4 A.2d 152 | Pa. | 1938
Upon a judgment against defendant, plaintiff issued an attachment execution wherein the Citizens Bank of Parsons, a Pennsylvania corporation, was summoned as garnishee. In answer to interrogatories, the garnishee stated that it had in its possession four certificates of stock of foreign corporations, one certificate of a Virginia corporation and three certificates of Delaware corporations, and that all these certificates, issued since 1929, were duly assigned in blank by defendant and delivered to the garnishee as collateral security for his demand note. The court entered judgment for plaintiff for the certificates and assignments thereof, subject to the payment to the garnishee of the amount for which they were pledged, and ordered that a writ of fieri facias be awarded to sell all the right, title and interest of defendant in the stock and the certificates. The writ issued and the sheriff levied upon the certificates and took them into possession. The garnishee surrendered them without contest and has raised no objection to these proceedings. Thereafter, upon petition of defendant pledgor, a rule was granted upon plaintiff and the garnishee to show cause why the proceedings should not be vacated and the sheriff directed to return the certificates to the garnishee, and that it be adjudged that the *233
garnishee has in its possession no property of defendant subject to the attachment. After argument, the rule was made absolute, and the court en banc, upon reargument, affirmed that order. Thereupon, the plaintiff appealed to the Superior Court, which reversed the court below and reinstated the writ of fieri facias (
The sole question for our determination is whether defendant's interest in shares of Virginia and Delaware corporations, assigned and delivered by him to the garnishee bank as collateral security for a note still unpaid, can be the subject of attachment execution in this state.
The fundamental problem is the existence or non-existence within the jurisdiction of the thing attached. At common law shares of stock of a corporation, whether foreign or domestic, were not subject to attachment: 6 C. J. 212 and cases there cited. In an attempt to enable creditors to reach this type of property, the Pennsylvania legislature passed statutes making stock subject to attachment: Act of March 29, 1819, P. L. 226; Act of June 16, 1836, P. L. 755. But these acts were held not to cover stock of a foreign corporation: Christmas v. Biddle,
If there were no other statutory authority in this State for subjecting to attachment shares of stock, we would stop here, for then shares of a foreign corporation in Pennsylvania would be in the position all shares were in at common law. But it is clear that foreign shares can be made subject to attachment, if the situs of the *234 stock is within the jurisdiction of the state where the attachment issues. The certificate itself is, of course, within the jurisdiction of the state where it is held. But this does not give that state jurisdiction over the share unless the certificate embodies the share. And since the state of incorporation has jurisdiction over the share, it alone can determine whether the certificate shall represent the share to the extent of making the situs of the share the jurisdiction where the certificate is found. Section 53 of the Restatement of Conflict of Laws provides: "(1) Shares in a corporation are subject to the jurisdiction of the state in which the corporation was incorporated. (2) The share certificate is subject to the jurisdiction of the state within whose territory it is. (3) To the extent to which the law of the state in which the corporation was incorporated embodies the share in the certificate, the share is subject to the jurisdiction of the state which has jurisdiction over the certificate."
This view is supported by two recent cases in the Federal courts. In Disconto-Gesellschaft v. U.S. Steel Co.,
By the adoption of the Uniform Stock Transfer Act of May 5, 1911, P. L. 126, Pennsylvania made this method applicable in this state, and has permitted the attachment of shares of foreign corporations where the state of incorporation has by consistent laws consented to such change. The main purpose of the Uniform Act is to make certificates of stock as far as possible the sole representative of the shares which they represent: U.S. Gypsum Co. v. Houston,
This conclusion finds support in the recent case ofElgart v. Mintz,
In New York it has been held that stock of a foreign corporation is subject to garnishment proceedings regardless of what the state of incorporation considers to be the situs. This doctrine was applied in Simpson v. Jersey City Contracting Co.,
In Delaware, which has not adopted the Uniform Stock Transfer Act, it is expressly provided by statute as follows: "For all purposes of title, . . . attachment, garnishment . . . but not for the purpose of taxation, the situs of the ownership of the capital stock of all corporations existing under the laws of this State . . . shall be regarded as in this State." (Revised Code, 1935, ch. 65, sec. 73.) However, Virginia, by its adoption of the Uniform Stock Transfer Act [Code of 1936, Title 34, sec. 3848(2) — 3848(26)], has made the certificate representative of the share. Hence, in this case, the certificates of stock in the Delaware corporations are not subject to levy, and therefore the pledgor's equity of redemption in such shares cannot be reached: Seip v. Laubach,
It is clear that for purposes of inheritance taxes, the situs of all foreign shares is at the domicile of the owner:First National Bank v. Maine,
We affirm the judgment of the Superior Court in reinstating the writ of fieri facias as to the stock of the Virginia corporation, and vacate its order as to the stock of the Delaware corporations, which is to be returned by the sheriff to the garnishee bank.
Judgment of the Superior Court, as modified, is affirmed.