Barrett v. King

• Citation: 63 N.E. 934,181 Mass. 476
• Parties: BARRETT v. KING et al.
• Decision Date: 22 May 1902
• Court: United States State Supreme Judicial Court of Massachusetts

181 Mass. 476

63 N.E. 934

BARRETT v. KING et al.

Supreme Judicial Court of Massachusetts, Suffolk.

May 22, 1902

COUNSEL

Whipple, Sears & Ogden and Ethelbert & Grabill, for plaintiff.

Peabody & Arnold, for defendants.

OPINION

HOLMES C.J.

This is an action of tort for the conversion of twenty shares of stock in the Continental Brewing Company, by a refusal to transfer it to the plaintiff on the books of the company. It may be assumed for the purposes of decision that the stock was purchased on the plaintiff's behalf, but it stood in the name of one W. A. Holmes, who judorsed the certificate and handed it over to the plaintiff as soon as he got it. This certificate was expressed to be transferable only in accordance with the by-laws of the company printed upon it and one of those by-laws forbade a disposition of the stock unless the stockholders, at least thirty days previous thereto, should have offered in writing to sell the same to the board of directors upon the same terms and the offer had not been accepted. There was no evidence that Holmes had made such an offer and the judge of the superior court ordered a verdict for the defendant, subject to the plaintiff's exception. If this course was right it is unnecessary to consider the various minor questions that were raised while the plaintiff's case was going in.

It is argued that the plaintiff is not within the by-law because she was an undisclosed principal and should be regarded as having had the legal title from the moment of the purchase with her money. But we might as well talk about an undisclosed principal in a deed of land. The corporation has nothing to do with undisclosed equities or undisclosed relations. The only person whom it can recognize as owner is the one who appears as such upon its books. J. H Wentworth Co. v. French, 176 Mass. 442, 57 N.E. 789. And if, after it has issued a certificate, some one else claims rights in the stock, it is entitled to require that person before disturbing it, to establish his right in accordance with the lawful conditions which the certificate expresses. We may observe that in the plaintiff's argument she is called an original subscriber, but that this would be inaccurate even if the argument were better than it seems to us. Holmes purchased of the defendant King. We do not perceive, however, that this fact is material on eithere side.

But it is said that if the plaintiff has to claim by virtue of Holmes's indorsement, then she has a legal title to the stock by transfer. For it is said that the by-laws do not purport to make invalid a transfer without a previous offer to the directors, and that if they do they are against public policy and void. As to the meaning of the by-laws we shall not spend argument. They certainly did not mean to leave the company and the directors liable to an action for refusing to carry out what they prohibit. As to public policy, we see nothin in the provision contrary to that at least as between the plaintiff and the corporation. The law of West Virginia under which the defendant corporation was organized, is not before us. Under the law of Massachusetts, the stipulations, considered as a contract between the corporation and Holmes, undoubtedly would be lawful. Trust Co. v. Abbott, 162 Mass. 148, 38 N.E. 432, 27 L. R. A. 271. And this decision goes far to sustain the by-law as such, by consequence. See Feckheimer v. Bank, 79 Va. 80, 83. Furthermore, looking at the stock merely as property, it might be said that, so far as appears and probably in fact, it was called into existence with this restriction...