Wilson v. St. Louis & S. F. Ry. Co.

• Citation: 108 Mo. 588,18 S.W. 286
• Parties: WILSON v. ST. LOUIS & S. F. RY. CO. et al.
• Decision Date: 22 December 1891
• Court: Missouri Supreme Court

18 S.W. 286

108 Mo. 588

WILSON v. ST. LOUIS & S. F. RY. CO. et al.

Supreme Court of Missouri, Division No. 1.

December 22, 1891.

JUDGMENT AGAINST CORPORATION — EXECUTION AGAINST NON-RESIDENT STOCKHOLDER — PROCEDURE — PERSONAL SERVICE OF NOTICE — RIGHTS OF PURCHASER.

1. Under Rev. St. 1879, c. 21, § 736, authorizing execution on a judgment against a corporation to be issued against a stockholder, to the amount of the unpaid balance of his stock, upon order of court, made "after sufficient notice in writing to the person sought to be charged," but not prescribing any method of service of such notice, personal service thereof on a stockholder without the state is a nullity, and every subsequent step dependent thereon is void. The provision of section 751 of the same chapter, that all notices, etc., "required in the progress of any cause, shall be served in like manner as in other civil causes," refers to interlocutory notices, not to those by which the action is begun; and sections 3505, 3506, providing that notices may be served "by delivering to the party or his attorney a copy," etc., and that, if the "adverse party" does not reside in the state, the notice "may be put up in the office of the clerk of the court wherein the suit is pending or the proceedings are intended to be had," contemplate a suit pending in a court which has already acquired jurisdiction of the party to be served with the notice.

2. In such case the remedy of plaintiff is by motion in the nature of an action at law, in which defendants, being non-residents, are to be proceeded against in the usual manner.

3. In such a proceeding, whether begun by writ or notice, the means employed to obtain jurisdiction of defendants is properly denominated "process," and must conform to the law in respect to the service of process against non-residents.

4. A non-resident stockholder is in no sense a party to an action against the corporation to which he belongs, so as to obviate the necessity of proceeding against him as a non-resident, on an application for execution against him on a judgment against the corporation, under Rev. St. 1879, § 736.

5. Process by notice against a stockholder, in such case, is, in substance and effect, a process of garnishment, and therefore an original proceeding, independent of the judgment against the corporation, so that such notice must be served on a non-resident in the same manner as ordinary process of garnishment.

6. Certain stock belonging to non-resident stockholders residing in the city of New York was sold under execution issued in Missouri on a judgment there obtained against the corporation. Held, in an action by the purchaser to compel the corporation to place his name on its transfer books, that the failure of the non-resident stockholders to appear and testify as to a transfer of the stock made by them prior to the levy of the execution should not operate to their prejudice, they being unfamiliar with the details of such transfer, which was made by their subordinates in Missouri.

7. A by-law of a corporation forbidding a transfer of stock by transfer of the stock certificate only, in place of transfer on the books of the company, cannot, in the absence of statutory prohibition, render such transfer invalid.

8. Such transfer is good against an execution creditor of the stockholder, who had no notice of the transfer when the execution was levied on the stock, but was notified thereof before he purchased the stock at a sale under the execution.

Error to St. Louis circuit court; AMOS M. THAYER, Judge.

Action by W. C. Wilson against the St. Louis & San Francisco Railway Company and J. & W. Seligman & Co. to compel defendant railway company to place plaintiff's name on its transfer stock-books as owner of certain shares of its stock purchased by plaintiff on execution issued against defendants Seligman & Co. as stockholders, on a judgment against the company's predecessor, the Memphis, Carthage & Northwestern Railway Company. Judgment for defendants. Plaintiff appeals. Affirmed.

Botsford & Williams, for plaintiff in error.

There are three questions in this case: First, whether the court had jurisdiction in the suit by plaintiff against the Memphis, Carthage & North western Railroad Company, on the notices given and served, to render a judgment and award of execution against the defendants Seligman, as stockholders in said company; second, whether plaintiff, having purchased at execution sale the stock in defendant corporation standing on its stock-book in the Seligmans' name, without notice, at the time of the levy of execution, that the stock certificate had been sold and transferred by Seligmans to other parties prior to the levy, acquired any right to such stock by his purchase; third, whether if such award of execution was valid, and such purchase by plaintiff conferred on him a superior right to such stock, the pendency of Seligman's suit against plaintiff and the railway company, in the United States circuit court, to set aside and cancel the execution and sale, is a bar to the prosecution of this suit.

