19 Colo. App. 483 | Colo. Ct. App. | 1904
July 24,. 1893, a certificate for 15 shares of stock running to Mrs. Marshall, being the certificate for that number of shares mentioned as standing in her name on November 17, 1891, and which certificate bore a blank indorsement of date July 18, 1891, was sent to the secretary of appellee company by O. W. Marshall, the agent of Mrs. Marshall, and one Porter, with the request to re-issue. In pursuance of this request two new certificates were then issued, certificate No. 479 to Porter for 10 shares, and certificate No. 480 to Mrs. Marshall for 5 shares. Williamson became the owner of the certificate for 10 shares September, 1897, and November, 1893, Mrs. Marshall hypothecated her certificate for 5 shares as collateral to one Dille, and caused the same to be noted on appellee’s books. At the time of the institution of this suit, February 24, 1899, no stock slood upon the books of appellee in the name of Mrs. Marshall. When or to whom the 27 shares standing in her name November 17, 1891, after the issuance of the certificate to Richardson, were transferred, does not appear, nor is it material to this controversy. For aught that appears in the evidence no stock appeared upon the 'stock-book of defendant in the name of Mrs. Marshall when the above certificates were issued to Porter and Mrs. Marshall.
The above written assignment of Mrs. Marshall to Richardson provided that until default should be made and declared in the payment of the above secured indebtedness, all stockholder’s rights should remain in her. August, 1897, the above trust deed,
The water called for by the 15 shares of stock for irrigation of the above land was obtained from appellee during 1896, -7 and -8, and whether earlier does not appear. From 1895, to April, 1898, inclusive, Richardson, trustee-, paid the assessments levied by appellee on this stock. November, 1898, appellee notified Richardson that the certificate held by him was void, being an over-issue, that water would no longer be delivered upon the stock, and that Richardson would no longer be - recognized as a stockholder. The reason assigned for refusing to recognize the stock, and refusing water upon it, was not that Richardson and Farm Investment Company had not presented the certificate for transfer, but was that the certificate was an over-issue, and for that .reason, void. The purpose of this action was to obtain a decree prohibiting appellee from refusing to deliver water on the stock and to prohibit appellee from declining to recognize Richardson as a stockholder.
The question-before us is: was this certificate, at the time of the institution of this suit, a valid certificate, and was Farm Investment Company at such ■date its equitable owner? Could Farm Investment
1. The by-laws of appellee provided that shares of stock should be transferred by recording a certificate of transfer upon the stock-book, and indorsing the same upon the certificate of stock, or by the sur1 render and cancellation of the old certificate and issuance of a new one of the same denomination as the old one. It is said this provision of the by-laws was not observed in the issuance of certificate No. 449 to Eichardson, as trustee, and that this violation of the by-laws invalidated the certificate.
November 16,1891, when Mrs. Marshall assigned to Eichardson, trustee, 15 of the 42 shares of stock standing in hér name as owner, on the stock-book, she did not designate through the mention of a certain certificate, or otherwise, what particular 15 shares she intended to assign, she simply assigned 15 shares of her stock. As 42 shares stood in her name, and as she owned them, according to the stock-book, and according to other evidence before us, free of any lien, no reason appears why she should have designated any particular shares. So-far as appears from the evidence no certificate had been issued for any of the shares owned by Mrs. Marshall except the one certificate, No. 441, for 15 shares. Eichardson presented his assignment of 15 shares, the stock-book showed 42 shares standing in Mrs. Marshall’s name, and for aught that appears no certificate had ever been issued for the- 15 shares assigned, .and there was no certificate to surrender, so we do not think it appears that the by-laws of appellee were violated in the issuance of this certificate. True it is, a notation appears -on the stub from which certificate No. 449 was detached, which indicates that it was the intention of the secretary that certificate No. 449 should be a transfer of or in lieu of No. 441 for 15
We do not think it affirmatively appears that the by-laws were violated in the issuance of this certificate, "hut if we assume that it does so appear, it does not seem to us just that this appellee, after it has issued and delivered this certificate as a valid certificate, and Richardson has received it in good faith, believing it- to he what it represents, and the beneficiary of the trust has loaned money upon the certificate, that appellee ought to he permitted to repudiate the certificate upon the ground that one of its by-laws was violated by it in the issuance of the certificate, and the law does not permit it to do so. By the issuance of the new certificate under the circumstances stated, even if issued in violation of the recited by-laws, appellee waived a compliance with the provision of its by-laws requiring a surrender of the original certificate, and the new certificate, No. 449, issued to Richardson, trustee, although issued in violation of appellee’s by-laws, is valid. — N. Y. & N. H. R. R. Co. v. Schuyler et al., 34 N. Y. 30, 78, 90; Thompson’s Commentaries on the Law of Corpora
2. It is contended that the, trust deed which incumbered the real estate and purported to incumber 15 shares of stock in appellee company, was as to the stock a chattel mortgage; that as the notes secured thereby exceeded $2,500, and as the trust deed was not foreclosed for more than five years after the recording of the trust deed, that the trust deed, when foreclosed, had lost its validity as a lien upon the shares of stock, and that having lost its validity as a lien no interest whatever in the shares of stock was passed by the trustee’s deed. This limit as to time of the validity of a chattel mortgage is prescribed by Mills ’ Ann. Stats., Yol. 1, section 387, p. 562. The lien, however, which was foreclosed, and through the foreclosure of which The Middlesex Banking Company deraigns its title, is not by this trust deed. By a lien created through a pledging of the certificate of stock, and an entry of such transfer appearing upon the books of the company when the loan was made, and the .trust deed given contemporaneously therewith, Mrs. Marshall, by a written contract of assignment, assigned all her interest in 15 shares of stock to Richardson, trustee, as collateral security, and directed the secretary of appellee to make the necessary transfer on its books. In such contract of assignment the transfer to be made in pursuance thereof is designated a pledge, and it is provided in such contract of assignment'that if the pledge be not redeemed it shall be sold in connection with the real estate described in the trust deed, and in accordance with its provisions. This assignment was presented to the secretary of appellee, and he certified upon it that he had made the necessary transfer of the shares of stock to Richardson, trustee, on the books of said company, and what he did was this: He
This valid lien was foreclosed as provided in the contract of assignment creating it, in August, 1897, and at the foreclosure The Middlesex Banking Company became the purchaser of the stock. A deed was made on that date transferring the 15 shares of stock to The Middlesex Banking Company.
