Greasy Brush Coal Co. v. Hays

• Decision Date: 18 December 1942
• Citation: 292 Ky. 517
• Parties: Greasy Brush Coal Co. et al. v. Hays et al.
• Court: United States State Supreme Court — District of Kentucky

292 Ky. 517

Greasy Brush Coal Co. et al. v. Hays et al.

Court of Appeals of Kentucky.

December 18, 1942.

1. Corporations. — A corporation transfers stock at its peril and must be sure that person to whom it issues certificate is true owner.

2. Judgment. — Where only person, other than record owner of stock, who ever claimed rights to any portion of stock, relinquished right by formal assignment which was duly executed, authenticated, and made basis of judgment of court of general jurisdiction in a proceeding in which genuineness of document was fully proven, corporation could not be held liable for paying dividends to record owner.

3. Action. — Where record owner of stock had assigned stock to daughter who reassigned stock to record owner, and such stock had never been transferred on books of corporation and daughter's reassignment was made basis of judgment of court of general jurisdiction in a proceeding in which genuineness of document was fully proven, and record owner's actual ownership of stock and absence of right of corporation to require him to file with corporation assignment from his daughter was adjudicated

by Court of Appeals in former proceeding, corporation was not entitled to declaration of rights relating to ownership of such stock (KRS 271.160, 271.170).

4. Appeal and Error. — Where defendants appealed from judgment which granted plaintiff pecuniary relief but which did not provide appointment of receiver, in absence of a cross-appeal by plaintiff, Court of Appeals could not require appointment of receiver.

5. Set-Off and Counterclaim. — In suit by stockholder to recover unpaid dividends where corporation's claim for set-off alleged that costs in previous land litigation between the parties were owing by stockholders' daughter and did not disclose that any such costs were awarded against stockholder, chancellor properly ignored counterclaim (Civil Code of Practice, sec. 96).

Appeal from Knox Circuit Court.

J. Smith Hays, Williams Hays and J.J. Tye for appellants.

J. Milton Luker and James M. Hays for appellee.

Before Flem D. Sampson, Judge.

OPINION OF THE COURT BY JUDGE TILFORD.

Affirming.

This action was instituted by James M. Hays, a stockholder of the Greasy Brush Coal Company, against that corporation and its three remaining stockholders for the appointment of a receiver, and to require the receiver to pay over to the appellee, Hays, $1,623.04, his proportion of the royalties directed to be paid by the corporation to its stockholders as dividends. Without reciting the details of the pleadings or proof, it is sufficient to say that the refusal of the corporation to pay James M. Hays his proportionate share of the royalties declared as dividends was predicated upon the allegations that the corporation's officers were in doubt as to his actual ownership of the stock standing in his name on the corporation's records, and that the corporation was entitled to recover of James M. Hays and his daughter, named in the statement of appeal as a co-appellee, certain court costs adjudged it in the land litigation reviewed in our decision reported in 288 Ky. 774, 157 S. W. (2d) 75. By counterclaim, appellants sought a declaration of rights respecting the stock ownership, and by cross-petition sought to make the daughter a party to the litigation. The Chancellor settled the controversy by denying the application for a receiver, dismissing the cross-petition seeking to make the daughter a defendant, and by awarding the appellee a judgment against the corporation for the amount of the dividends prayed for.

It is obvious from a consideration of this record and the record in the preceding...