Georgia Cas. Co. v. McRitchie
| Decision Date | 21 September 1932 |
| Docket Number | 21929. |
| Citation | 166 S.E. 49,45 Ga.App. 697 |
| Parties | GEORGIA CASUALTY CO. v. McRITCHIE. |
| Court | Georgia Court of Appeals |
Rehearing Granted Sept. 23, 1932.
Adhered to Oct. 1, 1932.
Syllabus by the Court.
Corporation by transferring stock on its books and issuing new certificate does not pass title to stock, but it is transfer of certificate that passes legal and equitable title, as between seller and purchaser (Civ. Code 1910, § 2219).
Right to assail validity of married woman's sale of separate property to husband without court order is personal to wife and her privies in blood or estate.
Presumption is that every person obeys mandates of law and performs all official and social duties.
Corporation's compliance with married woman's direction to transfer her stock to husband and issue new certificate accordingly held not such conversion as would authorize her suit in trover against corporation (Civ. Code 1910, § 2219).
Corporation's compliance with married woman's direction to transfer stock on its books and issue new certificate to husband held not to pass title to husband (Civ. Code 1910, § 2219).
In married woman's action against corporation to recover stock transferred on corporation's books to husband count of petition held insufficient as against general demurrer.
Married woman could not maintain trover action against corporation which, in compliance with her directions, transferred her stock on its books and issued new stock certificate to husband, who subsequently transferred stock to innocent third person.
Court of Appeals held not without jurisdiction on theory that rejected amendment to answer converted case into equity proceeding, amendment being purely defensive.
1. "Except as against the claims of the corporation, a transfer of stock does not require a transfer on the books of the company." Consequently, it is the transfer of the stock certificate that passes both the full legal and equitable title as between the seller and the purchaser. Even where the charter or by-laws of a corporation require that transfers shall be effective only when evidenced on its books, the only effect of such an additional entry is that the corporation thereby relinquishes any lien which it may have on the stock. Accordingly, since it is the transfer of the stock certificate which passes title to the stock represented thereby, the act of a corporation in carrying out the direction of a stockholder in entering a record of such a transfer of stock on its books and issuing a new certificate accordingly is but an impotent act in so far as passing title is concerned.
2. While a purported sale by a married woman to her husband of her separate property, if made without a proper order of court authorizing it, has been held to be void, "the right to assail its validity on this ground is personal to the wife and her privies in blood or estate, and cannot be asserted by a stranger to her title."
3. Unless and until there be facts or circumstances to indicate to the contrary, it will be presumed that every person obeys the mandates of law and performs all of his official and social duties.
4. In accordance with the foregoing principles of law, where direction is given to a corporation by a married woman in a purported sale of stock to her husband, to transfer the stock sold to her husband and issue a new certificate accordingly the act of the corporation in complying with her direction does not constitute a conversion of her stock by the corporation such as would authorize a suit in trover by the wife against the corporation for the recovery of the stock and a general demurrer to the petition should have been sustained. In such a case, compliance by the corporation with the direction of the wife did not pass the title of the stock to the husband; nor was the transaction one in which the corporation was authorized to interfere; nor does the petition indicate any fact or circumstance which would prevent the corporation from assuming that the wife had previously complied with the antecedent obligations imposed upon her by law.
5. Especially would the conclusion stated in the preceding headnote be true where the suit against the corporation is one in trover, for the recovery of the stock, and where it appears from the petition that at the time the suit was instituted the title to the stock was not in the plaintiff but that by virtue of her own voluntary action a good title thereto had subsequently become vested in an innocent third person.
6. The Court of Appeals is not without jurisdiction in this case on the theory that the proffered but rejected amendment to the defendant's answer converted the case into a proceeding in equity. A suit at law is not thus converted into one in equity where such an amendment, even when allowed, is purely defensive in its nature.
7. The verdict in favor of the plaintiff under the second count about which there is no contest or dispute, is affirmed.
Error from Superior Court, Bibb County; Malcolm D. Jones, Judge.
Action by A. A. McRitchie against the Georgia Casualty Company. Judgment for plaintiff, and defendant brings error.
Affirmed in part, and reversed in part.
