Case Name: Martha Hussey versus The President &c. of the Manufacturers and Mechanics' Bank of Nantucket
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1830-10
Citations: 10 Pick. 415
Docket Number: 
Parties: Martha Hussey versus The President &c. of the Manufacturers and Mechanics’ Bank of Nantucket.
Judges: 
Reporter: Massachusetts Reports
Volume: 27
Pages: 422–431

Head Matter:
Martha Hussey versus The President &c. of the Manufacturers and Mechanics’ Bank of Nantucket.
As it is a regulation with all banks, or nearly all, to issue certificates of ownership of shares in the capital stock, it will be presumed, where ¿lie contrary is not shown, that a stockholder in a bank is entitled to such usual evidence of that kind of property.
The St, 1804, c. S3, prescribing the mode of attaching on mesne process, and selling on execution, shares in incorporated companies, applies to shares in a bank, where no mode is prescribed in the act incorporating the bank.
An original, subscriber for ninety shares, of 0 100 each, in a bank, paid towards an instalment of 80 per cent on the shares and interest thereon, the sum of $ 2750, and drew a draft in favor of the bank, for the balance, and transferred to the bank “ all his right and title to and interest in ninety shares in the capital stock of the bank excepting and reserving twenty-seven hundred and fifty dollars in said stock as collateral security for the payment of the draft.” The draft was never paid, and the bank never passed to the credit of the subscriber any stock in the bank» nor gave him any certificate or scrip for shares. Thirty-four shares were sold on an execution against him, and the purchaser tendered to the bank a further instalment of 20 per cent upon the same, and demanded a certificate of her ownership of the shares ; which the bank refused, the original subscriber being then indebted to them to a greater amount than $ 2750, independently of the transaction respecting the shares. It was held, that the original subscriber was once the proprietor of ninety shares, and that the effect of the reservation in his conveyance to the bank, was, that an amount equal to thirty-four shares of the par value of $ 80 a share remained his property, and was liable to seizure and sale on the execution.
The aum of $ 2750 having been paid by such original subscriber on account of his shares, the fact that the bank had placed it to his credit in part-payment of a debt due from him to the bank independently of the transaction respecting the shares, was held to have no effect upon the title to the shares, such appropriation being unauthorized.
An action on the case for damages, was held to be a proper remedy for the purchaser, against the bank, for refusing to deliver to her a certificate of her ownership of the thirty-four shares.
The measure of damages in such case, is the value of the shares at the time of the refusal, with interest to the time of the judgment.
This was an action on the case, in which the plaintiff demanded damages against the defendants for refusing to issue certificates of her ownership of certain shares in the capital stock of the Manufacturers and Mechanics’ Bank of Nantucket.
At the trial, before Morton J., it appeared that Francis G. Macy and others were created a corporation on June 18th, 1825, by the name of The President, Directors and Company of the Manufacturers and Mechanics’ Bank of Nantucket, the capital stock of which company was to consist of the sum ol $ 100,000, divided into shares of $100 each ; and that Macy was an original subscriber for ninety shares. An instalment of eighty dollars on a share being required to be paid, Macy, on the 6th of January, 1826, paid $2750 towards his ninety shares and drew his order on Messrs. Macy, Bunker & Macy for $4637-62, being the residue then payable on the ninety shares, together with interest on the same from the time the instalment became due. This order was drawn in favor of Barker Burnell, the cashier of the bank, and at the same time Macy executed an instrument as follows : — “ Know all men by these presents, that whereas I have drawn a draft on Messrs. Macy, Bunker & Macy, merchants, New York, at one hundred and twenty days date, in favor of Barker Burnell, cashier, for four thousand six hundred and thirty-seven dollars and sixty-two cents, and which was delivered to said Burnell in payment for stock, I hereby transfer to the President, Directors and Company of the Manufacturers and Mechanics’ Bank of Nantucket, all my right and title to and interest in ninety shares of the capital stock of said bank, excepting and reserving twenty-seven hundred and fifty dollars in said stock, as collateral secu rity for the payment of said draft.” The draft was made when Macy had no funds in the hands of Macy, Bunker & Macy, and without authority, and it was never accepted nor paid. The remaining twenty per cent on the ninety shares, was never paid by Macy. The bank never passed to his credit any stock in the bank, and no certificate or scrip was ever issued to him for shares. The above sum of $2750 was placed to. his credit in part-payment of sums due from him to the bank, apart from the transaction respecting the shares. At the time when the. attachment hereafter mentioned was made by the plaintiff, Macy was indebted to the bank for money received of them, in a sum exceeding $2750.
