Sibley v. Quinsigamond National Bank

• Decision Date: 27 November 1882
• Citation: 133 Mass. 515
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Experience C. Sibley, administratrix, v. Quinsigamond National Bank & others

133 Mass. 515

Experience C. Sibley, administratrix, v. Quinsigamond National Bank & others

Supreme Court of Massachusetts

November 27, 1882

Argued October 8, 1880

Worcester. Bill in equity, filed October 7, 1879, against the Quinsigamond National Bank, a corporation having its place of business in the city of Worcester in this Commonwealth Daniel A. Hawkins, and Charles A. Hill, the assignee in insolvency of the estate of said Hawkins, to compel the transfer to the plaintiff of seven shares of the capital stock of the defendant bank.

The case was heard upon the pleadings and agreed facts, before a single justice of this court, who ordered a decree to be entered for the defendants. The plaintiff appealed to the full court. The facts appear in the opinion.

Decree for the plaintiff.

The case was argued at the bar in October 1880, by F. T Blackmer, for the plaintiff, and by E. B. Stoddard, for the defendants; and was afterwards submitted on briefs by the same counsel.

W Allen, J. Lord, J., absent.

OPINION

W. Allen, J.

The plaintiff, as administratrix of Rhoda Wheelock, seeks a transfer to herself of certain stock of a national bank, standing on its books in the name of Daniel A. Hawkins. It appears that the stock was purchased by Mrs. Wheelock in 1865, and the certificate issued to her; that in 1866 she transferred it to Hawkins, and a new certificate was issued to him, and the stock has ever since stood in his name on the books of the bank, and he has voted on it at meetings of the stockholders, and received the dividends from the bank, and acted as shareholder. The stock was transferred by Mrs. Wheelock to Hawkins solely that he might hold it in trust for her; and, when he received the certificate from the bank, he indorsed upon it an assignment to Mrs. Wheelock, and delivered the certificate and assignment to her, and she has held them ever since; he received the dividends for her, and paid them over to her. The bank had no notice of the trust.

The by-laws of the bank provide that the stock shall be assignable only on the books of the bank, and that a transfer-book shall be kept in which all assignments and transfers of stock shall be made; and in the certificate to Hawkins the stock is declared to be transferable only on the books of the bank by him or his attorney, on the surrender of the certificate. The plaintiff has offered to surrender the certificate, and has demanded a transfer of the stock to herself as the administratrix of Mrs. Wheelock.

The defendant Hill contends that he is entitled to the stock, as assignee of the estate of Hawkins, under the insolvent laws of this Commonwealth; and it appears that, upon the petition of Hawkins, insolvency proceedings were instituted, and his estate was duly assigned to the defendant Hill, before the demand made by the plaintiff upon the bank, and before the bank had notice of the trust. The question presented is, whether the stock passed to the assignee by virtue of the assignment.

As an assignment under the insolvent laws operates by force of the statute, and not as a conveyance from the debtor, the terms of the statute, as applied to the subject matter, must determine what will pass by the assignment. The language of the statute is, "The assignment shall vest in the assignee all the property of the debtor real and personal which he could have lawfully sold, assigned or conveyed, or which might have been taken on execution upon a judgment against him." Gen. Sts. c. 118, § 44. Property held in trust by a debtor is not property of his which he could have lawfully sold, assigned or conveyed, or which might have been taken on execution upon a judgment against him. There is no provision in the insolvent law that property held in trust by the debtor shall not pass by the assignment, and there is no occasion for such a provision. Such property is not the property of the debtor within the meaning of the act, and does not come within its provisions as property which will pass by the assignment. Holmes v. Winchester, ante, 140. Chace v. Chapin, 130 Mass. 128. Hunnewell v. Lane, 11 Met. 163. To enable the defendant to hold the stock in question as property of Hawkins, which could be taken on execution against him, it must be brought within some exception to the general rule of the common law, either by the effect of some statute, or by some application of the law of estoppel.

