Case ID: haw_10/html/0379-01.html
Source: Caselaw Access Project
Author: {"author": "FREAR, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

RUDOLPH SPRECKELS v. WALTER M. GIFFARD.
    Appeal prom Circuit .Judge, First Circuit.
    Submitted June 30, 1896.
    Decided July 22, 1896.
    Judd, C.J., Fkear and Whiting, JJ.
    Quaere, whether a corporation or its officers may he compelled to record a transfer of stock as a pledge, hut held that the right, if any, to refuse to so record the transfer was waived in this case.
    In a suit to compel the registry of a pledge of stock, a former pledgee who has assigned his pledge and no longer claims any interest in the stock as a pledgee is not a necessary party, although the record of his pledge is still on the hooks of the corporation.
    So also in such suit, where the certificate of stock' and the hooks of the corporation indicate that the plaintiff is the owner of the stock, one who claims to he the owner hut who refuses to state his grounds therefor, and who is not interpleaded, need not he made a party.
    Such suit may he instituted hy either pledgor or pledgee after proper demand, and without first satisfying the corporation or its officers that pledgor and pledgee are in accord as to the form of the record.
    Where such suit is brought hy the pledgor after proper demand, a special replication setting up a subsequent similar demand hy the pledgee is improper.
    A witness summoned hy subpoena regular on its face, hut who refuses to attend on the ground that no hearing had been set for the day on which he was summoned to appear, may he brought in hy attachment.
    A decree will not he reversed or a new trial ordered for matters not prejudicial to the appellant.
   OPINION OF THE COURT BY

FREAR, J.

This is an appeal from a decree in equity ordering the defendant, as Secretary of the Paauhau Plantation Company, a Hawaiian corporation, to record in the books of the corporation a transfer by way of pledge of 2500 shares of the stock of the corporation from the plaintiff to Messrs. Allen & Lewis, of San Francisco.

The arguments for the defendant will be considered in order.

1. That the corporation or its officers cannot be required to record a transfer as a pledge. We know of no judicial decision upon this question. (Queen v. Gen. Cemetery Co., 6 Ell. & Bl. 415, is materially different from this case.) To judge from the opinions of some text writers, it would seem that the question is an open one and that its solution may depend somewhat upon custom. See Lowell, Transfer of Stock, p. 86; Cook, Stock and Stockholders, Secs. 245, 397. In this case it was shown in evidence to be the general custom of corporations in these islands to record pledges as such, and a transfer of the stock in question had previously been recorded as a pledge on the books of this corporation. This seems to be a reasonable custom, and no especial objection to recording the transfer as a pledge is shown in this instance. However, we need not decide now that a transfer by way of pledge may always be required to be recorded as such. The right, if any, to object to making such a record may be waived and we think it has been waived in this case. So far as the form of the record is concerned, the defendant, both previous to the suit and in his answer, assumed the position of a disinterested party willing to record the transfer as a pledge if both parties so desired. He should not be allowed to assume a different position after-wards unless at least good reason is shown therefor. See Bond v. Mt. Hope Iron Co., 99 Mass. 505.

2. That Claus Spreckels is a necessary party. There appears on the books of the coloration a record of a pledge of the stock in question to Claus Spreckels. We need not consider wbetber a second pledge may be required to be recorded, even if a first pledge may be, for it is proved by ample and undisputed evidence that Clans Spreckels bad assigned and delivered tbe stock and bis contract of pledge to tbe Nevada Bank of California, wbieli bad in tarn assigned and delivered tbe contract and stock to Allen & Lewis with tbe consent of tbe plaintiff. This contract and tbe assignments of Clans Spreckels and the Nevada Bank were produced and tbe signature of Claus Spreckels to bis assignment was proved. Tbe certificates of stock, which also were produced, are in tbe name of tbe plaintiff and endorsed in blank by him. Tbe contract and certificates came from tbe custody of Allen & Lewis. It also appears affirmatively that Claus Spreckels does not now claim any interest in tbe stock as pledgee. A person is not a necessary party to a proceeding- of this nature from tlie mere fact that he has previously been a holder of tbe stock. See Tregear v. Etiwanda Water Co., 76 Cal. 537.

