Van Norman v. Jackson Circuit Judge
| Decision Date | 12 January 1881 |
| Court | Michigan Supreme Court |
| Parties | VAN NORMAN v. JACKSON CIRCUIT JUDGE. |
Shares in a corporation can be attached or levied upon only in cases where the defendant is the legal owner of the time of the attachment or levy. If he has assigned them, even with the intent to defraud his creditors, they cannot be reached by such process.
Mandamus to vacate injunction against proceeding with an action to compel the payment of dividends by a corporation.
This is a hearing on an order to show cause why a mandamus should not issue to require an order for an injunction to be vacated. For an understanding of the case a reference is necessary to the main circumstances. In 1873 the relator, husband, Arthur Van Norman, was a stockholder in the private corporation in Jackson known as the Central Car & Manufacturing Company, and held 917 1/2 shares of the capital stock of the face value of $22,937.50. Sometime about the month of August, 1877, said Arthur Van Norman and one Hiram Gay began negotiations with Luther Beecher for the occupation on special terms of his establishment known as the "Biddle House," and they at length ripened into a contract which was reduced to writing and executed by February 14, 1878, and on or about March 27, 1878, they received possession of the real estate and also of certain personal property which the arrangement likewise covered.
Up to February 19, 1878, or until four days after the execution of said agreement and a little more than a month prior to possession under it, the said Arthur Von Norman continued his ownership of said stock. But at that date he returned the certificate thereof to the company's secretary and with assignments indorsed which purported to convey the stock to relator, and the company immediately issued new certificates to her in place of the old ones. There appears to be no question of the sufficiency in form at least of this transfer. January 31, 1879, Beecher obtained possession of the "Biddle House" property. But about two weeks earlier and on the eighteenth of January he began a suit by attachment in the circuit court for the county of Jackson against the said Arthur Van Norman and Hiram Gay for an indebtedness he alleged had accrued to him against them under the contract, the ground for the writ as set up being that the transfer of said stock to relator was made with intent to defraud his creditors. The sheriff executed the writ by levying on this stock as though it belonged to the defendant Arthur Van Norman. Subsequently and on the seventh of March 1879, the company declared a dividend of 20 per cent. and directed payment on all shares except those in question and ordering that payment on those should be withheld until a determination should be reached of the dispute about their ownership. In July, 1880, the relator sued the company at law for the dividend and in August following Mr. Beecher filed his bill on the equity side of the court having cognizance of the law cases.
The bill seems to be one of first impression and the pleader would probably concede that some matters pertinent to its theory are omitted and that others not needful to it are inserted. But that is perhaps not important now. It contemplates that by the levy of the attachment Mr. Beecher obtained a positive lien on the stock and on the accruing dividend, and it proceeds upon the idea that the aid of equity as here involved is requisite to protect and enforce this lien.
It will not escape notice that if the case requires as an equitable basis that a lien was created by the levy, the necessity would hardly be met by taking the existence of the lien for granted. It might well be argued that whether there be a lien or not is a vital question, and that to assume its existence as a ground of equity is to assume the essential point in controversy. If the attachment were considered as well laid the lien would be merely provisional. It might cease before the determination of the action. But if not it might then turn out that there had never been any just foundation for it, and the authority of equity to intermeddle for the supervision of such a lien is not so clear as to be assumed. There are many cases where the service of mesne process will bind personally for the time being without creating a lien properly subject to equitable protection and enforcement. According to the theory of the bill the dividend was bound equally with the stock, and one is supposed to be in the same plight as the other, and if the case called for it, it might be useful to inquire into the necessity for the bill on its own principle. If a lien was established by the levy, or if the levy bound the stock and dividend as it claimed, the occasion for the suit in equity on its own facts is not self-evident. These observations on the character of the bill are merely incidental and are mine only.
An injunction was sought against the relator and the company and in relation to her prayer was that she "be enjoined and restrained from prosecuting her said action in relation to said dividend and from commencing or prosecuting any and all other suits or actions in relation to said stock or dividend or any other dividend thereon against the said company or any other party or parties pending the determination of this your orator's suit or until this court shall make further order herein, and that she be perpetually or until the determination of said attachment suit enjoined and restrained from so doing by the final decree of this court herein and that she be restrained from transferring or assigning said stock until further order of this court." In regard to the company the prayer was that it "be enjoined and restrained from paying over to said Cecilia E Van Norman or to any one for her said dividend or any other moneys due or which may become due upon said stock until this court shall make further order herein."
On or about August 7, 1879, a preliminary injunction was allowed according to this prayer, and April 27, 1880, the relator moved its dissolution. May 11, 1880, the motion was denied and soon thereafter the present application was made to this court. Were the question to be examined under an assumption that the attachment was well laid it would not follow as of course that the case made by the bill might be deemed sufficient to serve as a basis for the exercise of discretion on the application for an injunction, but no investigation of the controversy in that aspect is deemed necessary. Fox v. Miller, 1 Mich, 321; Williams v. Hubbard Walk. 28; Beck v. Burdett, 1 Paige, 305.
If the levy...
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