State ex rel. N. American Co. v. Koerner

• Citation: 211 S.W.2d 698
• Decision Date: 12 April 1948
• Docket Number: No. 40643.,No. 40644.,No. 40645.,40643.,40644.,40645.
• Parties: STATE EX REL. NORTH AMERICAN COMPANY, a Corporation, Relator, v. HONORABLE WILLIAM K. KOERNER, Judge of the Circuit Court, City of St. Louis, Missouri.
• Court: United States State Supreme Court of Missouri

211 S.W.2d 698

STATE EX REL. NORTH AMERICAN COMPANY, a Corporation, Relator, v. HONORABLE WILLIAM K. KOERNER, Judge of the Circuit Court, City of St. Louis, Missouri.

No. 40643.

No. 40644.

No. 40645.

Supreme Court of Missouri.

Court en Banc, April 12, 1948.

Rehearing Denied, May 27, 1948.

Prohibition.

PRELIMINARY RULES IN PROHIBITION DISCHARGED.

Frank Y. Gladney, J.C. Jones, Jr., Lon O. Hocker, Fred L. Williams and Roland F. O'Bryen for relator; Jones, Hocker, Gladney & Grand and Williams, O'Bryen & Schlafy of counsel.

(1) Under provisions of the Uniform Stock Transfer Act, the right of property in the shares, the title to the shares, is embodied in the certificates representing such shares. Such title and possession of the certificates is one and inseparable. Since such certificates were and are beyond the territorial jurisdiction of the court, the attempted attachment is an obvious abuse of power and an assumption of jurisdiction over property held and owned in New York and thereby is a violation of relator's rights as secured to it by the due process clause of the Fourteenth Amendment to the Constitution of the United States. Pennoyer v. Neff, 95 U.S. 714; State ex rel. v. Barnett, 245 Mo. 99. (2) The property right in shares of stock of a Missouri corporation under principles of the common law had the characteristics following: The right or interest was intangible; Title to the shares was held by the issuing corporation for the benefit of the shareholder; The situs of the shareholder's beneficial interest was immovably fixed with the issuing corporation; there could be no change of possession; Legal title and beneficial ownership were split apart; the title being in the issuing corporation and the beneficial interest in the shareholder. Foster v. Potter, 37 Mo. 525; Armour Bros. Banking Co. v. St. Louis Natl. Bank, 113 Mo. 12; Tufts v. Volkening, 122 Mo. 631; Richardson v. Busch, 198 Mo. 174. (3) The exclusive subject matter of the Uniform Stock Transfer Act of 1943 is the property in shares of stock in a Missouri corporation. Its obvious purpose, as indicated by the scope and character of its provisions, is to supplant the common law and bring the law of the subject matter into harmony with the actual course of business in owning and transferring shares of stock. As such alteration of the common law it is valid and is to be liberally construed. Sec. 645, R.S. 1939. (4) Under the substantive provisions of the Act, the property in shares of stock has the characteristics following: It is tangible: embodied in and inseparable from the certificate, which is a physical chattel; The title is wholly dissevered from the issuing corporation, embodied in and identified with the certificate; Situs of the shares circulates with the certificate; Possession of the certificate and title to the shares are one and inseparable. The certificate representing the shares is negotiable. Uniform Stock Transfer Act of 1943, Secs. 1, 5, 7, 8, 15, 16; Turnbull v. Longacre Bank, 249 N.Y. 159, 163 N.E. 135; Haughey v. Haughey, 305 Mich. 356, 9 N.W. (2d) 575; Mills v. Jacobs, 333 Pa. 231, 4 Atl. (2d) 152; American Surety Co. v. Cunningham, 275 N.W. 1; Edmund Wright, etc. Co. v. Ribbon Mills, 148 Atl. 178; Priess v. Terazzo Co., 309 Ill. App. 475, 33 N.E. (2d) 504; Swain v. Martin, 302 Ky. 381, 194 S.W. (2d) 855. (5) The positive, substantive provisions of the Uniform Act legislate out of existence the sole subject matter of the remedy formerly afforded by Sections 1345 and 1346. Nothing is left for the old remedy to act upon. The very subject of the court's jurisdiction is destroyed. Chastleton v. Sinclair, 264 U.S. 543; Railway Co. v. Walters, 294 U.S. 405. (6) Section 13 of the Uniform Act, both as originally passed in the House and as subsequently amended in the Senate, is altogether procedural or remedial in scope and character. It does not purport to define, create or alter the property right in shares of stock. It does not purport to qualify or limit any substantive provision of the Act. Just as Sections 1345 and 1346 presupposes as subject matter the common law property right in such shares, so likewise Section 13 presupposes as subject matter the statutory property right as set forth in the Transfer Act. Maurizi v. West Coal & Mining Co., 321 Mo. 378. (7) Section 13 as amended is directly contradictory and repugnant in its provisions in that it attempts and purports to treat shares of stock for purposes of attachment both as negotiable under the Transfer Act and as non-negotiable under the common law. A statute so badly drawn as to vest a right to the same property in hostile claimants, would itself be a nullity. City of Mobile v. Esclava, 16 Pet. 234. (8) Sections 1345 and 1346, R.S. 1939, and the Transfer Act "cannot stand together"; it is legally impossible to give effect to and enforce both. A purchaser at an execution sale pursuant to Sections 1345 and 1346 would not contribute one dime to the issuing corporation and could not be entitled to any of the rights and privileges of a shareholder. For, it is beyond the power of the court to compel an increase in the number of shares or an issue of shares without payment therefor in money, labor or property; the Constitution of Missouri forbids it. Constitution of Missouri, Art. XI, Sec. 7; Berry v. Rood, 168 Mo. 316; Parkhurst v. Almy, 222 Mass. 27, 109 N.E. 733; Cook on Corporations (7th Ed.), sec. 284, p. 815. (9) The second sentence of Section 13 is unconstitutional and void in this: The statute makes no provision whatever for giving notice of the attachment to an innocent holder of the certificate who is not a party to the attachment proceeding. For this reason the provision is void. Security Trust Co. v. Lexington, 203 U.S. 323; Wuchter v. Pizzuti, 276 U.S. 13. (10) The court cannot compel a non-resident to come in and submit his property rights to its jurisdiction. Sheedy v. Second Natl. Bank, 62 Mo. 17; State ex rel. v. Blair, 238 Mo. 132; Baker v. Baker, Eccles Co., 242 U.S. 394. (11) The fact that the Legislature by Section 13 mistakenly supposed that it could authorize an attachment both by seizure of the certificate under the Transfer Act and by constructive seizure under Sections 1345 and 1346 does not affect the old law or the new. A mistaken opinion of the Legislature does not make or change the law. Tilford v. Ramsey, 43 Mo. 410; State ex rel. v. Lincoln Trust Co., 144 Mo. 562; Kern v. Legion of Honor, 167 Mo. 471; State ex inf. v. Goffee, 192 Mo. 670; Hall v. Sedalia, 232 Mo. 344; Knickerbocker Ice Co. v. Stewart, 253 U.S. 149. (12) Conceding that implied repeals are not favored yet, it is settled doctrine that a subsequent statute necessarily repeals a prior one when there is between them a conflict and repugnancy so clear that the two cannot stand together. State ex rel. v. Shields, 230 Mo. 91; Pac. R. Co. v. Cass County, 53 Mo. 17; State ex rel. v. Buckner, 300 Mo. 359, 254 S.W. 179; State ex rel. v. Rutledge, 321 Mo. 1090, 13 S.W. (2d) 1061; State ex rel. v. Smith, 345 Mo. 1158, 139 S.W. (2d) 929. (13) The court will interpret and apply the Transfer Act in a way to carry out the object and purpose of the enactment so far as that can be ascertained from the language of the statute. Cummins v. K.C. Public Service Co., 334 Mo. 672; White v. Greenlee; 337 Mo. 514; Rust v. Missouri Dental Board, 348 Mo. 616. (14) The declared general purpose of the Transfer Act is to make certificates representing shares of stock negotiable throughout the boundaries of all states that adopt either the Act or equivalent legislation bringing about the same result. Secs. 19, 22; Haughey v. Haughey, 305 Mich. 356, 9 N.W. (2d) 575; Chatz v. Midco Oil Corp., 152 F. (2d) 153. (15) The principle of reciprocity is the essence of the Transfer Act. The Act as adopted by the Missouri Legislature has either made certificates negotiable and is thereby consistent with the law of other states; or it leaves such certificates non-negotiable as at the common law and is thereby inconsistent with the law of the other states. The reciprocal operation of the Act must be recognized or rejected. There is no middle ground. Mills v. Jacobs, 33 Pa. 231, 4 Atl. (2d) 152; Rand v. Hercules Powder Co., 223 N.Y. Supp. 383; U.S.F. & G. Co. v. Newberger, 188 N.E. 141; Pennington v. Commonwealth Hotel, 156 Atl. 259; Castro v. Wreen, 150 N.E. 898.

