custody or manual possession of any part of such assets. The corporation has the custody of the whole, and holds possession of his share for him. His title is evidenced by his stock certificates. This title can be passed from him to. another only by transfer thereof upon the stock books of the corporation. The cor*464 poration. holds'possession of each share of each shareholder in whose name the stock stands on the books of the corporation. The possession of the corporation as to the share of each stockholder, is, in one sense, the possession of the shareholder, and is the only possession which a shareholder can lawfully have, and is the only possession which any grantee of any shareholder can acquire; and such possession by a vendee of a shareholder can only be obtained by a transfer of the stock to him upon the boohs of the corporation. Until that transfer be made, the possession of the corporation is the possession of him in whose name the stock stands upon the books. The certificate of stock does not constitute property in the assets of the corporation. * * * When the sheriff has exhibited his execution, and on demand has received from the corporation, by virtue of his execution, a certificate of the shares standing in the name of the execution debtor, from that moment the possession of the corporation becomes, in fact, the possession of the sheriff, or rather a possession for the sheriff, in whom the title to the stock, by virtue of such actual levy, is, for the time, invested. The sheriff then has all the possession which the shareholder had before the levy. By giving the certificate provided for, * * * the corporation, in substance, agrees to hold possession for the sheriff,” etc.
Under the joint provisions of the statute and the code, it appears to us that an equity of redemption in corporate stock may be levied upon and sold under execution with like effect as an equity of redemption in real estate may be sold under execution, by compliance with the statutory requisites. The decisions of courts of different states ate in hopeless conflict on this question, and citations thereto' would be of slight benefit.
3. We do not regard the fact, that at the time the levy herein was made, the time, for an appeal from the decision of the court in the Gibbons v. O’Connor suit had not lapsed, as important, in the absence of any contention or showing that an appeal had been taken or writ of error prosecuted which
4. Defendants in error complain of the 'levy , and the return made by the sheriff on the execution, pointing out certain alleged defects therein. A careful scrutiny of the manner of the levy, including the garnishment proceedings, leads us to the conclusion that the provisions of the statute were substantially complied with, and that the return of the sheriff correctly recites the levy made by him. Long before Bordeleau purchased the stock from Gibbons, the sheriff had. delivered to the president of the corporation a copy of the execution, with a certificate that pursuant thereto he levied upon and seized all the interest or shares in said corporation belonging to Gibbons, and in response to the sheriff’s request, and the interrogatories in the garnishment writ, the president of the corporation had furnished the sheriff with certificates and affidavits, stating the number of shares which the court had decided were held in trust by O’Connor for the use of Gibbons, and these, with the sheriff’s return, when filed in court, recited accurately and in great detail all the pertinent facts concerning the stock. Whatever rights Bordeleau has in the stock, it must be considered, for the purpose of this hearing, he took with knowledge or notice of the levy. It is also urged that no notice was given Gibbons of the attempted levy upon the mining stock. We have no statute which in terms requires notice to the defendant in execution prior to levy of the writ. — Victor Inv. Co. v. Roerig, 22 Colo. App. 257, 124 Pac. 351. Failure to give notice of the levy to the execution debtor was not fatal.
“Goods are not in possession of the law simply because there is some litigation, touching their true ownership, pending in the courts.”
A fortiori, it may be said that property is not in the custody of the law merely because there has been some litigation touching its ownership.
In deciding the questions discussed in this opinion, we have sought to avoid a decision on any matter, that, by be
' Judgment reversed and cause remanded for further proceedings in conformity with the views herein expressed. The district court is directed to vacate the order quashing the levy.
Reversed and Remanded.