Commercial National Bank v. Farmers & Traders Nat. Bank
| Citation | 47 N.W. 1080,82 Iowa 192 |
| Parties | COMMERCIAL NATIONAL BANK, Appellee, v. FARMERS & TRADERS' NATIONAL BANK, Appellee; E. CLARK, Appellant. E. CLARK, Appellant, v. FARMERS & TRADERS' NATIONAL BANK, Appellee |
| Decision Date | 05 February 1891 |
| Court | United States State Supreme Court of Iowa |
Appeal from Mahaska District Court.--HON. J. K. JOHNSON, Judge.
THESE are actions in chancery to restrain the sale and transfer of certain stock in the American Coal Company, a corporation existing under the laws of this state, and to settle the conflicting claims and title thereto of the respective parties. The cases were consolidated in the court below, and tried together. A decree was entered sustaining the title to the stock claimed by the Farmers & Traders' National Bank. The defendant, E. Clark, appeals.
Reversed.
C. C. & C. L. Nourse and Seevers & Seevers, for appellant: Section 1078 of the code, in so far as the same relates to the transfer of shares in a corporation on its books, is solely for the benefit of the corporation, and for its protection only. Black v. Zachari, 3 How. 494; Bank v Lanier, 11 Wall. 369; McNiel v. Bank, 46 N.Y 325, 331; Blowin v. Liquidators, 30 La.Ann. 671; Duke v. Navigation Co., 10 Ala. 82, 90; Bank v Richards, 6 Mo.App. 454; Boatman v. Abel, 48 Mo. 186; Moore v. Bank, 52 Mo. 379; Fraser v. Dell, 11 S.C. 486; Nat. Bank v. Bank, 105 U.S. 217. An assignment of shares not entered on the books of the corporation vests in the assignee a title to the stock which is superior to that of an attaching creditor of the assignor who has no notice of the assignment. Thurber v. Crump, 86 Ky. 408; Corrick v. Richards, 3 Lea, 1; Broadway Bank v. McElrath, 13 N.J.Eq. 24; Com. Bank v. Kortright, 22 Wend. 348, 362; Smith v. Coal Co., 7 Lansing, 317; Cormean v. Oil Co., 3 Daly, 218; Building Ass'n v. Sundmeyer, 50 Pa.St. 67; Finney's Appeal, 59 Pa.St. 398; Eby v. Guest, 94 Pa.St. 160; Smith v. Cresent City, 30 La.Ann. 1378; Seeligson v. Brown, 61 Tex. 114; Com. Nat. Bank v. Nat. Bank, 7 F. 369; Sibley v. Bank, 133 Mass. 515; 2 Waterman on Corporations, 205; Boston Music Hall v. Corey, 129 Mass. 435; Scott v. Bank, 15 F. 594; Conant v. Bank, 1 O. St. 298; Cook on Stockholders, secs. 486 to 490; 1 Morawetz on Corporations, secs. 198 to 199; Coleridge on Collateral Securities, secs. 271 to 275; Newberry v. Iron Co., 17 Mich. 140, 141, 157. An erroneous construction of this section 1078 of the Code was adopted in Fort Madison Lumber Co. v. Bank, 71 Iowa 270. Transfer of stock in national banks not in accord with the provisions of the by-laws are by the federal courts held to be valid as against an attaching creditor or an assignee under insolvent laws. Sibley v. Bank, 133 Mass. 515. The statute does not forbid such a transfer. It must, therefore, be true, that as between the parties the transferee is vested with the absolute legal title to the stock. The person making the transfer leaving no interest when the stock is attached, the attaching creditor gets nothing. Manny v. Adams, 32 Iowa 165; Harshbarger v. Harshbarger, 26 Iowa 503; Bacon v. Thompson, 60 Iowa 284; Rogers v. Highland, 69 Iowa 504. The statute clearly means that the attachment and sale is not valid against a good faith purchaser, and it has been so held in Weston v. Bear River Co., 6 Cal. 425; Winter v. Mining Co., 53 Cal. 429. In Smith v. Am. Coal Co., supra, the provision in the by-laws of the company was "no transfer of the stock shall be valid unless made upon the books of the company" and in Bank v. Kortright, supra, the charter of the corporation provided that "no transfer shall be valid unless such transfer shall have been registered in a book kept for that purpose by the directors," yet in both cases it was held an assignment of the certificate not so recorded was entitled to priority over a subsequent attaching creditor without notice. It was held in Thurber v. Crump, supra, that an unrecorded assignment of the certificate was entitled to priority over a subsequent attaching creditor without notice. The provision of the charter and statute in Fisher v. Bank, 71 Mass. 373, 380, was that "the stock of said bank shall be transferable only at its banking house on its books." There is no such provision in our statute, and the validity of a transfer not so made is not by the Massachusetts statute made valid between the parties. The prior case of Sargent v. Ins. Co., 25 Mass. 99, is fully distinguished in the opinion in and so far as the same is applicable to the case at bar. See also in this connection Boston Music Hall v. Corey, supra, and Sibley v. Bank, supra. In the following cases it is held under a statute like ours in substance that an unrecorded transfer was valid against all the world except good-faith purchasers. Colt v. Ives, 31 Conn. 25, 34, 35; Weston v. Bear River Co., 5 Cal. 186; s. c., 6 Cal. 425; Parrott v. Bayers, 40 Cal. 614; Winter v. Mining Co., 53 Cal. 429. This court said in Moore v. Walker, 46 Iowa 164, that section 1078 of the Code was "intended as a protection to the company, and is designed to apply only when the sale or transfer of the stock in some way conflicts with the interests of the corporation." The same remark was made by this court in The Farmers & Merchants' Bank v. Wassen, 48 Iowa 336. The attachment is invalid and void, because no notice was served on the defendants in the action or either of them that the stock had been attached. First Nat. Bank of Newton v. Bank, 71 Iowa 486; Collier v. French, 64 Iowa 577.
