Wight v. Washoe County Bank

• Decision Date: 01 July 1918
• Docket Number: 3091.
• Citation: 251 F. 819
• Parties: WIGHT et al. v. WASHOE COUNTY BANK et al.
• Court: U.S. Court of Appeals — Ninth Circuit

251 F. 819

WIGHT et al. v. WASHOE COUNTY BANK et al.

No. 3091.

United States Court of Appeals, Ninth Circuit.

July 1, 1918

Mastick & Partridge, John S. Partridge, and Alan C. Van Fleet, all of San Francisco, Cal., and Cole L. Harwood, of Reno, Nev., for appellants.

Harwood & Springmeyer, of Reno, Nev., for appellee Estate of W O'H. Martin, Inc.

A. E Cheney, S. S. Downer, and Cheney, Downer, Price & Hawkins all of Reno, Nev., for other appellees.

Before GILBERT, ROSS, and HUNT, Circuit Judges.

HUNT Circuit Judge.

Clara M. Wight and others, appellants, sued as stockholders of the Estate of W. O'H. Martin, Incorporated, to compel the Washoe County Bank, appellee, a Nevada corporation to transfer on its books 50 shares of its stock standing in the name of Harry M. Martin, and for accrued dividends. Upon a trial these facts were developed:

W. O'H. Martin died in 1901, owning 300 shares in the Washoe County Bank. Distribution to the widow and children followed, and thereafter the heirs formed a corporation, known as the Estate of W. O'H. Martin, Incorporated. The shares of stock were transferred to the corporation, and on February 19, 1903, 300 shares in the name of the estate were represented by a single certificate. Mrs. Martin testified that some time before February, 1903, she interviewed several directors of the bank about having a representative upon the board of directors of the bank; that she was told by them that she would only have to have a transfer of some stock to her son, Harry M. Martin, in order that he might appear on the books as a stockholder, but that the Estate Company would not have to surrender the ownership of the shares to be transferred. But Mr. Mapes, one of the directors referred to, said that he told Mrs. Martin that no one could be a director unless he owned stock in his own name, and that Mrs. Martin said that either she would let him have stock, or give him stock. In February, 1903, Mrs. Martin went to the bank, and saw Mr. George Taylor, who was then the assistant cashier and assistant secretary, but not a director of the institution. Mr. Taylor went with Mrs. Martin to the stockholders' room in the bank, and there opened her safe deposit box and took out the certificate for 300 shares of stock. Two new certificates were made out by Mr. Taylor, one for 250 shares in the name of the Estate Company, and one for 50 shares in the name of Harry M. Martin. After the certificates of stock were signed by Mr. Ward, a vice president of the bank, Mr. Taylor delivered them to Mrs. Martin, and she handed the 50-share certificate to her son, Harry M. Martin, who immediately indorsed it and handed it back to his mother, who put it in the safe deposit box of the Estate Company. On the following day the son, Harry M. Martin, was appointed a director of the bank; the minutes of the appointment being kept by Mr. Taylor as assistant secretary.

Harry M. Martin remained a director until June, 1905, when he went to Tonopah, and became the owner of 479 shares of stock in the Nye County Mercantile Company. Thereafter, in 1906, Mr. Martin, through Mr. Taylor, who was at hat time the agent and bookkeeper of the Martin Estate Company, and also assistant cashier of the bank, obtained a loan of $15,000 from the bank, and gave as security 479 shares which he owned in the Nye County Mercantile Company. At that time the shares in the Nye County Mercantile Company were worth approximately $75,000, and under the agreement of pledge the bank had the right at any time, on nonpayment, to sell the stock or to compel the deposit of additional security. On January 15, 1909, the loan was renewed by Mr. Martin, and again the security of 479 shares of the Mercantile stock were pledged. Checks for the dividends paid upon the shares of stock of the bank were sent by the bank to Harry M. Martin up to 1909. Mr. Martin indorsed them and sent them to his mother, who in turn indorsed them, 'Estate of W. O'H. Martin, Inc., by Louise W. Martin, President,' and deposited them with the bank, whereupon they were entered upon the books of the Estate Company as being credited to that corporation; but after 1909 checks were delivered directly to the Estate Company, and, although drawn to Harry M. Martin, were not indorsed by him, but were indorsed by his mother, Mrs. Martin, and deposited in the bank.

It is not disputed that the stock was transferred to Harry M Martin without consideration, and with a view of having him qualify as a director in the bank, or that the certificate has always remained in the possession of the...