(1) The affidavit of Jesse Seligman, filed in the probate court, was admissible to prove the partnership of the Seligmans. Rev. St. 1879, § 2315. The failure of a party to a suit to testify to facts within his knowledge, and put in issue by him, raises a presumption against him. Baldwin v. Whitcomb, 71 Mo. 658; Goldsby v. Johnson, 82 Mo. 605; 2 Whart. Ev. § 1266. Where a party gives a reason for his conduct and decision, touching anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. Railway Co. v. McCarthy, 96 U. S. 267. Where an execution plaintiff claims the property against the execution defendant, such defendant cannot defeat the plaintiff's recovery by setting up an outstanding title. Laughlin v. Stone, 5 Mo. 43; Boyd v. Jones, 49 Mo. 202; Matney v. Graham, 59 Mo. 190; Jackson v. Bush, 10 Johns. 223. The constitution and laws of Missouri contemplate that, as against judgment creditors of stockholders, the title to such stock shall be determined and pass only by a transfer on the books of the corporation. Const. art. 12, § 15; Rev. St. 1879, p. 85. The provisions regulating transfers of stock, determining who are stockholders, and defining their rights and liabilities are as follows: Rev. St. 1879, c. 21, §§ 706, 714, 716, 720, 736, 737, 739, 841; and, as to the statutory provisions governing the levy and sale of corporate stock under execution, see Rev. St. 1879, c. 32, §§ 2354, 2363, 2364, 2370, 2391. The holder of the certificate is not the owner of the stock. Pullman v. Upton, 96 U. S. 328; Bank v. Case, 99 U. S. 631; Railway Co. v. Moss, 14 Beav. 64; Adderly v. Storm, 6 Hill, 624; Wheelock v. Kost, 77 Ill. 296; Miller v. Insurance Co., 50 Mo. 55; McClaren v. Franciscus, 43 Mo. 468; Erskine v. Lowenstein, 82 Mo. 301; Fowler v. Ludwig, 34 Me. 455; Thomp. Stockh. c. 13, pp. 246-307. As to rights of a purchaser of stock under execution sale, see Kahn v. Bank, 70 Mo. 262. A transfer of stock in a corporation, if not entered upon the stock-books, is not good against a judgment creditor acquiring a lien by virtue of an execution, and purchase at execution sale, without notice of the transfer before or at the time of the levy. Fisher v. Bank, 5 Gray, 373; Bank v. Williston, 138 Mass. 244; Bank v. Gridley, 91 Ill. 457, citing Pinkerton v. Railroad Co., 42 N. H. 445. See Shipman v. Insurance Co., 29 Conn. 245, citing Dutton v. Bank, 13 Conn. 498; also Colt v. Ives, 31 Conn. 25; Scripture v. Soapstone Co., 50 N. H. 571. No transfer of a certificate of capital stock will secure the share of stock from attachment, against the assignor, until the transfer is entered upon the stock-book of the corporation. Bank v. Cutler, 49 Me. 315, 52 Me. 509; Fiske v. Carr, 20 Me. 301; Bank v. Burr, 24 Me. 256; Sabin v. Bank, 21 Vt. 353; Cheever v. Meyer, 52 Vt. 66; Bank of Commerce's Appeal, 73 Pa. St. 59; Geyer v. Insurance Co., 3 Pitts R. 41; Railroad Co. v. Griffith, 76 Va. 913; State v. Bank, 89 Ind. 302; Jones v. Latham, 70 Ala. 164, citing Daniel v. Sorrells, 9 Ala. 436; Jordan v. Mead, 12 Ala. 247; Governor v. Davis, 20 Ala. 366; Devendell v. Hamilton, 27 Ala. 156; Preston v. McMillan, 58 Ala. 84. See Weston v. Mining Co., 5 Cal. 186, 6 Cal. 425; Naglee v. Wharf Co., 20 Cal. 533; People v. Elmore, 35 Cal. 655; Brewster v. Sime, 42 Cal. 139; Thompson v. Toland, 48 Cal. 112; Winter v. Mining Co., 53 Cal. 428: Ex parte Murphy, 51 Wis. 519, 8 N. W. Rep. 419. The precise question in the case at bar has never been before the United States supreme court for adjudication; but see Bank v. Laird, 2 Wheat. 390; Black v. Zacharie, 3 How. 483; Bank v. Lanier, 11 Wall. 369; Johnston v. Laflin, 103 U. S. 800; Iron Co. v. Lissberger, 116 U. S. 8, 6 Sup. Ct. Rep. 241. There is a class of cases frequently cited as holding that laws providing for the transfer of shares upon the books of the corporation are to enable the company to know who should have dividends and who should vote, and not intended for the benefit of the creditors of the individual shareholders. Strange v. Railroad Co., 53 Tex. 162. These cases are collected in Continental Nat. Bank v. Eliot Nat. Bank, 7 Fed. Rep. 372, 373, but they do not support the doctrine announced in that case; and see Van Norman v. Circuit Judge, 45 Mich., 204, 7 N. W. Rep. 796; Na bring v. Bank, 58 Ala. 204; National Bank of New London v. Lake Shore & M. S. R. Co. 21 Ohio St. 221. Prior to the constitutional provision the public had no access to registries of transfers of stock. 1 Wag. St. p. 299, § 6; Griswold v. Seligman, 72 Mo. 119. Books kept under the constitutional provision are public registries, but there has been no decision on the question by the supreme court. See Insurance Co. v. Goodfellow, 9 Mo. 149; Spring Co. v. Harris, 20 Mo. 382; White v. Salisbury, 33 Mo....