Claus Spreckels notified the corporation that be is “tbe owner of five thousand shares of tbe capital stock of tbe Paau-hau Plantation Company, in which Budolph Spreckels asserts and claims some title or property.” This notice sets forth no ground whatever for tbe claim of ownership, and Claus Spreck-els himself refused to appear when summoned before a commissioner in San Francisco appointed in this case to take bis testimony in regard to bis claim or title, if any, to tbe stock. As above stated, tbe certificates are in the name of the plaintiff; tbe stock also stands in bis name as owner on tbe books of tbe corporation. Tbe defendant did not interplead Claus Spreckels. Under all these circumstances, tbe court was not obliged to require him to be made a party.

3. That tbe transferror and transferree were not in accord as to tbe form of tbe record when tbe suit was brought or that, at least, if they were, tbe defendant bad no notice thereof. Either tbe transferror or tbe transferree may apply for and compel a record of tbe transfer. If they make application for materially different forms of record and there is a serious question as to tibe proper course to pursue, it is not only tibe right, but it may be tbe duty, of tbe officer to leave tbe parties to settle tbeir differences in court. But even in such case, either of the parties may after proper demand institute a suit against the officer to compel him to record the transfer, and the proper course then is, not to ask to have the bill dismissed because the parties are not in accord, but to interplead and ask that the parties be required to contest the matter between themselves. In this case, the transferror demanded a record of the transfer as a pledge and, upon defendant’s refusal to comply with the demand on the ground that the parties were not in accord, instituted this suit. This he was entitled to do. If he could, by reasonable effort before suit, have satisfied the defendant that the parties were in accord, and failed to do so, he might be required to pay the costs of suit but the suit would not on that account be dismissed. The latter result would not necessarily follow even if the parties were not in accord up to the time of final decree. There were introduced in evidence in this case letters of the transferees themselves, written after suit was brought, demanding that the transfer be recorded as a pledge. This evidence was admissible, not for the purpose of showing a demand (the demand which was made by the transferror alone before suit having been sufficient) but to show the consent of the transferees to the form of record demanded, and thus render it unnecessary for the court to decide as between the transferror and transferees whether the record should be absolute in form or by way of pledge and. perhaps also obviate the necessity of formally making the transferees parties of record. In this view of the case it was immaterial, except as to the question of costs, whether the parties to the pledge were in fact in acCord before the commencement of the suit or whether, if so, the defendant knew it.

4. That the special replication setting up a demand by the pledgees similar to that of the pledgor after the commencement of the suit was improper. It is contended that this matter should have been set up, if at all, by supplemental bill. The argument is tbat if tbe special replication sbonld be struck out, the evidence of the transferrees’ demand would also have to be struck out, for the reason that, as contended, there would then be no allegation in the pleadings under which such evidence would be admissible. But, as has been stated, 'evidence of this demand was admissible for other reasons, and therefore the defendant was not prejudiced by the special replication. As a matter of correct practice the special replication was, in our opinion, unnecessary and should not have been allowed.

Hartwell, Thurston & Stanley, for plaintiff.

Kwm.ey & Ballou, for defendant.

5. That the testimony of "W. G-. Irwin should not be considered, because it was forced from him by void process. Mr. Irwin was summoned as a witness for the plaintiff by a subpoena regular on its face, but on advice of counsel did not appear because, as is contended, the day upon which he was summoned to appear had not been set for hearing. Thereupon, at the instance of plaintiff’s counsel, he was brought in by attachment and compelled, against objection, to give his testimony. As to the validity of the attachment, that is a matter that concerns Mr. Irwin rather than the defendant, but we may state for guidance in the future that in our opinion, even though no hearing has been set, a witness duly subpoenaed should appear and then state his objections, if any, to being examined. If he fails to appear, he may according to the circumstances b'e brought in at once by attachment or required to show cause why he should not be attached. As to the admission of Mr. Irwin’s testimony, assuming that no hearing had been set, we think that the defendant was not prejudiced thereby, for the facts testified to by this witness were fully proved by the testimony of other witnesses. This being an appeal in equity, the appellate court may consider the whole case on its merits.

The decree appealed from is affirmed.