Morrison v. Gulf Oil Corporation

• Decision Date: 27 May 1940
• Docket Number: 34139
• Citation: 196 So. 247,189 Miss. 212
• Court: Mississippi Supreme Court
• Parties: MORRISON et al. v. GULF OIL CORPORATION et al

196 So. 247

189 Miss. 212

MORRISON et al. v. GULF OIL CORPORATION et al

No. 34139

Supreme Court of Mississippi, Division B

May 27, 1940

Suggestion Of Error Overruled September 4, 1940.

APPEAL from the chancery court of Harrison County, HON. D. M RUSSELL, Chancellor.

Action by E. A. Morrison and others against the Gulf Oil Corporation and others to recover by attachment and garnishment the amount of an indebtedness due the Cahn Bank & Trust Company of Meridian, Miss. Judgment for defendants, and plaintiffs appeal. Reversed, and judgment directed for plaintiffs.

Reversed, and decree here for appellants.

Jacobson & Snow, of Meridian, for appellants.

The court below was correct in holding that the suit was properly instituted in the name of the assignor, and also that this appeal is properly before this court.

Ridgeway et al. v. Jones, 122 Miss. 624, 84 So. 692; Solomon v. Continental Baking Company, 174 Miss 890, 165 So. 607; Sec. 505, Miss. Code of 1930.

The universal rule of law applicable to this case is that when the corporate stock of the Gulf Oil Corporation was pledged by the said R. L. Bradshaw to the Cahn Bank & Trust Company as security for the pledgor's indebtedness to it by delivery of the stock certificate, together with power of attorney to transfer the stock, that the pledgee became entitled to all dividends including stock dividends.

Timberlake v. Compress Co., 72 Miss. 323, 16 So. 530; Scherck v. Montgomery, 81 Miss. 426; 67 A. L. R. 485; Peoples-Pittsburgh Trust Co. v. Saupp, 103 A. L. R. 844, 849, 320 Pa. 138, 182 A. 376.

Actual notice by letter bound the Gulf Oil Corporation notwithstanding the statute law of Pennsylvania which it sets up in defense, and the Uniform Stock Transfer Act.

7 R. C. L. 294, Sec. 268; Guarantee Co. of North America v. East Rome Town Co. (Ga.), 51 Am. St. Rep. 150, and note; White River Savings Bank v. Capital Savings Bank & Trust Co. (Vt.), 77 Vt. 123, 59 A. 197, 107 Am. St. Rep. 758; 4 Thompson on Corporations, (2 Ed.), p. 889, Sec. 4402; 121 Am. St. Rep. 197; 14 C. J. 822, Sec. 1243; 18 C. J. S. 1118; 67 A. L. R. 488; 103 A. L. R. 852.

The Pennsylvania statute only determines the name of shareholders in the absence of notice to the contrary or otherwise.

Homestake Oil Co. v. Rigler (9 C. C. A.), 39 F.2d 40.

Eaton & Eaton, of Gulfport, for appellees.

The suit as instituted cannot be maintained because the liquidating committee is not the original party assignor in the alleged assignment upon which suit is predicated.

Sec. 505, Miss. Code 1930; Warburton-Beacham Supply Co. v. City of Jackson, 151 Miss. 503, 118 So. 606; Chattanooga Sewer Pipe Wks. v. Dumler, 153 Miss. 276, 120 So. 450, 62 A. L. R. 999; Webster's International Dictionary; Solomon v. Continental Baking Co., 174 Miss. 890, 166 So. 376; Wells v. R. R. Co., 96 Miss. 191, 50 So. 628.

The suit as instituted cannot be maintained because the right asserted in the pending suit is not an assigned chose in action.

18 C. J. S., Secs. 463, 472; Sec. 505, Miss. Code 1930.

Under Pennsylvania laws which control the issue, the dividend for which suit is brought was legally paid to Bradshaw.

John Hancock Mutual Life Ins. Co. v. Yates, 299 U.S. 178, 81 L.Ed. 106; Bradford Elec. Light Co. v. Clapper, 286 U.S. 145, 76 L.Ed. 1026; Secs. 301 and 303, Title 15, Purdon's Pennsylvania Statutes 1936; Penn. Statutes, Sec. 509, Act No. 106; Connell's Estate, 282 Penn. 555, 38 A. L. R. 1362, 128 A. 503; Citizens Nat'l Bank of Irwin v. Irwin Bldg. & Loan Assn., 175 A. 399; Peoples-Pittsburgh Trust Co. v. Saupp, 103 A. L. R. 844; Homestake Oil Co. v. Rigler, 39 F.2d 140; Erie R. R. Co. v. Thompkins, 304 U.S. 64, 82 L.Ed. 1188; 14 C. J. 819.

Argued orally by Gabe Jacobson, for appellants, and by B. E. Eaton, Sr., for appellees.

