Basting v. Northern Trust Co.
| Decision Date | 07 June 1895 |
| Docket Number | Nos. 9503 - (328).,s. 9503 - (328). |
| Citation | 61 Minn. 307 |
| Parties | THEO. BASTING, Receiver, v. NORTHERN TRUST COMPANY.<SMALL><SUP>1</SUP></SMALL> |
| Court | Minnesota Supreme Court |
Cobb & Wheelwright, for appellant.
Carman N. Smith, for respondent.
The plaintiff, as receiver of the Times Company, appointed in proceedings under G. S. 1894, § 5897, brought this action to recover a call on 75 shares of the capital stock of the insolvent corporation alleged to be owned by the defendant. The defendant denied that it was the owner of the stock. When plaintiff rested the court dismissed the action on the ground that the stock had never been transferred to defendant on the books of the corporation, and hence no relation of privity, such as to impose upon it the obligation of a legal stockholder, existed at the time the call was made. The correctness of this ruling is the only question presented by this appeal. The facts are practically undisputed.
The Times Company was organized under G. S. 1894, c. 34, tit. 2, § 2794 et seq. The statute, it will be remembered, provides that the stock of any such corporation shall be transferable only on the books of the company, and that a transfer shall not be valid, except as between the parties, until it is regularly entered on the books of the company, so far as to show the names of the persons by and to whom transferred, the numbers or other designation of the shares, and the date of the transfer; also that the books of the company shall be so kept as to show intelligibly the original stockholders, their respective interests, the amount which has been paid in on the shares, and all transfers thereof. G. S. 1894, §§ 2599, 2796, 2799.
This company kept no regular "stock book." It kept a "certificate book," containing printed certificates of stock, which, as occasion required, were filled out, signed by the proper officers, and then delivered to the subscribers. In this certificate book there was a stub opposite each certificate, on which was entered the name of the person to whom issued, the date of issue, and the amount or number of shares. When a certificate was surrendered and canceled, an entry of the fact was usually made on the corresponding stub, and the canceled certificate pasted into the book. It appears that the stock certificates were issued before the stock was paid for in full, and there was nothing in the certificate book to show the amount which had been paid on the shares. The method adopted by the company to show this fact was to open in its general ledger a "stock account" with each shareholder, showing the number of shares held by him, and in which he was charged with the amount of all calls made thereon, and credited with all sums paid on such calls.
One Nimocks having subscribed for 75 shares of the capital stock of the company, a certificate was issued to him, by the terms of which the stock was transferable only on the books of the company on surrender of the certificate. The usual entry or notation was made on the stub, showing the date and amount of the certificate, and the name of Nimocks as the person to whom it was issued. The company also opened in its ledger the usual stock account with him, as a shareholder. Subsequently the company made a "call" on the stock, which Nimocks failed to pay. In this condition of affairs the defendant, the trust company, upon an execution issued on a judgment in its favor against Nimocks, levied upon and sold the stock, became the purchaser at the execution sale, and received a certificate of sale from the sheriff.
The defendant had been informally advised that the Times Company claimed a lien on the stock for the unpaid call, and would not transfer the stock on its books to the defendant until this call was paid. Nevertheless, on November 15, 1892, the defendant served on the Times Company a notice that it was the owner of stock, as evidenced by the stock certificate indorsed by Nimocks, and by the sheriff's certificate of sale, and requiring the Times Company to transfer the stock to the defendant, on its books, and to issue to it a new certificate. This notice was accompanied by the stock certificate indorsed by Nimocks, and by the sheriff's certificate of sale. The Times Company declined to make the transfer at that time, but the court correctly states in its memorandum that "because of the incumbrance then resting on the stock, arising from the unpaid call theretofore made upon Nimocks, the defendant was not entitled to a compliance with its demand; and this was understood to be the reason, and the only reason, at the time, by both parties, for the refusal." The defendant made no offer to pay this call, but left the notice, together with the stock certificate and the sheriff's certificate of sale, with the defendant.
Matters rested thus until February, 1894, when the Times Company succeeded in collecting from Nimocks the amount due on the call referred to. Thereupon, and about the 21st of that month, it made in Nimocks' stock account (a copy of which is to be found on page 82 of the paper book) in the ledger the following entry: "C. A. Nimocks, under execution sale, sold to Northern Trust Co. 75 shares." No entry or memorandum of this sale was made on the certificate book, and the above was the only entry of the transfer ever made on the books of the company. It appears that this entry was first made in pencil, and afterwards in ink. There is some question, under the evidence, whether this change was made in February, or at some later day between that date and May 28 following; but we do not deem this question at all material.
The next thing done was that on May 28 the directors made a call (the one sued on) of 48½ per cent. on the stock, and on the same day called a special meeting of the stockholders, for June 4, to consider the financial condition of the company. Notice of the call and notice of this special meeting were both served on defendant at the same time. The only action of the defendant on receipt of these notices was as follows: The president of the defendant executed to its attorney a written authority or proxy to attend the special meeting of the stockholders, and "represent it," or "represent the interests of the company," but accompanied, as the president testified, with verbal instructions "not to represent it in a voting capacity, as a stockholder." The attorney attended the meeting, and, before it convened, made inquiries of the...
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Basting v. N. Trust Co.
...61 Minn. 30763 N.W. 721BASTINGv.NORTHERN TRUST CO.Supreme Court of Minnesota.June 7, 1895. [63 N.W. 721](Syllabus by the Court.) Held that, upon the facts in this case, there was a sufficient transfer of stock upon the corporate books, and a sufficient mutual recognition by the corporation and the ......