Case Name: The Richmondville Manufacturing Company against Prall and others; Harsen against Stebbins and others; Stebbins and others against Harsen
Court: Connecticut Supreme Court
Jurisdiction: Connecticut
Decision Date: 1833-06
Citations: 9 Conn. 495
Docket Number: 
Parties: The Richmondville Manufacturing Company against Prall and others. Harsen against Stebbins and others. Stebbins and others against Harsen.
Judges: The other Judges were of the same opinion, except Peters, J., who was not present.
Reporter: Connecticut Reports
Volume: 9
Pages: 495–504

Head Matter:
The Richmondville Manufacturing Company against Prall and others. Harsen against Stebbins and others. Stebbins and others against Harsen.
A. being insolvent and compelled to suspend payments, conveyed his property, by a deed of assignment, to B., in trust, to be converted in cash, and tha proceeds, after defraying the expenses of executing the trust, to be die. tributed among the several persons named in a schedule, annexed to the assignment, as creditors under accommodation responsibilities for A.
Both the parties to the assignment living in the city of New-York, where the assignment was made, it was not lodged for record in the office of any court of probate, in this state. Among the property, thus assigned, wore 198 shares of the stock of the Richmondville Manufacturing Company, an association incorporated by the legislature of Connecticut, and situated in Fairfield county, in this state. Held, 1. that such shares were subject to the laws of this state; 2. that the assignment was within the provisions of the act of 1828, relating to fraudulent conveyances ; 3. that it was void, by that act, because it was not for the benefit of all the creditors of the assignor, and because it was not lodged for record in the office of the court of probate for the district, in which the property was situated.
Where it was provided, by the charter of incorporation of a manufacturing company, that the shares of its stock should be transferable only on tha books of the company, in such form as the directors should prescribe; and the directors were empowered to make by-laws, rules, and regulations for the company ; the directors passed a by-law prescribing the form of transfer, which was to be made in a book to be kept by the secretary of the company for that purpose, and to be signed by the person making, the transfer ; although this by-law was never expressly repealed or abolished, and although many transfers were afterwards made, yet none was ever made in the form prescribed in the by-law, but a different mode of transfer, was adopted in practice, viz. by an entry made by the secretary, on the application of the seller, to the credit of the purchaser, in the stock book of the company, whereupon the scrip of the seller was surrendered to the secretary, and a new scrip was issued to the purchaser, signed by the president, and countersigned by the secretary, with the seal of the corporation affixed, certifying that such purchaser was entitled to the number of shares so entered to his credit, after which he was recognized by the directors and the company, as ⅜ stockholder, and was permitted to aet as such in. the meetings of the stockholders ; in ⅝ suit by m»e claiming under a transfer so made, for the dividends, it was held, that he was entitled to the dividends as against the company; but whether his title would prevail against that of a creditor of the assignor, acquired by a subsequent attachment and levy of execution, was left; undecided.
These were bills of interpleader. The bill of the Rich-mondville Manufacturing Company, stated, that one, hundred and ninety-eight shares of the stock of that company, now stand in the name of Cornelius Harsen, of the city and state of New-York, who now claims them as his property, by virtue of a transfer from Jeromus Johnson, to whom they were transferred, by Ichahod Frail and Abraham A. Frail, of the city of New-York, by virtue of a deed of assignment, executed on the 1st of September, 1829 ; that in the course of the same month, after the transfer by said Frails to Johnson, one Barnard Dunn, of the city of New-York, attached, in a suit, in his name, against said Frails, the same shares, as the property of said Frails, obtained judgment, and having taken out execution thereon, caused it to be duly levied on those shares, which were sold, under the execution, to Russel Stebbins, John Brou-wer and Jacob Brouwer, of the city of New-York, who now clairp them ; and that said company have made a dividend of 118 dollars, 80 cents, which they have not paid to any one, because they know not to whom to pay it; Harsen insisting on his right to the dividend, by virtue of his transfer from Johnson, under the assignment from said Frails, and Stebbins and said Brouwers insisting on their right, under the sale on the execution of Dunn against said Frails. The plaintiffs then prayed, that the parties aforesaid might be compelled to in-terplead with each other; and that the court would, on such interpleadings, establish the right of one party or the other, to the dividend, and also to the shares.
The superior court directed such interpleadings to be had ; and thereupon the parties respectively preferred their bills, stating their claims to the shares in question, which they en-deavoured to establish by their proofs.