Sebastian C. Pugliese, Paul Dillon and Claude O. Pearcy for respondent.

(1) Writs of execution and attachment may be levied on shares of stock in a domestic corporation owned by an individual or corporation under the Missouri Stock Transfer Act of 1943 without a levy upon and seizure of the certificates evidencing such shares. Secs. 1345, 1346, 1457, R.S. 1939; Laws 1943, p. 495, 499; Mo. Rev. Stat. Ann., Vol. 14, Cumulative Annual Pocket Part, 1947 (for use during 1948), title Corporations, Chap. 33, Art. 17, Stock Transfers, Sec. 5563.1 Sec. 5563.24; Uniform Laws Annotated, Vol. 6, Uniform Stock Transfer Act, Secs. 13, 23, published by Edward Thompson Company (1922) and supplement for use during 1947; State ex rel. Auchincloss, etc. v. Harris, 349 Mo. 190, 159 S.W. (2d) 799; Tufts v. Volkening, 122 Mo. 631, 27 S.W. 522; Armour Bros. Banking Co. v. St. Louis Natl. Bank, 113 Mo. 12, 20 S.W. 690; Jellenik v. Huron Copper Min. Co., 177 U.S. 1, 20 S. Ct. 559, 44 L. Ed. 647; In re Finn, 40 F. Supp. 607; Thompson v. Terminal Shares, Inc., 89 F. (2d) 652; Wilson v. St. Louis & S.R. Co., 108 Mo. 588, 18 S.W. 286; Restatement of the Law — Conflict of Laws, Secs. 53, 104; see also Missouri Annotations to the same, Sec. 104; 7 C.J.S., sec. 92 (b), p. 263. (2) Section 13 of the Act cannot be disregarded in determining the question of jurisdiction over the shares and must be given force and effect as enacted. Relator's point that it is impliedly repealed by the clause repealing "All acts or parts of acts inconsistent with this Act" is self destructive, since Section 13 is...