66 P. 157 | Idaho | 1901
Lead Opinion
— This case was before this court on appeal at its November, 1898, term, and is reported in 55 Pac. 864. This action was brought by C. E. Thum, the receiver of C. Bunting & Co., Bankers, hereinafter referred to as the “Banking corporation,” against F. A. Pyke, receiver of C. Bunting & Co., Merchants, hereinafter referred to as the “merchants corporation,” in which action the Ogden Savings Bank, a corporation, intervened. C. Bunting & Co., bankers and merchants, are corporations organized and existing under the laws of the state of Utah, and doing business exclusively in Idaho; and the Ogden Savings Bank is also a Utah corporation, doing business at Ogden, Utah. The Bunting Company corporations wrere organized in 1892, and all of the business of each of said corporations was in and conducted in the state of Idaho. The capital stock of the merchants corporation consisted of $75,000, divided into 750 shares of the par value of $100 each. Its capital stock was all issued to C. Bunting, George Y. Wallace, and C. W. Lyman, except two shares, one of which was issued to John Flowers and one to F. A. Pyke, evidently for the purpose of organization. Flowers was elected secretary of each of said corporations, and as such he had in
The assignment of errors involves the sufficiency of the legal proceedings above referred to in the courts of the state of Utah, and the rights of the intervener to come into the courts of this state and demand and recover two-thirds of the assets of said merchants corporation on shares of stock obtained in the legal proceedings in the courts of Utah, above stated. Counsel for respondent concede that the purpose of this proceeding is to receive the benefits of the stock certificates that it purchased at the execution sales in Utah, above referred to. The question presented is, Will the title thus acquired to said paper shares of stock entitle the intervener to recover in the courts of this state two-thirds of the assets of said merchants corporation? The intervener evidently claims title to said 500 shares of stock by reason of having purchased them at said execution sales, and asks the courts of this state to assist it in securing $40,000 worth of property which had been in the hands of the receiver of the court of the fifth judicial district of this state long before either of the actions were commenced on which said executions were based. Said property was placed in the hands of a receiver on the fifteenth day of February, 1897, and the first suit by the Ogden Savings Bank was commenced in a
But it is contended by counsel for the intervener that full faith and credit must be given by the court of this state to the judgments of the courts of the state of Utah. While that is true, it is also true that the jurisdiction of every court is open to inquiry when its judgments and decrees are produced in the court of a sister state, and it is there sought to give them effect. (Pendleton v. Russell, 144 U. S. 640, 12 Sup. Ct. Rep. 743, 36 L. ed. 574; Reynolds v. Stockton, 140 U. S. 254, 11 Sup. Ct. Rep. 773, 35 L. ed. 466; Beach on Beeeivers, sec. 460; High on Beeeivers, sees. 47a, 349; Smith on Beeeivers, par. 237; Rust v. Waterworks Co., 17 C. C. A. 16, 70 Fed. 129.) We recognize the constitutional rule enunciated by the provisions of section 1, article 4, of the federal constitution, that full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state, and we insist that the intervener must recognize said rule. Long before it brought either of the suits above mentioned in the Utah courts, all of' the assets of said merchants and banking corporations were in ■the hands of the receiver of the district court of the fifth judicial district of this state. It was in custodia legis, and the courts of Utah, as well as the intervener, should give full faith and credit to the judicial proceedings of the courts of this state. The intervener did not get any title to said 500 shares of stock by virtue of the execution Sale made under the judgment of the Utah court entered in the suit brought on March 2, 1897, for at that time said stock was held by McComick & Co. in pledge, and was not assigned to the intervener until the thirteenth day of August, 1897, and it acquired nothing by its execution sale thereof. The record fails to show when the sale of said stock took place under the execution issued^ on said judgment, and, so far as the decision of this ease is concerned, makes no difference. That stock was not pledged to secure the payment of the $15,000 note due from Bunting & Co., Bankers, to the Ogden
! It is shown that the intervener had a claim against C. Bunting & Co., Bankers, for about $16,000 at the time said banking corporation was declared insolvent, and a receiver appointed. The complaint shows that McCorniek & Co. also had a claim against said banking corporation for about $6,000, for the payment of which last sum McCorniek & Co. held in pledge 500 shares of the capital stock of the merchants corporation, all of which stock was owned by the insolvent banking corporation; and after the intervener had submitted itself to the jurisdiction of the courts of this state, it procured an assignment of said ' 500 shares of stock to itself, and on the eleventh day of October, ' 1897, commenced' suit, which resulted in the sale of said stock