It is contended by the defendant, that, by force of statute provisions, national bank stock is deemed to belong to the person in whose name it stands on the books of the bank, and is liable to be taken on execution against him as his property, although he may have no beneficial interest in it, and may hold it as a trustee. Stock in corporations cannot be taken on execution, except as authorized by statute, and the statutes of this Commonwealth have made property of this nature liable to be so taken. The Gen. Sts. c. 133, § 43, provide that "the share or interest of a stockholder in any corporation established under the authority of this State, may be taken on execution and sold as hereinafter provided." The St. of 1870, c. 291, § 1, provides that "the shares or interest of a stockholder in any corporation organized under the laws of the United States, and located or having a general office in this State, may be attached on mesne process and taken on execution in the same manner as the shares or interest of a stockholder in corporations organized under the laws of this State, may be attached and taken on execution." These statutes do not define what shall be an attachable interest in stock, but leave that to be determined by the common law, or by some other statute. Boston Music Hall v. Cory, 129 Mass. 435.

At common law, property held in trust cannot be taken on execution as the property of the trustee, and there is no statute of this Commonwealth which relates to the subject. The defendant bank is organized under an act of Congress, and the question then is, whether there is any statute of the United States which makes the stock in a national bank liable to be taken on execution against the person in whose name it stands on the books of the bank, although he never had any beneficial interest in it, and has given a written assignment of it to a person for whom he holds it in trust. The U.S. Rev. Sts. § 915, which give like remedies against the property of a defendant, by attachment or execution, as are provided by the laws of the State, do not affect the question of what shall be competent evidence of the ownership of stock in national banks. The only statutes which bear upon that are the provisions of the U.S. Rev. Sts. which provide, in § 5139, that "the capital stock of each association shall be divided into shares of one hundred dollars each, and be deemed personal property, and transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association."§ 5136 authorizes the association by its directors to make by-laws, not inconsistent with law, regulating the manner in which its stock shall be transferred. § 5210 requires that a list of the names and residences of the shareholders, and the number of shares held by each, shall be kept in the office of the association, which shall be subject to the inspection of the shareholders and creditors of the association, and State officers authorized to assess taxes. § 5151 makes shareholders individually liable for the debts of the association, to a limited amount. But for these provisions and the by-laws enacted in pursuance of them, the assignment in the case at bar would have transferred the legal interest in the stock to Mrs. Wheelock, and made her the shareholder instead of Hawkins. By the effect of the statute, the legal title is in him, and he is the legal shareholder. The statute provides for transfers of stock, and concerns only the legal status of the shareholder. It does not require that the shareholder shall be deemed to be the beneficial owner of the stock, nor prescribe what shall be competent evidence to prove that he holds it in trust. Although the act makes provisions concerning stock held in trust (§ 5152), yet it does not prescribe how a trust shall be created, or proved, but leaves that and the rights of the cestui que trust unaffected by its provisions. If it contained the provision common in registry acts, that an assignment in any other than the prescribed mode should be void against all persons except the assignor and those having notice, or like that in the railroad law of this State, that a transfer not recorded as prescribed shall be void against all persons other than the grantors or their representatives; Pub. Sts. c. 112, § 56; or that in the general corporation law of this State, that no assignment shall affect the rights of an attaching creditor unless recorded as prescribed; Pub. Sts. c. 105, § 24; or any provision prescribing the manner in which a trust should be created or proved,--a different question would be presented.

It is argued that, by force of the provisions of the statute, the equitable interest of a purchaser for value, who should hold an assignment without a transfer, would not avail against an attaching creditor of the assignor; and that Mrs. Wheelock having but an equitable interest, stands in the position of such a purchaser. There are two answers to this argument: first, Mrs. Wheelock does not stand in the position of a purchaser from Hawkins. The interest she has was never his; the assignment was but the declaration of an existing trust. If his creditors take all the right that he ever had in the stock, they will not take the beneficial interest. What they seek to take is what he never had, and what he never could have sold or assigned to Mrs....