283 Mass. 173 | Mass. | 1933
This is a bill in equity wherein the plaintiff seeks to compel the defendant Citizens Finance Corporation to deliver to it thirty-four certificates of the plaintiff’s capital stock alleged to have been unlawfully transferred to said defendant in violation of the plaintiff’s rights.
Following the filing of answers by the defendants, and the allowance by the court of a motion filed by the defendant Citizens Finance Corporation in the nature of a cross bill, the parties filed an “Agreed Statement of Facts” which concluded with a paragraph reading: “No question of pleadings is raised and it is agreed that all pleadings may be referred to in the determination of the issues herein presented.” The following is the statement of facts agreed upon by the parties: “The plaintiff seeks possession of certificates for thirty-four shares of its corporate stock now in the possession of Citizens Finance Corporation. Certificates for fourteen of these shares were issued to George Gordon and certificates for twenty shares to Gordon’s Value Shop, Inc., a corporation, which is hereinafter re
The trial judge upon the above agreed facts found and ruled “that the Citizens Finance Corporation made the loans to or for the benefit of ‘Gordon’s Shop’ and received the collateral note and the delivery of the certificates in good faith, for consideration, without knowledge or reasonable grounds to believe, that ‘ Gordon’s Shop ’ or George Gordon had made an assignment of these shares of stock as security for loans by the plaintiff; that there was no transfer of legal title to the shares of stock to the plaintiff corporation; that the Citizens Finance Corporation became entitled to the possession of the certificates of stock as security for its loans, and, subject to the provisions of the by-laws of the corporation printed on the certificates of stock, entitled to sell the stock and apply the proceeds to its loans.”
In accord with the request of the plaintiff numbered 6, the trial judge ruled that all knowledge pertaining to the Good Fellows Associates, Inc. possessed by Robert Porter, as principal stockholder, general manager and in complete charge of the business of the Citizens Finance Corporation at the time of the delivery of the shares of stock by George Gordon, is chargeable to the Citizens Finance Corporation; and further ruled with the request of the plaintiff numbered 8 that “If the shares of stock of the Good Fellows Associates, Inc. were pledged to secure a loan made by the Citizens Finance Corporation as claimed by Robert Porter, then said company is in the position of a purchaser within the meaning of chapter 155 of the stock transfer act and is, therefore, chargeable with the restrictions on the transfer of said shares.” All other requests for rulings of law or findings of fact were denied by the trial judge because not applicable to the facts found. A final decree was entered in accordance with the order that a decree be entered establishing the right of the Citizens' Finance Corporation to the certificates of stock and the right of the plaintiff to the deposit in the bank with its accumulations, and dismissing the bill with costs. From this final decree the plaintiff appealed to this court.
The issues presented by the plaintiff’s brief are (1) On the
It is agreed that the certificates of stock referred to in these documents were not delivered to the plaintiff, were not indorsed and were retained by “Gordon’s Shop” and George Gordon until they were delivered as collateral security to the Citizens Finance Corporation on June 29, 1925. Under G. L. (Ter. Ed.) c. 155, § 27, these documents were not effective to transfer the title to the shares of stock absolutely or in mortgage or pledge, because the certificates were not delivered indorsed in blank or to a specified person. It would follow that the only title vested in the plaintiff perforce of these documents was an equitable title to the stock by way of pledge or mortgage which might be enforced between the parties and against all persons taking the certificates of stock with notice of the plaintiff’s equitable right. G. L. (Ter. Ed.) c. 155, § 36. In the pending case there is nothing in the agreed facts to warrant an inference that the Citizens Finance Corporation had actual knowledge of the transfer of stock from “Gordon’s Shop” and from George Gordon to the plaintiff in pursuance of any agreement of the plaintiff to lend money to the “Gordon’s Shop” on the security of the thirty-four shares of stock held by the “Gordon’s Shop ” or George Gordon. The mere fact that Robert
Did the restriction printed on the back of the stock certificates prevent the Citizens Finance Corporation from obtaining a title to the stock after notice in writing to the directors of the plaintiff corporation of its desire to sell the thirty-four shares of stock in accordance with the by-law of the plaintiff corporation and after an assertion by the plaintiff that it did not recognize the title of the Citizens Finance Corporation? It is.plain the Citizens Finance Corporation did not hold title to the stock evidenced by the thirty-four certificates of stock as owner, but held such in pledge, with power to sell upon default, subject to the restriction printed on the back of the certificates for the thirty-four shares of stock. It is obvious that the restriction looks to a sale and has no natural application to a pledge of stock which does not transfer title as a mortgage does. The Citizens Finance Corporation upon the refusal of the plaintiff to purchase the stock became entitled under the restriction to have the corporation issue new certificates of stock. Bond v. Mount Hope Iron Co. 99 Mass. 505, 507. Palmer v. O’Bannon Corp. 253 Mass. 8, 17. Handy v. Miner, 258 Mass. 53, 61.
Decree affirmed with costs.