OPINION

McGehee, J.

The appellants, who compose the liquidating committee of the Cahn Bank & Trust Company, of Meridian, Mississippi, and who are vested with authority under a decree of the chancery court to sue for and collect the indebtednesses due said bank, brought this suit by attachment and garnishment in the Chancery Court of Harrison County, under Section 173 of the Code of 1930, against the Gulf Oil Corporation, of Pittsburgh, Pennsylvania, as a non-resident defendant, the Gulf Refining Company as a resident garnishee, and R. L. Bradshaw, a local resident debtor, to recover an indebtedness of $ 1, 491.71 due and owing by the said Bradshaw to the Reconstruction Finance Corporation on his promissory note executed in favor of the said Cahn Bank & Trust Company to evidence a loan obtained by him from said bank, and which note and ten shares of the capital stock of the non-resident defendant corporation, which were issued and registered in the name of the said Bradshaw and pledged by him as collateral security, were assigned and transferred along with other collateral by proper endorsement to the Reconstruction Finance Corporation as security for a loan made by it to the bank; and in which suit a decree was also sought, but denied appellants, against the non-resident defendant for the sum of $ 567.68, with interest thereon at the legal rate from and after December 26, 1936, on the ground that the said defendant, on that date, paid over to the said Bradshaw, who was insolvent, a 100% stock dividend in said amount, after notice of the rights of the assignees, respectively, and demand made by them for said dividend, and which was thereupon converted by the said Bradshaw to his own use and benefit.

The proof disclosed without dispute that upon learning that the stock dividend was to be declared on December 21, 1936, the appellants advised the appellee, Gulf Oil Corporation, at its home office in Pittsburg, by letter of November 13, 1936, and by repeated communications thereafter, of the rights of the assignees in and to the dividend in question, and urged the said corporation not to pay the same to the said Bradshaw. On November 16th, 1936, the treasurer of said corporation wrote the receiver of the Cahn Bank & Trust Company, acknowledging receipt of his letter of the 13th instant, and stated that "Any dividends payable on Gulf Oil Corporation stock will be paid to R. L. Bradshaw who is the registered holder on my records." Again, on December 9, 1936, he wrote the receiver of said bank that, "I will be unable to comply with your request unless I receive written request from Mr. R. L. Bradshaw to forward this stock dividend to him in care of your bank." Of course, as shown by the evidence, the assignees could not get the co-operation of Bradshaw in the matter, otherwise the written request from him for the dividend to be paid over to one or the other of the assignees would have been forwarded.

The appellee, Gulf Oil Corporation, defended the suit on two grounds: (1), that the suit could not be maintained by the appellants, for the reason that Section 505, of the Code of 1930, requires that the last assignee, the Reconstruction Finance Corporation, must bring the suit on any assigned chose in action, or that it must be begun, prosecuted and continued in the name of the original party, where there has been a transfer or an assignment of any interest in such chose in action before or after suit brought; and (2) that under the "Uniform Transfer Act, " approved May 5, 1911, Section 303 of Title 15 of Purdon's Pennsylvania Statutes 1936, and Section 509 of Act No. 106, 15 P. S. Sec. 2852--509, approved May 5, 1933, known as the "Business Corporation Law of Pennsylvania, " the said corporation was protected in paying out the said stock dividend to the person in whose name the shares of stock were registered on the books of the corporation.

Responding to the first contention above stated, we are of the opinion that the lower court was correct in holding that the suit was properly brought, for the reason that it was necessary for the debt due by Bradshaw on the note to be established in order to entitle the holder of the note to the income from the stock which was held as collateral thereto. The Cahn Bank & Trust Company, as the payee named therein, was the original party entitled to sue on the note, within the meaning of Section 505, Code of 1930, supra, since the suit on the note could not be maintained in Bradshaw's name as maker, even though he was the original party insofar as the right to collect the dividend on the stock pledged as collateral was concerned. Moreover, the original party in each instance was before the court as complainant and defendant, respectively.

On the second ground of defense interposed by the appellee corporation, we find that Section 303 of Title 15 of Purdon's Pennsylvania Statutes 1936, known as the "Uniform Transfer Act, " reads in part as follows: "Corporation not forbidden to consider registered holder as owner Nothing in this act shall be construed as forbidding a corporation--(a.) To recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, or (b.) To hold liable for calls and assessments a person registered on its books as the owner of shares."

Also that Section 509 of Act No. 106, approved May 5, 1933, known as the "Business Corporation Law of Pennsylvania, " supra, so far as its provisions here pertinent are concerned, provides for the fixing of a date, by the board of directors of a corporation in that state, not less than ten or more than forty days in the future, for the payment of any such dividend or distribution; that, "in such case, only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting, or to receive payment of such dividend , . . . notwithstanding any transfer of any...