Shaw v. Goebel Brewing Co.

• Decision Date: 07 January 1913
• Docket Number: 2,272.
• Citation: 202 F. 408
• Parties: SHAW v. GOEBEL BREWING CO., Limited.
• Court: U.S. Court of Appeals — Sixth Circuit

202 F. 408

SHAW v. GOEBEL BREWING CO., Limited.

No. 2,272.

United States Court of Appeals, Sixth Circuit.

January 7, 1913

This was a suit in equity to establish ownership in appellant of 60 shares of the capital stock of the appellee company; to compel the company 'to reissue said stock' to appellant and to pay him all dividends that have accrued or may accrue thereon; and meanwhile to enjoin payment of accruing dividends. The appellee is a corporation created under the Companies' Act of Great Britain.The company has two sets of officers and directors, who are designated as 'general' and 'local.' The general officers and directors reside in London, England, and the local in Detroit, Mich. The Register for Members (stockholders) of the company is kept in London, and the issue and transfers of stock of the company are made and entered there. The company's brewery and equipment are located in Detroit and its brewing business is conducted there. It has complied with the statute of Michigan permitting foreign corporations to conduct business in the state, and is admittedly there amenable to process and suit. Its capital stock is divided into preference and ordinary shares, and the par value of both classes is 10 pounds each. The stock in dispute consists only of ordinary shares represented by three certificates bearing date June 12, 1891 and numbered respectively 402, 403, and 404, each in due form and under seal, in the name of John Peter Grant of Detroit and certifying that he is the proprietor of ordinary shares numbered (in 402) 4,961 to 4,980 inclusive, (in 403) 4,981 to 5,000 inclusive, (in 404) 5,001 to 5,020 inclusive 'subject to the articles of association and the rules and regulations of the company, and that there has been paid in respect of each of such shares the sum of three pounds (and it appears by indorsements on the certificates that further payments were made in June, 1891, until such shares were fully paid). * * * No transfer of any of the above shares can be registered without the production of this certificate.'

July 7, 1890 (Shaw testifying, however, that he received the paper in '91 or '92), John Peter Grant signed and sealed the following:

'I, John Peter Grant, * * * in consideration of the sum of fifteen hundred dollars paid by David R. Shaw, of Detroit, Michigan, hereinafter called the transferee, do hereby bargain, sell, assign and transfer to the said transferee one hundred fully paid 10-pound shares numbered 5,021 to 5,040, 5,001 to 5,020, 4,981 to 5,000, 4,961 to 4,980, 4,941 to 4,960 of and in the undertaking called the Goebel Brewing Co., Led. To hold unto the said transferee, his executors, administrators, and assigns, subject to the several conditions on which I held the same immediately before the execution hereof; and I, the said transferee, do hereby agree to accept and take the said shares subject to the conditions aforesaid.'

The paper was not signed by Shaw; nor was it stamped. While this paper refers to a greater number of shares than the 60 shares described in the three certificates of stock before mentioned, the appellee never received any other certificates; but he has held the three ever since their delivery to him with the instrument of transfer. No dividends were paid on the stock between that time (1891 or 1892) and 1908; but there is testimony tending to show that the stock possessed a market value of . . . 3 and upwards per share 'for a good many years' prior to 1908. In that year demand was made both upon the local secretary and the London secretary for transfer of the stock to the name of appellant and payment of dividends, but answer was made by the London secretary that, while in Europe some 14 or 15 years before, Grant had executed a transfer of all his shares in the company to a Mr. Byrne and had promised to remit the certificates immediately upon his arrival in New York; that he had failed to do so and Byrne had never been able to trace him; that in 1904 Byrne made application to the board in London to register his transfer, which was declined without an order of court; that such an order was obtained December 9, 1904, compelling the company to rectify the register by entering Byrne's name as the owner of the shares formerly standing in the name of Grant. The form of assignment of Grant to Byrne differs from that of Grant to appellant Shaw, above set out, only in date, description of shares, and in the fact that the instrument was stamped and was signed and sealed by Byrne, the transferee. The instrument bears date October 1, 1894, and embraces among others the shares included in the assignment to appellant and represented by the three certificates before mentioned. The order of court before referred to was made by the High Court of Justice, Chancery Division, sitting in London, and, omitting the findings, is as follows:

