15 N.Y.S. 202 | N.Y. Sup. Ct. | 1891
A great many important questions are presented by this appeal, but, in the view which we take of the primary fact, it will not be necessary to consider them. Upon a caréful review of all the evidence adduced upon the trial, we are of opinion that the defendants never became stockholders of the corporation represented by the plaintiff, and, consequently, are not responsible for the unpaid assessment sought to be recovered in this action. The shares in question were never purchased by the defendant’s firm, (Harrison, Garth & Co.) This firm was engaged in the business of bankers and brokers in stocks, bonds, and securities in this city. They had a customer named Ficklin, who desired to purchase these shares upon a margin. Mr. Garth was the particular member of the firm who dealt with Ficklin. Mr. Garth agreed, as it is termed, to carry these shares for Ficklin—that is, to pay for them as he (Ficklin) purchased them—upon receipt of a sufficient margin to secure the firm against loss. This stock was not listed upon the Hew York Stock Exchange, and was not dealt in here, but Ficklin told Garth that he could pick the shares up at Baltimore and other places. The company was a Virginia corporation. Some time after the making of this arrangement, several lots of these shares were purchased, doubtless upon the orders of Ficklin, by McKim & Co., brokers, in Baltimore, and, in accordance with Garth’s promise to carry these shares, Harrison, Garth & Co. settled McKim & Co.’s account for what they had disbursed in the transaction. The certificates of stock were of course sent on from Baltimore by McKim & Co. to the defendant’s firm as their security for the advance thus made to them for Ficklin. The invariable custom, under such circumstances, is for the seller to deliver the certificates to the broker with a blank assignment and power of attorney (to transfer upon the books of the company) indorsed thereon. Such a thing as placing stock in the name of the firm, when thus acting as brokers, had never once occurred in all its business life. To this Mr. Garth explicitly testified as follows: “Question. Have you a recollection now of all the various certificates representing stock which came to the firm of Harrison, Garth & Company, bought by that firm. Answer. Oh, no; there were millions of dollars’ worth. Q. Am I correct in understanding you to swear deliberately that this is the only instance of all the stock dealt in by Harrison, Garth & Company in which the certificates were put in the name of the firm, Harrison, Garth & Company? A. You distinctly understand me to say that, so far as my recollection is concerned, that was the only instance. Q. That is, so far as your recollection is concerned? A. Yes, sir; we dealt in stocks, bonds, and gold as other brokers did, and never had them transferred in our name.”
Instead of following this custom, and forwarding the ordinary and proper
The actual fact may always be inquired into, and, if it be shown that the transferee upon the books never consented to accept the shares, the transfer to him is simply null and void. Mor. Priv. Corp. § 223, and authorities there cited. “It is,” as was said in Cartmell's Case, L. R. 9 Ch. App. 694, “of the essence of a transfer that it should be accepted by the transferee. ” See, also, Henessey's Executor's Case, 3 De Gex & S. 191, and Chapman's Case, L. R. 3 Eq. 361.
Hor did the defendants, by any neglect or default, bring themselves within the rule that a person who permits his name to appear and remain in its outstanding certificates of stock and on its register as a shareholder is estopped, as between himself and the creditors of the bank, to deny that he is a shareholder. Whitney v. Butler, 118 U. S. 655, 7 Sup. Ct. Rep. 61. That doctrine applies to one who actually is a shareholder in fact, as well as upon the books of thp company, and who transfers his shares to a given person. It is ordinarily his duty to see to it that the latter causes the proper transfer to be made upon the books of the company. But here the defendants were not shareholders, in law or in fact, and" they made no transfer to any given,person. They simply disaffirmed the unauthorized act whereby their names were inserted in the certificates as shareholders, and placed as such upon the books of the company. They had then no means of transferring the shaves to any given person. The shares had not been resold when they repudiated the transfer to themselves, and consequently' there was no person to whom the retransfer could be made when such repudiation took place. XVhat they did do was all that they could do, namely, to return the shares to the Baltimore brokers, with instructions to sell them at once, and have them transferred from their names. And it appears that when McKim & Co., in obedience to these instructions, resold the shaves, the books of the corporation were closed,
Upon both the facts and the law, therefore, we think that the complaint .should have been dismissed. As to the other points which were presented, we need only say that we have grave doubts as to the plaintiff’s right to maintain this action, and that in several respects his position with regard to this hard and stale demand fails to commend itself to our sense of equity and justice. But these questions need not be passed upon, as the single consideration already discussed is sufficient to dispose of the entire case. The exceptions must therefore be sustained, and a tew trial ordered, with costs to •abide the event