Counsel for the intervener admit, in their brief, as follows: "The purpose of the action here is to receive the benefits of the stock to which the Ogden Savings Bank had established ownership in Utah.” As the Ogden Savings Bank attempted to procure title to said 500 shares of stock long after the property represented by said shares had been in the' custody of the courts of Idaho, and after a resident creditor could have brought suit to enforce his claim against the insolvent, the courts of this state will not assist it in getting possession of assets belonging to the insolvent that are in the custody of the courts, and thus give a foreign creditor a decided advantage over resident creditors. Even if it he conceded that the intervener got title to the shares of stock under the execution sales in Utah, the courts of this state will not assist it in getting possession Of assets to make its paper stock valuable, when it would not assist creditor citizens of this state in doing so, had they procured title to the paper stock in the same manner that the intervener did. No doubt equity would require the payment of the debt due to McComick & Co. in full, if anything be found to be due them on the claim for the payment of which said 500 shares of stock were pledged, if the assets represented by said shares amount to that sum; and the Ogden Savings Bank may come in and file and prove its claim against said insolvent estate, and share with other creditors in its assets, provided the time has not expired for filing and proving such claims against said insolvent estate. The judgment is reversed, and the cause remanded, with instructions to dismiss the complaint in intervention, and to
Dissenting Opinion
Dissenting. — Some of the probative facts upon which the findings of the lower court are based do not fully appear in the majority opinion. On June 30, 1894, the corporation C. Bunting and Co., Bankers, borrowed of McCornick & Co., of Salt Lake ‘City, Utah, the sum of $10,-000, and executed therefor two notes of $5,000 each, and delivered to said payee, as collateral security for the payment of said notes, 500 shares of the capital stock of the corporation, C. Bunting & Co., Merchants, of the par value of $100 per share. On February 1, 1897, the intervener, the Ogden Savings Bank, loaned to said C. Bunting & Co., Bankers, $15,000, and took a note therefor. On March 2, 1897, the intervener commenced an action against said corporation, C. Bunting & Co., Bankers, upon said note, to recover judgment for the principal and interest due thereon and attorney fees, in the district court of the second judicial district in and for Weber county in the state of Utah, and had summons issued in said action, and the same duly served on C. Bunting, vice-president and general manager of said corporation defendant, but designated in the sheriff’s return as president thereof. In said action, an attachment was issued and levied upon the said stock so pledged to the' said rMcCornick & Co., and the intervener paid to McCornick & Co., the balance due on said notes to secure which said stock was pledged, and thereupon, said notes were assigned to the intervener by McCornick & Co., and the said collateral security turned over to it with said notes. On April 16, 1897, the,corporation defendant in said action having failed to answer or otherwise plead, the default of said defendant was duly entered, and thereupon judgment was duly rendered and entered in favor of the plaintiff, the Ogden Savings Bank, and against the defendant, C. Bunting & Co., Bankers, for the sum of $16,812.50. On October 11, 1897, the intervener here, the- Ogden Savings Bank, com
A number of sections of the Compiled Laws of Utah, relating to the issuance of attachments, levies thereof, property subject to attachment, and to matters of practice in relation to the entry, etc., of judgments were introduced and received in evidence in the lower court, and are in the record before us. A careful inspection of the judgment-roll in both of the cases decided by the Utah courts show that the proceedings therein were fair and regular on their'face, and show’apparent jurisdiction in both cases. In the first action named, the jurisdiction of the Utah court as to person and subject matter is unquestionable, and the validity of the service upon the corporation defendant by serving the summons upon C. Bunting, president, or vice-president and general manager, of said corporation, is not seriously questioned. But the receiver here attacks the service made upon the said corporation defendant in the latter case by serving summons upon John Flowers, secretary of the corporation defendant, as invalid and insufficient to give the Utah court jurisdiction. The sheriff’s return to said summons is as follows:-
County of Salt Lake. $
gg
“Sheriff’s Office.
