143 Iowa 286 | Iowa | 1909
The plaintiff is the trustee in bankruptcy of the Byan Implement & Hardware Company, and this action is based on an alleged. unpaid balance owing for five shares of its capital stock at the par value of $100. per share. The company was organized early in 1901, and after repeated efforts induced defendant to contract for five shares of stock at the par value of $100 each and execute his note to the company therefor in the sum of $500. The stock was issued, and the note immediately deposited with a bank as collateral security of a loan to the company. This was January 11, 1902, and as a part of the transaction the manager of the company represented that it was in great need of money and agreed that, if defendant would take the stock and give his note therefor, this would be an accommodation, and the company, upon the return of the certificate, would give the note back at the end of a year; the note to be used as stated. Both the manager and the agent assisting in the sale of the stock promised to see that the arrangement should be carried out. Defendant was notified by the bank shortly before the note fell due and called on the manager to take it as agreed. He responded that collections could not be made, as the crops had been poor, and proposed that defendant give a renewal note which, when due, the company would pay. Defendant had brought back his stock and laid it on the secretary’s table, but finally renewed the note and took the stock with him; the manager saying he would have to retain, the stock until the company took up the note. As it was never paid, the bank delivered it to the trustee, when the company was declared a bankrupt, and defendant retained the stock, and the company’s books at all times indicated that he was owner thereof. A dividend of thirty-three cents on a dollar of indebtedness of the company
Two conclusions are necessarily to be drawn from the facts stated: (1) That defendant never surrendered the certificate of stock, and (2) that he received and retained it as collateral security of a loan of the $500. True, he offered to surrender it, and even laid it on the table of an officer of the company'; but this was done in demanding the return of the note, and immediately upon the renewal of that instrument he picked up the certificate and kept it. That he had no thought of yielding the certificate for cancellation save upon the surrender of the note is manifest. That defendant permitted the company to retain a couple of dividends it declared is entirely consistent with the finding that he was merely holding the stock as collateral security, for it does not appear that he kept up the interest on the note. That this was executed merely as an accommodation to the company, and that it was the purpose of the manager as well as of the defendant that the certificate of stock be issued and held as collateral security, is not open to controversy. Though that term was not employed, the purpose, as stated, is necessarily to be inferred from what was said and done.
There seems to be some conflict in authority as to whether, -in the absence of statute, a pledgee of stock will
Sec. 1627. No certificate or shares of stock shall be issued, delivered or transferred by any corporation, officer or agent thereof, or by the owner of such certificate or shares, without having indorsed on the face thereof what amount or portion of the par value has been paid to the corporation issuing the same, and whether such payment has been in money or property.-
Sec. 1631. ... In suits by creditors to recover
Sec. 1626. The transfer of shares is not valid, except as between parties thereto, until regularly entered upon the books of the company, showing the name of the person by and to whom transferred, the number or other designation of the shares, and the date of the transfer; but such transfer shall not exempt the person making it from any liability of said corporation created prior thereto. Its books must be so kept as to show the original stockholders, their interests, the amount paid on their shares, and all transfers thereof; which books, or a copy thereof, so far- as the items mentioned in this section are concérned, shall be subject to the inspection of any person desiring the same. When any shares of stock shall be transferred to any person, firm or corporation a-s collateral security, such person, firm or corporation may notify in writing the secretary of the corporation whose stock is transferred as aforesaid, and from the time of such notice, and until written notice that such stock shall have ceased to be held as collateral security, said stock so transferred and noticed as aforesaid shall be' considered in law as transferred on aforesaid, and from the time of such notice, and until out any actual transfer on the books of the corporation of such stock. In such case, it shall be the duty of the secretary or cashier of the corporation or of the person or firm to which such stock shall have been transferred as collateral security at once, upon its ceasing to be so held, to inform the secretary of the corporation issuing such stock of such fact. The secretary of the company whose stock is transferred as collateral shall keep a record showing such notice of transfer as collateral, and notice of discharge as collateral, subject to public inspection. No holder of stock as collateral security shall be liable for assessments on the same.
It will be noted that the first of the above sections was violated, in that the certificate did not indicate that it was issued as security; and the last in that the company
It follows that the court erred in not dismissing the petition. — Reversed.