251 S.W.2d 320 | Tenn. Ct. App. | 1952
The bill in this cause was filed to establish title to stock certificate No. 328, representing ten shares ^of stock in the Kingston Bank & Trust Company, at Kingston, Tennessee.
The bill alleges in substance that Plo Parker Rose, now deceased, was the wife of complainant, and that complainant is the legally appointed administrator of his wife’s estate; that at the time of her death she was the owner of said stock certificate, which she had, prior to her death, entrusted to her father, J. S. Parker, and that after his death the defendants got possession of said certificate along with other papers belonging to his estate.
The bill further alleges that the dividends declared and paid on said stock have, since Flo Parker Rose’s death, been paid to her two sons, Hugh M. Rose and Charles P. Rose, and that prior to her death the tax schedules in the Tax Assessor’s Office of Roane County show that she was the owner of said stock, and since her death the tax schedules «how that said stock has been assessed in the name of her heirs. The bill prayed that a writ of replevin issue, and that said stock certificate be taken out of the defendants’ possession and delivered to complainant.
■ Upon the hearing the Chancellor sustained the bill and held that the stock in question belonged to the estate of Flo Parker Bose, and a decree was accordingly entered awarding the stock certificate to complainant. From this decree the defendants have appealed and numerous errors have been assigned, complaining of the findings and conclusions of the Chancellor. As will hereinafter appear, we think that the learned Chancellor erred, in holding that the stock in question belonged to Flo Parker Bose’s estate.
The record discloses that complainant is the husband of Flo Parker Bose, who died intestate on June 30, 1930.
The defendants, • R. S. Parker, Henry Parker and Howard Parker, are the sons of J. S. Parker, deceased, and the brothers of Flo Parker Rose. On the date of his death, May 23, 1934, and for several years prior thereto, J. S. Parker was an outstanding citizen and one of the leading bankers in east Tennessee.
It appears that sometime previous to 1924, J. S. Parker and a business associate, C. M. Rose, acquired practically all of the stock in the Kingston Bank & Trust Company. At that time Rose was President of the Bank and Parker was its Cashier, which position he held until his death. They both had large families and decided to issue certificates representing ten shares of stock, valued at that time at about $1,000, to each of their respective children so that the stock could be assessed in their names and be free of tax under the personal exemption statute, as the bank paid all taxes on stock not exempt. Accordingly, the plan was put into effect and on January 2,1924, stock certificate No. 328 was issued in the name of Flo Parker Rose, and her name, as well as the names of all the others to whom certificates were issued, according to the plan, was entered on the records of the bank by Parker who also filed tax schedules with the Tax Assessor’s Office of Roane County showing her as the owner of the stock. However, both Rose and Parker retained possession of the stock certificates, received the dividends and voted the shares
The record further discloses that stock certificate No. 328 was indorsed by Flo Parker Rose on July 31, 1928, and that J. S. Parker, on December 31, 1931, after her death pledged it to his son, Henry Parker, to secure a $600 loan which at the time of his death had not been repaid. The loan note to which the certificate was attached specifically gave the holder the right to sell or transfer any security attached thereto. It also appears that R. S. Parker to whom a certificate representing an equal number of shares was issued, also indorsed said certificate and retransferred it to his father shortly after the plan was put into effect. R. S. Parker stated that his father told him at the time that the stock was being issued in this manner only for tax purposes.
By the terms of his will J. S. Parker named two of his sons, Henry and R. S. Parker, as executors of his estate, which was at the time of his death heavily involved financially and thought to be insolvent, because of the depression. In handling the affairs of the estate it was agreed by the executors, as well as by the adult heirs, that the ten shares of stock held as collateral by Henry Parker would be transferred to a Trustee who would hold it until after the expiration of 18 months, the period allowed creditors for filing claims against the estate, and the executors were authorized to transfer to Henry Parker seven other shares of stock owned by the estate in payment of his note. Accordingly, on August 8, 1934, stock certificate No. 328 was surrendered at the bank and a new certificate, No. 348, was issued in lieu thereof to Howard Parker, Trustee.
