Court Opinion

ID: 6545038
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:18:53.911924+00
Date Added: 2024-06-11T15:55:56.612587
License: Public Domain

BattuE, J. (dissenting.) Can a transferee of corporate stock, whose transfer has 'not been registered in the county clerk’s .office, hold the stock as against an attaching creditor, with notice of such transfer received by him prior to a sale under a judgment rendered in the attachment proceeding? The answer to this question depends upon section 1338 of Sandels & Hill’s Digest, which is as follows: “Whenever any stockholder shall transfer his stock in any such corporation, a certificate of such transfer shall forthwith be deposited with the county clerk aforesaid, who shall note the time of said deposit and record it at full length in a book to be by him kept for that purpose; and no transfer of stock shall be valid as against any creditor of such stockholder until such certificate shall have been so deposited.” What is the object of the deposit and record of the certificate of transfer? In Batesville Telephone Company v. MyerSchmidt Grocer Company, 68 Ark. 115, this court said that its object “is to make known the names of the stockholders and the number of shares owned by each of them.” To make known to whom? Obviously, creditors. If it had any other object, why does the statute declare that “no transfer of stock shall be valid as against any creditor of such stockholder until such certificate shall have been so deposited?” The deposit and record were intended for the protection of the creditor by giving him notice of the transfer. The statute provides that it shall be invalid as to creditors, and not to any one else, “until such certificate shall have been so deposited.” When deposited, the transfer shall become valid as to creditors, thereby showing that the deposit and record are required for the protection of the creditor. If such is not its object, why declare the effect of the failure to deposit the certificate of the transfer with the county clerk to be to render it invalid as to creditors, and as to them only so long as such failure continues? Under no circumstances is the transfer declared void as to any other persons. The question suggests its answer. Its object is to give notice to creditors. Such is the object generally of recording acts. Notice being the object of recording acts, it has been held, with few exceptions, that actual notice is equivalent to registration to all persons who have received it. While a record of an instrument of writing is constructive notice to all the world that comes after, any other notice is equally as good so far as it goes. Such doctrine has been maintained undér statutes “which declare without qualification.that an unacknowledged or unrecorded deed shall be void as against purchasers; or as against all persons who are not parties to the conveyance.” In Massachusetts a statute provided that a conveyance shall not “be good and effectual against any other person than the grantor and his heirs unless acknowledged and recorded.” “But,” said Parsons, C. J., in Norcross v. Widgery, 2 Mass. 506, “if the second purchaser, had notice of the first conveyance, the intent of the statute is answered, and his purchase afterwards is a fraudulent act.” The same construction was placed upon a similar statute in Rhode Island. In Westerly Savings Bank v. Stillman Manufacturing Co., 16 R. I. 497, the court, in speaking of this statute, said: “We understand that it has always, notwithstanding the absoluteness of its language, been construed to be subject to an exception, implied from its purpose as a provision for the protection of bona fide purchasers and creditors, to the effect that any deed, valid between the parties and their heirs, though neither acknowledged nor recorded, shall likewise be valid as to other persons having actual notice of it; "so that if any other person having such notice take a conveyance of the land covered by the prior deed, he will take it subject to any right, title or interest therein created by the prior deed as fully as if the prior deed had been duly acknowledged and recorded. * * * This construction is confirmed by numerous decisions under similar statutes in other States, some of which follow: Norcross v. Widgery, 2 Mass. 506; State of Connecticut v. Bradish, 14 Mass. 296; Trull v. Bigelow, 16 Mass. 406; Jackson, dem. Gilbert v. Burgott, 10 Johns. Rep. 457; Van Rensselaer v. Clark, 17 Wend. 25; Rogers v. Jones, 8 N. H. 264; Emmons v. Murray, 16 N. H. 412; Hart v. Farmers & Mechanics Bank, 33 Vt. 252; Ohio Life Ins. Co. v. Ledyard, 8 Ala. 866; Rupert v. Mark, 15 Ill. 540; Correy’s Lessee v. Caxton & Rees, 4 Binney, 140. * * * This construction finds countenance in the wording of the statutes of some of the States; but the construction is the same, generally, even when the statute declares unqualifiedly that unregistered conveyances shall be void as against purchasers, or as against all persons who are not parties to the conveyance. LeNeve v. LeNeve, Ambler 436, 2 White & Tudor, Lead, Cas. Eq. 4th Am. Ed. 109, and cases cited in American notes on pages 213, 214.” The reason for this rule is forcibly stated by Judge Redfield in Hart v. Farmers & Mechanics Bank, 33 Vt. 252. He says: “Where a party proposes to take advantage of the literal application of the provisions of the registry system to perpetrate a fraud by levying upon the land, or purchasing it, after he has knowledge of .an unregistered deed, the law interferes by mere construction, and engrafts an exception, not named in the statute, but which it is necessary to imply, in order to defeat the fraudulent use of the provisions of the statute, which it is always safe to presume that the Legislature did not intend.” The same construction was placed by this court upon the following statute: “No deed, bond, or instrument of writing, for the conveyance of any real estate, or by which the title thereto may be affected in law or equity, hereafter made or executed, shall be good or valid against a subsequent purchaser of such real estate for a valuable consideration without actual notice thereof; or against any creditor of the person executing such deed, bond or instrument, obtaining a judgment or decree, which by law may be a lien upon such real estate, unless such deed, bond or instrument, duly executed and acknowledged, or proved, as is or may be required by law, shall be filed for record in the office of the clerk and ex officio recorder of the county where such real estate may be situated.” Sand. & H. Dig. § 728. In Byers v. Engles, 16 Ark. 543, this court, ixx speaking of this statute, said: “It will be seen that the 30th section makes deeds, etc., filed for record, constructive notice from the time they are filed. And the 31st section makes actual notice equivalent to registry notice as against