Joslyn v. St. Paul Distilling Co.

• Decision Date: 22 July 1890
• Court: Minnesota Supreme Court
• Parties: JOHN R. JOSLYN <I>vs.</I> ST. PAUL DISTILLING COMPANY, impleaded, etc.

44 Minn. 183

JOHN R. JOSLYN vs. ST. PAUL DISTILLING COMPANY, impleaded, etc.

Supreme Court of Minnesota.

July 22, 1890.

Appeal by the defendant corporation (impleaded with George W. Hicks and Lizzie M. Hicks, his wife, who appeared and answered) from a judgment of the district court for Ramsey county, where the action was tried by Otis, J.

Lusk & Bunn, for appellant.

William G. White, for respondent.

COLLINS, J.

At the commencement of this action, one of the defendants, Lizzie M. Hicks, appeared on the books of the defendant corporation to be the owner of shares of its corporate stock of the par value of $30,000. There had previously been issued to her, and in her name, a certificate representing and evidencing these shares, in which was the usual clause and recital that the stock was "transferable only on the books of the company, on the indorsement and surrender of this certificate." The object of this action was to compel the defendant corporation to cancel the certificate to the extent of $15,000, and to issue its certificate to plaintiff for that amount of its corporate stock, upon the ground that to that extent the certificate had been fraudulently obtained by Lizzie M. Hicks, and that plaintiff was the real owner of the stock. The trial court had jurisdiction of the parties defendant, but did not obtain possession of the stock certificate issued to Mrs. Hicks. By its decree the full relief demanded in the complaint was awarded by the court.

The character and qualities of stock certificates are the only questions involved here. If they are to be treated as if they were the shares themselves, and, when properly transferred, as passing to the assignee all the equitable rights of the holder, and the legal right to be admitted as a shareholder on the books of the association, it must follow that, upon a regular assignment and delivery of the certificates there has been transferred to the purchaser the full legal and equitable ownership of the shareholder's contract, with all the indicia of such ownership. While there has been some difference of opinion upon this, the weight of authority is, undoubtedly, that where a corporation having authority to issue a stock certificate does issue such a certificate, wherein it is affirmed, as in the case at bar, that a designated person is entitled to a certain number of shares of stock, transferable only on the books of the association, on the indorsement and surrender of the certificate itself, it thereby holds out to persons who may deal in good faith with the person named in the certificate that he is the owner, and has capacity to transfer the shares. There is in the certificate, which evidences and represents the shares, the assurance of the corporation to the commercial world that no prior right to the stock can be obtained, unaccompanied by possession of the certificate, and that the shares shall not be transferred upon the books of the corporation unless the certificate is first surrendered. As was said in Bank v. Lanier, 11 Wall. 369, 377, when speaking of stock certificates in which the same assurance was found: "No better form could be adopted to assure the purchaser that he can buy with safety. He is told, under the seal of the corporation, that the shareholder is entitled to so much stock, which can be transferred on the books of the corporation * * * when the certificates are surrendered, but not otherwise. This is a notification, to all persons interested to know, that whoever in good faith buys the stock, and produces to the corporation the certificates regularly assigned, with power to transfer, is entitled to have the stock transferred to him. And the notification goes further, for it assures the holder that the corporation will not transfer the stock to any one not in possession of the certificates." These conclusions have not been adopted by the courts on any view of the negotiability of stock certificates, but on general principles appertaining to the doctrine of estoppel. A representation, which has tended to enhance the value of the stock, has been made with a view or expectation that it would be acted...