Scott v. Houpt

• Decision Date: 19 November 1904
• Citation: 83 S.W. 1057,73 Ark. 78
• Parties: SCOTT v. HOUPT
• Court: Arkansas Supreme Court

83 S.W. 1057

73 Ark. 78

SCOTT v. HOUPT

Supreme Court of Arkansas

November 19, 1904

Appeal from Garland Chancery Court, LELAND LEATHERMAN, Chancellor.

Reversed in part.

Reb Houpt, H. D. Hill and N. C. Foster Lumber Company brought suit in equity against Ed Hogaboom, Arkansas National Bank State Exchange Bank, Park Hotel Company, W. T. Joyce, E. F Klein, George C. Ball, Moses P. Hays, John West, Adolphus Busch, Abner Gile, M. A. Lynch, F. J. Allen, R. C. Brown Phillip Riley, R. E. Jackson, Graeme Stuart, Mrs. A. W Greenway, John Knickerbocker, James H. Weed, John J Lawrence, Fannie Eisele, John Martin Lumber Co., and all others interested. The complaint alleged the institution of attachment suits by plaintiffs and by the Arkansas National Bank and State Exchange Bank against Hogaboom and the recovery of judgments therein. That plaintiffs sued out attachments, and had them levied on the stock of Hogaboom in the Park Hotel Company, a corporation; that Hogaboom was the owner of 5,889 shares of the stock of said company, and in addition thereto was entitled to 1,480 shares which had not been issued to him; that 5,285 of the shares alleged to belong to Hogaboom appeared on the books of the hotel company to have been transferred to defendants; that 604 shares appeared on the books in the name of Hogaboom; that the transferees of the aforesaid shares failed to deposit certificates of transfer with the county clerk of Garland County, as required by Sandels amp; Hill's Digest, section 1338; that they were claiming title to the stock, and had combined together to assert title thereto and object to its sale, and to deter persons from bidding therefor; that the priorities between the attaching creditors were undetermined. The bill proved that the prior transfers of the stock made by Hogaboom be declared void, and that the stock be sold and the proceeds distributed among the creditors according to their priorities.

By an amendment to the complaint plaintiffs alleged that the 604 shares of the Park Hotel Company, standing in Hogaboom's name, had been sold, and were bid in by judgment creditors for $ 600; that the original capital stock of the hotel company was $ 200,000; that Hogaboom subscribed for 7,984 shares of $ 25 each; that the stock was afterwards increased to $ 400,000, and that Hogaboom subscribed for the increase; that it was uncertain how much of said stock had been issued to Hogaboom. The prayer of the original complaint was repeated.

The Arkansas National Bank, the State Exchange Bank and D. H. Kochersperger, judgment creditors of Hogaboom, joined in the prayer of the complaint.

The defendant stockholders, whose stock was involved in the controversy, filed answers, respectively, in which they severally set out the stock owned by them. They denied that any valid order of attachment was issued or levied upon the shares of stock owned by them in the Park Hotel Company.

M. P. Hays, John West, M. A. Lynch, F. J. Allen, R. E. Jackson, Graeme Stuart, John Knickerbocker, A. Gile's executors, the appellants, and other stockholders of the Park Hotel Company, further answered that they severally acquired the stock held by them in the Park Hotel Company long prior to the issuance of the orders of attachment against the defendant Hogaboom; that they had severally paid full and valuable consideration therefor; that the stock held by them was never owned by Hogaboom, or held by him for them; that he had no title thereto or claim thereon at the date of the institution of said proceedings, and that said stock never stood on the books of the company in the name of Hogaboom.

The defendant, R. E. Jackson, alleges that the stock owned by him in the Park Hotel Company was by him sent to the office of the county clerk for the purpose of having the transfer recorded, and the same was, through mistake of the officer, recorded in the office of the circuit clerk, without fault on his part, prior to the issuance of the attachment.

The Park Hotel Company for further and separate answer denied that Hogaboom was at the time alleged in the complaint the owner of 5889 shares of the stock of the Park Hotel Company, or that he was the owner of any shares of stock that had not been issued to him.

