Campbell v. Woodstock Iron Co.

• Decision Date: 15 December 1887
• Citation: 3 So. 369,83 Ala. 351
• Parties: CAMPBELL v. WOODSTOCK IRON CO.
• Court: Alabama Supreme Court

3 So. 369

83 Ala. 351

CAMPBELL v. WOODSTOCK IRON CO.

Supreme Court of Alabama

December 15, 1887

Appeal from chancery court, Calhoun county; S. K. MCSPADDEN, Judge.

Bill in equity to redeem corporate stock sold by virtue of the following instrument:

"I Richard L. Campbell, of the city of Pensacola, state of Florida, do hereby transfer and assign to Thos. K Fergusson, of Selma, Alabama, my one-sixth (1-6) interest in the Oxford Iron Co., of Calhoun county, state of Alabama, as security for promissory note for the sum of five thousand nine hundred seventy-one dollars and two cents ($5,971.02) made by me, dated the fifth day of December, 1872, and payable to the order of Thos. K Fergusson on the first day of January, 1874. And I do hereby authorize and empower the said Thos. K. Fergusson and his assigns to sell and transfer my said interest so as to satisfy and discharge said note (unless I shall sooner do so) at maturity.

"In testimony whereof, I have hereunto set my hand and affixed my seal this twenty-fourth day of December, A. D. 1872.

[Signed]

"RICHD. L. CAMPBELL. [Seal.]"

The relief sought was denied, and complainant appealed.

Stringfellow & Le Grand, for appellants.

John B. Knox and Caldwell & Caldwell, for appellee.

SOMERVILLE J.

The ground upon which the appellant's right to file the present bill is based is the alleged ownership of two shares of corporate stock in the Oxford Iron Company, of the par value of $2,000 each, which are now claimed by the Woodstock Iron Company, one of the defendants to the bill in the lower court. It is insisted by the defendant that the complainant's title to this stock has been divested by sale under a mortgage executed by him to one Thomas K. Fergusson, in December 24, 1872, to secure a debt of nearly $6,000, evidenced by complainant's (Campbell's) promissory note, payable January 1, 1874.

The first inquiry is whether this contention on appellee's part is supported by the evidence. There is no difference of opinion between counsel as to the general nature of the instrument executed by Campbell to Fergusson. It is admitted to be a mortgage, and not a pledge, although it is denied by complainant that it conveys to the mortgagee or his assigns the legal title of the stock. It purports to "transfer and assign" the stock as security for the complainant's debt, and authorizes the mortgagee, Fergusson, or his assigns, to sell or transfer it "so as to satisfy and discharge" the mortgage debt. Not only is his instrument a mortgage, but it contains words sufficiently apt to operate as a transfer of the legal title of the stock as between the mortgagor and mortgagee. It is not a mere lien or equitable charge. It shows an intention to transfer the mortgage property as security for a debt, and imports a conveyance of title in the nature of a conditional sale. Jackson v. Rutherford, 73 Ala. 155; Jones, Chat. Mortg. §§ 8, 9. There is absent from the transaction one necessary element of a pledge, which is possession, actual or symbolic, of the thing which is the subject of the pledge. That stock of this character may be mortgaged, as well as pledged, admits of no doubt whatever, at least in this state. Gilmer v. Morris, 80 Ala. 78, 89; Code 1876, § 2044; Cook, Stocks, §§ 463, 464. And this may be done, as between the parties, without a transfer of the certificates of stock, or without a transfer of the stock itself on the corporation books. The certificate does not constitute the stock, any more than a promissory note does the debt which it describes; it is the mere evidence of its existence and ownership. Frenkel v. Hudson, 82 Ala. 158, 161, 2 South. Rep. 758. So, there is nothing in the statutes under which the corporation in question was organized which invalidates any sale or mortgage of stock, as between the parties to such transaction, without a transfer on the books of the company. If in proper form, and otherwise unobjectionable, such a conveyance is good and valid between the parties, although it may be void as against bona fide creditors, or subsequent purchasers without notice, and although, as against the corporation itself, it may convey only an equitable title, conferring no right to vote, draw dividends, or other like incidents of ownership. It is, in other words, effectual against the transferrer, whoever else may complain. Fisher v. Jones, 82 Ala. 122, 3 South. Rep. 13; Code 1876, § 3044; Duke v. Navigation Co., 10 Ala. 82; Cook, Stocks, §§ 308, 358, 374, 379; 2 Add. Cont. (Morgan's Ed.) 283, note 1.

It is further contended by appellant that the execution of the power of sale conferred by the mortgage was void. This instrument, executed, as we have said, by the complainant Campbell, in December, 1872, authorized a sale under the power to be made by the mortgagee, Fergusson, or his assigns. The power of sale is thus expressly made to follow the mortgage into the hands of any assignee; which it would do under the statute, however, even in the absence of any express stipulation. Code 1876, § 2198. Fergusson assigned the mortgage and note to the Deposit Savings Association of Mobile, and appointed its cashier, one L. C. Fry, to exercise the power of sale. As the assignee had the power to make the sale through its agents,-the only way a corporation can act,-the appointment of Fry for this purpose, and by its consent, impliedly constituted him the agreed agent of both Fergusson and the Deposit Savings Association to make such sale. The sale was made by Fry in April, 1874, under the authority of what he designates "the annexed letters of attorney." This may reasonably be construed to have reference to the power conferred by Fergusson in his written appointment of Fry, or to the power conferred by Campbell which passed with the assignment of the mortgage, first to Fergusson,...