Hiller v. American Tel. & Tel. Co.

• Decision Date: 07 March 1949
• Citation: 324 Mass. 24,84 N.E.2d 548
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: HILLER v. AMERICAN TELEPHONE & TELEGRAPH CO.

324 Mass. 24

84 N.E.2d 548

HILLER

v.AMERICAN TELEPHONE & TELEGRAPH CO.

Supreme Judicial Court of Massachusetts, Suffolk.

March 7, 1949.

Action by George R. Hiller, as administrator of the estate of Lilburne Hiller, deceased, against the American Telephone & Telegraph Company to recover damages for defendant's wrongful acceptance of surrender of certificates for shares of its capital stock, to which plaintiff claimed title, by another, and issuance of new certificates to persons unknown to plaintiff. From an order sustaining a demurrer to the declaration and an order for judgment for defendant, plaintiff appeals.

Affirmed.Appeal from Superior Court, Suffolk County; Donahue, Judge.

Before LUMMUS, DOLAN, WILKINS, and SPALDING, JJ.

E. D. Sharkey, of Boston, for plaintiff.

J. N. Clark, of Boston, for defendant.

WILKINS, Justice.

The plaintiff appeals from an order sustaining a demurrer to the declaration and from an order for judgment for the defendant. The case originated as a suit in equity and was amended into an action at law on the plaintiff's motion. The declaration does not state to what division of actions it belongs. See G.L.(Ter.Ed.) c. 231, §§ 1, 7, First. The plaintiff contends that the action sounds in tort, and we consider the case on that footing. The demurrer assigns numerous grounds. If any ground is good, it will be enough to dispose of the appeal. Ratte v. Forand, 299 Mass. 185, 187, 12 N.E.2d 102;Hogan v. Hogan, 320 Mass. 658, 661, 70 N.E.2d 821;Monach v. Koslowski, 322 Mass. 466, 468, 78 N.E.2d 4.

The allegations of the one count of the declaration are the following. The plaintiff is the administrator of the estate of Lilburne Hiller, late of Mattapoisett, by appointment of the Probate Court for Plymouth County in January, 1936. The defendant is a corporation of New York having a usual place of business in Boston. On or about June 24, 1933, Joseph L. Hiller obtained possession of certain certificates for one hundred eighty shares of the capital stock of the defendant which stood in the name of, and were the property of, Lilburne.burne. By ‘overpowering the mind and will’ of Lilburne and ‘substituting therefor his own will,’ Joseph obtained Liburne's indorsement in blank of the certificates, and ‘thereupon wrongfully, and contrary to the right’ of Lilburne, possessed himself of the certificates. On or about November 20, 1933, Joseph surrendered the certificates to the defendant, which cancelled them and issued new certificates to, and in the name of, Joseph. On December 29, 1935, Lilburne died. On May 1, 1936, the plaintiff brought a suit in equity against Joseph seeking recovery of the shares in the Probate Court, which enjoined Joseph from assigning, pledging, or transferring the stock. On the same day the plaintiff notified the defendant of the injunction. Notwithstanding the notice given the defendant by the plaintiff and ‘the defendant's knowledge of the plaintiff's claim of title to the shares of stock heretofore alleged,’ the defendant, on or about May 14 and May 21, 1936, accepted the surrender of, and cancelled, the certificates, and issued a certificate or certificates to a person or persons unknown to the plaintiff. The certificates surrendered on May 14 and May 21 represented fifty and fifty-six shares, respectively, of the one hundred eighty shares. On January 11, 1937, the Probate Court entered a decree avoiding the transfer from Lilburne to Joseph, and ordering Joseph to deliver to the plaintiff, as administrator, certificates properly indorsed for the one hundred eighty shares. Joseph has failed to comply with the decree. The plaintiff seeks damages for the one hundred six shares of which ‘the defendant wrongfully accepted the surrender.’

The second ground of demurrer is the general one that the declaration is insufficient in law to enable the plaintiff to maintain an action against the defendant. The fourth ground is to the more definite effect that Joseph ‘became the legal owner of the title to the shares' and of the certificates issued to him by the defendant.

The declaration alleges that the defendant is a corporation of New York, but does not allege that the uniform stock transfer act, G.L.(Ter.Ed.) c. 155, §§ 24-44, had been adopted and was in effect in that State at all material times. Neither does the declaration allege in what State the defendant in 1933 cancelled the original certificates in the name of Lilburne and issued new certificates in the name of Joseph, or in what State the defendant in 1936 cancelled the certificates in the name of Joseph and issued the new certificate or certificates to a person or persons unknown to the plaintiff.