The court fpund, that the allegations in the bill of the Rich-mondville Manufacturing Company were true: that said Frails, Johnson and Harsen, were citizens of the state of New-York, residing in the city of New-York ; that on the 1st of September, 1829, said Frails, having become insolvent, and being compelled to suspend payments, assigned, by a deed of indenture, executed in the city of *Vr:n-Yur>i, to &;tid Johnson, certain property specified in a schedule annexed to the assignment, including said shares, in trust tor the benefit of certain creditors of said Pralls, named in another .schedule ; that such assignment was made in good faith, for the purposes therein expressed ; but it was not lodged for record in the office of any court of probate or town-clerk in this state ; that the property thereby assigned, was greatly insufficient to discharge the debts due from said Pralls, specified in the schedule : that Johnson accepted the assignment and immediately undertook the trust; that on the 2nd of September, 1829, the shares were transferred, by I. Frail to Johnson, on the books of the company; that on the 15th of December, 1829, Jolm-son, in the exercise of the powers and duties .conferred upon him, by the deed of assignment, and in good faith, sold the shares to Harsen, who knew that they had been previously at-iached by Dunn, for 2500 dollars, which was the full value thereof; and that on the 9th of March, 1830, they were transferred to him, on the books of the company.
The court further found, that by the charter of the Rich-mondville Manufacturing Company, it is provided, that the shares of its-stock shall be transferable only on the books of said company, in such form as the directors of said company shall prescribe ; and that the president and directors of said company shall have power to make by-laws, rules and regulations for said company; and that on the 2nd of May, 1821, the directors passed a by-law, prescribing the form of transfer, in these words : “ That the secretary of said company shall keep a book, in which all transfers shall be made in the following form, signed by the person making such transfer, or his attorney duly constituted:
“ In consideration of the sum of to me paid by I do hereby transfer and convey unto said all my right and interest in and to shares, which I own and possess in the stock of the Richmondville Manufacturan' Company. In testimony whereof, I have hereunto subscribed my name, this » day of one thousand eight hundred and
The court also found, that the assignment made to Johnson, was not lodged for record in the office of any court of record or town-clerk in this state; that at the time of assignment, one hundred and ninety-eight shares stood on the books of the company, in the name of I. Prall, eighty-three of which he owned, by original subscription, and the remaining one hundred and fifteen, he owned by transfer from other persons; that the transfer from Prall to Johnson was made, by the secretary of the company, by an entry to the credit of Johnson, on the book, in this manner:
Dr. Jeromxjs Johnson
Scrip issued this date.
Contra Cr.
Sept. 2. 1829. By 198 shan - transferred from Ichabod Prall —Stock-—page 6. by a power of attorney from said Prall, on file, dated 1st day of £'• ¡>- tember, 1829 — Shares $50.11’) $9900.(if'
That the transfer from Johnson to Harsen was made in the ... . , / same manner ; the secretary, in making such éntnes, acting /the direction of Prall and Johnson respectively ; that each of .the persons to whose credit the shares were thus entered, im- / mediately received from the company, a scrip, signed by the president, and countersigned by the secretary, with the seal of the corporation affixed, certifying that such person was enti-tied to so many shares in the Richmondville Manufacturing Company, transferable only on the books of the company, by such person, or his attorney lawfully authorized ; and thereupon the scrip of the prior holder was surrendered to the secretary; that while these shares stood on the stock book, to the credit of Johnson and Harsen respectively, they were notified to attend, and did attend a meeting of the stockholders of the company, for the transaction of business, and voted therein as stockholders ; that though there have been many transfers of stock, yet no transfer has ever been made upon the books of the company pursuant to the by-law, or in the form therein prescribed, the only mode of transfer practised, at any time, having been that adopted in the transfers above mentioned ; that such transfers have always been made with the knowledge and acquiescence of the directors and the company, and those to whose credit the shares stood on the book, have always been recognized and considered, by the directors and the company, as stockholders of the company ; but that said by-law has never been repealed, or abolished, by any express vote or declaration of the president and directors ; that the scrip issued to Johnson and Harsen was in the form prescribed, by a previous by-law of the president and directors * and in every instance, in which stock has been passed to the credit of a purchaser, on the stock book, scrip has been issued, in this form, to such purchaser, and the scrip of the seller has been surrendered to the secretary,
Upon these facts, the question to which of the claimants the shares belonged, and what decree ought to be passed, was reserved for the consideration and advice of this Court.
Sherman and Hawley, for Harsen, contended,
I. That the assignment was not within the act of 1828; which plainly contemplates assignments by citizens of this slate, having their property here, generally subject to the laws, of this state and steadily residing within its jurisdiction. In its terms, it is applicable only to persons resident in some probate district in this state.
2. That the transfer of the shares was valid. It was made on the books of the company, as the charter required ; and in the form prescribed by the practice of the directors. The original form was never prescribed, according to the fair construction of that term ; having never been adopted or regarded in practice. But if prescribed, it was repealed and abrogated, by1 non-user and a practice uniformly variant. 2 Yes, 439. 330. Angelí & Ames, 128, 9. 1 Satmd. PL & Ev. 398, Mayor '&c. of Berwick upon Tweed v. Johnson, Lo ft, 334. 339. Mayor of Kingston upon Hull v. Horner, Cowp. 102.110.
