Court Opinion

ID: 8687172
Source: CourtListenerOpinion
Date Created: 2022-11-26 00:30:37.964707+00
Date Added: 2024-06-11T16:57:39.029044
License: Public Domain

HOPKINS, District Judge.
Adhering to the views I expressed upon the trial, that the mere assignment of the certificate did not of itself constitute the assignee a stockholder, or create a liability upon the part of such transferee to pay the company the assessment in controversy, in support of which see Humble v. Langston, 7 Mees. & W. 517; Helm v. Swiggett, 12 Ind. 194; Mann v. Currie, 2 Barb. 294; Worrall v. Judson, 5 Barb. 210; Adderly v. Storm, 6 Hill, 624; Marlborough Manuf’g Co. v. Smith, 2 Conn. 579; and also that an equitable holder of stock is not liable to the corporation for stock assessments, Newry Ry. Co. v. Moss, 14 Beav. 64, still, I think I erred in directing a verdict for the defendant instead of submitting to the jury the question as to whether the conduct of the defendant was not equivalent to a request or assent on his part to-the entry of hia name upon the stock book as a stockholder, and also whether the company had not, by entering his name as a stockholder in the stock register, given him the position of a legal member, and recognized the- transfer to him as sufficient, notwithstanding its want, of conformity to the formal transfer contemplated by its by-laws. There was some testimony given tending to show such facts, which, I think, should have been left to the jury.
The provision requiring the transfers to be upon the books was for the benefit of the company, and the company could waive it, and if waived at defendant’s request or with his consent, express or implied, he would be liable directly to the company for future assessments.
The registry of his name upon the books as a stockholder gave him all the rights of a •stockholder, the right to vote and participate in dividends, and converted that which was before an equitable into a legal relation, upon which his liability for assessments would attach. New Albany R. Co. v. McCormick, 10 Ind. 499. A new certificate was not necessary to constitute him a stockholder. Chester Glass Co. v. Dewey, 16 Mass. 94; Chouteau Spring Co. v. Harris, 20 Mo. 382. At the time of the assessment he was a registered stockholder, and as that gave him certain rights and benefits in the company, the law presumes that the registry was at his request. Tompkins v. Wheeler, 16 Pet. [41 U. S.] 106.
The assignment of the certificate. with- notice to the company conferred protection as against creditors of the assignee, and restrained the company from transferring or consenting to the transfer to any other party without incurring liability to him. Black v. Zacharie, 3 How. [44 U. S.] 463.
It was the duty of the defendant, as between him and the assignee, to pay all assessments after the transfer, although not registered. Brigham v. Mead, 10 Allen, 245; Shaw v. Rowley, 16 Mees. & W. 809; Walker v. Bartlett, 36 Eng. Law & Eq. 368; Huddersfield Canal Co. v. Buckley, 7 Term R. 36.
The cases hold that upon an assignment good as between the parties, this duty attaches. In Hall v. U. S. Ins. Co., 5 Gill, 484, it is held that when a purchaser of a stock certificate paid an assessment, without being registered as required by the charter, he was estopped from setting up such want of registry in an action afterwards brought to collect another assessment; that in paying he had acknowledged his obligation, and was liable to the company as a stockholder without being registered.
In Chittenham & G. W. Ry. Co. v. Daniels, 7 Eng. Ry. Cas. 728, it is also held that a purchaser may be estopped by his representations and made liable for calls before his name is actually substituted upon the registry. See also pages 735 and 870 for other *833cases to same effect, and Eames v. Wheeler, 19 Pick. 442.
NOTE. At the next trial of this case, at the May term. 1873, before Blodgett. J., and a jury [Case No 16,799], a verdict was rendered against the defendant for the unpaid balance on his stock, $12,000 and interest. The case is now pending in the supreme court. [Case unreported.] See, also, British & Am. Tel. Co. v. Colson. 6 L. R. Exch. 108, and Hebbs’ Case, 4 L. R. Eq. 9, and cases there cited, where the defendants were held not stockholders, as having never duly accepted the allotment of shares.
[See Case No. 16,801.]
The doctrine seems to be well settled that a certificate to a party, or registry of his name upon the stock register, is not absolute-, ly necessary to constitute the legal relation or privity. The purchaser may waive it and be held liable without either a certificate or registry of his name. The corporation may waive the formal transfer and register the purchaser’s name without any other transfer than the assignment in blank of the certificate.
In view of these principles and the equitable obligations of the purchaser to pay subsequent assessments, slight evidence of mutual recognition by the corporation and purchaser of the relation of stockholder might be sufficient to change the equitable relation | into a legal one, so as to make the purchaser liable directly to the company, and I am not prepared to say that the jury in this case might not have been warranted, upon the facts shown, in finding the defendant a stockholder, notwithstanding that a certificate of stock had never been issued to him.
The company after registering his name, as such, would be estopped from setting up that the formal transfer was not made, and after having registered his name it is very questionable whether it could collect of the original holder future assessments, or be allowed to question the sufficiency of the assignment. The company having accepted and substituted another party as stockholder, the liability of the original subscriber ought to terminate with his rights as stockholder. Shortridge v. Bosanquet, 17 Eng. Law & Eq. 331: Ex parte Bagge, 4 Eng. Law & Eq. 72; 1 Redf. R. R. § 41, and note. In this case the provision in regard to the mode of transfer is in the by-laws and not in the charter, and it may be that its observance is not as indispensable to vest the title in the assignee as it would be if it were in the charter. Chambersburg Ins. Co. v. Smith, 11 Pa. St. 120; 1 Redf. R. R. § 42.
Certain principal facts were proven, not admitting of doubt or controversy, while certain others were proven, not of themselves decisive, but as forming the foundation of inferences or conclusions, which inferences or conclusions were for the jury to find. I take it, if the jury should find that both parties waived a formal transfer, they would be bound by such waiver.
In view of these considerations I think a new trial should be granted.