Jones, Evins, Powers & Jones, of Atlanta, for plaintiff in error.
Hall, Grice & Bloch, of Macon, Watkins, Asbill & Watkins, of Atlanta, and Sid Holderness, of Carrollton, for defendant in error.
JENKINS, P.J. (after stating the foregoing facts).
1, 2. "Except as against the claims of the corporation, a transfer of stock does not require a transfer on the books of the company." Civil Code 1910, § 2219. In the instant case, it is not made to appear that the charter or by-laws of the corporation required that a transfer of its stock could be made only on its books. Even in a case "where the stock of a corporation is, by the terms of its charter or by-laws, transferable only on the books, the purchaser who receives the certificate, with power of attorney, gets the entire title,--legal and equitable,--as between himself and his seller, with all the rights the latter possessed; what, as between himself and the corporation, he acquires only an equitable title, which they are bound to recognize, and permit to be ripened into a legal title, when he presents himself, before any effective transfer on the books has been made, to do the acts required by the charter or by-laws in order to make a transfer." Witham v. Cohen, 100 Ga. 670, 674, 28 S.E. 505, 506. Thus it is the general rule that a transfer and assignment of a certificate of stock in a corporation passes title to the vendee thereof, irrespective of whether or not the charter or by-laws of the corporation require a transfer on its own books, except in so far as the claims of the corporation arising from any lien held by it on the stock may be involved. After such an assignment, the corporation may, in a proper equitable proceeding, be required to make a transfer of the stock on its books. Scott v. Flint River Pecan Co., 159 Ga. 668, 126 S.E. 769; Massengale v. Hodgson, 148 Ga. 97, 95 S.E. 975; Hardman v. Barrow, 147 Ga. 617, 95 S.E. 209. While it has been held that a sale by a wife to her husband of her separate property without an order of the superior court authorizing the same being first obtained is void (Hood v. Perry, 75 Ga. 310; Fulgham v. Pate, 77 Ga. 454; Stonecipher v. Kear, 131 Ga. 688, 63 S.E. 215, 127 Am.St.Rep. 248; Buchannon v. James, 135 Ga. 392, 69 S.E. 543; Echols v. Green, 140 Ga. 678 [3], 79 S.E. 557), it has also been ruled by the Supreme Court in Scaife v. Scaife, 134 Ga. 1 (1), 67 S.E. 408, that "the right to assail its validity on this ground is personal to the wife and her privies in blood or estate, and cannot be asserted by a stranger to her title." This ruling in the Scaife Case has been upheld and followed in Munroe v. Baldwin, 145 Ga. 215 (3), 88 S.E. 947; Williams v. Rhodes, 149 Ga. 170 (1), 99 S.E. 531; McArthur v. Ryals, 162 Ga. 413 (5), 417, 134 S.E. 76; Royster Guano Co. v. Odum, 167 Ga. 655 (1), 146 S.E. 475. In the instant case a sale of corporate stock was attempted by the wife to the husband, and, as it now appears, without an order authorizing the same having been first obtained. With respect to the wife and her privies in bloodor estate, this omission rendered the sale subject to repudiation whenever they might see proper to exercise such right, unless and until the rights of third parties should prevent; but the impotent act of the corporation in making the entry on its books as directed by the wife neither weakened nor strengthened, added to or took from, the validity or invalidity of the purported sale as between the wife and the husband, and was wholly unnecessary to the completion of the transaction attempted by them. Not only is it the rule that the transaction is completed whenever the transfer of the stock certificate is made, but the transferee in this case could just as well have himself assigned the original certificate to an innocent third person so as to carry the full and complete title, both legal and equitable, as against the claims of all persons, including the wife.
3, 4. While it appears from the petition that the corporation knew that the relation of husband and wife existed between the nonresident parties to the sale, which might be taken to put it on notice, as a matter of law, that an order of court was necessary, this is not a fact or circumstance even tending to indicate that this nonresident plaintiff had failed to do that which the law required of her. In the first case decided by our Supreme Court, Doe ex dem. Truluck v. Peeples, 1 Ga 3, 5, it was said that "it is presumed, till the contrary is proved, that every man obeys the mandates of the law, and performs all his official and...
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