In the attachment suit by Reb Houpt against Hogaboom, the process was directed to the coroner, Houpt being at the time sheriff of Garland County. The order of attachment was issued on the 1st day of May, 1896, and was returnable at the succeeding June term of the court. The return as to the levy upon the stock of the Park Hotel Company was in the following words:

"I have this 1st day of May, 1896, at 3 o'clock p. m., duly served the within writ of attachment by delivering a true copy of the same, together with a written notice specifying the property attached, which notice is as follows:

"'Park Hotel Company: You are hereby notified that I hereby levy on all the shares of stock of said company owned by Ed Hogaboom, R. H. Moore, Coroner,' to E. F. Klein, secretary of the Park Hotel Company, Ed Hogaboom, the president of said company, being absent from said Garland County, and by summoning said Park Hotel Company to answer in this action, the levy under this order being upon 7,961 shares of stock in said Park Hotel Company subscribed by Ed Hogaboom and not transferred by him, as appears from the records of Garland County, Arkansas."

In the attachment cases of the Arkansas National Bank and of the State Exchange Bank against Hogaboom the sheriff's return to the attachment showed that he levied upon the entire amount of stock of the Park Hotel Company to which Hogaboom was entitled, and gave written notice of such levy, similar to the above, to E. F. Klein, secretary of the company, in the absence of the president.

During the pendency of the various attachment proceedings against Hogaboom, the plaintiffs therein filed petitions in their respective cases, stating that they had applied to the secretary of the Park Hotel Company for permission to examine the stock books of the company, but that he refused to permit them to make the examination. They asked that the secretary of the Park Hotel Company be required to produce in court the stock books of the company. This petition was granted, and the sheriff and coroner were permitted to amend their returns to the writs of attachment so as to describe specifically the shares of stock upon which the levy was made. Thereupon the court sustained the attachment in each case.

The finding of the chancellor in the consolidated suit, so far as is material to this appeal, was as follows:

"Certain creditors of Ed Hogaboom seek to subject to the payment of their respective debts the stock held by said Hogaboom as a stockholder in the Park Hotel Company which had not been transferred by him, and a certificate of the transfer of the same filed for record, as provided by section 1338 of Sandels & Hill's Digest of the statutes of Arkansas; and attachment proceedings were instituted by certain creditors of Ed Hogaboom, as appears herein, to subject such stock to the payment of their respective demands, and judgments were obtained for amount due and sustaining the attachment in each respective suit, and the stock ordered sold."

After reciting upon what specific stock the attachments were levied, the court continued:

"In determining the rights of parties herein to such stock, the court finds the facts to be as follows: The company was incorporated and articles filed in the office of the county clerk of Garland County on May 8, 1889; that the capital stock of said company was fixed at $ 200,000, of which amount, the articles of incorporation show that $ 30,000 was paid into the treasury of the company; that the shareholders appearing from the articles of incorporation were as follows Ed Hogaboom, 7,984 shares; E. F. Klein, 4 shares; M. A. Eisele, 4 shares; George W. Baxter, 4 shares; R. B. Bancroft, 4 shares; that at a meeting of the stockholders on September 6, 1890, the capital stock of the company was increased $ 100,000, making the stock of the company $ 300,000. The certificate showing such increase was filed for record September 19, 1890, and on April 18, 1891, the capital stock of the company was again increased from $ 300,000 to $ 400,000, and the number of shares were increased from 12,000 to 16,000 shares. The certificate of increase was filed for record May 29, 1891; it appears from the certificate showing such increase that Ed Hogaboom subscribed and paid for all of said increase of stock.

"The court finds that certain shares of stock which had been subscribed for prior to filing the articles of incorporation were paid for by the subscribers direct to the company, to whom certificates therefor were issued after the organization of the company. That the shares of stock originally issued to Ed Hogaboom and by him transferred to others, who failed to have their certificates deposited for record prior to the attachment herein, are as follows, to-wit: Certificates Nos 54 and 55, for 200 shares each, issued to Abner Giles May 12, 1891, in lieu of certificate No. 51, which was originally issued to Ed Hogaboom April 20, 1891; certificate No. 77, for 40 shares, issued to Graeme Stuart March 23, 1892, in lieu of certificate No. 69, for 40 shares, originally issued to Ed Hogaboom July 27, 1889; certificate No. 99, for 160 shares issued May 1, 1895, to R. E. Jackson, 120 shares of which were issued in lieu of certificates Nos. 70, 72 and 73, originally issued to Ed Hogaboom on July 27, 1891, and the other 40 shares comprising a part of certificate No. 99, were issued in lieu of certificate No. 82, issued to Ed Hogaboom on April 13, 1892, which certificate No. 82, being in lieu of certificate No. 79, issued to J. J....