Case ID: mass_8/html/0274-01.html
Source: Caselaw Access Project
Author: {"author": "Sewall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

* Ephraim Titcomb versus The Union Marine and Fire Insurance Company.
    Where an act incorporating an insurance company prescribed a particular manner in which the shares of members in the stock were to be attached and sold on execution, it was held, that such provision superseded the general pro vision on the same subject contained in the previous statute of 1804, c. 83.
    This was an action of the case, in which the plaintiff declared, 1. For not transferring to him fifteen shares in the stock of said company, purchased by him, and which having become his property, the defendants had undertaken to have transferred. 2. For not paying dividends on fifteen shares when purchased. 3. For not paying 3000 dollars, money received by the company for the use of the plaintiff.
    The defendants pleaded that they never promised, &c., on which issue being joined by" the plaintiff, a trial of the issue was had before Sewall, J., at the April term of this court, 1810.
    For the plaintiff, the evidence at the trial was, that on the 7th of April, 1809, P. Bagley, a deputy sheriff, having an original writ in a suit of Samuel Williams against John Wood, Joseph Cutler, and George A. Rogers, returnable to the Court of Common Pleas for this county, June term, 1809, inquired at the office of the said company for the shares of the original stock of the company holden by said Rogers; and notwithstanding information stated to him by J. Balch, their secretary, that Rogers held no shares there, excepting the interest he might have in fifteen shares, which had been transferred to the company as collateral security for his note .due to the company, the said Bagley gave notice at the office that he attached the said number of shares as the property of Rogers, and returned upon the said writ that he had attached the same. — Judgment for the sum of 4900 dollars and costs being afterwards recovered in the said suit, an execution to satisfy the same was returned by the same deputy sheriff. By the said return it appears that on the 21st of July 1809, the said fifteen shares were levied and taken, and on the 22d of August, next following, were sold at vendue to the plaintiff at five dollars per share; * and on [ the 4th of September then next, the said Bagley left a copy of the said execution and return at the office of the said company ; and the plaintiff, being then there, tendered to their secretary his reasonable fees for recording a transfer of the said shares, and demanded to have the same entered, and to have certificates of the shares in his own name, all which was refused.
    The act for incorporating the said company (iStat. 1806, c. 89.) was read, as was also a copy of the supposed transfer to the said company, received by the said Bagley when he made the said attachment, and of a certificate which was endorsed thereon by the said secretary--(The said transfer purports a conveyance of fifteen shares of the stock from Rogers to the company, as collateral security for the payment of his note of even date to T. Cross, and by him endorsed, payable in sixty-five days; and also for the payment of such notes as he may give by way of renewal of the said note, or any part thereof, and of any other sums he may owe the company. — In default of payment of such notes or other debts, he authorizes a sale of the shares at auction after public advertisement, a transfer of them to the purchaser, and the appropriation of the proceeds to the payment of the notes or debts, and the surplus to himself; and finally engages to surrender the certificates of his shares ; reserving a right to act and vote as a stockholder until such sale shall have been made. Dated February 1st, 1809. The secretary certifies that Rogers was, before the said transfer, holder of fifteen shares; that there was no dividend due on them; that the note mentioned in the transfer remained unpaid; that the transfer was immediately noted, as was customary, in the books of the company; and that Rogers had never been required to give up the certificate of the shares, on the presumption that the note would be duly paid and the certificate restored.)
    For the defendants, the evidence was, that the usage of the corn-pony, since its incorporation, had been, (they having no by-laws upon the subject of transfer, or any express * bylaws at all,) in all absolute transfers of stock, to have the same entered and signed by the party making the transfer, in a book kept for that purpose, of which a statement is then made in the day-book to the debt of that party, and to the credit of the party to whom the transfer is made; which is afterwards accordingly posted in the leger. But in occasional transfers of stock, of which there had been no example other than transfers to the company foi collateral security, the usage had been for the stockholder to make his transfer upon a sheet of paper, to be kept on file, and in a form similar to that of which a copy was given to Bagley; after which an entry is made in the day-book and leger, as in the case of an absolute transfer. — On the 1st of February, 1809, the company held the note described above in the secretary’s certificate, which was deposited with them by Rogers, and was the balance of a former note given in discharge of his subscription of twenty-five shares to the stock of the company, and which had been before several times renewed on the deduction of sundry payments made by him ; and on the said 1st of February, 1809, Rogers transferred fifteen shares, as above, being all he then owned. The day-book of the company being produced at the trial, an entry appears therein made on the same day as follows, viz.: “ Sundry accounts dr. to the capital for shares transferred to the co. as collateral security for debts due from the persons hereafter named, as per transfer.” After which are inserted many names, with the number and amount of their shares transferred; and among the rest is the name of “ George A. Rogers fifteen shares, 1500 dollars.”—Afterwards, on the 26th of April, 1809, his note not having been paid, said shares were sold at vendue, pursuant to the authority and trust declared in the said transfer. Ten of them were purchased by M. Hall at 99 dollars per share, and five of them by J. Greenleaf at 100 dollars per share.
    The sale had been ordered on the 10th of April, and had been advertised more than fourteen days ; and on * the 27th the president of the company transferred the said shares to the respective purchasers. Afterwards, at the sale by Bagley under the execution, the president of the company read to the persons assembled at the auction the minutes of the said transfer by Rogers, and of the sale pursuant thereto, and cautioned all persons against purchasing; and the plaintiff’s purchase was made with a full knowledge of the foregoing transactions. It was admitted on the part of the defendants, that Rogers retained his certificate of stock until May 8th, 1809.
    Upon this evidence a verdict was taken for the plaintiff for 1560 dollars, subject to the opinion of the Court; and if their opinion should be that the action was not maintained upon the facts above stated, the veidict was to be set aside, and the plaintiff to become nonsuit.
    The cause stood continued to this term, when it was argued by Story and Mosely for the plaintiff, and by Putnam and Banister for the defendants.
    
