Court Opinion

ID: 6474209
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:33:33.892395+00
Date Added: 2024-06-11T15:53:54.919680
License: Public Domain

CUNNINGHAM, J.,
Dissenting.—The plaintiff asserts title to 50,000 shares of the stock of La Demócrata Oananea Sonora Copper Company, a corporation organized and existing under and by virtue of the laws of Arizona. Plaintiff’s title to the stock was acquired by means of a promoters’ contract, ratified by the said corporation after its organization, by which the promoters became entitled to the stock, and, through plaintiff’s testator and another of the promoters, plaintiff acquired her title. The certificates of stock were issued to the defendant, and he holds such certificates. This plaintiff as*563serts title to the shares, alleging that the defendant claims to be the owner of said stock, and that demand has been made upon him for the delivery of the same and the delivery refused.
This appeal does not raise questions based upon the sufficiency of the complaint to state a cause of action, but the question here raised is whether the court can entertain the suit for the purposes for which the action is commenced. Necessarily the complaint, having for its purpose the enforcement of the cause of action attempted to 'be stated, must be examined to determine whether, upon any theory, the suit may be maintained against a nonresident defendant upon constructive service.
The relief' demanded limits the right to recover. Here plaintiff demands an adjudication upon the ownership of 50.000 shares of corporate stock, now issued to and standing in the name of the defendant, and prays that plaintiff’s title to said stares of stock be quieted and established, and that defendant be “directed to cause to be issued and to deliver certificates for said 50,000 shares of stock to the plaintiff, and that the defendant be ordered and directed to deliver up for cancellation 50,000 shares of the stock now held by him,” that the defendant be required to discover certain facts, and “for such other and further relief as may be just.”
No argument need be advanced to sustain the position that the defendant must be personally before the court in order that the mandate of the court will affect him, and require him “to cause to be issued and to deliver certificates for said 50.000 shares of stock to the plaintiff, and that the defendant be ordered and directed to deliver up for cancellation 50,000 shares of the stock now held by him.” The court must also necessarily hold the defendant within its grasp, in order to require him to discover to the court the other facts complained of and alleged to be within his knowledge.
Whether the court may determine the title to the stock and quiet plaintiff’s title thereto, in the absence of the defendant holding the legal evidence of title, is the only question involved for decision. The prayer for general relief is effective only after a trial on the merits, and such general relief may then be granted as may seem equitable and just upon the facts shown.
*564“A state court .cannot determine the validity of any demand against a nonresident without personal service or personal appearance, beyond such as may be satisfied by' his property within its jurisdiction.” Freeman v. Alderson, 119 U. S. 185, 30 L. Ed. 372, 7 Sup. Ct. Rep. 165.
No effort is here made to satisfy any demand of plaintiff out of defendant’s property, within the jurisdiction of the court. Plaintiff’s demand here is to have plaintiff’s title established. Plaintiff necessarily denies that the property affected belongs to defendant' at all. The shares of stock are within the jurisdiction of the court, and must remain there, whoever is or may be or become the owner. The interest represented by the shares of stock is held by the corporation for. the benefit of the true owner. Jellenik v. Huron Copper Min. Co., 177 U. S. 1, 44 L. Ed. 647, 20 Sup. Ct. Rep. 559.
In order to grant the relief demanded, the court must, by its decree, establish the plaintiff’s title to the shares of stock and find that plaintiff is entitled thereto, and cause a transfer of the title wrongfully standing in defendant’s name to the plaintiff. If the decree of the court cannot be given effect, the decree in nugatory as a necessary consequence. This is the principle upon which the right to proceed against the thing itself, in the absence of the owner, is based. This is borne out in Judge FIELDS’ opinion quoted in the majority opinion of the court. To repeat that quotation, is of advantage to a clear understanding of what I mean:
Suits in rem are divided into four classes: “First, those which are directed primarily against particular property, and are intended to dispose of it without reference to the title of individual claimants; second, those which are instituted to determine the status of particular property or persons; third, those which are, in form, personal suits, but which seek to subject property brought by existing lien or by attachment, or some collateral proceeding, under the control of the court, so as to give effect to the rights of the parties; and, fourth, those which seek to dispose of property, or relate to some interest therein, but which touch the property or interest only through the judgment recovered.”
If this action comes within any of the classes of actions thus described, it comes within either the third or the fourth class. If within the third class, then the property must be brought *565under the control of the court, “so as to give effect to the rights of the parties.” The property is concededly within the territorial jurisdiction of the court, and is held by the corporation in trust for the owner. The corporation is not before the court in any capacity, as adverse owner, as trustee, as stakeholder, or at all. If the corporation was brought before the court by some collateral proceeding, so that it is subject to the orders of the court, as regards these shares of stock, then the property, the shares of stock, would be under the control of the court, and the court would then have the power “to give effect to the rights of the parties.” Without the presence of the corporation in court, the shares of stock cannot be transferred by a decree of the court to that effect. Paragraph 2106, Civil Code of 1913, controls, and is as follows:
“Transfer of the stock (of corporations) shall not be valid except as between the parties thereto, until the same is regularly entered upon the books of the company so as to show the names of the persons by whom and to whom the transfer is made, the number or other designation of the shares, and the date of the transfer. ...”
By this statute the decree of the court establishing plaintiff’s title to the shares of stock standing in the defendant’s name would be ineffective for any purpose of transfer until the same is regularly entered upon the books of the company. Certainly the shares of stock are not in the control of the court, if the court is powerless to give effect to its decree in that proceeding.
I am of opinion the plaintiff has not brought herself within the third class of cases, supra. We have just seen that the decree recovered does not touch the property in the shares, in the absence of some collateral proceedings bringing the corporation before the court.
I am of opinion that the property in the shares of stock involved is not before the court in this action, and the court has no jurisdiction over it, so as to proceed to adjudicate its status as between the adverse claimants and give effect to its decree. Por this reason the judgment should be affirmed.