Case Name: Mary F. LINDNER, Plaintiff and Respondent, v. UTAH SOUTHERN OIL COMPANY, a corporation, Defendant and Appellant
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1955-05-16
Citations: 3 Utah 2d 302
Docket Number: No. 8045
Parties: Mary F. LINDNER, Plaintiff and Respondent, v. UTAH SOUTHERN OIL COMPANY, a corporation, Defendant and Appellant.
Judges: WADE, J., concurs.
Reporter: Utah Reports, Second Series
Volume: 3
Pages: 302–310

Head Matter:
283 P.2d 605
Mary F. LINDNER, Plaintiff and Respondent, v. UTAH SOUTHERN OIL COMPANY, a corporation, Defendant and Appellant.
No. 8045.
Supreme Court of Utah.
May 16, 1955.
• Elliot W. Evans, Salt Lake City, for appellant.
Stewart, Cannon & Hanson, E. F. Baldwin, Jr., Jesse R. S. Budge, Salt Lake City, for respondent.

Opinion:
HENRIOD, Justice.
This case is here on rehearing and was reported before in 2 Utah 2d 74, 269 P.2d 847, where we held that 'plaintiff was not entitled to the amount of dividends declared by defendant and paid to one Leary by mistake, under circumstances outlined below. We now hold that plaintiff is entitled to the amount of such dividends for the reasons herein set forth. The judgment of the lower court is affirmed, with costs to plaintiff.
In brief, the facts are as follows: Before 1931 one Dalziel was the owner of record and the true owner of shares of the defendant corporation. In 1931 plaintiff became the lawful owner of such shares, and in 1951 she sold the same. Between 1931 and 1951, dividends were declared. Plaintiff did not advise defendant of her ownership or possession of the certificates before she sold them. Leary claimed to be the owner thereof by purchase from a broker, setting forth such claim, together with the assertion that the certificates had been lost, in an affidavit signed in 1949, which, together with a so-called "assignment" of interest from the ad-ministratrix of Dalziel's estate, and a bond to protect the company, he presented to the defendant, — all of such asserted claims being untrue. On the'strength of the documents, defendant issued new certificates to Leary and paid him the accrued dividends,— all of which obviously was accomplished by mistake. On discovery .of the error, defendant bought a -like amount of stock and delivered it to plaintiff's vendee, conceding that plaintiff had been the owner of such certificates, but contending, however, that she had not been the owner of the dividends, basing such contention on the theory that the statute protects a corporation in paying dividends to the record owner and that payment to an "assignee" of such record owner is the equivalent of payment to the record owner,- — although the statute specifically does not say this can be done.
The record owner here had noth-' ing to transfer, and any purported assignment by his -administratrix could .transfer. nothing' more. The argument that the record owner is entitled to receive the dividends and hence may assign such dividends. even though he no longer owns the stock, — or the dividends for that matter, — simply ignores rules of property, since a right to receive dividends does not in and of itself establish ownership therein, nor does it permit transfer thereof invulnerable to attack. Best that can be said about such right to receive dividends is that it clothes the one receiving them with the personality of trustee for the true owner, who, we have said, is the owner of the certificate as of the date the dividends were declared. And best that can be said about the statute is that it arbitrarily will protect a corporation, by departing from orthodox principles relating to property, its ownership and incidents, because, as a practical matter, it would be an impossibility for a modern day corporation to ferret out each of its many thousand stockholders existing as of dividend day. Giving the corporation such protection requires strict adherence to the statute and cannot permit something to be read into the statute that isn't there.
We recognize that defendant's authority does not square with our conclusions and that it recognizes rights in an assignee of the record owner, even though, on close analysis, such record owner may not have any dividends to assign, but only dividends which he should hold as trustee for the true stockowner. However, we can see no reason or logic in holding a corporation accountable to the owner of the certificate, but not to the owner of the dividends.
We cannot say that the corporation here was careful or free from negligence in accepting as gospel the statements of Leary that he was the owner of the stock and that the certificates were lost (neither of which facts was true), when the corporation, by the simple, easy device of insisting on making its check payable to the record owner or his estate, could have protected itself and its true stockholder and dividend owner beyond peradventure of doubt. So far as we discern this situation, Leary had no better right either to the certificates or the dividends than a forger or thief would have had, i. e., none would have any interest to transfer or own, — although a forger or thief at least would have possession and thus indicia of ownership, — something which Leary lacked. No one would contend that the corporation could protect itself by paying a forger or thief. The authorities hold that payment to such a person will charge the corporation with actionable negligence, and, as we have said, there seems to be no reason to treat a person in Leary's position any differently, or relieve a corporation in such case, where it has no immunity otherwise. We believe the authorities generally sustain our con- elusions and that defendant's position becomes untenable upon examination of the plain wording of the statute and the application of elementary principles relating to property, its ownership and transfer thereof.
WADE, J., concurs.
. Title 16-2-34, Utah Code Annotated 1953.
. Western Securities Co. v. Silver King Consol. Mining Co., 57 Utah 88, 192 P. 664.
. Cleveland & Mahoning R. Co. v. Robbins, 35 Ohio St. 483.
. Holly Sugar Corp. v. Wilson, 101 Colo. 511, 75 P.2d 149; Citizens' Nat. Bank v. Kellogg, 179 Ind. 621, 101 N.E. 620, 45 L.R.A.,N.S., 1075; Telegraph Co. v. Davenport, 97 U.S. 369, 24 L.Ed. 1047.