      For the defendants,
    
    it was objected, in the first place, that the sale by the deputy sheriff under the execution was not legal. The statute of 1804, c. 83, concerning the attachment on mesne process and selling by execution shares of debtors in incorporated companies, provides, in the second section, that an attachment of such shares shall hold the same until thirty days after judgment, and no longer; within which time an attested copy of the execution must be left with the clerk, &c., of the company, and an advertisement of the time and place of sale be at least once published, both which are necessary to perfect the lien created by the attachment.—Or if the shares are seized on execution without previous attachment, the first section of the statute requires a copy to be left, and advertisement made in the same manner.
    Neither was the sale in this case within the provisions of the act incorporating the defendants, the eleventh section of which authorizes the levy of an execution upon * the shares, and a sale thereof in the same manner only as is by law prescribed, where personal estate is taken in execution Now, the sale was not at all in conformity to the directions of the .general statute of 1783, c. 57, respecting the sale of personal prop erty on execution, which is the law referred to in the act of incorporation.
    In any view of the subject, then, the sale was void; the plaintiff obtained no title to the shares, and therefore cannot maintain this action.
    It was also contended, and argued at much length by the counsel for the defendants, that the title of the company to the shares in question, under Rogers’s transfer to them, was good and valid, and paramount to the title derived from the posterior attachment and sale of them to the plaintiff, even if these had been perfectly regular. But as the decision of the Court finally rested only on the regularity of the sale by the deputy sheriff, the arguments for the defendants, as well as the answer to them on the part of the plaintiff, bearing upon the other point, are omitted.
    
      For the plaintiff,
    
    it was insisted that the sale was conformable to the statute of 1804, c. 83, which in its terms applies as well to corporations created after as before its enactment. The provisions of this statute are more favorable to the debtor than those in the charter, as to the sale of the shares; and as there is no repealing clause in the latter act, justice would be fully done by considering them as coexisting modes of executing process, and not as contradictory. Probably the clause in the charter was inserted by mistake.
    To the objection that it did not appear, by the return of the officer, that a copy was left and advertisement made, it was answered, that the provision is barely in affirmance of the law as existing before that statute ; that by comparing the first and second sections of the statute, it will appear that the leaving a copy of the execution is only required where there is n previous attachment; and that the intention was to protect intermediate bona fide purchasers before execution executed.
    Further, the clause could only operate in case of an intermediate purchaser bona fide, because the first section required that a copy of the execution and return should be left with the company; and a previous notice to them would be useless, as they could have no interest to be affected by such notice, and no mischief could arise to any party. — It is also stated in the officer’s return, that he took the shares in execution; and it is a regular inference, that he did every thing necessary to the seizure, and of course left a copy with the company.
    But even admitting that the execution has been irregularly executed, still, however, it may be as between the officer and the judgment debtor — a purchaser of chattels at a sheriff’s sale is not affected by the irregularity, even as against the judgment debtor ; and a fortiori, not against mere strangers, as the company are. A purchaser is protected, although the judgment be reversed for error,  and where, too, the execution has issued irregularly, as if a fieri facias issues after the party is in execution on a copias ad satisfaciendum,. 
      