Blanchard & Preston and Wm. McNett, for appellee: Fort Madison Lumber Co. v. Bank, 71 Iowa 270, is decisive of this case. A transfer of corporation stock is not valid as against attaching creditors of the assignor without notice, unless the transfer is entered on the books of the company as provided by section 1078 of the Code. Fort Madison Lumber Co. v. Bank, 71 Iowa 270; Ryan v. Campbell, 71 Iowa 760; Fisher v. Bank, 5 Gray, 373; Skowhegan Bank v. Custer, 49 Me. 315; People's Bank v. Gridley, 91 Ill. 457; Sabin v. Bank, 21 Vt. 353; Cheever v. Meyer, 52 Vt. 66; State Ins. Co. v. Sax, 2 Tenn.Ch. 507; In re Application of Murphy, 51 Wis. 419; In re Application of Murphy, 8 N.W. 419; Pinkerton v. Railroad, 42 N.H. 424; Northrop v. Turnpike Co., 3 Conn. 544; Fisher v. Carr, 20 Me. 301; Weston v. Bear River & C. Co., 5 Cal. 186; Strout v. Natoma Co., 9 Cal. 186; Nagles v. Wharf Co., 20 Cal. 329; Farmers' Nat. Bank v. Wilson, 58 Cal. 600; Warren v. Mfg Co., 52 Vt. 75; Dutton v. Bank, 13 Conn. 493; Oxford Turnpike Co. v. Bunnell, 6 Conn. 552; Boyd v. Rockport, 7 Gray, 406; Newell v. Williston, 138 Mass. 240; Coleman v. Spencer, 5 Black. 197; State v. Bank, 89 Ins. 302; Topeka Mfg. Co. v. Hale, 17 P. 601; Richmond v. Irons, 121 U.S. 27, 58; Cent. Nat. Bank v. Williston, 138 Mass. 244, 1 Morawetz, Corporations, sec. 199. The statute does not require that a notice be given the defendant that the stock has been attached. The proceedings specified in paragraph 1 are not required as to the kind of property named in paragraphs 3 or 4, that is, no notice is required. It has been so held as to paragraph 4. Phillips v. Germon, 43 Iowa 101. Paragraph 3 is a law unto itself. This is the construction given by this court in Mooar v. Walker, 46 Iowa 164. The cases of First Nat. Bank v. Bank, 71 Iowa 486; Collier v. French, 64 Iowa 577; related to real estate, and can have no bearing on the question. If it be conceded that a notice of attachment was required and that none was given, this would not invalidate the sale, the debtor's remedy being against the sheriff. Cowles v. Hardin, 101 N.C. 388; Wilkins v. Turtellott, 28 Kan. 825; Waples on Attachment, pp. 181, 182; Covender v. Smith, 1 Iowa 306; Ayers v. Campbell, 9 Iowa 213; 1 McClain's Dig., pp. 772, 773. If such notice was required it will be conclusively presumed that it was given. Code, sec. 3669. Every legal presumption should be entertained that an officer has done his duty. Cole v. Porter, 4 Green, 510; Goodrich v. Beauman, 37 Iowa 563; In re Estate of Edwards, 58 Iowa 431; Bud v. Durall, 36 Iowa 315; Spitler v. Scofield, 43 Iowa 571.
I.
The controversy in this case involves the title and right to three hundred shares of stock of the American Coal Company, a corporation organized pursuant to the laws of this state. The facts, briefly but sufficiently stated to present the questions in the case, are as follows: The Farmers & Traders' National Bank, defendant in each of the cases which are consolidated, claims title to the stock under sheriff's sale to it upon a judgment against H. W McNeil, and another. The stock was owned by McNeil, and stood in his name on the books of the corporation. No question arises as to the validity of the judgment and regularity of the attachment on which the stock was seized, or of the execution upon which the stock was finally sold to the defendant. E. Clark, the plaintiff in one, and a defendant in the other, of the cases which were consolidated, claims right and title to the stock in question upon these facts: McNeil transferred the stock in question to the Commercial National Bank, the plaintiff in the first cause consolidated, as collateral security, and the bank transferred it to Clark. The first transfer was by an indorsement of the certificates of stock to the bank. This indorsement was filled up with the name of the receiver of the bank, and, after Clark purchased the stock, his name as assignee was inserted, and the receiver's name was erased. No transfer of the stock on the books of the coal company was made to Clark. The sheriff, upon making the sale of stock to the Farmers & Traders' Bank, entered upon the stub of the stock certificates, bound with other certificates in a book in the usual way, a transfer to the Farmers & Traders' National Bank. No notice was...
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