The uniform stock transfer act now governs the transfer of title in Massachusetts to shares in corporations of Massachusetts and other States having laws consistent with it. Casto v. Wrenn, 255 Mass. 72, 75, 150 N.E. 898;Edgerly v. First National Bank, 292 Mass. 181, 184, 197 N.E. 518;Whitney v. Nolan, 296 Mass. 419, 424, 6 N.E.2d 386;DeBoer v. Anthony, 300 Mass. 403, 411, 15 N.E.2d 260;Meehan v. North Adams Savings Bank, 302 Mass. 357, 358, 359, 19 N.E.2d 299. See Turnbull v. Longacre Bank, 249 N.Y. 159, 165, 163 N.E. 135;United States Fidelity & Guaranty Co. v. Newburger, 263 N.Y. 16, 23, 24, 188 N.E. 141;Rand v. Hercules Powder Co., Inc., 129 Misc. 891, 894, 223, N.Y.S. 383. And shares created in a State in which the uniform stock transfer act is in force may be transferred by the delivery of the certificate as provided in that act even though the delivery takes place in another State where that act is not in force. Morson v. Second National Bank, 306 Mass. 588, 591, 29 N.E.2d 19, 131 A.L.R. 189;Restatement: Conflict of Laws, § 53, comment d.

The record does not disclose that the adoption by New York of the uniform stock transfer act was brought to the attention of the court below, but the defendant's brief now brings it to our attention: N.Y. Consol.Laws, c. 41, Personal Property Law, §§ 162-185. Notwithstanding that this court in the circumstances might not be required to take judicial notice of the New York statute (see Donahue v. Dal, Inc., 314 Mass. 460, 463, 50 N.E.2d 207), we are nevertheless authorized to do so by G.L.(Ter.Ed.) c. 233, § 70. Walker v. Lloyd, 295 Mass. 507, 510, 4 N.E.2d 306;Hite v. Hite, 301 Mass. 294, 298-299, 17 N.E.2d 176, 119 A.L.R. 517;Smith v. Brown, 302 Mass. 432, 433, 19 N.E.2d 732;Vergnani v. Guidetti, 308 Mass. 450, 455, 32 N.E.2d 272;Pilgrim v. MacGibbon, 313 Mass. 290, 296-297, 298, 47 N.E.2d 299. See Bradbury v. Central Vermont Railway, 299 Mass. 230, 234, 12 N.E.2d 732. We believe it to be our duty in giving our opinion to recognize the effect of the applicable New York law, and not to disregard it by expressing abstract views of a superseded common law. We, accordingly, notice judicially the pertinent provisions of the uniform stock transfer act adopted in the State of New York. We do not regard what was said in Richards v. Richards, 270 Mass. 113, 117, 118, 169 N.E. 891, and McCarthy v. Hawes, 299 Mass. 340, 342, 12 N.E.2d 722, as controlling in these circumstances. Compare also Alropa Corp. v. Bloom, 311 Mass. 442, 445, 42 N.E.2d 269.

The material provisions of the New York statute are substantially indentical with ours. Each act applies to certificates of stock in corporations of that State or of another State whose laws are consistent with the act. G.L. (Ter.Ed.) c. 155, § 26; N.Y.Consol.Laws, c. 41, Personal Property Law, § 183. Title to a certificate and to the shares represented thereby can be transferred by delivery of the certificate indorsed in blank by the person appearing by the certificate to be the owner of the shares represented thereby. G.L.(Ter.Ed.) c. 155, § 27(a); N.Y.Consol.Laws, c. 41, Personal Property Law, § 162(a). The delivery of a certificate to tranfer title in accordance with the last mentioned section shall be effectual (except as provided in § 33 of the Massachusetts act or § 168 of the New York act) though made by one having no right of possession and having no authority from the owner of the certificate. G.L.(Ter.Ed.) c. 155, § 31; N.Y.Consol.Laws, c. 41, Personal Property Law, § 166. The indorsement of a certificate by the person appearing by the certificate to be the owner of the shares represented thereby shall be effectual (subject to the same exception) though the indorser or transferor was induced by fraud, duress, or mistake to make the indorsement or delivery. G.L.(Ter.Ed.) c. 155, § 32; N.Y.Consol.Laws c. 41, Personal Property Law, § 167. If the indorsement or delivery was procured by fraud or duress or was made under such mistake as to make the indorsement or delivery inequitable, or if the delivery was made without authority from the owner, possession of the certificate may be reclaimed and the transfer rescinded unless the certificate has been transferred to a purchaser for value in good faith without notice of any facts making the transfer wrongful. G.L. (Ter.Ed.) c. 155, § 33; N.Y.Consol.Laws, c. 41, Personal Property Law, § 168. ‘Although the transfer of a certificate or of shares represented thereby has been rescinded or set aside, nevertheless, if the transferee has possession of the certificate or of a new certificate representing part of the whole of the same shares of stock, a subsequent transfer of such certificate by the transferee, mediately or immediately, to a purchaser for value in good faith, without notice of any facts making the transfer wrongful, shall give such purchaser an indefeasible right to the certificate and the shares represented thereby.’ G.L.(Ter.Ed.) c. 155, § 34; N.Y.Consol.Laws, c. 41, Personal Property Law, § 169.

If the act applied, Joseph L. Hiller, who in 1933 received delivery of the certificates indorsed in blank by the owner, became the owner of the full legal title to the certificates and to the shares represented thereby. Stuart v. Sargent, 283 Mass. 536, 541, 186 N.E. 649;Morson v....