93 F. 603 | 8th Cir. | 1899
after stating the case as above, delivered the opinion of the court.
The claim of the Arkansas National Bank, the attaching creditor, to the 400 shares of stock in controversy, derives little or no support from the Arkansas statute (section 1342, supra), which declares that stock in a corporation shall be deemed personal property, and shall be transferred only on the books of the corporation in such form as
In view of the doctrine last stated, and in view of another rule of very general application, namely, that a creditor, by the levy of a writ of attachment or execution, merely succeeds to the rights of his debtor in the attached property, whatever the same may be, it follows that the attaching creditor in the case at bar cannot maintain its right to the stock of the Park Hotel Company as against the appellant, to whom the certificate representing the stock had been indorsed and delivered as collateral security long prior to the attachment, merely because no record of the transfer to her had been made on the books of the corporation when the attachment was levied. The pledge of the stock being valid as between the pledgor and the pledgee, the attaching creditor, under and by virtue of the statute requiring registration on the books of the corporation, and by virtue of its purchase of the stock at the execution sale, could at most only assert a right to redeem the stock, inasmuch as it was duly notified of the pledge prior to the execution sale, and bought with full notice of the fact that the stock was then held by the appellant as collateral security for an unpaid debt.
It is claimed, however, — and this is the principal contention on the part of the attaching creditor,- — that it acquired a valid title to the stock because the general incorporation law of the state of Arkansas also provides (section 1338, supra) for the registration of stock trans
Sections 1337 and 1338, above quoted in the statement, originally formed section 12 of an act entitled “An act to provide for the creation and regulation of incorporated companies” (Laws Ark. 1868-69, pp. 179-183, c. 92), which was approved on April 12, 1869. The section as originally enacted is quoted below in a footnote.
Moreover, if the section of the act now under consideration is construed so as to embrace a pledge of stock certificates, as well as absolute sales of stock, such a construction will needlessly embarrass and restrict the circulation of such securities, and prevent their use for legitimate business purposes. It is a well-known fact that stock certificates frequently circulate in places far remote from the home of the corporation by which they were issued, that in all commercial centers they are commonly transferred from hand to hand like negotiable paper, and that they are hypothecated for temporary loans by a simple indorsement and delivery thereof, the latter being perhaps the most common use to which such securities are put. In the great majority of cases, when stock is merely pledged for a loan, no record of the transfer is made on the books of the corporation, and in the judgment of laymen the making of such a record seems to be a needless formality. The trend of modern decisions has been to encourage the free circulation of stock certificates in the mode last indicated, on the theory that they are a valuable aid to commercial transactions, and that the public interest is best subserved by removing all restrictions against their circulation, and by placing them as nearly as possible on the plane of commercial paper. In the state of Massachusetts, where a different rule once obtained and was for a long time adhered to, — Fisher v. Bank, 5 Gray, 373; Newell v. Williston, 138 Mass. 240,— a law has recently been enacted which makes the delivery of a stock certificate, with a written assignment indorsed thereon, effectual to convey a title to the stock as against all parties, thereby conforming the law of that state to the law as it has been established by the great weight of judicial opinion in most of the other states. In view of the premises, we are of opinion that section 1338
In conclusion it may be said that it has been very forcibly argued in behalf of tbe appellant that, even if section 1338 does embrace transfers of stock by way of pledge, and require such transfers to be registered witb tbe county clerk, nevertheless, a holding to that effect would - not enable tbe attaching creditor to appropriate tbe stock in controversy, inasmuch as actual notice of tbe pledge of tbe stock to tbe appellant was given to tbe attaching creditor prior to bis purchase of tbe stock at tbe execution sale. Counsel urge witb great force that actual notice to an attaching creditor of a prior pledge or transfer, before tbe stock is actually sold, should be held tantamount to registration witb tbe county clerk, and a decision by tbe supreme court of Arkansas (Byers v. Engles, 16 Ark. 560), construing an analogous statute, is cited in support of such contention. However, as we have reached tbe conclusion that tbe case at bar is not within tbe provisions of section 1338, we have not deemed it necessary to consider tbe latter contention, or to express any opinion thereon. Tbe decree of tbe circuit court is accordingly reversed, and tbe case is remanded for a retrial.
Sec. 12. The president and secretary of every corporation, organized under the provisions of this act, shall annually make a certificate showing the condition of the affairs of such corporation, as nearly as the same can he ascertained, on the first day of January or July, next preceding the time'of making such certificate, in the following particulars, viz.: The amount of capital actually paid in; the cash value of its real estate; the cash value of its personal estate; the cash value of its credits; the amount of its debts; the name and number of shares of each stockholder; which certificate shall be deposited on or before the 15th day of February, or of August, with the county clerk of the county in which said corporation transacts its business, who shall record the same at length in a book to be kept by him for that purpose; and whenever any stockholder sháll transfer his stock in any such corporation a certificate of such transfer shall forthwith he deposited with the county clerk, as aforesaid, who shall note the time of said deposit, and record it at full length in a hook to he kept by him for that purpose; and no transfer of stock shall be valid as against any creditor of such stockholder until such certificate shall have been deposited.