Batesville Telephone Co. v. Meyer-Schmidt Grocer Co.

• Decision Date: 21 April 1900
• Parties: BATESVILLE TELEPHONE COMPANY v. MEYER-SCHMIDT GROCER COMPANY
• Court: Arkansas Supreme Court

56 S.W. 784

68 Ark. 115

BATESVILLE TELEPHONE COMPANY v. MEYER-SCHMIDT GROCER COMPANY

Supreme Court of Arkansas

April 21, 1900

Appeal from Independence Circuit Court RICHARD H. POWELL, Judge.

Judgment reversed.

J. C Yancey, J. W. Butler, Rose, Hemingway & Rose, and J. M Moore, for appellants.

The statute (Sand. & H. Dig., § 1338) requiring that all transfers of corporate stock be recorded does not apply to a pledge of stock. 45 P. 320; 93 F. 603; 1 Sumn. 133; 34 A 1127; 34 S.W. 209; 18 id. 549; 87 F. 58; 4 Mass. 511; 3 Binn. 394; 2 Cow. 526. In New York it is held that the registration laws have no effect as to equitable claims. 49 N.Y. 222; 14 id. 560; 22 Wend. 362; 34 N.Y. 80. See also, 3 How. 512. The stock, being under pledge, was not subject to sale under execution. 42 Ark. 236; 58 id. 291; 64 id. 215. Actual notice of the transfer was equivalent to registration. Even in cases of the grossest fraud, fraud and injury must concur, to give a right of action. 12 Pet. 178; 43 Ark. 462; 11 id. 370. That actual notice should be tantamount to the registration prescribed by the statute, see: 16 Ark. 543; 3 Atk. 646; S. C. 2 Lead. Cas. Eq. 35; 26 Ark. 523; 30 id. 114; 47 Ark. 540; 58 Ark. 252; 42 id. 450; 53 id. 139; 34 id. 92; 33 id. 336; 28 id. 85; 93 F. 607; 11 Wall. 369; 15 F. 501; 30 Conn. 270. The doctrine regarding the registration of mortgages laiddown in Main v. Alexander (9 Ark. 112) does notinvalidate this position. That case has been restricted to thenarrowest possible limits. Cf. 61 Ark. 125; 60 id. 595; 43 id. 464; 37 id. 511; 37 Ark. 632; 49 id. 270; 52 id. 385; 42 id. 66. Also that case has been muchdoubted. 39 Ark. 386; 42 id. 148; 41 id. 92. The literalconstructionof the statute, contended for by appellee, can not be maintained. Broom, Leg. Max. 536; 4 H. L. 97; "Any creditor," as used in the statute, should be given a usual and fair construction. 51 S.W. 633; Endl. Stat. §§ 44, 67, 118, 225, 167, 405, 278, 258, 338e, 114, 291,296, 125, 142, 381, 299, 166, 65, 216, 225b, 115, 228, 249, 62, 173, 385r, 151, 345, 248, 227, 340, 121, 334, 251, 170c, 335, 340, 174. An unregistered transfer of stock is good as against an attaching creditor with notice. 7 F. 369; 15 id. 494; 1 Sumn. 153; 3 How. 483; 118 U.S. 9; 116 U.S. 8. Further on the general proposition that actual notice dispenses with necessity of registration, see:--Lowell, Transf. of Stock §§ 91, 96, 105; 2 Freeman Ex. § 348; 1 Mor. Corp. § 196; Cook, Stock, etc. § 489; 2 Thomps. Corp. § 2410; 26 F. 94; 2 E. & B. 624; 29 Pa.St. 398; 137 id. 138; 50 N.H. 571; 52 Vt. 73; 52 N.W. 268; 35 id. 578; 86 Ky. 408; 78 S.W. 295; 6 Mo.App. 454; S. C. 74 Mo. 77; 61 Tex. 114; 12 So. 6; 3 Daly, 219; 48 N.Y. 585; 132 N.Y. 251; S. C. 30 N.E. 644; 46 N.Y. 332; 34 N.Y. 79, 85; 4 Halst. Ch. 167; 29 Pa.St. 146; 63 F. 900; 1 Oh. St. 305; 21 Fla. 1; 35 Cal. 655; 58 id. 603; 64 id. 388; 40 id. 614; 26 Minn. 55; 45 P. 329; 87 F. 58; 26 A. 882; 13 N.J.Eq. 24; 49 N.Y. 222; 14 id. 560; 22 Wend. 362; 34 N.Y. 80; 2 Wheat. 393; 137 Pa.St. 147, 148; 3 Binn. 401; 6 Whart. 116; 146 Pa.St. 356; 44 id. 5; 29 Mo.App. 492; 10 Mo. 388; 52 N.Y. 203; 17 N.J.Eq. 119; 76 N.Y. 371; 31 La.Ann. 149; 30 id. 714; 33 id. 1286; 11 S. Car. 520; Jones, Stockholders, § 160; Cook, stock, etc. § 465; 111 U.S. 479; 103 Mass. 306; 34 A. 1127; 34 S.W. 209; 18 id. 549; 50 Conn. 472; 47 Am. Rep. 663; 3 Paige, 350; 40 Cal. 614; 35 id. 653; 10 Bush 54; 33 N.W. 897; 32 Am. St. Rep. 624; 3 Binn. 394; S. C. 5 Am. Dec. 375; 6 Wash. 597; S. C. 61 N.W. 839.