3. The Middlesex Banking Company at no time requested a transfer of the 15 shares of stock, so purchased, on the stock-book of appellee. It is said that the trustee’s deed was ineffectual to pass any interest whatever in the shares of stock to The Middlesex Banking Company because shares of stock cannot be transferred by deed and First National Bank v. Hast
Speaking of the general law expressly providing that shares shall be transferable only on the books of the corporation in such manner as the articles of association or by-laws may prescribe, it is said:
“The purpose of such a requirement is to be taken into consideration in construing it, and in determining the effect of a failure to comply therewith * * * A requirement of registration of transfers, therefore, must, according to all decisions, be given such effect as is necessary to accomplish this purpose.” — Clark and Marshall, Private Corporations, Vol. 3, § 585.
As between the parties there is no reason for observing this requirement of the statute law.
The transfer by deed made by the trustee, Richardson, to the transferee, The Middlesex Banking Company, on August, 1897, was effectual to pass the equitable title of the 15 shares of stock to such transferee. The same is true of the transfer by deed of the 15 shares of stock by The Middlesex Banking Company to Farm Investment Company in October, 1897. At the time of the institution of the present ■suit the legal title to the stock was in Richardson, trustee, the equitable title of the stock in Farm Investment Company. Farm Investment Company was in position to demand an entry of a transfer to it on the books of the company, it was the equitable owner of the stock with reference to the company. The parties who purchased the remainder of Mrs.
‘ ‘ The assignment of the certificate of stock estops the transferrer from claiming any further title in the stock as against subsequent bona fide transferees, although such assignment be not registered. * * * The transferrer himself is not allowed to impeach his unregistered transferee’s title. * * * That the transferrer cannot question the completeness of his transfer of title is a rule binding not only on himself, but also upon his assigneés in bankruptcy or insolvency. The transferrer is estopped also from attacking the assignment of the certificate on the ground of informalities in the transfer. ’ ’ — Cook on Stock and Stockholders and Corporation Law, Vol. 1, § 378; Morawitz on Private Corporations (2d ed.), §174.
It is not within the purpose of the statute to invalidate the transfer as between the transferrer and the transferee by the failure to register the transfer. — Parrott v. Byers, 40 Cal. 614.
4. Mrs. Marshall pledged her certificate of stock for 15 shares, No. 449, to secure the loan made by The Middlesex Banking Company. The certificate was issued to the trustee, who was to be the custodian of the certificate, and the same was delivered to him. This transfer was properly entered upon the books of the company so that any one thereafter acquiring any of Mrs. Marshall’s shares was charged with notice of this lien and charged with notice of anything that might be done under the lien. Under the lien
Appellee company declined to recognize this certificate of stock which stands in the name of Richardson, or to recognize any rights under it, for the reason as assigned by it that the certificate of stock is an excess certificate and a nullity. The reason assigned was not that The Middlesex Banking Company, or Farm Investment Company, had not presented the certificate for register, but because the certificate under which they claimed was and is a void certificate because an excess certificate.
Under the position taken by appellee company it would have been useless for Farm Investment Company to have presented this certificate for registry.
“When the corporation refuses to allow a registry for reasons other than those connected with the mere formalities of registry, or for reasons not given to the applicant, it waives its right to insist on them, and cannot afterwards claim that the appellant did not conform to such technicalities.” — Cook on Stock and Stockholders and Corporation Law, § 383.
In this case the facts are such that if Farm Investment Company had demanded the issuance to it of a certificate of stock for the 15 shares, it would have been the duty of appellee to have granted it. This being true, and as Farm Investment Company, the equitable owner of this certificate, and Richardson, trustee, in whom rests the legal title, joined in-the request for recognition of their rights under the certificate, it was error in the lower court to deny ‘them.
Judgment reversed. Reversed.