“I certify that I served the within and hereunto annexed summons in the city and county of Salt Lake, state of Utah, on the fifteenth day of October, 1897, upon the within named defendant, C. Bunting & Co., a corporation, by delivering to, and leaving with, John Flowers, personally, the secretary of the said C. Bunting and Company, a corporation defendant, a true and certified copy of the annexed summons, attached to a certified copy of the complaint referred to in the annexed summons; and I further certify that, after due search and diligent inquiry, I was unable to find in Salt Lake county, state of Utah, the president of said company, corporation defendant, George Y. Wallace, and I am reliably informed and believe that he is at present out of the state of Utah.
“Fees,-$1.20, paid.
“THOMAS P. LEWIS,
“Sheriff.
“By BOWMAN CANNON,
“Deputy Sheriff.”
The evidence shows that John Flowers was elected a director in, and secretary of, said corporation defendant, C. Bunting & Co.,‘ Bankers, at its organization in 1892 and actively served as such for about eighteen months following, when he turned the books Over to 0. Bunting, vice-president and general manager, who took them to Idaho; that he never resigned, was never removed, and his successor was never elected. The evidence simply shows that he ceased to act as said officer; but by reason of article 9 of the articles of incorporation of said corporation defendant, in evidence before us, he remained secretary de jure, although another officer was keeping the books of the corporation. Said article 9 is as follows: “The term of office of all directors or other officers, except when a vacancy is filled, and except as provided in section 10, shall be one year and until their successors are elected and qualified.” Flowers was a stockholder, as shown
The appointment of a receiver by the district court below did not affect the property of the corporation 0. Bunting & Co., Bankers, in Utah. Courts of this state cannot extend their jurisdiction into another state by the appointment of a receiver or otherwise. Both of the corporations, C. Bunting & Co., Bankers, and C. Bunting & Co., Merchants, were Utah, corporations, and that state was the domicile of both of them. Shares of stock held in either of said corporations could be seized under attachment or execution in Utah, and there alone. Subsection 4 of section 415 (No. 3313) of the Compiled Laws of Utah provides: “Stocks or shares, or interest in stocks or shares, of any corporation or company, must be attached by leaving with the president, or other head of the same, or the secretary, cashier or other managing agent thereof, a copy of the writ, and a notice stating the stock or interest of the defendant is attached in pursuance of such writ.” But, aside from the writ of attachment and judgment in the first suit brought by the intervener in Utah, the purchase by it of the 500 shares of pledged stock under the order of sale in the last s.ction brought by it in Utah vested title to said shares of stock in the intervener. The 500 shares of stock in controversy here never came into the hands of the receiver, and the
The majority opinion is based upon the erroneous theory that the shares of stock in controversy were merely muniments of title to two-thirds of the corporate property of C. Bunting & Co., merchants, situated in Idaho. It is somewhat remarkable that my associates should fall into this error. The certificate of stock is merely a muniment of title to the shares of stock, not to the corporate property. The certificate is prima facie evidence of ownership of the stock named therein, but the owner of stock need not necessarily possess a certificate showing that fact in order to entitle him to the benefits thereof. The owner of shares of stock, whether evidenced by a certificate of stock or not, does not make the shareholder an owner or part owner of the corporate property. This is true where one owns all of the stock of a corporation. (See Parker v. Hotel Co., supra.) Mr. Cook, in his work upon the Law of Stock and Stockholders, at section 5, quotes with approval from the decision of the New York court of appeals in the case of Plimpton v. Bigelow, 93 N. Y. 592, as follows: “The right which a shareholder in a corporation has, by reason of his ownership of shares, is a right to participate according to the amount of his stock in the surplus profits of the corporation on a division, and ultimately on its dissolution, in the assets remaining after payment of its debts.” And Judge Thompson, in his Commentaries on the Law of Corporations (volume 3, section 3292), says: “It must be kept in mind that when all the shares of stock of a corporation pass into the ownership of one person the corporation is not thereby ipso facto dissolved, nor its stock merged, so to speak, so as to make him the legal owner of the tangible property of the corporation.” (See same author, sections 5096, 6653, 6654.) It will thus be seen that the passing of all the stock into the hands of one shareholder does not work
For the reasons stated, I am of the opinion that the judgment of the district court is correct, and that the same should be affirmed.