H. L. Coleman and Robert Neill, for appellees.

It was necessary that the transfer be recorded. Sand. & H. Dig., § 1338; 13 Am. & Eng. Enc. Law, 655. Such a construction will be placed upon a statute as will not suffer it to be eluded. 3 Ark. 285. Byers v. Engles, 16 Ark. 543, relied upon by appellants, is applicable to real estate conveyances; while Main v. Alexander, 9 Ark. 112 applies to mortgage registration. The rule in the latter case--that actual notice does not dispense with the necessity for registration--applies to the case at bar. This still is the rule in Arkansas. 20 Ark. 193; 37 Ark. 91, 94; 18 Ark. 85, 105; 42 Ark. 140; 32 Ark. 598; 22 Ark. 136; 33 Ark. 63, 68; 41 Ark. 186; 35 Ark. 62, 68; 40 Ark. 536; 35 Ark. 365; 49 Ark. 83; 49 Ark. 83; 61 Ark. 123; 54 Ark. 179. As showing the rule in other states see 108 Ill. 459, 461, construing statutes requiring record of conveyances, etc. Cf. 51 Ill. 217, 219; 122 Ill. 657, 668; 53 Ill. 478; 83 Ill. 538; 50 Ill. 444; 128 Ill. 29--all recognizing the distinction as to mortgages. Compare, also, 26 Ind. 124 and 38 Ind. 474, 476, with 125 Ind. 432, 439. See also, in Massachusetts, 13 Metc. 200, 202-3; id. 304; 1 Allen, 373-4; 137 Mass. 460--to the effect that notice is not tantamount to registration of mortgages. See, also, 48 Me. 458; 108 Mo. 451, 458; 31 Mo. 437; 63 Mo.App. 315; 89 Wis. 61, 64; 80 Wis. 339; 24 Wend. 115; 31 Barb. 590, 613, 619; 27 N.Y. 568, 581-2-3; 3 Cranch, 140; 40 Oh. St. 569; 7 ib. 199; 42 Oh. St. 360; 103 Ia. 437; 7 Colo.App. 129; 49 Me. 315; 5 Cal. 186; 7 N. M. 611; 7 Col. 129; 51 Wis. 519; 5 Cal. 186; 9 Cal. 78; 20 Cal. 529.

BATTLE J. BUNN, C. J., dissenting.

OPINION

BATTLE, J.

Section 12 of an act entitled "An act to provide for the creation and regulation of incorporated companies," approved April 12, 1869, which is sections 1337 and 1338 in Sandels & Hill's Digest, is as follows:

"The president and secretary of every corporation organized under the provisions of this act shall annually make a certificate showing the condition of the affairs of such corporation, as nearly as the same can be ascertained, on the first of January or July next preceding the time of making such certificate, in the following particulars, viz: The amount of capital actually paid in; the cash value of its real estate; the cash value of its personal estate; the cash value of its credits; the amount of its debts; the name and number of shares of each stockholder; which certificate shall be deposited on or before the 15th day of February or of August with the county clerk of the county in which said corporation transacts its business, who shall record the same at length in a book to be kept by him for that purpose; and whenever any stockholder shall transfer his stock in any such corporation, a certificate of such transfer shall forthwith be deposited with the county clerk aforesaid, who shall note the time of said deposit and record it at full length in a book to be kept by him for that purpose; and no transfer of stock shall be valid as against any creditor of such stockholder until such certificate shall have been deposited."

Does the transfer of stock mentioned in this section include pledges of stock, or those transactions by which liens upon the same are acquired? This is the only question necessary for us to decide in this case. Eliminating from the section all except what has reference to the question, it reads as follows: "The president and secretary of every corporation organized under the provisions of this act shall annually make a certificate showing the condition of the affairs of such corporation, as nearly as the same can be ascertained, on the first day of January or July next preceding the time of making such certificate, in the following particulars, viz: * * * the name and number of shares of each stockholder; which certificate shall be deposited on or before the 15th day of February or of August with the county clerk of the county in which said corporation transacts its business; * * * and whenever any stockholder shall transfer his stock in any such corporation, a certificate of such transfer shall forthwith be deposited with the county clerk aforesaid, who shall note the time of said deposit and record it at full length in a book to be kept by him for that purpose; and no transfer of stock shall be valid as against any creditor of such stockholder until such certificate shall have been deposited." It is evident that the object of the certificate of the president, and secretary as to the name and number of shares of each stockholder and that of the transfer of the stock by the stockholder are the same; and that the latter is intended to carry into effect the intention of the former; and that the object of both is to make known the names of the stockholders and the number of shares owned by each of them. This being true, it is obvious that the transfer of stock referred to was the absolute transfer of the legal and equitable title to stock, and not pledges or liens. This section does not undertake to regulate the creation or protection of liens, and hence does not affect those transactions by which liens are created without the transfer of stock, or any indorsement and delivery of stock which do not transfer, and create only a lien.

Section 12 of the act of April 12, 1869, was construed, in part, by the circuit court of appeals of the Eighth circuit of the United States, and the same question we have under consideration was decided in Masury v. Arkansas National Bank, 93 F. 603. Judge Thayer speaking for the court, said: "Looking at the two sections (sections 1337 and 1338 in San-dels & Hill's Digest) in the form in which they were originally enacted, the inference is a reasonable one that the legislature had in mind transfers whereby a shareholder parted with his entire legal and equitable title to the stock transferred, when it declared in the concluding clause of the section, that whenever a stockholder transferred his stock a certificate of such transfer should be deposited with the county clerk. While the act does not in terms prescribe by whom the certificate of transfer shall be filed, whether by the corporation or by the person receiving a transfer of stock, nor what the certificate...