159 Ga. 668 | Ga. | 1925
Lead Opinion
The judgment complained of in this ease was rendered at an interlocutory hearing. No demurrer was filed to the original petition, complaining that an equitable petition would not lie, and that the plaintiff had an adequate remedy by mandamus. Indeed had there been such a demurrer it could not have been expressly ruled upon at the interlocutory hearing before the first term. The trial judge, in refusing the injunction prayed for, put his decision upon the ground that the petition seeks mandatory relief. This ordeT of the court is excepted to, “because the same is contrary
In Thornton v. Martin, 116 Ga. 115 (42 S. E. 348), it Avas held:
We are unable to distinguish the principle ruled in these cases from the one involved in the case at bar; and applying those principles here, we are forced to the conclusion that mandamus will not lie, but that an equitable petition seeking the relief win lie. We are of the' opinion that the relief sought in the present case is not of such mandatory character as is forbidden by the statute as contained in our code. Of course mandatory relief could not be granted at an interlocutory hearing. The relief sought is by those who hold stock in a corporation by assignment, to examine the books of the corporation at reasonable hours and under reasonable circumstances in order to protect their own interests.
The transfers on the certificates of stock attached to the amendment were, at the time of the trust agreement, signed by Foy & Shemwell, by H. H. Hedrick, in blank, and were delivered to the plaintiffs, who later filled in the blanks by inserting the words “Townsend Scott and Arnold Elzey Waters as trustees,” and also the words “the proper officers of the Flint River Pecan Co.” The following is a copy of one of the certificates of stock and the transfer of the same as appears in the record; the other certificates and transfers being in like form:
“Certificate for 40Ó Shares of the Capital Stock Flint River Pecan Company, Albany, Georgia.
“Issued to Foy & Shemwell, Date Mch. 22, 1922.
“Incorporated under the laws of Georgia.
“Number 142 ' Shares 400.
“Flint River Pecan Company, Albany, Ga.
“This certifies that Foy & Shemwell is the owner of four hundred shares of the capital stock of Flint River Pecan Company, transferable only on the books of this corporation in person or by attorney upon surrender of this certificate properly endorsed.
“Flint River Pecan Company, Albany, Georgia.
“Attest: [Signed] Dermot Shemwell, President, fm. L. Lee,
Jr., Secretary.
“Shares $100.00 each.
“For value received, we hereby sell, assign, and transfer unto Townsend .Scott and Arnold Elzey Waters, as trustees, four hundred (400) shares of the capital stock represented by the within certificate, and do hereby irrevocably constitute and appoint the proper officers of Flint River Pecan Co. attorney to transfer the said stock on the books of the within named corporation with full power of substitution in the premises. Dated-19--.
[Signed] Foy & Shemwell, by H. H. Hedrick.
“In Presence of W. L. Crawford (Signed).
“Notice: The signature of this .assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever.”
The question, is, therefore, what is the effect of this transfer of the stock by Foy & Shemwell in blank to the plaintiffs in the court below? In this State it is not necessary that stock in a corporation be reissued on the books of the company, in order for the holder to be entitled to the rights of a stockholder. Civil Code (1910), § 2219. In Thompson v. Selcer, 142 Ga. 809 (83 S. E. 965), it was held: “If an owner of corporate stock transferred the certificate thereof to another under an agreement that the latter should negotiate, use, or hypothecate the stock and use the proceeds for the benefit of the transferor in the advancement of an enterprise in which both were interested, and if such stock was levied on under an execution against the transferee and sold at sheriff’s sale to a purchaser bona fide, for value, and without notice of any equity in the transferor, the purchaser obtained a title superior to the claim of tire transferor growing out of the agreement as to the application of the proceeds.” In delivering the opinion of the court Mr. Justice Lumpkin said: “Where an owner of a number of shares of stock in a corporation endorsed the certificate
In 7 R. C. L. 265, § ,243, it is stated: “In America the courts, have held that it is only necessary to a valid transfer, as between the parties, that the assignment and power of transfer should be in writing. The common practice of passing the title to stock by delivery of the certificate, with blank assignment and power, has been repeatedly shown and sanctioned in cases which have come before our courts. It has also been stated by- repeated adjudications that, as between the parties, the delivery of the certificate with assignment and power passes the property in the shares, notwithstanding that by the terms of the charter or by-laws of the corporation the stock is declared to be transferable only on its books.” The same author (p. 274, § 252) says: “The transfer and assignment of stock in a corporation, either by absolute sale or by way of pledge as security for a deht, passes to the vendee or pledgee the title thereto.” And-see, to the same effect, Parker v. Bethel Hotel Co., 31 