168 Ky. 433 | Ky. Ct. App. | 1916
Opinion of the Court by
— Affirming.
Charles P. Rodgers was the owner of fifty-two shares of stock in the Third National Bank of Lexington. This stock was pledged to secure indebtedness which did not equal the market value of the stock. The First National Bank and the Fayette National Bank sued Rodgers on certain indebtedness due them and attached the stock. The actions were consolidated and Mrs. Henrietta P. Bowman intervened and asserted ownership of the stock by purchase made prior to the attachments. On final hearing, her claim was sustained and the banks appeal.
It appears that on August 20, 1910, Rodgers, for an agreed consideration of $7,500.00, purchased from Mrs. Bowman an interest in some lands situated in Mexico. As part payment therefor he transferred and assigned to her his equity in the stock in question, which, after the payment of the debts for which it was pledged, was estimated to be worth $1,315.00, together with a claim for past salary against the American Trading Company amounting to $279.60. At the time of the assignment the stock was in the possession of the pledgees and no transfer thereof was made on the books of the corporation.
We have carefully considered the evidence bearing on the transaction in question and find nothing in the record to justify the conclusion, either that the transaction itself was not bona fide, or that the transfer was made by Rodgers for the purpose of defrauding his creditors, and that Mr. Bowman, who acted as. agent for his wife, knew of such purpose when the transfer was. made.
There being no actual fraud, the rights of the parties depend on whether the transfer itself is valid as to the-attaching creditors whose debts accrued prior to the transfer.
“But the section supra does not operate as a registration law in the interest of the creditors of the stockholder, for the reason that the books of the' company are not required to be kept open for the inspection of the public. The books are required to be kept open to the stockholders only; outsiders have no right to demand an inspection of the books; therefore the section in question was not intended for the protection of creditors. As to the creditor, the stock of the stockholder is as though the stockholder held it in his pocket on some private individual, in which case a bona fide transfer of value is good against the transferrer’s creditors. So in the case at bar, the recording of the transfer of stock on the books of the company not being required for the benefit of the stockholder’s, creditors, but for the benefit of the company and purchasers, the transfer of the stock, without the transfer being entered upon the books of the company, limited the passage of the legal title strictly to the vendor and vendee as between the vendee and the company and a subsequent purchaser for value, without notice of the prior purchase at the time he had his transfer recorded on the books of the company; but as between such purchaser and the . creditors ' of the stockholder, the purchaser acquires a perfect legal title: ‘ (New York & New Haven R. R. Co. v. Schuyler, 34 N. Y., 30; Lowell on Transfer of Stock, sections 93, 95, 96.)”
Judgment affirmed.