Lipscomb's Adm'r v. Condon.
| Decision Date | 06 December 1904 |
| Citation | 56 W.Va. 416 |
| Parties | Lipscomb's Adm'r v. Condon. |
| Court | West Virginia Supreme Court |
1. Stock. Intangible Property.
By the common law, shares of stock in a corporation, being in the nature of choses in action, intangible property incapable of manual seizure, are not subject to execution or attach ment. They are by statute. (p. 418).
2. Lien of Attachment or Execution. Corporation Stock.
Section 9 of chapter 106, Code of 1899, giving the plaintiff in an attachment proceeding a lien on the personal property of the debtor from the time of the levying of the attachment, or serving a copy thereof on the garnishee, on all the personal property, choses in action and other securities of the defendant in the hands of the garnishee, and, on any real estate of the debtor levied on by virtue thereof, from the suing out of the same, includes shares of corporation stock in the terms "personal property, choses in action and other securities." (p. 419).
8. Corporation Stock. Incorporeal Property.
Such shares are personal estate, and a species of incorporeal property. (p. 419).
4. Garnishment.
In his proceeding by the creditor of a shareholder to subject his shares to the payment of his debt, the corporation in which the shares are held should be made the garnishee. (p. 420).
5. Corporation Stock. Evidence.
A certificate of stock is not the stock itself, but is evidence of its existence and ownership. (p. 420).
6. Corporation Stock. Muniment of Title.
Though, when issued, such certificate is a muniment of title, it is not essential to the existence of the property represented by it. (p. 420).
7. Stock. Sale of Stock Parol Assignment.
A Certificate is not necessary to a sale of shares. The beneficial interest in them is assignable by parol, the ownershiip passing immediately on consummation of the sale, by force of the contract, as in the case of ordinary choses in action, and not by operation of law. (p. 421).
8. Stock. Certificate. Sale of Stocks.
A sale of shares for which no certificate has been issued may be evidenced by an informal written instrument, executed and delivered by the transferrer to the transferee, without a power of attorney entitling the latter to have the same transferred on the books of the company. (p. 422).
9. Stock. Sale. Certificate.
In this State, a shareholder may, upon his demand, obtain a certificate of his shares, but, unless demanded by him, it need not be issued, and he may freely transfer the shares without it if they are fully paid up, or security for the balance due on them, satisfactory to the board of directors, be given. (p. 432)
10. Stock. Statute Construed.
Section 21 of chapter 53 of the Code of 1899, requiring corporations to keep transfer books and the shares to be assigned therein, is intended for the protection and convenience of the corporation and its shareholders. (p. 433).
11. Corporation Records. Private Property.
The books and papers of a private corporation under the laws of this State are not public, but private, records and documents. (p. 433).
12. Stock. Attaching Creditor. Assignee.
An unregistered transfer of shares of corporation stock, for which no certificate has been issued, if made for a valuable consideration and without fraud, vests in the transferee a title to the shares superior to the claim of a subsequent attaching creditor of the transferrer. (p. 436).
13. Execution. Attachment. Lien.
In the absence of fraud and statutory regulations, a creditor proceeding by execution or attachment, only obtains such rights in the property seized as his debtor had at the time of the seizure. (p. 426).
14. Creditor. Chose in Action.
The rights of a creditor, respecting shares of corporation stock for which certificates have not been issued, alleged to be the property of his debtor, are the same as in the case of an ordinary chose in action. (p. 437).
15. Petition. Issue. Jury Trial.
When, under the provisions of section 23 of chapter 106 of the Code, a petition is filed in a suit in equity founded upon an attachment, setting up title by purchase, and the plaintiff in the cause relies upon fraud in the alleged purchase to defeat the claim of title so set up, the trial of the issue must be upon the petition without any other pleading, and by jury, unless
trial by jury is waived. (p. 439).
16. Equity. Jury.Trial. Issue Out of Chancery.
In such case, it is reversible error to hear and determine the issue upon the petition, and answer thereto and depositions of witnesses, according to tne rules and principles governing courts of equity. (p. 443).
17. Jcey Trial Waiver Record.
Waiver. of the right of trial by jury must be by consent en-tered of record. It cannot be merely inferred from the fact
that the court tried the case without objection. (p. 445).