On December 19th, 1825, the plaintiff sued out her writ of attachment against Macy, in which she demanded of him the sum of $2500, and on January 10th, 1826, she caused thirty-five shares of the stock in the bank, to be attached as his property, to respond the judgment which she might recover in that action. On the first Monday in October 1826, the plaintiff, in pursuance of the writ of attachment, recovered judgment and execution against Macy for the sum of $ 2500 debt, and $15'56 costs of suit, which execution was delivered to the sheriff who made the original attachment. The cashier of the bank gave the sheriff a certificate as follows. “ Nantucket, Oct. 10, 1826. The sheriff of this county having requested me to state what interest Francis G. Macy may have in the capital stock of the Manufacturers and Mechanics’ bank, I now certify that said Macy has transferred all his stock in said bank to the president, directors and company thereof as collateral security, excepting twenty-seven hundred and fifty dollars, and that said Macy is indebted to said bank in a sum exceeding the transferred and untransferred property.” On the 25th of November, 1826, the sheriff sold on the execution, at public vendue, twenty-seven of the shares attached by him, to the plaintiff, who was the highest bidder, at $81 for each share ; and on the 27th of November, by virtue of an alias execution issued on the same judgment, he sold seven more of the shares attached by him, to the plaintiff, who was the highest bidder, at $ 80 for each share. The officer, in making the attachment and the sales on execution, pursued the directions of St. 1804, c. 83. On the 3d of October, 1827, tl e plaintiff tendered to the cashier of the bank, the sum of $ 680, as an instalment due on the shares sold to her, and exhibited to him attested copies of the executions and officer’s returns thereon, and demanded of the bank that they should issue certificates to her of her ownership of these shares ; which was then and there refused.
The plaintiff demanded damages to the value of the shares as they were struck off" to her, and interest on that sum. The defendants claimed to hold the shares by virtue of Macy’s conveyance above recited.
The defendants were defaulted. If the opinion of the Court should be in favor of the plaintiff, the default was to stand, and the Court were to assess such damages as they might deem proper ; otherwise the plaintiff was to be nonsuit.
The papers in the case, and the act incorporating the bank, were to be referred to by either party.
Oct. 30 th,
Coffin, for the defendants.
F. G. Macy never was the proprietor of any shares in the capital stock of the bank ; he had an inchoate right, but not an attachable interest. By the charter (St. 1825, c. 17, § 2,) fifty per centum of the capital stock was to be paid in by the first day of January, 1826, and the residue within one year from the 18th of June, 1825, the date of the charter. Macy did not comply with this provision. The sum of $2750 was paid towards the first instalment on the ninety shares, and would have enured to that purpose if he had complied with the terms of the charter ; but not having done so, he did not become the proprietor of any shares ; and the bank were obliged to consider the $2750 like any deposit of money, and they were authorized to apply that sum in payment of any demands against Macy. The draft was not a payment, Macy having no funds in the hands of the drawees.
The plaintiff has not pursued an appropriate remedy. This action sounds in damages, but if she has a right to the stock, the moment the officer made bis return on the execution, her title was complete, and no damages have been sustained by her. There was no evidence that a certificate of ownership had bsen issued to any stockholder, or that it was the usage of the bank to issue such certificates. The plaintiff may sue in assumpsit for a dividend, if she has a title to the shares.
Admitting that Macy ever owned the stock, he transferred all his shares to the bank, as collateral security.
L. Williams and A. Bassett, for the plaintiff.
The assignment to the bank does not purport to transfer ninety shares, but expressly excepts $2750 in the stock. That sum of money was paid as an instalment of 80 per cent upon thirty-four shares, including interest, and the draft was given in payment of a like instalment on the remaining fifty-six shares, which were conveyed as collateral security.
The transfer to the bank was void; being repugnant to the provision in the 12th section of the act of incorporation, that the capital stock “ shall not be sold or transferred, but be holden by the original subscribers thereof, for and during the term of one year from the passing of this act.”