No stock dividends were paid by the bank for the years 1934 to 1938 inclusive, but were paid from 1939 to 1948, except for the year 1945, and all dividend checks were made payable to Howard Parker, Trustee. However, in 1946 and 1947 the bank, at the Trustee’s request, sent the dividends to complainant’s two sons, Hugh O. and Charles P. Rose. There is also proof that the Rose boys received the dividends on previous occasions, and complainant relies a great deal upon these payments to prove his ease. We think that these transactions are satisfactorily explained by Clyde Parker, brother -of the defendants and Cashier of the bank since 1946, who was introduced as a witness on behalf of the complainant. Clyde Parker explained that the dividends were equally divided between the Rose boys as a gift from the Parker family; that the Parker family had raised the two boys and thought that it would be a good gesture to make them a gift of the dividends. This witness testified that one of the boys, Charles P. Rose, lived with the Parker family until 1937, and that the other boy lived there through May, 1941, at which time he graduated from High School and immediately thereafter joined the Army. He further said that Howard Parker, as Trustee, had since 1934 voted the ten shares of stock without objections at the stockholders’ meetings, and that the minority of each of the Rose boys was removed in 1941.
It is undisputed that the original transfer of the stock to Flo Parker Rose was fictitious and made solely to evade taxes, and it is apparent that J. S. Parker did not retain the stock for safe-keeping, as insisted, as in that case no indorsement would have been necessary. It appears that up until the time of his death Parker looked upon the stock as his own to do with as he pleased. He not only retained possession of the stock and kept the dividends, but he also pledged it to one of his sons to secure a loan, thereby indicating that he retained ownership. In Figuers v. Sherrell, 181 Tenn. 87, 178 S. W. (2d) 629, 632, 152 A. L. R. 420, a ease involving an alleged gift of stock and similar in many respects to the present case, the Supreme Court said:
“Intention to give and delivery of the subject of the gift must clearly appear. Doubts must be resolved against the gift. There is no delivery unless the complete dominion and control of the gift is surrendered by the donor and acquired by the donee. The burden of proving that a gift was made is upon the donee.”
“The title of the purchaser upon the assignment of the certificate was complete without registration or transfer on stock-books of the corporation. The rule requiring transfer on the books of the company by the well-settled line of decisions in this state, and by the great weight of authority in the courts of America, is a rule made solely for the benefit of the company. By it the company is enabled to know who are entitled to vote, and to whom it may pay dividends.” Smith v. Railroad, 91 Tenn. 221, 238, 18 S. W. 546, 549.
“There is no longer any doubt that the transfer and assignment of certificates of stock in a corporation, either by absolute sale or by way of pledge or security for debt, passes to the vendee or pledgee the title thereto. * * * Provision in the by-laws of the corporation, requiring the transfer to be made on the books of the company, is solely for the benefit of the corporation.” Parker v. Bethel Hotel Co., 96 Tenn. 252, 284, 34 S. W. 209, 217, 31 L. R. A. 706.
“* * * a complete equitable and legal title is passed by the act of the owner in assigning a certificate of stock and * * * a subsequent registration of the assignment and issuance of a new certificate in no way affects the rights of the immediate parties.”
*54 “It is clear, therefore, from onr decisions that as between the parties thereto the completion of a sale or a gift cannot be made to depend npon entries on the boohs of a corporation where its shares of stock are involved. Title in this jurisdiction goes with the certificate.” Figuers v. Sherrell, snpra.
Furthermore, it appears that if Flo Parker Bose’s estate owned the stock her father committed an act of conversion when he pledged it for a loan, in which case the 18 months limitation for filing claims against his estate would apply. Code Sec. 8608. Also Code Sec. 8610 requires that “All actions against the personal representative of a decedent, for demands against such decedent, shall be brought within seven years after his death, notwithstanding any disability existing; otherwise they will be forever barred.”
It results that the assignments of error are sustained, and the decree of the Chancellor is reversed at complainant’s costs.