170 P. 534 | Or. | 1918
delivered the opinion of the court.
“The case of Parsons v. Hartman denies the right to obtain an injunction against an execution sale of exempt personal property. _ There is some conflict of authorities on this question, but where there is a special statutory remedy, that is quick, adequate, and affords the same relief as would be obtained by injunction, as in Parsons v. Hartman, the rule adopted in that case is supported by some authorities. But*426 where the objection to the injunction is, that there is a remedy by replevin, trover, damages, or the like, the weight of authority is in favor of granting the injunction. ’ ’
Shares of stock in a corporation, though treated as personal property, are in the nature of choses in action: Helliwell, Stock & Stockholders, § 9; Commonwealth v. Peebles, 134 Ky. 121 (119 S. W. 774, 20 Ann. Cas. 724, 23 L. R. A. (N. S.) 1130). A clause of the stipulation of facts, which was adopted by the court in referring to such property reads:
“Said stock hereinbefore listed is now in the possession of plaintiff subject to its claim therein as herein set out, and is now shown by the books of the defendant bank to be owned by H. Rostad.” .
The facts so agreed upon show that though Rostad assigned and delivered his shares of stock to the plaintiff to secure the payment of $2,000, as evidenced by his promissory note, it nowhere appears from an inspection of the transcript before us, whether or not a request was ever made to have noted upon the books of the defendant bank any memorandum that such certificates were held by the plaintiff as pledgee.
In this state a chattel mortgage when duly recorded creates only a lien upon the goods and chattels hypothecated, but upon a default in the conditional transfer, such lien is converted into a qualified ownership which entitles the mortgagee to the possession of the property: Section 7410, L. O. L; Knowles v. Herbert, 11 Or. 54, 240 (4 Pac. 126); Backhaus v. Buells, 43 Or. 558 (72 Pac. 976, 73 Pac. 342); Ayre v. Hixson, 53 Or. 19 (98 Pac. 515, 133 Am. St. Rep. 819, Ann. Cas. 1913E, 659); Swank v. Elwert, 55 Or. 487 (105 Pac. 901). A text-writer in speaking of the delivery of
“A pledge of stock is a bailment as security for an obligation. Contrary to the rule with reference to a mortgage of realty, the pledgee acquires the legal title to the property pledged. If the pledgor retains possession, he does so merely as the agent of the pledgee. Where stock is transferred as security for a debt by an assignment absolute on its face, parol evidence is admissible .to show the true nature of the transaction. A court of equity, upon full facts shown, will give effect to the actual contract intended by the parties”: Helliwell, Stock & Stockholders, § 356.
This author also observes:
“Where the pledgee is not apprehensive of liability, he may have stock transferred to himself, personally, on the corporate books. Where, however, there is danger of such liability, the pledgee may have the stock registered in his name ‘as pledgee’ in which case no liability attaches”: Id., § 357.
• Another author in commenting upon the right of a court of equity to restrain the sale of stock for an amount alleged to have been improperly levied thereon, in excess of the subscription price, says:
“Where an illegal assessment has been made, and the stock is about to be sold, a stockholder may enjoin the sale and cause the assessment to be set aside”: 1 Cook, Corp. (6 ed.), § 134.
To the same effect, see also, 2 Clark & Mar. Priv. Corp., §495; 10 Cyc. 489; Redkey Citizens’ Natural Gas etc. Co. v. Orr, 27 Ind. App. 1 (60 N. E. 716). The assignment of stock as security for the payment of a debt, creates such a privity between the pledgee and pledgor that the former may maintain a suit in equity to protect his rights in and to the property, whenever the latter might have done so: 22 Am. & Eng. Ency. Law (2 ed.), 907; Herbert Kraft Co. Bank v.
It is believed that an action at law conld not have furnished the plaintiff as plain, speedy and adequate remedy as a suit in equity would have afforded: Section 389, L. O. L.; South Portland Land Co. v. Munger, 36 Or. 457 (54 Pac. 815, 60 Pac. 5); Benson v. Keller, 37 Or. 120 (60 Pac. 918); Livesley v. Johnston, 45 Or. 30 (76 Pac. 13, 946, 106 Am. St. Rep. 647, 65 L. R. A. 783); Hall v. Dunn, 52 Or. 475 (97 Pac. 811, 25 L. R. A. (N. S.) 193); Dose v. Beatie, 62 Or. 308 (123 Pac. 383, 125 Pac. 277); Campbell’s Automatic Safety Gas Burner Co. v. Hammer, 78 Or. 612 (153 Pac. 475); Butson v. Misz, 81 Or. 607 (160 Pac. 530). This test being the criterion for invoking an exercise of chancery jurisdiction, the suit herein was properly brought in a court of equity.
“The stockholders of all corporations and joint stock companies shall be liable for the indebtedness of said corporation to the amount of their stock subscribed and unpaid, and no more.”
That there then existed no reserve power whereby the articles of incorporation of any such artificial being or company could be altered, amended or repealed so as to increase the liability of a stockholder in excess of the sum so limited; that the clause of the organic law quoted made the charter of the defendant bank a contract between it and its stockholders, and between the latter and the state, thereby authorizing the holders of
“Excepting that the stockholders of corporations or joint stock companies conducting the business of banking shall be individually liable equally and ratably and not one for another, for the benefit of the depositors of said bank, to the amount of their stock, at the par value thereof, in addition to the par value of such shares”: Laws Or. 1913, p. 8.