L. R. A. 706, 713. In 7 R. C. L. 281, § 258; the same author declares that “There can be no doubt but that a pledgee of stock has a right to cause a proper entry of the transaction between himself and his pledgor to be entered upon the books of the corporation for his protection, although the contract may be silent on the subject. A pledgee of corporate stock has such an interest therein as entitles him to be heard in a court of equity concerning the preservation and protection of the assets and property of the corporation. His rights in this respect would seem to be essentially the same as those of the owner of stock, for a loss of corporate assets must result in a depreciation in the value of the stock and a consequent impairment of his security.” In 2 Cook on Corp. (7th ed.) 1279, § 466, the author says: “Where certificates
In Guarantee Co. v. East Rome Town Co., 96 Ga. 511 (23 S. E. 503, 51 Am. St. R. 150), it was held: “Where stock of a corporate company is pledged by the owner as collateral security for the payment of a debt, the pledgee is, as a general rule, entitled to collect- and receive the dividends thereof, unless this right is reserved by the pledgor at the time the pledge is made.” In Hardman v. Barrow, 147 Ga. 617 (95 S. E. 209), it was held: “Where oshares of stock were unqualifiedly assigned in writing, with express power to have them transferred on the books of the corporation, and the assignee received the certificates of stock as collateral security for a negotiable promissory note made to him by the assignor, the former or his assigns could surrender' the certificates to the corporation, and receive a certificate of the same character for an equal number of shares in his own name, to be held as collateral security for the debt, and, while so holding, could vote the stock at corporate elections held under the by-laws of the corporation, which provided that no person should have the right'to vote stock except those in whose names the stock stood on the books of the company. 22 Am. & Eng. Enc. of Law, 907; Jones, Col. See. (3d ed.) § 441; Colebrooke, Col. Sec. 493; 10 Cyc. 332.”
The petition in the present case comes within the requirements of Winter v. So. Securities Co., 155 Ga. 590 (118 S. E. 214), where this court held: “A bona fide stockholder has the legal right to inspect the books and records of the company, where the examination is asked for in good faith for a specific and honest purpose, and not to gratify curiosity, or for speculating or for vexatious purposes; and provided further that the purpose of the stockholder desiring to make the examination is germane to his interest as a stockholder, proper and lawful in character, and not inimical to the interests of the corporation itself, and the inspection is made during reasonable business hours. 14 C. J. 855; 7 R. C. L. 322, § 298 et seq.; Cook on Corporations (7th ed.), § 511; Thompson on Corn. (2d ed.) § 4515.”
From the foregoing facts and authorities we reach the conclusion that the title to the stock is in the pledgee; and that being so,
As to the relief sought, viz., a decree requiring the corporation to make a transfer of the stock on the books of the corporation, that was not a subject-matter of relief at the interlocutory hearing, and the court did not err in refusing the injunction for this reason. But inasmuch as the stockholders have .the right to examine the books of the corporation under reasonable regulations, and the evidence showed that they were denied this right, the injunction for this reason should have been granted.
Judgment reversed.
Rehearing
ON MOTION ROS REHEARING.
The plaintiffs in error ask for a rehearing, stating that they have no objection to the intervention asking that parties be made to the litigation, but that they do object to the order allowing the parties to become parties defendant for the purpose of asking for damages in the sum of $100,000. The ruling made on the allowance of the intervention is not susceptible of that construction. The judgment of the trial court, of which the bill of exceptions complains, did nothing more than to allow the intervenors to be made parties; and in no sense did the judge deal with the demurrer which attacked that part of the intervention asking for damages, or for any relief not germane to the original pleadings. That is true because the appearance term of the suit had not arrived, and the court could not and did not deal with the demurrer as such, and did not undertake to do so; and therefore this court did not deal with the demurrer, and that question is still open for the trial judge.
The defendants in error moved for a rehearing on two grounds. First. That the court has overlooked Civil Code of 1910, § 4538, and the two decisions of Board of Education v. Felder, 116 Ga. 788 (43 §. E. 56), and McCaskill v. Bower, 126 Ga. 341 (54 S. E. 942), which they contend are controlling authority to the effect that mandamus lies as an adequate remedy to enforce a stockholder’s right to examine the books of a private corporation. This question was thoroughly considered when the case was decided and no new light is thrown upon the question in the motion for rehearing. The second ground of the motion for rehearing is that the court overlooked the decisions of Fender v. Shaw, 135 Ga. 224
Eor these reasons both motions for rehearing are denied.