purchasers, but does not, in express terms, extend to judgment lien creditors; thus leaving the latter clause of the section, which relates to judgment lien creditors, to be construed in view of the whole statute, and its obvious intent according to precedent and authority. Considering the statute as, in terms, declaring unregistered deeds, etc., void as against subsequent judgment liens, the question is, shall we give this statute a literal construction, by which judgment lien creditors will override incumbrances or conveyances not of record at the time judgment is obtained, wholly irrespective of any actual notice which the judgment creditor may have; or shall we place this class of creditors upon the same general footing of creditors who contract for liens, and hold actual notice equivalent to registry notice in all cases?” This court held in that case that notice of an instrument of writing, at any time before, or at the time of, a sale under execution would in all respects, as to execution or attaching- creditors, be equivalent to registration under the statute; “and that actual notice, or the filing for record of an instrument affecting real estate, at any time before sale, would be sufficient to protect the rights of the vendee as against the creditor of the vendor.” After reviewing a long line of decisions, and finding them to the effect it held, this court said : “Upon general principles, therefore, the construction of the registry acts may be said to be well and firmly established, and it is but fair to suppose that the language of our statute, being like that of the English, and most of the American States, was adopted with reference to the uniform construction which these statutes had received. And so permanently has this construction been settled, as well as a like liberal construction of the statute of frauds, and some others, that to change the construction given by the courts would, in effect, be changing the law itself.” Again, it said, in the same connection, in the same case: “In view of the object intended to be effected, * * * and the almost uniformly liberal construction which the courts have given to them (the registry acts), we do not feel at liberty to depart from the spirit of these decisions, wnich look beyond the mere letter of the act, and give it such an interpretation as to protect the innocent purchaser and creditor from fraud, but at the same time never to allow a fraud to be perpetrated under cover of the statute. Should we go back to a literal construction of this act, we might, with the same propriety, indulge in a like limited construction of our statute of frauds, to which, like those of other States and of England, we have given a liberal construction; indeed, so uniformly has this construction been given to both these statutes, and also, to some others of like class that the law and its judicial interpretation are so delicately interwoven, and rights so spring into life under them, that a change in the decisions would be, in effect, a repeal of the act itself?” The ruling in Byers v. Engles has been approved and followed, without any exception, in every subsequent case that has come before this court involving the construction of our registry acts. Hornor v. Hanks, 22 Ark. 580; Peay v. Capps, 27 Ark. 164; Doswell v. Adler, 28 Ark. 85; Shinn v. Taylor, 28 Ark. 528; Stirman v. Cravens, 29 Ark. 561; Jackson v. Allen, 30 Ark. 115; Pindall v. Trevor, 30 Ark. 267; Apperson v. Burgett, 33 Ark. 336; Williams v. McIlroy, 34 Ark. 92; Atkinson v. Ward, 47 Ark. 540; Watson v. Murray, 54 Ark. 508; Tennant v. Watson, 58 Ark. 258. But in Main v. Alexander, 9 Ark. 112, it was held that a mortgage is no lien upon the mortgaged property as against strangers until it is filed for record, “even, though they may have actual notice of its existence.” That decision was based upon a statute which provides: “Every mortgage, whether for real or personal property, shall be a lien on the mortgaged property from the time the same is filed in the recorder’s office for record, and not before, which filing shall be notice to all persons of the existence of such mortgage.” (Sand. & H. Dig. § 5091.) The ruling in that case is based upon the peculiar language of the statute, and is an exception to the equitable rule of construction that is usually applied to statutes upon the subject of registration ; and this court, in following it, has yielded obedience to what it deemed the “unbending and imperious requirements of a legislative enactment,” and has never extended it to facts that do not fall within the language of the statute. Fort Smith Milling Co. v. Mikles, 61 Ark. 127; Martin v. Schichtl, 60 Ark. 595; Moore v. Little Rock, 42 Ark. 69; Mitchell v. Wade, 39 Ark. 386. There is no similarity in the language of the statute upon the registration of mortgages and that upon the transfer of corporate stock. But there is a strong similarity in the language of the statute as to the recording of deeds and the latter statute. For the purpose of comparison, I insert the provisions of the statutes made for the benefit of creditors in parallel columns: “No deed, bond or instrument of writing, for the conveyance of any real estate, or by which the title thereto may be affected in law or equity * * * shall .be good or valid against * * * any creditor of the person executing such deed, bond or intrument * * * unless such deed, bond or instrument * * * shall be filed for record in the office of the clerk and ex officio recorder of the county where such real estate may be situated.” Sec. 728. “Every mortgage * * * shall be a lien on the mortgaged property from the time the same is filed in the recorder’s office for record, and not before.” Sec. 5091. “Whenever any stockholder shall transfer his stock in any such corporation, a certificate of such transfer shall forthwith be deposited with the county clerk * * * and no transfer of stock shall be valid as against any creditor of such stockholder until such certificate shall have been so deposited.” Sec. 1338. This comparison shows that Byers v. Engles, supra, and the numerous cases that have followed it are decisive of the question propounded in the beginning of this opinion. In view, therefore, of the object intended to be effected by the statute that requires the transfer of corporate stock to be filed for record, “and the almost uniformly liberal .construction which the courts have given” such statutes, I do not think it wise to depart, from the spirit of these decisions, but, on the contrary, for the purpose of protecting the innocent purchaser and creditor from fraud, and preventing the statute becoming an instrument or cover of fraud, and for the purpose of preserving the symmetry of our laws, I think that we should adhere to them. I answer the question first propounded in the opinion in the affirmative. Riddick, J., concurs with me.