       By the seizure of chattels in execution, the property is divested, and is in the sheriff; and if he seize to the value, the execution is satisfied, although no return be made.  And by analogy in this case, by the seizure the property of the shares was in the sheriff; and his subsequent sale, however irregularly made, would convey the title.
    
      
       5 Co. 90. — Dyer, 363.— Yelv. 180.— Cro. Jac. 246.
    
    
      
      
        Jeanes vs Wilkins, 1 Vez. 195.
    
    
      
       1 Lev. 282. — 6 Mod. 290. — 2 Roll. 57. — 4 Mass. Rep. 402.
    
   The action was continued nisi for advisement, and at the next March term in Suffolk the opinion of the Court was pronounced by

Sewall, J.

The controversy between these parties is respecting sertain shares, originally subscribed by George A. Rogers, in the stock of the corporation, the defendants in this action. Fifteen of twenty-five shares subscribed by Rogers were sold by the directors of this corporatioil on the 26th of April, 1809, and the proceeds applied to the payment of a note, in which the said Rogers was indebted to the corporation for certain instalments of'money due upon *his subscription. — The corporation attempt to justify this sale, having proceeded in making it, in consequence of a written transfer of the said fifteen shares, executed by the said Rogers on the 1st of February, 1809. This transfer was understood between the parties, and was entered in the books of the corporation, as a collateral security of Rogers’s note due them for the sum of 1900 dollars, the balance of his subscription, dated on the same day, and payable in sixty-five days. This sale was ordered on the 10th of April, upon the authority and trust declared in the transfer to the corporation ; and on the 27th the president of the corporation completed the transfer, and gave certificates of those shares to the several purchasers thereof at the vendue holden the preceding day.

That the purchasers of these shares have acquired a title to them against the company, and against all persons claiming under Rogers, seems to be conceded by the present form of action, and to be consonant to the decision of this Court, in the case of Gray vs. The Portland Bank.

By the action in the case at bar, the defendants are charged in damages, — 1st. Upon the implied undertaking to admit the transfer of the fifteen shares in question, which the plaintiff avers to have been duly sold to him, by virtue of an execution against George A. Rogers ; — 2dly. Upon an implied undertaking to pay the dividends due on those shares when purchased ; — and, 3dly. Upon an implied promise to pay the plaintiff the sum of 3000 dollars received to the plaintiff’s use. This action is therefore not in the nature of a specific remedy for the shares themselves, as retained by the defendants; but for a sum of money accruing to the defendants, or lost to the plaintiff, in consequence of a misappropriation of the shares in question, or a refusal to appropriate them to the plaintiff. The action is of a new impression, and arises upon a novel provision, and extension of the law of attachments and executions in civil suits, and to satisfy judgments recovered in civil actions.

*In the year 1805, before the existence of the corporation, defendants in this action, a statute was enacted, directing the mode of attaching on mesne process, and selling by execution, shares of debtors in incorporated companies. By this statute, the shares or interest of any person in any turnpike, bridge, canal, or other company, then before incorporated, or which might be incorporated, with all the rights and privileges appertaining to such shares, are subjected to attachment and execution. This stat ute prescribes the mode of attachment, levy and sale, and the effects thereof.

In 1807 the Union Marine and Fire Insurance Company at Newburyport, the defendants in this action, were incorporated by statute into a body politic; and the property of any member vested in the stock is, by the same statute, made liable to attach ment, and to the payment and satisfaction of his just debts to any of his bona fide creditors." The manner in which this provision is to be carried into effect, is prescribed by the statute, differing in several particulars from the mode prescribed by the- general statute before cited.

