State ex rel. Cooke v. New York-Mexican Oil Co.

• Decision Date: 20 March 1923
• Citation: 32 Del. 244,122 A. 55
• Court: Delaware Superior Court
• Parties: STATE ex rel. COOKE v. NEW YORK-MEXICAN OIL CO. et al

122 A. 55

32 Del. 244

STATE ex rel. COOKE v. NEW YORK-MEXICAN OIL CO. et al

Superior Court of Delaware, New Castle

March 20, 1923

George N. Davis, of Wilmington, for relator.

Herbert H. Ward (of Ward, Gray & Neary), of Wilmington, for defendants.

PENNEWILL C.J., and RODNEY, J., sitting.

OPINION

RODNEY J.

In this case a petition was filed for a writ of mandamus to do two things: (1) To compel the defendant company to transfer on its books the stock in controversy to the name of the relator; and (2) to issue to the relator a new certificate for the shares so transferred.

Before taking up the two objects of the application, it may not be improper to set out some general principles governing the writ of mandamus as existing in Delaware so as to apply them to this case.

In England, prior to the statute of Anne, the writ was a prerogative one, so called because the power to issue it was vested in the judges of the King's Bench, the court in which the sovereign was supposed to be personally present. In Delaware it is issued exclusively by the Superior Court.

Whether in this state it is still a prerogative writ in a supervisory sense (McCoy v. State, 2 Marv. 543, 36 A. 81 [1896]), or whether it has been divested of many of its ancient and prerogative features (Richardson v Swift, 7 Houst. 137, 30 A. 781; Brumley v. J. & M Paper Co., 3 Boyce, 118, 80 A. 350), there are certain principles, among others, to which our courts have ever adhered and which have considerable application in the present controversy:

(1) The writ will never be granted in a doubtful case; there must be a clear legal right. Road Commissioners v. New Castle, 2 Pennewill, 466, 47 A. 374.

(2) The writ will never issue where there is other adequate legal remedy. Hastings v. Henry, 1 Marv. 287, 40 A. 1125; McCoy v. State, 2 Marv. 543, at page 562, 36 A. 81; Bay State Gas Co. v. Content, 4 Pennewill, 497, 56 A. 1120.

(3) The writ is a legal remedy for a legal right, Union Church v. Sanders, 1 Houst. 100, at page 123, 63 Am.Dec. 187.

It is, I apprehend from all the authorities, an extraordinary legal remedy; that is, it is an extraordinary remedy for the enforcement of legal rights, being extraordinary as indicattve that it is only available when other adequate legal remedies are lacking and yet there must be a plain legal right to justify its issuance.

The writ has been called the "flower" of the jurisdiction of this court (Knight v. Ferris, 6 Houst. 283), and it can neither increase nor diminish the duty which the law prescribes and its function is not to create a duty but only to coerce the performance of a pre-existing duty. In Townes v. Nichols, 73 Me. 515, the writ is called "the right arm of the law."

With these general principles, as declared in this state, in mind, we can approach the particular controversy with confidence. It is practically admitted by the counsel for the relator that mandamus will not lie to compel the transfer of stock on the books of a company where the change in the title to the stock was brought about by contract of the parties. The great weight of authority sustains this view. The right to a mandamus to compel the transfer of stock on the corporate books must not be confused with the right to a mandamus to compel the issuance of a certificate of stock, the distinction being herein later pointed out.

In Fletcher, Cyclopedia of Corporations, vol. 6, p. 3818, it is said:

"The general rule is that mandamus will not lie when there is an adequate remedy by ordinary process of law; and since a transferee of a certificate of stock has an adequate remedy at law by an action to recover damages or in equity by a suit to compel the corporation to register his transfer, and issue him a proper certificate, in case the corporation wrongfully refuses to recognize the transfer, most of the courts have held that mandamus will not lie."

Then follow citations from California, Connecticut, Georgia, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Pennsylvania and England. The citations so fully bear out the text that extended quotations would seem to be superfluous.

In 2 Cook on Corporations (7th Ed.) § 390, it is said:

"The weight of authority holds very clearly that mandamus will not lie to compel a corporation to allow a registry on its books of a transfer of stock."

To the same effect is Thompson on Corporations (2d Ed.) §§ 4439, 5761, 5762, and 18 R.C.L. § 106, etc.

Full and instructive notes on the subject gathering together all the authorities may be found in 13 Ann.Cas. 299, 16 Ann.Cas. 900, 133 Am.St.Rep. 728, and 48 L.R.A.(N.S.) 854.

