Court Opinion

ID: 9833982
Source: CourtListenerOpinion
Date Created: 2023-09-01 23:12:09.127149+00
Date Added: 2024-06-11T07:44:10.157217
License: Public Domain

*138On Motion for Rehearing.
Numerous objections are urged to the conclusions presented in our original opinion. Perhaps the vital contentions are that the writ of mandamus is a legal remedy, and that appellant is entitled to an unconditional order of the court requiring the bank to transfer upon its books the 25 shares of capital stock which had been pledged by Holbrook to the Security State Bank of Fort Worth, regardless of whether or not the appellee bank of Iowa Park was entitled to a lien as asserted by it. Another contention stressed in the motion is to the effect that the answer of the Iowa State Bank, asserting a lien on Holbrook’s stock, amounts to a legal action, and that hence its action is undoubtedly barred by limitation, regardless of the rule referred to in our original opinion that in equity, a right as distinguished from the remedy, is often available in defense when it would be barred, if asserted affirmatively in a legal action.
It is true the statute and Constitution in terms authorize the district court to issue writs of mandamus, and hence, in a sense, the remedy may be said to be a legal one. It is to be observed, however, that the statute does not undertake to define the term (see Rev. Stats, art. 1914; Const, art. 5, § 8), but its functions have often been held to be properly applicable only in cases where, as here, there was no* specific legal remedy. Steele v. Goodrich et al., 87 Tex. 401, 28 S. W. 939; Aycock v. Clark, 94 Tex. 375, 60 S. W. 665; Arkansas Building & Loan Ass’n v. Madden. Secretary of State, 91 Tex. 461, 44 S. W. 823. Thus operating in the field of equitable jurisprudence. See Simpkins on Equity, p. 96 et seq. Moreover, as it seems to us, the title acquired to the Holbrook stock by the Security State Bank of Fort Worth was, con-traiy to appellant’s, contention, an equitable title, and not a legal one.
As we understand the record, the Holbrook stock was merely pledged to the Security State Bank to secure the Holbrook indebtedness to that bank. In 14 Corpus Juris, p. 746, § 1136, it is said: “As a general rule the plédgee cannot become a purchaser of the stock pledged at a sale thereof by him, unless the pledgor either by the terms of the contract of otherwise consents to his doing so.”
On page 753, § 1151, it is said: “Under, a provision requiring a transfer of stock to be made on the books of the corporation, an unregistered transfer passes to the transferee, as against the corporation, only an equitable title, and confers on him, as against the corporation, no rights except that of having the stock properly transferred to him on the books of the corporation, or of suing to establish and protect his rights in .the corporate property, such as against the corporation in committing ultra vires acts, -or in disposing of or dissipating the corporating assets. Until such entry is made, the person in whose name the stock is registered is, as between himself and the corporation, the owner to all intents and purposes, and the corporation has the right to treat and deal with him on that assumption, unless it has notice of the transfer, or unless it waives or is estopped to require registration of the transfer. * * ⅞ ”
Again, on page 757, § 1158, it is said:
“In General. Subject to the right of the corporation to assert a lien on the shares, and to make reasonable regulations in regard to the manner in which the transfer shall be made, a transferee of stock properly assigned ordinarily has the (right to have it transferred to his name on the books of the corporation, and to have a new certificate issued to him, even after the death of the transferor.” * * *
But in the following section, to wit, section 1159, it is further said:
“In General. The corporation should at all times regard its own interest, as well as those of the stockholders in making transfers, and it must exercise ordinary care in doing so, and hence it may always refuse to make a transfer when it has reasonable grounds for so doing, but it must act in good faith, and present some adequate reason for the refusal.
“Sufficient Grounds. A corporation may properly refuse to transfer the shares where the person requesting the transfer fails to produce sufficient proof of his right or title to such transfer, or fails to produce the certificate of stock, or proof of its loss or destruction ; * ⅜ * where the corporation has some claim upon the stock, or some rights against the claim upon the stock, or some rights against the transferor that might be affected or lost by the transfer, as where it is indebted to the corporation, or has not paid his original subscription,” etc.
We will not take the time to discuss the numerous authorities cited in the notes to support the text. But we think it must be conceded that the specific requirement written in the face of the Holbrook stock, of which the Security State Bank and appellant had full notice, that it was transferable on the books of the bank, must be given some effect. Thereby some right, privilege, benefit, or control over the stock and proceedings relating thereto must be inferred and assumed. Whatever be the nature of the right, benefit, or control, it was not destroyed by Holbrook’s assignment, nor can it be said that such right or benefit was in any way interrupted or questioned until the institution of this suit. The right or equity of the bank became fixed, we think, when it paid the assessment due from Holbrook made in obedience to the order of the commissioner of insurance and banking and we fail to see *139that appellant’s plea of limitation is applicable in any view of the case.
It is further very earnestly insisted that-the Iowa- State Bank had no lien, equitable or otherwise, for reimbursement. While in our original opinion we indicated that we were inclined to the view relating to that subject expressed by the Kentucky case of Corbin Banking Co. v. Mitchell, 141 Ky. 172, 132 S. W. 426, 31 L. R. A. (N. S.) 446, and while several cases, not available to us, cited on pages 963, 964, and 965 of volume 6, Century Edition of the American Digest, are said to hold that a bank has a lien on its stock to secure an indebtedness of a stockholder, yet'we were not and are not convinced that, in order to support the judgment of the court below, it is necessary that a definite ruling by us on that question be made. We certainly think the circumstances sufficiently establish a natural right or equity, however classified, that will fall within the expanding principles of equity indicated by the authorities from which we quoted in our original opinion. Moreover, as stated, we conclude that the assignment or pledge to the Security State Bank only passed the equitable title to Holbrook’s stock, and the judgment of the trial court granted the prayer of appellant for the mandamus, merely attaching the condition that appellant meet the right and equity found to exist and remain in appellee. The case, therefore, is not an independent .action, by the appellee bank, asserting and endeavoring to -foreclose an equitable lien founded on its payment of the Holbrook assessment. We fail to see how appellant can justly complain of the condition upon which he was granted the relief he prayed for, or, if he refuses to do equity by complying with such condition, to complain of the judgment of the court giving life or fruition to appellee’s equity.
Motion for rehearing will accordingly be overruled.