The St. 1804, c. 83, § 1, makes it the duty of the cashier of the bank to issue to the purchasers of shares under an execution, such certificates as by the by-laws of the corporation are the-evidences of the shares or interest of a proprietor in the corporation.
The defendants are estopped to say all the instalments were not paid within one year from the date of the act of incorporation, for on October 10th, 1826, being called upon by the sheriff to say what interest Macy has in the capital stock of the bank, the cashier certifies that Macy has transferred all his stock to the bank as collateral security, excepting $ 2750; and this certificate was exhibited at the sale on execution. The tender by the plaintiff, of $ 680, was an act of supererogation, Miles v. Boyden, 3 Pick. 217.
As to the form of action and the measure of damages, Williams cited Gray v. Portland Bank, 3 Mass. R. 364 ; Rex v. Bank of England, 2 Doug. 524 ; Commonwealth v. Rosseter, 2 Binney, 360 ; Shipley v. Mechanics' Bank, 10 Johns. R. 484.
Coffin, in reply. If Macy himself were the plaintiff, all the evidence for him would be, that he had paid 30 per cent on ninety shares ; and the present plaintiff cannot stand in a better situation than Macy himself would. The year having expired before the tender was made by the plaintiff', the Court will presume that all the capital had been paid within the year and that Macy had no stock, for where a subscriber is delinquent, the others have a right to assume the shares he had subscribed for, or transfer them to another person ; and this course was necessary in the present case, to prevent a forfeiture of the charter of the bank.
The 12th section of the act of incorporation, prohibiting the sale of shares, was not intended to prevent a subscriber from pledging his shares to the bank.
It is said the bank were bound to issue a certificate according to their by-laws ; but it does not appear that they had any by-laws.
The opinion of the Court was afterward drawn up by
See Nesmith v. Washington Bank, 6 Pick. 324.

Opinion:
Shaw C. J.
The facts are somewhat imperfectly stated in the present case. Several corrections and amendments were made by consent, during the argument; but it does not distinctly appear, whether there was any by-law of the bank requiring its officers to issue certificates to stockholders. But as it is a regulation common to all banks, or nearly all, and as the contrary does not appear, we think it is to be presumed that stockholders are entitled to the usual and common evidence of that kind of property, and therefore if the plaintiff had a valid title to the shares, she had a good right to a certificate.
The question therefore is, whether the plaintiff has established a good and valid title to the shares in the stock of this bank, of which she demanded a certificate. It appears by the facts agreed, that such a demand was made by the plaintiff, and that the officers of the bank refused to issue such certificate, on the ground that she bad no title, but on the contrary, that the bank itself had a better title ; and the bank now defend the action on the same ground, thereby affirming and adopting the acts of their agents.
The plaintiff claims by attachment and sale on execution of the shares in controversy, as the property of Francis G. Macy, her debtor, and it is agreed that the attachment and sale were regular afid conformable to the statute, and that the plaintiff was the purchaser.
It is the policy of our laws, to make all property, as far as • practicable, liable on legal process for the payment of debts. The St. 1804, c. '83, [see Revised Stat. c. 97, § 36,] providing for the sale of shares in incorporated companies, was assumed in the argument to apply to banks, and if so, a sale conformably to the statute passes the right of property to the purchaser, provided the debtor had shares liable to be attached and taken on execution. In Titcomb v. Union M. & F. Ins. Co., 8 Mass. R. 333, a doubt was expressed by Mr. Justice Sewall, whether this statute extends to banks. But it was not then necessary to decide the question, because the act of incorporation, being of later date than the general act, contained special provisions in regard to the attachment and sale of shares ; and it was held, that whether such general statute would apply or not, in ordinary cases, yet the'special subsequent provisions in the act of incorporation would suspend, and pro tanto repeal the general statute. But as the act in terms extends to shares in incorporated companies, and as neither the act incorporating the defendant bank, nor that incorporating the State bank, which is referred to and made part of this act of incorporation, provides any mode of attachment, the general statute must be held to apply.