Freeman, in one of his valuable notes in 133 Am.St.Rep. 724, in speaking of a case where a petition had been filed for a mandamus to compel the transfer of stock by a corporation, says:

"Indeed, our only surprise is that the application to the court was made at all in the face of the numerous decisions almost on the point. The courts have consistently held that mandamus does not lie to compel the transfer of stock by a corporation to a purchaser except in the one case of a judicial sale hereafter referred to, and it would only be repeating the principle to quote at any length the opinions."

While the precise question has never before arisen in Delaware as to the availability of mandamus to compel the transfer of stock, the antithesis of this principle has arisen, and one of our earliest cases, McDowell v. Bank of Wil. & Brandywine, 1 Har. 27, was an action of trespass on the case for refusing to permit the plaintiff to transfer bank stock on the books of the bank. We can, therefore, I think, assume with safety that mandamus will not lie at the instance of an assignee to transfer on the books of the company stock which he has received from the assignor.

In an interesting note on the question as to the availability of mandamus' to compel the transfer of corporate stock on the books of the company in 133 Am.St.Rep. 728, it is said that the general rule is that mandamus is not available as a remedy and that -

"The one, and it appears the only, exception is that where shares have been sold under a judicial sale mandamus will lie to compel the corporation to transfer such stock."

The theory of this so-called exception seems to be that since the sheriff cannot put the purchaser in possession of the stock solo that the ordinary duty of the corporation's officer becomes an official duty, and, therefore, the proper officer of the corporation becomes pro hac vice a public officer under the law, and refusing to perform his public duty, mandamus becomes the appropriate remedy. The following authorities have been cited as sustaining this theory. Bailey v. Strohecker, 38 Ga. 259, 95 Am.Dec. 388; People v. Goss, etc., Mfg. Co., 99 Ill. 355; State v. Jeffersonville First Nat. Bank, 89 Ind. 302; Slemmons v. Thompson, 23 Or. 215, 31 P. 514; Hair v. Burnell (C.C.) 106 F. 280.

The Georgia case is easily understood when the Georgia statute is kept in mind. This provides that the officer selling the stock should give to the purchaser a certificate of purchase and on presentation of this certificate to the proper officer to make the transfer on his books and afford the purchaser such evidence of title to the stock purchased as is usual and necessary with other stockholders. The decision was solely on the statute. Terrell v. Georgia, R. & B. Co., 115 Ga. 104, 41 S.E. 262.

The Illinois case can have no place as a citation supporting the exception of judicial sales from the general rule denying the availability of mandamus as a remedy to compel the transfer of stock for the reason that the Illinois courts like those of Louisiana have never accepted the general rule as to mandamus and hold that the writ is granted irrespective of the existence of any other remedy, and this deprives it, so far as they are concerned, of its claim to be an extraordinary legal remedy. 113 Am.St.Rep. 724; Smith v. Automatic Photographic Co., 118 ill.App. 649. A statute provides that mandamus shall not be denied because there may be another specific legal remedy. Carus v. Matthiessen, 196 Ill.App. 445.

State v. First Nat. Bank of Jeffersonville, 89 Ind. 302, was decided solely on the statute which required the sheriff to transfer the stock on the books of the company. There the mandamus was to compel the officers of the company to give the sheriff access to the books to make such transfer. The court recognized the general rule that mandamus was not ordinarily available. That the facts in this case make it inapplicable to the case at bar is immediately apparent when it is pointed out that the law of Indiana, certainly when the cited case was decided, provided that no person, even a pledgee of stock, could hold title to the stock until and unless the stock was recorded in his name upon the corporate books of the company. This is so entirely different from the law of Delaware where title passes by the unrecorded transfer of the certificate (Allen v. Stewart, 7 Del.Ch. 287, 44 A. 786) that the case can have no application.

In Durham v. Monumental S.M. Co., 9 Or. 41, where the interests of third parties by unrecorded assignments appeared, the court refused to order a mandamus to compel the transfer of stock; and in Slemmons v. Thompson, 23 Or. 215, 31 P. 514, the court approved of the Durham Case and while mandamus was there issued under a statute similar to that of Georgia, the court was influenced solely by the facts of the case. The court approved the general doctrine that mandamus would not issue when there was an adequate remedy at law and that generally corporate stock constituted no pretium affectionis, but there decided that the fact that the directors of...