Richards v. Montgomery

• Decision Date: 21 March 1935
• Docket Number: 6 Div. 703
• Citation: 230 Ala. 307,160 So. 706
• Parties: RICHARDS v. MONTGOMERY, Superintendent of Banks.
• Court: Alabama Supreme Court

160 So. 706

230 Ala. 307

RICHARDS v. MONTGOMERY, Superintendent of Banks.

6 Div. 703

Supreme Court of Alabama

March 21, 1935

Rehearing Denied April 25, 1935

Appeal from Court of Common Claims, Jefferson County; Sam C Pointer, Judge.

Action in detinue by Mrs. L.M. Richards against H.H. Montgomery, as Superintendent of Banks, liquidating the Woodlawn Savings Bank, From a judgment for defendant, plaintiff appeals. Transferred from Court of Appeals.

Affirmed.

Lange Simpson & Brantley, of Birmingham, for appellant.

Wilkinson & Wilkinson, of Birmingham, for appellee.

FOSTER Justice.

This is an action of detinue for the recovery of a certain defined certificate for shares of stock in a corporation, a building and loan association.

Plaintiff claims title by virtue of a collateral note executed to her by her son W.M. Richards, in whose name the certificate was issued, and by a sale of it under power in the note to satisfy the debt, giving her authority to buy at the sale. The note was dated October 10, 1930, but was not executed as indicated by the evidence until some time after March 6 1931; the exact date is not clear. It was in renewal of another, said to mature October 10, 1930. At the time it was executed, whether on October 10, 1930, or after March 6, 1931, the stock certificate was at the time in the possession of the liquidating agent of the Woodlawn Savings Bank, which went into liquidation July 6, 1929. W.M. Richards was indebted to the bank as evidenced by notes, which had no provision for transfer of the certificate. But it was transferred in blank signed by W.M. Richards, witnessed by Dr. Bell, president of the bank, and in its custody. Richards claimed that the certificate was there merely for safe-keeping. There was some corroboration of that claim. But the liquidating agent refused to surrender the certificate, and there was no record to show that the assignment was not made as collateral security to the bank so in possession of the certificate, nor that it was for that purpose, further than the circumstance of its assignment in blank, in the custody of the bank, and that the owner owed the bank a debt.

The defendant, representing the bank, takes the position, in the first place, that the note, if executed in good faith, did not convey the legal title to the plaintiff; that it was but an attempt to pledge without a delivery of possession of the certificate, and thereby failed to pass the legal title necessary to sustain an action of detinue.

Shares of stock have a distinct status and are personal property transferable as such, subject to certain principles peculiar to them. Section 6994, Code; Gen.Acts 1931, p. 565; B'ham. Tr. & Says. Co. v. La. Nat. Bk., 99 Ala. 379, 13 So. 112, 20 L.R.A. 600; B'ham. Tr. & Savs. Co. v. Cannon, 204 Ala. 336, 337, 85 So. 768. As between the seller and his purchaser, they are salable somewhat as other personal property, except where some statute or special rule is applicable. They are not governed by all the rules applicable to notes or other contracts to pay money, nor by section 9231, Code, but to sales of personalty to the extent that special provisions are not made. Uniform Stock Transfer Act, July 22, 1931, p. 565.

The note here in question provides' that the maker "having deposited as collateral security for the payment of this note" certificate No. 95, etc. But it was not in fact so deposited. Apt words of conveyance are not necessary to transfer the title of personal property any more than of realty. Section 6839, Code; Pierce v. Jackson, 56 Ala. 599; Campbell v. Woodstock Iron Co., 83 Ala. 351, 3 So. 369; Jackson v. Rutherford, 73 Ala. 155, 157; Barnhill v. Howard, 104 Ala. 412, 417, 16 So. 1.

The form and language of the instrument make it a mortgage sufficient to pass the legal title, and to vest in plaintiff; the purchaser at foreclosure, a title free from the equity of redemption. Campbell v. Woodstock Iron Co., supra; Oden v. Vaughn, 204 Ala. 445, 85 So. 779; Ala. State Bank v. Barnes, 82 Ala. 607, 2 So. 349. We are not therefore concerned with the law applicable to pledges. It was a valid hypothecation (14 Corpus Juris, 720, § 1101; 31 Corpus Juris, 234) in form sufficient to write in the instrument the qualities of a chattel mortgage. Delivery of possession was not necessary. If the note was executed and foreclosed, the purchaser acquired at the sale such title and right as the maker had, and could maintain detinue against him for the certificate here in question. Pierce v. Jackson, supra.

But the general rule is well settled in Alabama, not changed by amendment to section 7453, Code, applicable to ejectment suits, that when a conveyance is made of personal property which is at the time in the adverse possession of a third person, no title passes to the grantee which will sustain an action of detinue against such adverse possessor. Foy v. Cochran, 88 Ala. 353, 6 So. 685; Huddleston v. Huey, 73 Ala. 215; Ala. State Bank v. Barnes, 82 Ala. 607(6), 618, 2 So. 349; Pope v. Union Warehouse Co., 195 Ala. 309, 70 So. 159.

A different rule is applicable to contracts for the payment of money, not negotiable, by virtue of section 5699, Code although the note is adversely held when it is assigned by separate...