106 P. 98 | Cal. | 1909
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *18 This action was brought to obtain a decree that plaintiff is the owner of two hundred and forty-five thousand shares of stock of the defendant corporation, and that the defendants have and hold the same in trust for the use and benefit of plaintiff, and requiring said corporation to issue to plaintiff said two hundred and forty-five thousand shares. Defendant Latham having prior to the institution of the action absconded and left the state of California and his whereabouts being absolutely unknown, the only service of summons had upon him was by publication. He did not appear in the action. Defendant corporation answered, and the trial of the action was had as between it and plaintiff. The findings were substantially in favor of plaintiff upon all material issues except that of ownership of the stock, the court finding that it is not true that plaintiff is now, or ever was, the owner of said two hundred and forty-five thousand shares of stock. The court concluding, as matter of law, that plaintiff was not such owner, and further that the court had never acquired jurisdiction of *19 the person of defendant Latham, adjudged that plaintiff take nothing by his action, and that defendant corporation recover its costs of action. A motion for a new trial on the part of the plaintiff was denied. Plaintiff appeals from the judgment and from an order denying his motion for a new trial.
The motion to dismiss the appeals was denied by the court when the case was called for oral argument.
Defendant corporation is a corporation organized and existing under the laws of the territory of Arizona, but all of its property is situate and all of its business carried on in this state, and it has its office in the city of Los Angeles. It was organized by Latham, the purpose thereof being the development and handling of certain mining claims in Kern County owned by him, and upon the facts set forth we are warranted in assuming that the sole purpose of its formation as stated in its articles of incorporation was the carrying on of business in the state of California. These mining claims were transferred by him to the corporation upon the understanding that one million of the two million of the shares of stock thereof should be owned and held by him and his associates, while the other one million should be set aside as treasury stock, to be sold for the purpose of raising a fund with which to develop the property. Of his one million shares, five hundred thousand were to be issued as demanded by him to himself or any other person, and the other five hundred thousand were issued to certain persons at his request. In May or June, 1903, Latham employed plaintiff to go to Chicago and endeavor to sell fifty thousand shares of the treasury stock at ten cents per share, and promised that if he sold the same or any considerable portion thereof at that price "he would pay to plaintiff for his services" in making said sales two hundred and fifty thousand shares of his own stock, and also would see that the corporation paid him a certain commission on all stock sold. Latham thereupon caused five thousand shares of his two hundred and fifty thousand to be issued to plaintiff, and the corporation agreed to pay him certain commissions and his expenses, a portion of which he has received. Plaintiff thereupon went to Chicago, and remained there until February, 1904, when he was recalled to California, and thereafter remained in California in the performance of service for the corporation. He had then obtained purchasers for *20 about seventeen thousand shares at the designated price and the sales thereof had been made and the proceeds sent to Latham, who was the president of the corporation. What plaintiff had done in Chicago was entirely satisfactory to Latham and was "accepted by him as full performance of said agreement." Latham subsequently absconded and left the state, without having caused any of the two hundred and forty-five thousand shares due plaintiff to be issued to him and without having delivered to him any of the stock agreed to be delivered except five thousand shares. Of Latham's original five hundred thousaid unissued shares, more than two hundred and forty-five thousand shares have never been issued by the corporation to Latham or anyone else. These facts were found by the trial court and there is no sufficient specification of insufficiency of evidence as to any of them.
Defendant corporation was, of course, a mere trustee as to such of Latham's shares of stock as remained unissued, being entitled simply before being compelled to issue the same to any other person to be protected against any subsequent claim therefor by Latham. Its only other claim in regard thereto intimated by the record was a claim that it had a lien thereon for money which it claimed Latham had embezzled from it, but this may here be disregarded in view of the fact that the merits of such claim do not appear to have been determined by the trial court. The theory of plaintiff is that by virtue of his performance of the terms of the agreement between himself and Latham, he became the owner in equity of two hundred and forty-five thousand shares of Latham's unissued stock, with the consequent right to have the certificate for the same issued to him by the corporation, or at least, if he was not such owner, that he had such an interest in or lien on the stock as would warrant the relief sought against the corporation, even though by reason of his non-residence personal service had not been made and cannot be made on Latham.
While Latham was undoubtedly a necessary party to this action, we are of the opinion that the constructive service of summons upon him was effectual to give the lower court jurisdiction to determine the rights of plaintiff against him so far as the disposition of any of the shares of the stock in question is concerned. *21
It does not appear to be questioned that the legal situs of the shares of stock constituting the subject-matter of this action is, for all purposes material here, in this state. It is well settled that for purposes of execution or attachment, the situs
of shares of stock is within the state where the corporation resides, and that they may lawfully be levied on in such state though owned by a non-resident. We can perceive no reason why the rule as to situs should not be the same as to any authorized proceeding to subject the stock to the lawful claim of another, whether that claim be one of ownership of the property or of a right to specific enforcement of a contract relative to it. In other words, wherever such stock constitutes the subject-matter of an action, we see no reason why it should not be held to be within the state where the corporation resides. That state is ordinarily, of course, the state by or under the laws of which the corporation was created. Defendant corporation was, as we have seen, organized under the laws of Arizona. But for all practical purposes, according to the record, it is a California corporation. Its contemplated business was all to be transacted in this state, all of its property is here and it does business nowhere else. As was said by Judge Lurton of another corporation in Young v. South Tredeger Co.,
The relief sought by plaintiff against Latham is in the *22
nature of specific performance of a contract for the delivery of certain mining stock, in a case where all the conditions to be performed by him have been performed, and nothing remains to be done other than the mere delivery by Latham of the stock. If we are correct in what we have said as to the situs of this stock, we have an action for specific performance as against a party who is a non-resident and cannot be personally served with summons, in a case where the whole subject-matter of the contract is within this state, and nothing remains to be done but to compel a transfer thereof. While it is well settled that a decree for specific performance of a contract operates primarily inpersonam, yet in a limited and qualified sense it may also be said to operate in rem when property to be transferred under the contract is within the jurisdiction of the court, but the defendant is absent therefrom. (See 26 Am. and Eng. Ency. of Law, p. 132.) Where the whole relief sought consists in the mere delivery of property within the jurisdiction of the courts of a state to the party entitled thereto under a contract, the proceeding is in a sense one in rem, sufficiently so, in our judgment, to give such courts jurisdiction to effectuate a delivery as against a non-resident defendant. In the leading case of Pennoyer v. Neff,
It is urged that there is a total lack of allegation and proof of facts necessary to bring the action within the exception to the rule that specific performance will not lie to compel a transfer of personal property, and nothing to overcome the presumption that an agreement to transfer personal property can be relieved by pecuniary compensation. (Civ. Code, sec.
The right of a court of equity to decree specific performance "does not turn at all upon the question whether the contract relates to real or personal property, but altogether upon the question whether the breach complained of can be adequately compensated in damages." (Senter v. Davis, *24
It is further urged that neither the complaint nor the decision of the trial court shows that Latham received an adequate consideration for the contract, or that the contract as to him was just and reasonable, in either of which cases the law specifies that specific performance cannot be enforced. (Civ. Code, sec.
We are of the opinion that the complaint and the findings showed a sufficient case for specific performance as against Latham. If this be so, in view of what we have said the judgment in favor of defendant corporation cannot be sustained.
The judgment and order denying a new trial are reversed.
Sloss, J., and Shaw, J., concurred.