#### Ignatius Sargent *et al. versus*The Essex Marine Railway Corporation

The by-laws of a corporation required that all transfers of shares should be made in a book to be kept by the treasurer. *Held,*that an assignment of shares by the deed of the vender, accompanied by a delivery of the certificates to the vendee, was valid, without any transfer on the books of the corporation, not only between the vender and vendee, but against a creditor of the former, who attached the shares before any notice of the sale had been given to himself or to the treasurer of the corporation.

It seems that the vendee could not compel a payment of dividends, or claim a certificate from the corporation, without first applying to have the transfer made according to the by-law.

Assumpsit to recover a dividend of $ 36 declared on three shares in the stock of the corporation, on January 1st, 1829, with special counts for not transferring the same shares to the plaintiffs.

The case was submitted to the Court on a statement of facts.

On January 5th, 1829, Winthrop Sargent, being the holder *206of the shares, executed and delivered to the plaintiffs a deed ot assignment of the shares, and also delivered to them the certifi cates of the shares. On January 6th, 1829, the same shares were attached on mesne process in suits against Winthrop Sargent, by creditors of his, who had no notice of the assignment. These suits were still pending. On January 24th, 1829, Winthrop Sargent’s certificate was presented to the treasurer of tha corporation, by the plaintiffs’ attorney, who then demanded the dividend and a transfer of the shares to the plaintiffs and a certificate in their names, all which were refused by the treas urer on account of the attachment.

The act incorporating the company, *(St.*1825, c. 66,) con tains no provision on the subject of the transfer of shares, but confers upon it the usual powers of corporations, and authorizes it to make by-laws. One of the by-laws of the corporation requires, that “ all transfers shall be made in a book to be kept by the treasurer for the purpose, in the following foim,” &c. Another article prescribes the form of the certificate, in which it is expressed, that “ the shares &c. are transferable on the books of the corporation or by lawful attorney.” A third requires, that “ all transfers shall be recorded in a book to be kept for that purpose.”

The case was argued in writing.

Saltonstall, for the plaintiffs,

contended that the shares being an incorporeal right, the plaintiff’s title to them was complete by the execution of the deed of assignment and the delivery of the certificates. Indeed a mere delivery of the certificates for a valuable consideration, would have been sufficient to pass the property. *Prescott*v. *Hull,*17 Johns. R. 284 ; *Briggs*v. *Dorr,*19 Johns. R. 95 ; *Jones*v. *Witter,*13 Mass. R. 304 ; *Mechanics Bank of Alexandria*v. *Seton,*1 Peters, 308 ; *Quiner*v. *Marblehead Social Ins. Co.*10 Mass. R. 476 ; *Alvord*v. *Smith,*5 Pick. 232 ; *Kane*v. *Bloodgood,*7 Johns. Ch. R. 132 ; *Brown*v. *Maine Bank,*11 Mass. R. 156. The corporation has no power by its by-laws to alter the general law relative to this description of property. 2 Kyd on Corp. 107 ; *Gray*v. *Portland Bank,*3 Mass. R. 374 ; *Chester Glass Company*v. *Dewey,*16 Mass. R. 101. The defendants are not a manufacturing corporation, and their act *207of incorporation does not make them subject to the statute of 1808, c. 65, regulating such corporations.

*B. Merrill,*for the defendants.

The transfer made by Winthrop Sargent was informal and void, as to all persons except himself and the plaintiffs, because it was not made in conformity with the general law, *(St.*1808, *c.*65, § 4,) requiring shares in manufacting companies to be transferred by deed, acknowledged and recorded in the corporation books, or because it did not conform to the defendants’ by-laws, regulating transfers, which were made under the authority of their act of incorporation. Shares of stock are not mere *choses in action,*but are capable of transfer and delivery and may be attached like other personal property. *St.*1804, c. 83. The plaintiffs having neglected to take possession until after the attachment was made, they and the attaching creditors stand in the same relation to each other as two purchasers of the same goods by different conveyances. In such case the party which first lawfully acquires possession will hold them. *Lanfear*v. *Sumner,*17 Mass. R. 110. The title of the attaching creditors, therefore, being subsequent purchasers without notice, who have first acquired possession, must prevail. Even in the case of the transfer of ships at sea, possession must be taken in a reasonable time. *Lamb*v. *Durant,*12 Mass. R. 54 ; *Bartlett*v. *Williams,*1 Pick. 288.

Parker C. J.

drew up the opinion of the Court. The question is, whether the property in the shares passed from Winthrop Sargent to the plaintiffs by the deed of assignment made on the 5th of January, 1829, and by the delivery over to the plaintiffs of the certificates of the shares. This assignment we take to have been *bona fide*and for a valuable consideración. The attachment was made on the 6th of January, and must therefore fail if the assignment is valid. That the assignment is good in equity, cannot be disputed. This point is settled in the case of *Quiner*v. *Marblehead Social Ins. Co.*10 Mass. R. 476, and in the case of *Nesmith*v. *Washington Bank,*6 Pick. 324. Under this assignment the officers of the corporation would have been obliged to enter the transfer on their books and issue certificates of the shares to the assignee. The property was equitably, if not legally, out of W. Sargent at the *208time of the attachment, and was vested in the plaintiffs. This ’nterest ln the funds of the company, as represented by the certificate of shares, is something more than a chose in action,1 for the transfer of it by deed or by any valid assignment, is a transfer of the interest and property itself, and being completed by a record in the books of the corporation, all right of the former owner is extinguished, and the purchaser is substituted as the owner.

But the by-laws provide that all transfers shall be made in a book to be kept by the treasurer for that purpose, and according to a particular form therein prescribed. This is not essential to the passing of the property as between the parties, or against creditors, if the assignment is not fraudulent. It was an arrangement of the corporation for their own convenience, and is so far binding upon purchasers, that they cannot compel any payment of dividends, or insist upon certificates, without applying to have a transfer made conformably to the by-laws. Neither the act of incorporation, nor any other statute, requires that an assignment shall be recorded, in order to give it validity. Certainly the purchaser of shares, perhaps at a distance from the books of the company, shall have a reasonable time to apply to the office to procure a registry of the transfer; and yet this attachment was made the very next day after the assignment was made. It is true that no application was made to the treasurer by the plaintiffs until a fortnight after the assignment was made, but this could not be important except as evidence of fraud.

In the case of *Sargent et al.*v. *The Franklin Ins. Co.*8 Pick. 90, an assignment by a stockholder was held to pass the property in the shares, although there had been no transfer entered in the books according to a by-law similar to that in the presént case.1

1

 See *Harris v. Stevens,*7 N. Hamp. R. 456.

1

 See *U. States*v. *Cutts,*1 Sumner, 133; *Bank of Utica*v. *Smalley,*2 Cowen, 770; *Union Bank of Georgetown*v. Laird, 2 Wheaton, 390. But see *Northrop v. Newtown &c. Turnpike,*3 Connect. R. 544 ; *Northrop*v. *Curtis,*5 Connect. R. 246; *Marlborough Manuf. Co.*v. *Smith,*2 Connect. R. 579; *Oxford Turn pike v Bunnel,*6 Connect. R. 552.