N. Smith and Betts, for Stcbbins and the Brouwers, contended,
1. That the assignment made by the Trails of property in Connecticut, must,-so far as that property was concerned, be governed by the laws of Connecticut.
2. That the assignment in question, was made under such circumstances, that is it embraced by the provisions of the act of 1828.
3. That if the deed of assignment was valid, it did not transfer the shares in the Richmondville Manufacturing Company, which could be transferred only according to the form prescribed by the by-law. The Marlborough Manufacturing Company v. Smith, 2 Conn. Rep. 579. Northrop v. The Newtown and Bridgeport Turnpike Company, 3 Conn. Rep. 544. The Oxford Turnpike Company v. Runnel, 8 Conn. Rep. 552.
- (a) The following is an abstract of the assignment: “This indenture, made the 1st day of September, 1829, between Ichabod Frail and Abraham A, Frail, of the city of New-York, merchants and co-partners under the firm of I. Frail Son, of the first part, and Jeromus Johnson, of said city, of the second part, witnesseth, that whereas the parties of the first part, owing to divers losses and misfortunes in their commercial affairs, have become in. solvent, and are unable to meet their pecuniary responsibilities, and are, eon-sequently, compelled to suspend their payments; and whereas the said parties of the first part, are possessed of, and entitled to, the goods, effects, debts and dioses in action and" other property, enumerated or referred to in the schedule hereto annexed, marked A.; and the said Ichabod Frail is possessed of, and entitled to, in his individual right, the manufacturing stock and utensils and other property also enumerated in said schedule ; the said parties of the first part, in consideration &c. do, and each of them doth, by these presents, sell, assign and transfer unto the said party of the second part, his heirs, &c. forever, all the manufacturing stock, goods, effects, debts, ch'oses in action, and other property and estate whatsoever, both real and personal, en-urnerated or referred to in said schedule, which schedule is to be taken as part of these presents; to have and to hold the premises unto the said party of the second part, lúa heirs &c. in trust for the following uses and purposes : In the first place, to convert the premises into cash, or other available means, for the purpose of distribution, with power to execute the requisite conveyances, assignments and transfers; secondly, with the first proceeds,: to defray the expenses of the trust; and thirdly, to apply the residue of the proceeds to and among the several persons named in the annexed schedule marked B., as creditors under accommodation responsibilities for the parties of the first part, or the said Ichabod Frail, in a fair and just proportion, according to the amounts set opposite to their respective names, in said last mentioned schedule, which is also to be taken as part of these presents.” Johnson, the as-signee, was one of the creditors named in the latter schedule. The amount of debts or responsibilities therein specified, was «$51,437. 71.

Opinion:
Daggett, Ch. J.
It was strongly urged, by those who assert their rights under the levy of the execution, and in opposition to those who claim under the assignment of the Pratts, that no such transfer was ever made, by the assignment, as vested any right in the assignee. It is here said, that by virtue of the charter incorporating the Richmondville Manufacturing Company, it is provided,* that the shares of its stock shall be transferable only on the books of said company, in such form as the directors of said company shall prescribe; and that power was given to the president and directors, to make a by-law on that subject; that they made a by-law pre scribing the form of transfers, to be made in a book to be kept for that purpose, by the secretary; that it should be signed that said by-law is by the person making the transfer; and always has been, in force ; and that no such transfer has ever been made. Hence they infer, that the shares were open to the attachment and execution of the creditors of the Pralls. The Marlborough Manufacturing Company v. Smith, 2 Conn. Rep. 579. Northrop v. Newtown and Bridgeport Turnpike Company, 3 Conn. Rep. 544. The Oxford Turnpike Company v. Bunnel, 6 Conn. Rep. 552.
Those who stand on the assignment and transfer by the Pralls, urge, that this by-law has been virtually repealed and abolished, for that there is no instance of its ever having been used in practice ; that the only mode adopted, was an entry in the book of the company, crediting the owner of shares witli the number to which he was entitled ; that no other evidence is to be found of any transfer, from the first organization of the company under the charter, though there have been many transfers; that the persons thus credited with shares, have been recognized, by the company, by being notified to attend the company's meeting, and being admitted to vote ; and that scrip, certifying the number of shares holden, have been issued to them. Hence it is inferred, that-shares, holden by virtue of such an entry in the books of the company, are well vested in the persons to whom such credit is given ; and, of course, that their transfers are good.
From the facts found, it would seem clear, that Johnson, and of course, liar sen, who claims under him, and to whom the company issued a scrip in like form, would be entitled to the dividends as against the company. They might be estopped to say, that the dividends on shares certified by them to belong to an individual, should not be paid to that individual. But all these questions and considerations may be waived; for, in my judgment, the levy of the execution on these shares was valid, and, of course, the title under it is good..
