The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1904-02-27
FINCH CANNOT BRING SUIT BE.
CAUSE HE is NOT LEGAL STOCK
HOLDER.

CAUSE HI Is NUl LEGAL SIUCk-
HOLDER.
Yesterday We printed the law applicable
to receiverships, which makes it clear
that no receiver should be appointed upon
the application of stakeholder. without
notice and hearing, except in three in
stances:
1. Unless there is danger of a removal
of the assets beyond the jurisdiction of
the Court.
2. Where the corporation cannot be
found
g. Where it is a nonresident and is
removing its property or doing some other
act which would be greatly injurious,
and which would be accomplished in the
delay necessary to giving notice.
In the case Of the Atlantic and North
Carolina Railroad none of these conditions
existed and therefore the appointment of
McBee was unwarranted. But, even if the
| law were not plain against appointing a
receiver without a hearing. the fact re-
mains that Finch had no right to sue
and his application ought not even to
law stakeholder in the Atlantic and
North Carolina Railroad, The records
| of that company do not show that Finch
owns a single share of stock. He says
| he owns forty-fve shares. and he may
have them in his inside pocket. but they
have not been legally transferred to him,
and therefore he had no right to make
the application. When he made it, with
out any legal status, Judge Purnen should
have promptly declined to entertain the
application. Even now, when he learns
that Finch is not in law stockholder,
Judge Purnell, seeing that he has been
deceived by representations that Finch
/ had stock upon which he could sue should
reverse his judgment and prevent the
contemplated injury which will follow Nc
Bees taking charge of the property.
| If Finch has any stock at all, it has not
been transferred upon the books of the
company, and he had no right therefore,
to make application for receiver. This
is made clear in the case of Brown VS..
Duluth, NJ. & N. Railway Company ct al,
Federal Reports. Vol. SO, page SS9-S94 in
elusive In that case this is clearly laid
down:
"An assignee of railroad stock, who has
not registered his stock, nor obtained
recognition as a stockholder,, cannot bring
suit in behalf of himself and other stock
holders to restrain the action of the Off
GERS of the corporation from acts alleged
to be ultra wires and illegal"
In the decision the learned judge, in
terms that expressly apply to Finch's
claim to make the application, says:
"The complainant claims membership by
acquiring corporate stock by transfer, but,
not having registered his stock and OBJ
tanned recognition by the corporation as
a stakeholder he can claim no other
rights than those which the assignment
vests in him Undoubtedly, as between
himself and his assignors the purchase
of the certificate gives him all the rights
of ownership, and entities him to demand
that he shall be registered by the cor
poration: but. until he has caused q
transfer to be made upon the books of
the corporation, his title, as between the
corporation and himself is not perfected
and he neither has the rights nor Is sub
ject to the liabilities of membership He
may bring suit under some clrcum-
stances, to protect his individual inter-
ests in the corporate property, but he
cannot participate in the management of
| the corporation, and enforce corporate
rights to restrain threatened wrongs on
the corporate interests. He brings the
suit in behalf of himself and his associate
stockholders. Not being a stakeholder
himself recognized by the corporation he
is personally precluded from doing this"
The reason for such a determination is
plain and based upon sound public policy.
1t is to prevent just such injury to prop.
erty as Finch's suit contemplates and
to make 1t impossible for mere specula-
tors and wreckers to throw valuable prop
erty into the hands of receiver Bona
hide minority stockholders have the right
TO a receiver, IF 1T is SHOWN AFTER
HEARING that the property is dishonesty
OF grossly extravagantly managed. But
no person buying a few shares of stock,
not transferred on the books, for the
purpose, has any such right as the ex-
tracts above quoted clearly show. If a
SPECTATOR or any enemy or a person de-
handing lease can throw a railroad
INTO the hands of a receiver, without a
nearing as Finch has done. then the own
ers OF property have no right whatever
IN the management of their own propert!
which Federal Judge is bound to re
: spect.