Young v. South Tredegar Iron Co.

• Decision Date: 21 October 1886
• Citation: 2 S.W. 202,85 Tenn. 189
• Parties: YOUNG v. SOUTH TREDEGAR IRON CO. FOX v. SOUTH TREDEGAR IRON CO. and another.
• Court: Tennessee Supreme Court

2 S.W. 202

85 Tenn. 189

YOUNG v. SOUTH TREDEGAR IRON CO.

FOX v. SOUTH TREDEGAR IRON CO. and another.

Supreme Court of Tennessee.

October 21, 1886

Appeal from chancery court, Hamilton county.

Dewitt & Thomas, Lewis Shepherd, and W. L. Eakin, for complainant. Key, Richmond & Clark, for respondent.

LURTON J.

The subject-matter of the litigation in each of these bills is the same. The question is as to the title to 30 shares of stock in the Powell Iron & Nail Company, otherwise known as the South Tredegar Iron Company, Young claims title by virtue of an attachment proceeding in the chancery court of Hamilton county against W. H. Powell, the original owner of said shares, and under which proceeding these shares were sold and bought by him. Fox claims the same shares by virtue of a private sale and assignment of the certificates by Powell himself. The determination of the true title involves the settlement of several distinct questions. The attachment under which Young claims was issued under an original attachment bill filed in the chancery court of Hamilton county against W. H. Powell and the Powell Iron & Nail Company. Powell was charged to be a non-resident debtor to the complainant in attachment bill, and to own 30 shares of stock in the Powell, Iron & Nail Company, a Missouri corporation, conducting its business and having its chief office in Hamilton county, Tennessee. The stock was levied on, and notice given to the officer having charge of books of the corporation, June 1, 1882. By decree of chancery court based on publication, and pro confesso as to Powell and answer of the corporation, the stock was decreed to be sold, and the corporation ordered to make transfer on its books of the said stock to the purchaser. It was accordingly sold December 30, 1882; Young becoming purchaser. The corporation refused to recognize Young's purchase, or to transfer stock to him, for reasons which will appear hereafter. Young's bill is to compel transfer.

Fox claims to have purchased the same stock from Powell for a full consideration, before the filing of said bill. The proof, however, shows that, while there was a negotiation for the sale and purchase of the stock begun May 3, 1882, the effect of which is not necessary here to determine, yet the stock certificates were not transferred in writing, or actually delivered, until June 2 or 3, 1882, on which day the purchaser paid for same by giving his notes, payable in 45 75, and 105 days from that date. We think that the fact that the purchase price was not paid on the stock certificates in the hands of Powell, assigned and delivered to Fox, until June 2d or 3d, left the legal title to these shares in Powell, the owner, until such delivery and actual assignment, and they were subject to attachment at time they were levied on, June 1, 1882. At the time of this sale to Fox, both himself and Powell were non-residents of this state, and neither had any actual notice of the pendency of the attachment bill under which Young claims title. The stock certificates in the hands of Powell were the mere evidence of the ownership of shares in a corporation. It is well settled that such certificates are not negotiable. The assignee takes them subject to all the equities which existed against the assignor. They are choses in action. Cornick v. Richards, 3 Lea, 1.

The court in this case of Cornick v. Richards, it being a contest between attaching creditors and assignees of stock certificates, said: "We do not hold these certificates negotiable, or that any of the incidents of such character goes with them by assignment, so that the assignee must take subject to previous equities, as any other assignee standing in the shoes of his assignor. We only hold that the title passes and is completely transferred, whether in cases of collaterals or in absolute sale, so that a creditor who has fixed no lien on it before cannot appropriate it to his debt, and overrule the title of the purchaser who has in good faith obtained a regular assignment of the certificate of stock under a valid contract between himself and the owner."

While the case of Cornick v. Richards does hold that an assignment and delivery of a certificate of stock passes the title without transfer on the books of the company, or notice to the company, as against a subsequent attachment, yet we do not think that anything less than an actual transfer and delivery of the stock certificate will defeat an attachment levied before notice to the corporation, and we understood that case to so hold. The attachment bill under which Young's title arises specifically described this very stock, and it was filed May 3d, at least two days before any valid transfer of the title or delivery of the certificate to Fox. Any transfer of property thus specifically mentioned in an attachment bill is void as to the complainant on such bill. Code, 3507. By sections 1487, 3097, stocks in all corporations are declared to be personal property, and subject to executions. Memphis Appeal Pub. Co. v. Pike, 9 Heisk. 698. Undoubtedly all stocks subject to execution would be subject to attachment in equity, (Cornick v. Richards, 3 Lea, 15, 16;) and, indeed, without regard to the legislation making such stocks liable to execution, they could be reached by attachment in equity. Code, 3500. It follows, therefore, that, all other questions out of the way, the transfer of the certificate to Fox on the third June, 1882, was void as against the attachment bill and levy of June 1, 1882. Powell had not delivered the stock or transferred it at the time it was attached; and, not having parted with the title, it was subject to attachment; and the transfer, after filing of attachment bill, and after levy of attachment, gave to Fox no title which he can assert as against a purchaser under the attachment proceedings.

The bill of Fox presents another objection to the validity of the attachment proceeding which remains to be considered. He charges that the sale to Young was void "because said stock was not susceptible of being attached in this state, even if it had been Powell's stock, for the reason that the said corporation was a foreign corporation, having its principal office in the state of Missouri, and the said certificate of stock was held by the said Powell in his personal custody in his residence in the state of Illinois." We readily conclude that, under the codes of all civilized nations, jurisdiction ends when neither the person nor property of the defendant is within the territorial jurisdiction of the court. It is conceded that Powell was not personally served with the process of the court, and that jurisdiction, to make any decree affecting him or his property, depended upon a valid attachment of property owned by him, and within the state. If the presence, within the state, of the stock certificates was essential in determining the situs of the stock, then it is admitted that these certificates were both, in contemplation of law, as well as in fact, with the person of Powell, who was a non-resident. But these stock certificates were the mere evidence of his ownership of shares,-- indicia of his interest in the earnings and profits of the company. These seizures by an execution or by an attachment would not be a seizure or levy upon the stock itself, without more.

Notice to the corporation, or to the officer having charge of the books of the company, is essential in case of execution. Code, § 3035. If seized by an attachment in equity, the corporation would necessarily have to be notified, and probably made a party to the attachment bill. Here the locality of the paper certificates, or their actual seizure, is unimportant. If the corporation were a domestic one, it is clear that the absence of the certificates from the state could cut no figure. What, then, is the situs of the stock?

The original charter under which it is organized, it is...