Scruggs, Vandervoort & Barney Bank v. International Shoe Co.
| Decision Date | 04 October 1932 |
| Parties | SCRUGGS, VANDERVOORT AND BARNEY BANK, A CORPORATION, APPELLANT, v. INTERNATIONAL SHOE COMPANY, A CORPORATION, RESPONDENT |
| Court | Missouri Court of Appeals |
Re-hearing denied October 18, 1932.
Certiorari denied by Supreme Court, December 16, 1932.
Appeal from Circuit Court of City of St. Louis.--Hon. Wm. H Killoren, Judge.
AFFIRMED.
Judgment affirmed.
Vernon L. Turner and Suelthaus & Krueger for appellant.
(1) Stock certificates are personal property, not mere choses in action, and are transferable as such. Sec. 4549, R. S. 1929; Addis v. Swofford, 180 S.W. 548 (Mo.); Brinkerhoff Farris Trust & Savings Co. v. Home Lumber Co., 118 Mo. 447; Commercial Inv. Co. v Whitlock, 217 Mo.App. 676, 274 S.W. 833; Koellenz v. Citizens Bank of Warrenton, 237 S.W. 176 (Mo. App.); Morrison-Wentworth Bank v. Kerdloff, 75 Mo.App. 297; Carroll v. Mullanphy Savings Bank, 8 Mo.App. 249. (2) Stamp marks on the margin of a stock certificate to give notice of an option of repurchase are not part of the certificate itself, and an erasure of the rubber stamp is not an alteration of the instrument, and voids neither the certificate nor the property therein. Highland Investment Co. v. Kansas City Computing Scales Co., 277 Mo. 376, 209 S.W. 895; American Nat. Bank v. Bangs, 42 Mo. 450; Russell v. Wyant, 214 Mo.App. 377, 253 S.W. 790; Barnes Smith Mercantile Co. v. Tate, 156 Mo.App. 237, 137 S.W. 169; Merritt v. Boyden, 191 Ill. 136; Nassau Trust Co. v. Masterson, 113 A.D. 693, 100 N.Y.S. 55. (3) The purchaser of stock in a corporation is entitled to rely wholly upon the certificate, which is a representation by the corporation and its officers, duly authenticated, that the person therein named is the owner of a specified number of shares of the corporation which will be transferred on demand. National Bank of Webb City v. Newell Morse Royalty Co., 259 Mo. 637; Davey v. Newell Morse Royalty Co., 169 Mo.App. 565; Uniform Stock Transfer Act, sec. 16. (4) A purchaser or pledgee for value takes stock in a corporation free and clear of liens or options the company, or anyone else, may have thereon, in the absence of notice thereof. McMurray v. McMurray, 258 Mo. 405, 167 S.W. 513; Brinkerhoff Farris Trust & Savings Co. v. Home Lbr. Co., 118 Mo. 447; Miller v. Chinn, 195 S.W. 552 (Mo. App.); Chandler v. Blanke Tea & Coffee Co., 183 Mo.App. 91, 165 S.W. 819; Butler v. Montgomery Grain Co., 85 Mo.App. 50; People of State of Ill. ex rel. v. Lake Sand Corp., 251 Ill.App. 499.
Thompson, Mitchell, Thompson & Young, Richmond C. Coburn and Richard O. Rumer for respondent.
(1) By filing its reply after appellant's motion to strike certain parts of respondent's answer was overruled, the appellant waived its motion to strike. Springfield Eng. etc. Co. v. Donovan, 147 Mo. 622, 49 S.W. 500; International Harvester Co. v. Spires, 223 S.W. 799 (Mo. App.). (2) Appellant's objection to the testimony of the witness Ralph C. Becker that notice of respondent's option had been erased from the stock certificate came too late, as the witness had already testified fully before the objection was made. 38 Cyc. 1391; Rockenstein v. Rogers, 31 S.W.2d 792 (Sup. Ct.); Schulz v. Railroad, 319 Mo. 8, 4 S.W.2d 762. And by offering instructions submitting the issue of erasure to the jury, the appellant waived its objections to the introduction of evidence supporting that issue. The appellant cannot assume a different theory in the appellate court from the one voluntarily assumed in the trial court. Simpson v. Wells, 292 Mo. 301, 237 S.W. 520; Tomlinson v. Ellison, 104 Mo. 105, 16 S.W. 201; Plannett v. McFall, 284 S.W. 850 (Mo. App.); Berger v. St. Louis Storage and Commission Co., 136 Mo.App. 36, 116 S.W. 444. But the proof of erasure was admissible. See Points and Authorities cited under 4. (3) There was no error in respondent's instruction No. 3. If any ambiguity existed in this instruction, it was clarified by other instructions given by the court. Rudy v. Autenreith, 287 S.W. 850 (Mo. App.); Huffman v. City of Hannibal, 287 S.W. 848 (Mo. App.); Carroll v. Young, 267 S.W. 436 (Mo. App.); Davis v. Geiger, 212 S.W. 384 (Mo. App.). (4) There was no error in respondent's instruction No. 4. Any objection upon the part of the appellant to the defense of erasure raised by this instruction passed out of the case by the appellant's voluntarily joining issue with the respondent thereon in submitting this defense in other instructions. Simpson v. Wells, supra; Tomlinson v. Ellison, supra; Plannett v. McFall, supra; Berger v. St. Louis Storage & Commission Co., supra. The option of the respondent to repurchase the stock is a valid limitation. Brinkerhoff-Farris Trust & Sav. Co. v. Home Lbr. Co., 118 Mo. 447, 24 S.W. 129; State Sav. Ass'n v. Jones Prtg. Co., 25 Mo.App. 642; Morrison-Wentworth