'This court doth order that the Register of Members of the above-named company be rectified by removing therefrom the name of John Peter Grant as the holder of 117 ordinary shares numbered 4,941 to 5,057 and 95 preference shares numbered 4,181 to 4,257 inclusive, and by inserting in lieu thereof the name of said Edmund Byrne as the holder of the shares aforesaid pursuant to a transfer thereof by the said John Peter Grant to the said Edmund Byrne, dated the 1st day of October, 1894. * * * And it is ordered that due notice of the said rectification be given to the registrar of joint-stock companies.'

This order was no doubt carried into execution, for the secretary testifies that Byrne ceased to be a member of the company November 13, 1905, having on that date transferred the last of the shares standing in his name.

This suit was commenced in the state court and removed to the court below. Issue was joined by answer, and decree was entered below dismissing the bill.

Corliss, Leete & Joslyn, of Detroit, Mich. (John B. Corliss, of Detroit, Mich., of counsel), for appellant.

Orla B. Taylor and Chas. F. Delbridge, both of Detroit, Mich., for appellee.

Before WARRINGTON and KNAPPEN, Circuit Judges, and SESSIONS, District judge.

WARRINGTON Circuit Judge (after stating the facts as above).

The important question is whether Shaw can compel the Brewing Company to accept a surrender of his certificates and execute and deliver new ones in his name. He obtained his certificates some 16 years before notifying the company of his purchase or demanding a transfer; and this was about 4 years after the company had, in obedience to an order of court, entered upon its register a transfer of these shares to Byrne, and 3 years after Byrne had disposed of the shares and ceased to be a member of the company. It is true that each of Shaw's certificates contains the statement: 'No transfer of any of the above shares can be registered without the production of this certificate. ' It is also true that each of these instruments certifies that Grant is the 'proprietor' of the shares named, 'subject to the articles of association and the rules and regulations of the company. ' The twenty-ninth paragraph of the articles of association provides that transfers of shares shall be 'signed both by the transferror and the transferee'; but transfers were permissible in 'any usual common form of instrument of transfer,' and we think, if Shaw's omission in the present instance to sign as transferee were the only difficulty, he could solve it simply by signing the transfer. In re Tahiti Cotton Company, 17 Eq.Cas. 273.

Section 35 of the Companies' Act 1862-1909, Great Britain, which among other sections was admitted in evidence as part of the proofs, provides:

'If the name of any person is, without sufficient cause, entered in or omitted from the register of members of any company under this act, or if default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member of the company, the person or member aggrieved * * * or the company itself, may, as respects companies registered in England * * * by motion in any of Her Majesty's Superior Courts of law or equity, or by application to a judge sitting in chambers, * * * apply for an order of the court that the register may be rectified, and the court may either refuse such application * * * or it may, if satisfied of the justice of the case, make an order for the rectification of the register. * * * The court may, in any proceeding under this section, decide on any question relating to the title of any person who is a party to such proceeding to have his name entered in or omitted from the register, whether such question arises between two or more members or alleged members, or between any members or alleged members and the company, and generally the court may in any such proceeding decide any question that it may be necessary or expedient to decide for the rectification of the register.'

The Companies' Act provides for the organization of companies such as this, and it is not disputed that this company was so organized; nor is the settled principle disputed (indeed, it is in effect relied on in support of one portion of the argument for appellant) that the applicable provisions of the act must be regarded as entering into and forming part of the company's charter. If it be assumed for the moment that the principle can be safely applied in a case like this Shaw's rights as stated in his certificates of stock must be considered in connection with section 35 of the Companies' Act. Stated differently, Shaw's right to rely upon the representation contained in the certificates of stock that transfers of the shares could not be registered without production of the certificates was at least in terms qualified by the power vested in the courts of England by...