58 So. 1022 | La. | 1912
Statement of the Case.
Plaintiff’s father acquired in his own name, but as community property, one share of the stock of the defendant bank, represented by certificate No. 11, dated June 1, 1889, and, in like manner, acquired 20 shares of said stock, represented by certificate No. 127, dated December 8, 1891. Plaintiff’s mother died in 1893, leaving him as her sole heir, in which capacity he inherited an undivided half interest in said 21 shares of stock. In November, 1894, plaintiff’s father sdld the 20 shares, represented by certificate No. 127, to Ben. R. Mayer, and in December, 1895, he sold the one share, represented by certificate No. 11, to the same purchaser, and both certificates
“Part of the certificates described and sued for in the petition herein as being the property of the relator herein were originally issued to represent the said undivided one-fiftieth interest; * * * that it cannot issue the certificates herein claimed and the certificates for the undivided one-fiftieth interest referred to in the suit of Leurey v. Mayer without thereby increasing its capital stock,” which it cannot lawfully do; “that, before it can be required to issue the certificates herein claimed, the several parties asserting conflicting claims_ to the ownership of said fiftieth interest in said bank should be cited hereto and should be ordered to litigate between themselves, in order to determine who is the true and legal owner of the interest sued for by the said Leurey in the suit above mentioned, and who is, justly and legally, entitled to claim and demand from respondent certificates for the stock representing said interest.”
And it prayed that the relator, the Louisiana State B'auk, be ordered to litigate and determine, contradictorily with Leurey—
“with another bank, which was said to have had some interest, and with Mayer, the question of the ownership of the property, and that it be relieved until the matter should have been thus determined.”
It was, however, held by this court, on appeal, that the relator (bank), having acquired the certificates presented by it in good faith and in the usual course of business, was entitled to be recognized by the corporation as the owner of the stock, and could not be required, as a condition precedent to such recognition, to litigate its title with a third person, claiming under a certificate which had previously been surrendered and canceled, the question whether such cancellation and the issuance of the new certificate were authorized, being one (it was held) which the corporation and the third person
State ex rel. Louisiana State Bank v. Bank of Baton Rouge, 125 La. 138, 51 South. 95, 136 Am. St. Rep. 323. While the suit thus referred to was pending, the defendant herein had enjoined the plaintiff from proceeding to sell, under his judgment, in the suit of Leurey v. Mayer, the interest in its capital stock represented by original certificate No. 127, .together with the dividends not theretofore declared and paid, and by a judgment handed down in June, 1910, this court set the injunction aside, holding (to quote the syllabus) that:
“A banking company has no standing to enjoin a judicial sale of an alleged stock interest in' the corporation for the purposes of a partition between other parties, as such a sale will not affect any rights or defenses the corporation may have in the premises.”
And shortly thereafter plaintiff brought the present suit, in which, after alleging the facts which have been hereinabove set forth, he further alleges, in substance, that the one share of stock represented by certificate No. 11 (as well as the 20 shares represented by certificate No. 127) was transferred by defendant to Mayer; that defendant- was judicially notified of the suit No. 906, and had actual knowledge of the suit No. 947 and of the judgment therein rendered, but that it nevertheless continued to hold out Mayer as the owner of said stock, and converted the same and transferred it to him'; that such conversion, transfer, and reissuance of certificates did not destroy the identity of petitioner’s stock or his title thereto; that both defendant and Mayer knew of petitioner’s interest, and the transfers were made by them in fraud and bad faith; that in May, 1910, defendant increased its capital stock from $50,000 to $250,000, and that his said interest, exclusive of dividends, is now worth $7,000, wherefore he prays for judgment ordering defendant to issue to him certificates representing stock to the value that his original shares would now have if they had not been so transferred, and condemning it to pay him all dividends thereon since January 3, 1S96, with legal interest, or, in the alternative, that defendant be condemned to pay him $7,000 as the value of said stock, together with said dividends and interest.
Defendant admits that J. E. Leurey (plaintiff’s father) acquired 21 shares of its stock, and that they were transferred to Mayer, as alleged by plaintiff. It avers that the first notice which it received that plaintiff claimed any interest therein was derived from his suit (No. 906), instituted on November 16, 1905, at which date the stock had been pledged by Mayer, the transferee of J. E. Leurey, and that it (defendant) was subsequently condemned by judgment of court to issue new certificates to the pledgee, who had become the owner; that its entire capital is $250,000, divided into 2,500 shares of $100 each, and that, certificates for all the shares having been issued, it cannot lawfully issue more; that it acted in good faith in permitting the transfer of shares by persons in whose names the shares stood on its books, and cannot be made liable to persons having latent equities therein; that the amount paid by Mayer for the 21 shares in question was $2,100, the full market value at the time, and, should it be held liable at all, it should be for only the half of that amount with legal interest from January 30, 1896.
