Tide Water Pipe Co. v. Kitchenman
| Decision Date | 09 March 1885 |
| Citation | 108 Pa. 630 |
| Court | Pennsylvania Supreme Court |
| Parties | Tide Water Pipe Company, Limited, <I>versus</I> Kitchenman. |
Before MERCUR, C. J., GORDON, PAXSON, TRUNKEY, STERRETT and CLARK, JJ. GREEN, J. absent
ERROR to the Court of Common Pleas of Crawford county: Of January Term, 1885, No. 146.
Roger Sherman, for plaintiffs in error.—The only provision made by the law as to sale of stock or interests in capital of a partnership association organized under the Act of June 2d, 1874, is sec. 4 of that Act. That section is evidently for the protection of the members, not of third persons. It is directory and permissive. It is intended to allow the association to prevent the admission of a new member; and in effect recognizes the validity of ordinary though informal transfers, by providing for the appraisement of the interest transferred. In Collins' App., 15 W. N. C., 5; (s. c., 11 Out., 590,) an agreement to pledge an interest in a limited partnership was enforced in equity against other creditors. Though a certificate of stock stands upon the books of a company in the name of the original holder at the time of attachment by a creditor, that will not divest the title of a prior purchaser, even though the by-laws provide that the stock shall be transferable only upon the books of the company: Finney's App., 59 Pa. St., 398; Commonwealth v. Watmough, 6 Whart., 117; Webster v. Upton, 91 U. S., 65. Such a provision in a charter applies only to the transfer of the legal not the equitable title: Black v. Zacharie, 3 How., 483; Insurance Co. v. Smith, 11 Pa. St., 120; Morawetz on Corporations, sec. 326, 327.
F. B. Guthrie and Julius Byles, for defendant in error.— Sec. 4, of the Act of 1874 put Colton on inquiry whether any rules had been made for the transfer of the shares of the association, and rule 10 expressly provides that the transferee shall assent to and agree to be bound by the rules and regulations of the association; Stewart had subscribed to this rule. Colton recognized the invalidity of the earlier assignment by his acceptance as the transfer of August 11th, 1884.
The attachment in this case was served upon the plaintiff in error on the 9th of April, 1884. The attached stock, as appears by the answers, had been regularly assigned, by D. B. Stewart, the defendant in the Kitchenman judgment, on the 3d day of December 1883, to George W. Colton, with an irrevocable power of attorney to W. S. Benson to make the necessary transfers, and on the same day a like assignment was made, by Stewart to Colton, of all and every other claim or claims which the former then had against the Tide Water Pipe Company, garnishee as aforesaid. Thus before the levying of the attachment every interest which Stewart had previously owned in or against the company, whether in the shape of stock or indebtedness, had passed to Colton. About the facts as above stated there seems to have been no controversy in the court below. Nevertheless the learned judge of that court was of opinion that no transfer of the stock could be made effectual without a strict compliance with the company's tenth rule, and that as the transfer and acceptance of the 11th of August, 1884, were the first and only formal papers executed according to the provisions of the rule, no title passed, either to the shares or dividends, to Colton before that time, and, therefore, entered judgment against the company on its answers. We cannot see how a judgment of this kind can be sustained either on authority or the facts of the case. We held in Finney's Ap., 9 P. F. S., 398, on the authority of the Commonwealth v. Watmough, 6 Wharton, 117, and of the Building Association v. Sendmeyer, 14 Wr., 67, that title to the stock of a corporation passed to a purchaser at the time of the delivery of the certificate and power of attorney, and the fact that the stock was transferable only on the books of the company made no difference. So, in the case of the United States v. Vaughan, 3 Bin., 394; when stock of the United States Bank had been transferred in a similar manner, it was held that it could not be attached as the property of the vendor.
The garnishee however, in this case,...
To continue reading
Request your trial