It appears that Macy, the plaintiff's debtor, vas a subscriber for ninety shares in the capital stock of the bank ; that on January 6th, 1826, he paid in cash $ 2750 • towards the ninety shares, and on the same day drew a bill of exchange on time, for $ 4637-62, being the residue of the sum then payable on account of the ninety shares. As collateral security for the payment of this draft, an assignment of shares' was made, as hereafter stated. This draft was in fact never paid ; but as against third persons, the' principle adopted in Massachusetts must be held to apply, that the giving of a negotiable instrument, is primo facie to be deemed a payment; and this presumption is strengthened in the present case, by the fact, that collateral security was taken. As to the subsequent instalment of 20 per cent, the case finds that it was not payable till afler the attachment, and that the amount was seasonably tendered by the plaintiff.
Whether the instalments were fully paid in, within the time limited by the act of incorporation, or whether there was any forfeiture which the government might have enforced, we think wholly immaterial to the present inquiry.
Here then Macy is shown to have been a proprietor of the ninety shares, and the plaintiff is entitled to hold the thirty-four shares which were sold on her execution, unless the defendants can show a bettter title.
It was conceded at the hearing, that the bank has no lien upon the shares of its stockholders for debts due generally, and for which the stock is not specifically pledged ; and it had none for the payment of the draft before alluded to, except what was created by the instrument of assignment set forth in the judge's report.
This instrument was executed at the same time with the draft, and after reciting the draft, and reciting that it had been received by the cashier in payment of Macy's stock, it transfers to the bank, " all my right and title to and interest in ninety shares of the capital stock of said bank excepting and reserving twenty-seven hundred and fifty dollars in said stock as collateral security for the payment of said draft."
Though there is a slight ambiguity in this instrument, yet we think there can be little doubt of the meaning ; it was a transfer of all Macy's stock, except $ 2750. The effect of an exception and reservation out of a transfer or grant, is to leave the excepted part just as it was before, untransferred. Had this reservation been in shares, instead of dollars, it could scarcely have left a doubt. This is mere matter of description, and any intelligible description is sufficient as well in a reservation as in a grant. Suppose that by a similar description he had transferred $2750 of the capital stock, either to the bank itself or to an individual, would it not have been good, at least for the number of shares which it would cover ? Perhaps a bank, according to its regulations and by-laws, would not be bound to divide a share. But omne majus in se continet minus; $2750 would comprehend $ 2720, equal to thirty-four shares at $80 par value, and this is all the plaintiff claims. Until within a few years, the banks were accustomed to ex* press all transfers and certificates, in dollars and not in shares, and we cannot doubt that such a description is sufficiently definite and precise. The effect of this reservation therefore was, that an amount exceeding thirty-four shares of the stock, was not transferred, but remained the property of Macy and liable to attachment.
The circumstance that no stock was ever formally passed to the credit of Macy in the books of the bank, could make no difference ; he was an original proprietor and subscriber for ninety shares, and upon the payment of his instalments his title was complete, without any formal entry in the books.
Nor does it make any difference, that the bank credited the amount to Macy in his cash account with them ; it having been paid on account of his stock, it was not in their power to make any other application of it.
But it was contended that the plaintiff had misconceived her action, and that an action on the case will not lie against the corporation.
Had the gravamen of the action been the refusal of the agents and officers of the bank to deliver to the plaintiff certificates of shares, admitted and acknowledged to be her property, the case would have presented a different aspect. But here the substance of the complaint is, that the bank refuse to recognize the plaintiff as the owner of the shares, denying her title, and that they, the corporation, have converted the shares to their own use, either by holding them themselves or transferring them to persons other than the plaintiff. In such a case it has long been held, that an action on the case against the corporation, for the value of the stock, is the legal and appropriate remedy. Rex v. Bank of England, 2 Doug. 524 ; Shipley v. Mechanics' Bank, 10 Johns. R. 484 ; Gray v. Portland Bank, 3 Mass. R. 364.
As the action is for damages, and cannot have the effect of enforcing a specific performance, and the bank retain the shares to their own use, the rule of damages must be the market value, of the shares, at the time of the demand and refusal, with interest on that sum to the time of the judgment; the shares of course to be valued as they then stood ; that is, as shares upon whicli $ 80 had been paid.
Judgment on the default.
See 2 Phil. Ev. (Cowen & Hill's ed.) 294, in notes.