It has been made & question, therefore, in the argument of this cause, whether the attachment and levy, under which the plaintiff must entitle himself to this action, is to be examined by the former and general statute, or by the special provisions of the subsequent statute, the charter of incorporation. — And for myself, I am fully satisfied that this last statute contains the rules, by which the present case is to be decided, as to this point. It admits of some question, I think, whether the former general statute was intended to apply to corporations so dissimilar, in the condition and management of their property, as turnpikes, canals, and bridges are, when compared with banks and insurance companies; and perhaps the other companies, mentioned in the general statute, are other like companies, instituted for those definite and permanent establishments, and not moneyed institutions. This doubt is strengthened by the circumstance, * that the several statutes, by which institutions for banks and insurance are incorporated, as well since the general statute as before, contains provisions and regulations respecting attachments or executions, by which the shares of members are to be transferred. But whether this may be considered a legislative construction of the term “ other companies,” in the general statute, or not, I think the latter statute settles the rule by which the case is to be determined. A particular mode of attaching shares, and of levying executions upon them, may be considered in the nature of a special privilege, and a designed variation from the general rule.

Without regarding, therefore, the mode prescribed by the general statute, I shall examine how far the rules prescribed by the charter of this company have been observed, in the attachment and levy under which the plaintiff claims.

The attachment is stated to have been made of Rogers’s shares of insurance stock, on the 7th of April, 1809, by Bagley, a deputy sheriff, upon an original writ at the suit of Samuel Williams. The officer inquired at the office of the defendants respecting Rogers’s shares, and was informed that he had none there, excepting the interest he might have in fifteen shares, which had been transferred to the company as collateral security. Bagley proceeded, notwithstanding, to give notice at the office that he attached those shares, and returned an attachment upon the said writ. And the same officer, upon an execution to satisfy the judgment recovered in that suit on the last Monday of June, 1809, has returned that on the 21st of July, 1809, the said fifteen shares were levied and taken by the said execution, and on the 22d of August were sold at vendue to the plaintiff, at five dollars per share. And it appears, that on the 4th of September following, the officer left a copy of the execution and return at the office of the defendants. The plaintiff then demanded to have the transfer to him entered in the books of the company, and to have certificates of the shares in his own name, all which was refused.

* If this were a question with the judgment debtor, respecting a property tangible in'its nature, and capable of a distinct and visible possession and delivery, the return of the officer would be, I apprehend, conclusive; and the objections made to it would not operate to defeat the purchaser of his title; which would avail, notwithstanding any delays or irregularities in the levying of the execution, or in the proceedings of the officer; no other creditor or claimant having interferred to interrupt his possession. The officer might be liable to any party injured by his negligence or mistake, whether the creditor or the debtor in the execution; and the sale might be, nevertheless, valid.

But the case at bar being with the defendants as trustees to Rogers, and as they may have become liable to any other attaching creditor, or to any person to whom Rogers may have transferred his shares previous to the sale of them by the officer, I think, independently of the question arising upon Rogers’s transfer to themselves, and as a general principle applicable to actions of this description, that the defendants are not liable to the plaintiff, unless he can show a clear and indisputable title, under the execution levied by Bagley. And in this view of the case, the delay of thirty days after the execution was supposed to be levied, before the officer proceeded to sell, is fatal, I apprehend, to the plaintiff’s title. For, by the statute of incorporation, shares taken in execution are to be exposed to sale in the same manner as is by law prescribed where personal estate is taken in execution. The time for this purpose allowed and determined by the general statute is four days.

Now, after notice of the levy, when four days had expired, and no sale had taken place, a new notice to the office was requisite, in my opinion, to legalize a subsequent sale. In short, the sale, as it took place, was upon a levy which had ceased, and was to be con sidered as relinquished, by the subsequent delay and the length of time which had intervened. In this opinion we are agreed; and the consequence is, that this action is not maintained. *We have thought it unnecessary to determine in this action the other question, which has been urged upon the attention of the Court, respecting the validity of contracts between corporations and their members, to secure by their notes subscriptions to the stock. This is a question of very general importance ; and it is before the Court in another action, which we are not prepared to decide.

According to the agreement of the parties, the verdict in this case is to be set aside, and the plaintiff is to become nonsuit.

Plaintiff nonsuit 
      
      
        3 Mass. Rep. 364.
     
      
      
        Stat. 1804, c.83.
     
      
      
        Stat. 1806, c 89.
     
      
       1783, c. 57.