On April 18th, 1912, the defendant corporation, having resolved to largely increase its capital stock, offered to its stockholders of record the right to subscribe for twenty-five shares of new stock, to be issued at par, for every share held by them respectively. On that day one Parsons appeared on the books of the company to be a holder of one hundred and thirty-five shares, and she assigned her right to subscribe to Levy Brothers, the power to make such an assignment being conferred upon stockholders by the corporation. Levy Brothers, within the time limit fixed by the company, subscribed for three thousand three hundred and seventy-five shares, and paid the required deposit. The money was subsequently returned to them,'and their subscription refused, upon the ground that Miss Parsons was not, on April 18th, 1912, or at any time thereafter, a stockholder of .the defendant corporation, having sold her stock a considerable time before the date mentioned. Levy Brothers, conceiving that the action of the defendant corporation in refusing their subscription was without legal justification, claimed that they were entitled to be paid by the latter the difference between the price at which they subscribed for the stock, and its market value after it was issued, and this claim being repudiated by the company, they assigned to the appellant, Schmidt, any right of action growing out of the refusal of the-company to accept their subscription. At the trial the defendant company called as a witness John W. Griggs, its president and general counsel, ■who testified that prior to the assignment to the plaintiff' he had an interview with Levy Brothers, or some of them, with relation to their subscription and its rejection, in which he told them that the company had received information that Miss Parsons had sold and parted with all her right in the stock which stood in her name several years' before the issue of the new stock had been determined upon, and was then told by them that such was the fact, but that the persons who had bought the stock were in South America, and that as they were, in a measure, clients of theirs (the Levy Brothers)
We concur in the view of the trial court that the defendant corporation was under no legal obligation to accept the subscription of any person who was not, at the time when the new stock was offered for sale, a liona fide holder of stock in the company, or exercising the rights of such a holder. The right to subscribe depended upon a double condition — first, that the subscriber was in fact a stockholder of the company; and second, that he appeared to he such on the hooks of the company. But we cannot agree that it was so conclusively established that Miss Parsons was not the owner of stock at the time she made the assignment to Levy Brothers, as to make that essential fact one to he determined by the court rather than by the jury. There is nothing in the pleadings, or the ])roofs, to indicate that the plaintiff, who was the assignee of Levy Brothers, had any knowledge that they had made the admission of the non-ownership of stock by Miss Parsons testified to by Mr. Griggs, or that he had reason to anticipate that there would he any attempt made to prove her non-ownership by the admission of his assignors. .None of the members of the firm of Levy Brothers were called as witnesses, and it does not even appear that they were in court at the trial. Eot having been led to expect that the fact of non-ownership by Miss Parsons would be attempted to be proved by the admission of his assignors; not even having any knowledge, so far as the case shows, that Levy Brothers
We conclude, therefore, that it was error for the judge to take from the jury the question whether or not Miss Parsons, at the time of her assignment to Levy Brothers, was or was not the owner of stock in the defendant company, and that, for this reason, the judgment must be reversed.
For affirmance — Hone.
For reversal — The Chancellor, Ci-iiee Justice, Swayze, Trenchard, Bergen, Minturn, Kalisch, Bogbrt, Vredenburgh, White, JJ. 10.