That no retroactive force was imparted by the amendment to the original clause of the Constitution, whereby any authority was granted to assess shares of stock which had been subscribed for, the par value thereof paid in full, and the certificates delivered prior to November 29, 1912, when the amendment went into effect; and that the attempt to impose upon the stock so held by the plaintiff an additional burden was violative of the Constitution of the United States and of the State of Oregon and void, and hence errors were committed in dismissing this suit and in not granting the relief prayed for in the complaint.
It is argued by defendant’s counsel that the amendment of Section 4585, L. O. L., which went into effect May 20, 1911, or 90 days from February 18th of that year, the end of the legislative session (Const. Or., Art. IY, § 28), commanded the superintendent of banks, when it appeared to him that the capital stock of any state bank had been reduced below the amount specified in its articles of incorporation, to notify the officers and directors of such bank to make good the impairment within 90 days from the requisition, where
“Section 17 of Article II of the Constitution of this State, which provides, ‘Dues from private corporations shall be secured by such means as may be prescribed by law, but in no case shall any stockholder be individually liable in any amount over or above the amount of stock owned by him,’ relates to and limits the personal liability of a stockholder, but in no way limits the power of the corporation to make assessments upon stock fully paid up, and to subject such stock to sale in default of the payment of such assessment.”
It will be remembered that the amendment made in November, 1912, to Article XI, Section 3, of the Constitution of this State, declares:
“That the stockholders of all corporations # * conducting the business of banking shall be individually liable, equally and ratably and not one for another, for the benefit of the depositors of said bank, to the amount of their stock, or the par value thereof, in addition to the par value of such shares.”
It will thus be seen that our Constitution places a personal liability upon stockholders of a bank, and hence the case last cited is not controlling herein.
Considering the legal principles put forth by plaintiff’s counsel, the rule is firmly established that a charter is a contract between the corporation and its stockholders, and also between them and the State,
“A statute passed subsequently to the granting of a charter, and increasing the liability of a stockholder on his stock for debts already incurred, is unconstitutional and void unless the legislature has reserved the right to alter or amend the charter.”
No power was reserved whereby the legislative assembly was authorized to impose the burden undertaken to be laid by the amendment of Section 4585, L. O. L. That enactment, it will be kept in mind, went into effect after the defendant bank was incorporated but before Eostad subscribed for and received his certificates of stock. He and his pledgee, the plaintiff herein, had the right to rely upon the organic act that was in force when the defendant bank was incorporated, which fundamental law is superior to the amendment last mentioned.
In Harrison v. Remington Paper Co., 140 Fed. 385 (72 C. C. A. 405, 5 Ann. Cas. 314, 3 L. R. A. (N. S.) 954), it was held that a stockholder of a corporation, by his subscription for stock or by his acceptance of it, agreed with the corporation and its creditors that he would perform the obligations and discharge the duties imposed upon a stockholder by the Constitution, the statutes, and the law then in force; that Ms liability to creditors sprang from that contract; and that any repeal or change of the remedies of a creditor of a corporation against its stockholders which substantially obstructed or retarded the enforcement or lessened the value of the agreement, impaired its obligation, and was unconstitutional and void.
In Yoncalla State Bank v. Gemmill, 134 Minn. 334 (159 N. W. 798, L. R. A. 1917A, 1223), Section 3 of Article XI of the organic law of this state was construed, a head-note reading:
“At the time the plaintiff, a state bank of Oregon, was organized and defendant became owner of shares of stock therein the Constitution of said state contained no provision reserving in the state the right to amend or alter the charter of the bank so as to increase the obligations of its stockholders, but on the contrary a provision of the Constitution at that time did guarantee that a stockholder should not be liable beyond the unpaid par value of the shares of stock owned. A subsequent amendment of said provision imposing a double liability upon stockholders in banks, cannot be held to embrace those who become such previous to the adoption of the amendment.”
In Norris Safe & Lock Co. v. Weaver, 81 Or. 670, 672 (160 Pac. 807), Mr. Justice Burnett, referring to the effect of such amendment, remarks :
“Neither can it be made to impair the obligation of a subscription contract made before its adoption so as to double the original liability. So far as the increased responsibility is concerned, the utmost effect*434 it can have is to operate in favor of the depositors in a bank incorporated since the Constitution was so amended.”
From the time the decision was rendered in the famous case of Dartmouth College v. Woodward, 4 Wheat. (U. S.) 518 (4 L. Ed. 629), to the present, it has been uniformly held that any legislation that impairs the terms or conditions of a pre-existing contract is void: State ex rel. v. Sears, 29 Or. 580 (43 Pac. 482, 46 Pac. 785, 54 Am. St. Rep. 808); Lorntsen v. Union Fisherman’s Co., 71 Or. 540, 544 (143 Pac. 621).
The amendment of the clause of the Constitution referred to cannot be invoked to impair the obligations of the pre-existing contract between the stockholders of the defendant bank and that corporation, nor to abridge the agreement existing between such stockholders and the State of Oregon, and this being so the decree is reversed and one will be entered here granting to the plaintiff the relief prayed for in its complaint. Reversed and Decree Rendered.