The statute of 1828, entitled " an act in addition to an act entitled an act against fraudulent conveyances," renders this assignment and transfer of the Pralls to Johnson, void. By the first section of this act, it is declared, " that all conveyances and assignments of any lands, tenements, goods, chattels or choses in action, hereafter made, directly or indirectly, by
aily person in failing circumstances, with a view to his insolven-to any person or persons, ¡n trust lor bis creditors, or any as against the creditors of the person making such conveyance or assignment, be deemed and adjudged fraudulent and utterly void, unless the same be made in writing, for the benefit of all said creditors, in proportion to their respective claims, and be lodged for record in the office of the court of probate for the district where the assignor or assignors, or some of them, reside; and the judge or clerk of said court shall enter thereon, the time when the same was received for record, and the record shall bear the same date." Ch. 3. s. 1. p. 182. All the parts of this section bear directly on the assignment in question, with a single exception, which will hereafter be noticed. It is an assignment of shares in a manufacturing company; and therefore, the subject of assignment is within the description " lands, tenements, goods, chattels and choses in action." It is made by a person " in failing circumstances ;" and so expressed upon the face of it. It also appears, that it was made " with a view to their insolvency for they say, they are " compelled to suspend payments." It is made to Johnson, in trust for his benefit, and that of other favourite creditors, not " for the benefit of all their creditors, in proportion to their respective claims."
It is, however, objected, that the statute in question cannot apply to any person living out of the state, because of this direction, that the assignment shall be " lodged for record in the office of the court of probate for the district where the assignor or assignors, or some of them, reside." Now, in this case, the parties to the assignment all resided, not only out of the probate district, but out of the state. It will hardly be contended, that such property is not within the jurisdiction of our legislature, or that it is not the subject of any fit and proper municipal regulation. It may be attached and sold on an execution. Property in Connecticut gives jurisdiction to the courts in Connecticut, between people of other states. Thus it is laid down, I Sw. Dig. 591. 2 Sw. Syst. 198. Osborn v. Lloyd, I Root 447. Sill v. The Bank of the United States, 5 Conn. Rep. 102.
A gain ; what is the object of the law under consideration ? An equal distribution among the creditors of the effects of an insolvent and a prevention of the evil of partial assignments, to individual creditors, for their exclusive benefit. It is, then, the duty of the courts so to construe the law, if possible, to advance the remedy and suppress the mischief. The same principle lies at the foundation of all laws on the subject of bankruptcy and insolvency.
What then, if the parties to this assignment were citizens of the state of New-York, so that a literal compliance with that part of the section in question, which directs that the assignment. shall be lodged in the office of the court of probate in the district where the assignors live, cannot be had i Is the law, on that account, to be deemed a dead letter, in a case otherwise clearly embraced by it ? I think not.
If some of the rules of construing statutes are resorted to, they will shew, that this assignment is to be considered as within this statute.
Every statute ought to be construed according to the intent of the legislature; and therefore, if a corporation were intended, though it be misnamed, it is sufficient. 10 Co. 57. b. — Every statute ought to be construed according to the intent, and not according to the letter. Plowd. 353. 363. So the judges expound a case , within the mischief and cause of an act to be within the equity of the statute, though it be not within the words. Co. Litt. 24. So a case out of the mischief intended to be remedied, though embraced by the words, shall bo construed out of the purview. 2 Co. Inst, 386.— The statute of Gloucester, penal in its nature, which gave treble damages against a tenant for years, extends, by equity, to a tenant for half a year. Plowd. 178. Where remedy for waste is given against a lessee, it extends to a de-visee for life or years. Plowd. 10. A statute in relation to administrators, is extended to executors. Plowd. 467.
I have shewn this assignment to be within the equity of the statute. It ought, then, to be construed to embrace it. Or shall it be adopted as a sound construction of this act, that the property, however great, situated within our jurisdiction, but owned by a person not an inhabitant, may be conveyed or assigned, by tfie owner in failing circumstances, to a favourite creditor, to the exclusion of all others; and those too, perhaps, our own citizens!
If it. be asked, how and where the assignment is to be re corded, I answer, in the office of the probate judge of the dis-* trict where the property is situated.
If it still be urged, that this assignment was good, according: to the laws of the state of New-York, where it was made, it may be replied, it is not good in relation to property in ConnectU. cut, being made in contravention of a law rightfully made, and which binds here.
The result is, that the assignment in question is void, under our statute, and that the purchasers under the execution are entitled to the shares; and that the superior court be advised to decree accordingly.
The other Judges were of the same opinion, except Peters, J., who was not present.
Decree for purchasers under the execution.