Bank v. Kerdolff, 75 Mo.App. 297. The erasure of the option to purchase is an alteration of the certificate which does not affect the restrictions on the ownership of the stock. Brinkerhoff-Farris Trust & Sav. Co. v. Home Lbr. Co., supra; Nat'l Bank of Webb City v. Newell-Morse Royalty Co., 259 Mo. 637, 168 S.W. 699; Davey v. Newell-Morse Royalty Co., 169 Mo.App. 565, 154 S.W. 147; Citizens Nat'l Bank v. Santa Rita Hotel Co., 22 F.2d 524; Miller v. Houston St. Ry., 69 F. 63; 14 C. J. 469. There was no error in instruction No. 4 by its assuming the exercise of respondent's option, as this was an agreed fact and was not treated as a disputed question in the trial of the case. Dickensheets v. Patrick, 217 Mo.App. 171, 274 S.W. 891. (5) The verdict was proper in every sense. The essence of an action for conversion is the wrongful deprivation of one's property. Fitzwilliams v. Northwestern Trust Co., 10 S.W.2d 334 (Mo. App.); Peoples Bank v. The Railway, 158 Mo.App. 519, 138 S.W. 915. The verdict for the respondent in this case means that the respondent did not wrongfully deprive the appellant of its property in the stock, not that the appellant has no interest in the stock.
--This is an action to recover damages for the conversion of forty shares of the common stock of the defendant company, represented by a certificate issued by defendant to Eearsel W. Pollard, and endorsed by Pollard to plaintiff as collateral security for a promissory note in the sum of $ 2.610, made by Pollard to the plaintiff bank. The cause was tried to a jury. There was a verdict for defendant, and judgment was given accordingly. Plaintiff appeals.
The certificate for the forty shares of stock was issued by defendant to Pollard on December 1, 1927. Pollard was an employee of defendant, and the stock, on this account, was sold to him at a reduced price, with an option, to be asserted at any time prior to January 1, 1932, to repurchase the stock at $ 1,350, which was the price paid for the stock by Pollard. Other employees had the privilege of purchasing the stock of defendant on similar terms, and many of them did so, and received certificates therefor. The option contracts were in writing, and when certificates were issued for stocks sold to employees the defendant caused to be stamped, both on the face and back of each certificate, the following endorsement:
"Upon the happening of certain conditions prior to January 1, 1932, F. A. Sudholt, Trustee, has an option to repurchase this stock, and this certificate is issued subject to said option."
The defendant's evidence shows that this endorsement was stamped on both the face and back of the Pollard certificate at the time of its issuance. The option contract provided that the option could be exercised only if, for any cause, other than death, the employee's connection with defendant company should be severed prior to January 1, 1932, or an effort be made to sell the stock within that time. Pollard pledged his stock certificate to the plaintiff bank on December 20, 1928, to secure his note in the sum of $ 2,610, issued to the bank on that date, for a loan received by him from the bank. The evidence shows that Pollard severed his connection with the defendant company on January 4, 1929, and was not thereafter connected with the company.
Horace D. Pyle, assistant cashier of the plaintiff bank, testified that he made the loan of $ 2,610 to Pollard and took the note therefor from Pollard and received from him the certificate of stock pledged to secure the note; that at the time he received the certificate he examined it carefully; that he saw nothing out of the ordinary when he examined it; that he looked at both sides of the certificate; that he did not see any stamp on the certificate at the time; that he first found out about defendant's option to repurchase the note after the Pollard note became due; that he first discovered the words stamped on the certificate after the note was past due; that defendant demanded the stock back on the basis that Pollard did not own it outright unless he continued to be employed a certain length of time, and that at that time he discovered the defendant's option; that prior to the time the note came into default he had no knowledge of any agreement between Pollard and the defendant company that would give the defendant company any right to repurchase the stock.
When the Pollard note came into default, the stock was sold under the powers given in the contract under which it was pledged to plaintiff bank, and was bought in by the bank for $ 1,300.
It was stipulated at the trial that plaintiff made demand on defendant on March 19, 1929, for the transfer to it on the books of the defendant of the Pollard certificate of stock which transfer the defendant refused to make, and that at the same time defendant...
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