Rehearing
ON PETITION POE REHEARING.
— This is a petition for a rehearing. The first question presented for consideration is the validity of the service of summons in the case of the Ogden Savings Bank against C. Bunting & Co., bankers, in the Utah court.
Counsel contend that the person who first seizes stock certificates by writ of attachment acquires a better title to the property which such certificates represent than a court that has had possession of such property or assets long prior to the attachment proceedings. We cannot assent to that proposition. 'There is no question but that a person who acquires title to paper stock certificates before the property they represent is in the possession of a court of competent jurisdiction in insolvency proceedings acquires a tangible interest in the property. 'That question is not involved in this ease. Here was a corporation organized under the laws of the state of Utah, and •doing business exclusively in the state of Idaho. At least two-thirds of its capital stock was in Utah, and all of its property •and assets were in Idaho. Its entire capital stock was owned by the banking corporation of C. Bunting & Co. The latter •corporation was declared insolvent by the district court of the Fifth judicial district of Idaho, and all of its assets placed in "the hands of that court’s receiver. The intervener, who is the petitioner, was cognizant of all of those facts and proceedings; and, simply because the statutes of Htah declare that •certificates of stock shall be “deemed personal property,” it .sought to make its claim against said insolvent bank out of •500 paper shares of stock that belonged to said insolvent, and pledged to pay a certain debt due to McCorniek & Co. We ¡admit that said shares of stock are personal property, and that the intervener has possession of them. It no doubt may keep -them, and realize what it can out of them. But, as it acquired .said shares of stock after the property they represent had! passed into the hands of a receiver, and after it had subjected itself to the jurisdiction of the court having possession of said property, the courts of this state will not assist it in securing ¡an advantage over other creditors of said insolvent bank. It Is suggested that, if the intervener gained an advantage by its vigilance, it is entitled to such advantage. If, in fact, it has ¡secured an advantage, it has it; but the courts of this state will
We do not deny the right of a creditor, not a resident of this ■state, to bring his suit in another state against one who has been declared an insolvent 'by an Idaho court, and make his claim out of property that he may find in such other state. Counsel contend that the intervener has done that very thing. If so, why is their client here? The fact is they have not recovered their client’s debt, and it comes into the courts of this state for assistance. They recognize the fact that said 500' shares of stock are of no value unless the courts of this state give them value by doing an injustice to other creditors who-have filed their claims in good faith, in the court that has possession of said property.
Some stress is laid upon the point that the intervener is a stockholder in a corporation that has no creditors (the merchants corporation), but the fact that said corporation was-■owned by and was a part of the assets of the banking corporation at the time it was declared an insolvent is apparently over
Counsel say they have relied upon property rights which they had secured through _ courts of competent jurisdiction in the state of Utah. If they have made a mistake as to the law, it may be unfortunate; but as they sought to realize nearly double the amount of their claim against the insolvent, and failed, it would have been better for them to have come into the court that had possession of assets of the insolvent, and share with all other creditors. Counsel refer to unjust discrimination, and suggest that this court will not permit it. That is just what this court will not permit, and is what our decision prevents. It is also suggested that there is no disposition on the part of the intervener to secure money largely in excess of the amount due it. By its complaint in intervention it is shown that its entire claim against said insolvent estate is about $23,000, including the McCornick & Go. claim, and it asks to have turned over to it as its property assets of the alleged value of $40,000. And as a matter of fact the intervener bid in said five hundred shares of stock for $100. Thus it is shown that for five hundred shares, for which it paid but $100, it asks a court of- equity to deliver to it prop
— I have carefully read the opinion of my associates denying a rehearing in this case. That opinion is interesting. I am constrained to believe that my associates do not properly apprehend the facts material to a correct decision of this case, and that they have mistaken the law applicable thereto; wherefore, and for the reasons stated in the dissenting 'opinion heretofore filed by me, I am of the opinion that a rehearing should be granted.