It is admitted that B. R. Mayer was a director in the defendant bank when he bought the stock in question, and so continued until May, 1908; that S. G-. Laycoek was a director of the bank in 1905, when the suit of Leurey v. Bank, No. 906, was instituted, and that he was the attorney for the bank and also for Ben. R. Mayer, the defendant in the suit of Leurey v. Mayer, No. 947. Mr. Mayer testifies that he paid $100 a share
Mr. Knox, the president of the bank, testifies that he knew Leurey (plaintiff's father) merely to speak to him on the street, and did not know anything about his family or that he had a wife. He, also, testifies as follows:
On cross-examination:
“Q. Wasn’t the actual value of the stock greater than the book value, and don’t you so consider it? A. I don’t know. I didn’t have any for sale, and I didn’t put any value on it. I simply held it, and I have never sold any.”
Redirect:
“Q. Have you known since 1905 of any -sale of stock of the Bank of Baton Rouge at the book value of it? A. I don’t think that any was ever sold at that price. It would not pay a party to pay full book value. They would not get dividends sufficient to warrant their paying such a price. Q. You have never known of a sale at full book value, have you? A. No, sir.”
Recross:
“Q. You base that on the dividend producing power, that it would not pay a man to pay full value for the stock, because, if a man simply wanted it for an investment, it wouldn’t pay him anything? A. Yes, sir; the dividends would not warrant it.”
The evidence further shows that in November, 1894, with a capital of $50,000, the books of the bank showed a surplus of $55,000, and the cashier certifies that the book value of the stock was $128.07 per share; that in December, 1895, the surplus was $75,000, and the book value $154.06 per share. On the other hand, the dividend which was declared for each of the years 1894 to 1900, inclusive, was only 4 per cent., after which it ran from 6 per cent, to 10 per cent., save for 1906, when it was 5 per cent. In May, 1910, the bank was reorganized and the capital fixed at' $250,000, divided into 2,500 shares of $100 each, payable one-fifth by the surrender of the outstanding certificates' and four-fifths in cash, and a dividend (No. 34) was then declared of 400 per cent., “which, with the original stock, formed the capital for the reorganized bank,” after which, in June, a dividend (No. 35) of 70 per cent, was declared, so that, the whole of the original capital having been divided into shares and distributed, the reorganization operated no change in that respect.
Opinion.
“Where a corporation acts in good faith and without negligence in allowing a transfer b5' one who appears to be the absolute owner of shares, it is not liable to one having a mere equitable title by virtue of a prior unregistered transfer or otherwise of which it had no notice.”
“A private sale by the surviving husband of the half interest of his minor son in bank shares, made without an order of court, issued on the advice of a family meeting, is a nullity. The purchaser at such sale, knowing that the shares were acquired dhring the marriage and the wife was dead, was bound to know that the property belonged to the community and was owned jointly by the surviving husband and the minor heir of the wife.”
“The courts [he says] in general incline to the rule that the true measure of damages is the value of the stock at the time of the conversion, or a reasonable time after.”
He further says that the term “value of the stock” is usually tó be understood as the market value, though, from the authorities cited, it would appear that the value may also be determined with reference to the dividend making capacity, the good will, etc. The conversion is said to take place in general on the day of the demand for and refusal of delivery.
“It is settled law [he continues] that, in addition to the valúe of the stock at the date of conversion, the plaintiff may recover legal interest upon such valuation from the day of the conversion to the day of the trial. * * * In addition to interest, the plaintiff may recover also all accretions to the property made during the time when he was deprived of it. He is therefore entitled to judgment for all dividends paid upon the stock between the date of the conversion and the day of the trial.” Cook on Stock and Stockholders and Corporation Law, § 581, p. 646 et seq.
There are, no doubt, some transactions in stocks, in which to hold a defendant liable only for the value of the stocks at the date of their actual conversion would afford a very inadequate remedy; as, for instance, where one, acting through a broker, buys stocks with the intention of holding them for a rise in the market and the broker sells them without authority and delays giving notice to his principal, so that the latter loses the opportunity of availing himself of the rise that he expected, there is a loss of profit which was within the contemplation of the contract, and which should be borne by him through whose fault it is made. Galigher v. Jones, 129 U. S. 193, 9 Sup. Ct. 335, 32 L. Ed. 658. And so, where, as in the case between the plaintiff and Mayer, the element of bad faith is found, but, as between the plaintiff and the defendant before the court, whilst the defendant is liable, because it failed to discharge its obligation to him in the matter of the custody of his property, it is impossible to impute to it such knowledge as will convict it of bad faith, since, in order to do so, we should have to impute not only knowledge of the law, establishing and regulating the community and the devolution of property, etc., but also knowledge of the facts that plaintiff’s father was married, and had a son, issue of the marriage, that the stock in question was acquired during the life of his wife, and that she was no longer living when it was sold, etc. As the matter stands, the most that can be said as to defendant’s action is that it was negligent in failing to inform itself of facts which it
It is therefore ordered, adjudged, and decreed that the judgment appealed from be amended by increasing the one amount allowed from $1,050 to $1,280.70, and the other amount from $50 to $77.03; and, as thus amended, affirmed.