Appeal from Circuit Court, Tucker County. Bill by Lipscomb's administrator against Levi Z. Coftdon and Albert Ml Horner. Decree for plaintiff, and defendants appeal.
Reversed.
W. B. Maxwell and C. W. Dailey, for appellants. F. M. Reynolds and J. p. Scott, for appellee.
poffenbarger, president:
This is a suit in equity against a non-resident defendant, to subject to the payment of a debt, amounting to five thousand dollars and interest, by process of attachment and garnishment, certain shares of stock in a corporation which, the bill alleges, are the property of the defendant. The case presents a number of questions which seem never to have been passed upon by this Court.
In the absence of any statute upon the subject, shares of stock in a corporation are not subject to execution. Cook on Cor., section 480; Clark Cor. 1147. By that law, intangible property incapable of manual seizure and delivery cannot be taken on execution. Attachment being a purely statutory rem-edyreaches only such property as is made subject to it by the statute. Hence, if the statutes, governing the remedy by at-tachment, do not make shares liable under it, it is clear that they cannot be subjected to the payment of debts by such proceeding. Brake Attach. section 244; Haley v. Reid, 16 Ga. 437; Foster v. Potter, 37 Mo. 525; Howe v. Starkweather, 17 Mass. 240.
By section 20 of chapter 53 of the Code of 1899, it is declared that such shares shall be deemed personal estate. Section 9 of chapter 106 gives the plaintiff in an attachment proceeding a lien, from the time of the levying of his atachment, or serving a copy thereof, as provided in that chapter, "upon the personal property, choses in action, and other securities of the defendant against whom the claim is, in the hands of, or due from any garnishee, on whom it is so served." By these provisions, the legislature has expressly made choses in action liable to garnishment, and shares of corporate stock are almost universally held by the courts to be property of that nature. Thomp. Com. Cor., sections 1070, 2587, 4571; Cook Cor. section 123; Clark Cor. section 377. If there were no adjudications upon the subject, there would be no reason to hestitate in saying that shares of stock are subject to attachment, under these statutes. Although this Court has not construed them, similar statutes have been passed upon in many of the States. In Railroad Co. v. Payne, 29 Grat. 502, shares in a railroad company were held liable under a statute which made the attachment a lien upon all the "estate" of the debtor. In delivering the opinion of the court, Moncure, President, said such shares were plainly within the letter, as well as the spirit, of the law. In Bank v. Byram, 131 Ill. 92, it was held that the words "rights and effects" of the debtor in the general attachment law were broad enough to cover shares of stock. In Curtis v. Stcever, 36 N. J. L., 304, the words "rights and credits" in the general attachment law were sufficient. It is now well settled by the authorities that, in the absence of any statutory provision to the contrary, shares of stock, although incorporeal in their nature, are personal property. Clark Cor. 1142, 1143. As our statute makes them personal property and subjects apparently all forms of property to the process of attachment, by giving a lien on the real estate, personal property and chesses in action and other securities of the debtor, it would be very difficult to find a plausible technical ground upon which to except them, and utterly impossible to say, in view of the vast amount of money and prop-erty represented by corporation stock and the extent of its use for purposes of credit, that the legislature did not intend that it should be subject to the attachment laws.
Nor can there be any doubt that, in the matter of procedure, the corporation itself may be made the garnishee. Whatever interest the shareholder has, is in the custody and control of the corporation. A share of the capital stock of a corporation is the interest or right which the owner has in the management of the corporation, in its surplus profits, and, upon dissolution, in all of its assets remaining after the payment of its debts Clark Cor. 1141. The certificate of stock representing the share of the owner, may be in the hands of some person other than the debtor or the corporation, but the certificate is not the share itself. For most purposes, it is not regarded as property, but only as evidence of the existence and ownership of the shares named and described in it. 10 Cyc. 588. Where the proceeding to subject stock by attachment is under the general attachment laws, the corporation is made the garnishee. Railroad Co. v. Payne, 29 Grat. 502. Special statutes usually make the corporation the garnishee. Drake Attach section 2.59.
In this case, the stock, against which the proceeding is, stands on the books of the company in the name of the debtor, but is claimed by a third party under an alleged purchase thereof from the debtor, made long before the order of attachment was served upon the company, in fact, years before this suit was brought. Is the lien of the...
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