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and must render satisfaction to the purchaser. "He is told, under the seal of the corporation," said Mr. Justice Davis, delivering the opinion of the court, "that the shareholder is entitled to so much stock, which can be transferred on the books of the corporation, in person or by attorney, when the certificates are surrendered, but not otherwise. This is a notification to all persons interested to know, that whoever in good faith buys the stock, and produces to the corporation the certificates, regularly assigned, with power to transfer, is entitled to have the stock transferred to him. And the notification goes further, for it assures the holder that the corporation will not transfer the stock to any one not in possession of the certificates."

This decision was made not upon the ground of the negotia bility of the certificate, but upon the ground that the corporation was guilty of a breach of corporate duty in allowing a transfer to be made without a surrender of the certificate which in terms provided that the shares should be transferable on the books of the bank, in person, or by attorney, only on the surrender of the certificate. "The power to transfer their stock," say the court,'" is one of the most valuable franchises conferred by congress on banking associations. Without this power, it can readily be seen the value of the stock would be greatly lessened, and, obviously, whatever contributes to make the shares of the stock a safe mode of investment, and easily convertible, tends to enhance their value. It is no less the interest of the shareholder, than the public, that the certificate representing his stock should be in a form to secure public confidence, for without this he could not negotiate to any advantage. It is in obedience to this requirement, that stock certificates of all kinds have been constructed in a way to invite the confidence of business men, so that they have become the basis of commercial transactions in all the large cities of the country, and are sold in open market the same as other securities. Although neither in form or character negotiable paper, they approximate to it as nearly as practicable."

1 Bank v.

Lanier, 11 Wall. 369, 377, per Davis, J.

§ 176a. Shares of stock are taxable to a pledgor in whose name they stand upon the books of the corporation. Although the shares have been pledged as collateral security for loans, with power in the pledgee to transfer them to his own name, and in case the loans are not paid, to sell them, so long as they stand in the name of the pledgor on the books of the company, they are properly taxable to him.' It is not the policy of the law to have taxes upon pledged property assessed to the pledgee even when transferred to him."

VII. Such Transfers as between the Parties and their Creditors.

§ 177. Whether an unregistered transfer passes the legal title to the stock as well as the equitable, is a question upon which the decisions are not in harmony. This question is one of practical importance, because upon the answer to this depends the solution of the practical question whether such a transfer is effectual against the creditors of the assignor before the transfer is recorded upon the books of the company. If the legal as well as the equitable title passes by a delivery of the certificate, with a power of transfer, then of course the stock is not subject as the property of the assignor to attachment or levy of execution. But if such a transfer passes only the equitable title, while this may be good as between the parties, it is not good as against creditors of the assignor until the transfer is registered upon the books of the corporation, or at least until notice has been given it of such transfer.

§ 178. What is the effect of a sale of stock on execution against the registered owner, and the issuing of a certificate by the corporation to the purchaser at such sale without notice that the registered owner had already transferred his certificate in pledge for a loan? Such a case was before the circuit court of the United States for the Southern District of New York,

1 Ratterman v. Ingalls, 48 Ohio St. 468, 28 N. E. Rep. 168.


2 Waltham Bank v. Waltham, 10 Met. 334; Tucker v. Aiken, 7 N. H.

which held that the corporation was not liable for the value of the stock to the prior pledgee of the certificate. Stock of a bank in Connecticut was registered in the name of a resident of New York, who pledged it to a bank in the latter state for a loan made to him by an unregistered transfer of the certificate. A creditor of the registered owner attached the stock and sold it on execution in proceedings regularly conducted in Connecticut. The stock was by the terms of the certificate "transferable at the bank, in person or by attorney." These words were held to mean that the stock was transferable only at the bank; and the transfer of the certificate was held not to operate as a transfer of the stock, except as against the registered owner. The pledgee could obtain a valid title to the stock, except as against the pledgor, only by having it transferred, or, at least, by giving notice to the corporation of the transfer of the stock before it was sold on execution, and a new certificate issued to the purchaser.'

But while in some states a requirement by by-law of the corporation that stock shall be transferred only upon the books of the corporation is deemed sufficient to make that mode exclusive, except as between the parties themselves, in other states nothing less than a provision of the company's charter, having the force of a public statute, is deemed sufficient to prevent an unregistered transfer from being complete and effectual against every one but the corporation itself.

§ 179. As against creditors attaching stock with knowledge of a prior assignment of the equitable title by a transfer of the certificate, there is no doubt that such equitable transfer will prevail. Mr. Justice Story upon this point said: "Courts of

2 Black v. Zacharie, 3 How. 483, 512; Scripture v. Soapstone Co., 50 N. H. 571; Van Cise v. Merchants' Nat. Bank, 4 Dak. 485, 33 N. W. Rep. 897; Barse Live Stock Co. v. Range Valley Cattle Co., 16 Utah 59, 50 Pac. Rep. 630.

1 Williams v. Mechanics' Bank of A corporation can not acquire a lien New Haven, 5 Blatchf. 59. upon the shares of a stockholder of record after receiving notice of an equitable assignment of the shares. Bank of America v. McNeil, 10 Bush (Ky.) 54; Conant v. Reed, 1 Ohio St. 298.

3 Black v.

Zacharie, 3 How. 483, 512.

law, as well as courts of equity, are constantly, in all states where the common law prevails, in the habit of holding a prior assignment of the equitable interest in stock, as superseding the rights of attaching creditors, who attach the same with a full knowledge of the assignment. It is immaterial in such case that the charter of the corporation provides that no transfer of stock shall be valid until it is entered or registered in a book to be kept by the corporation for that purpose. This is manifestly a regulation designed for the security of the corporation itself, and of third persons taking transfers of the stock without notice of any prior equitable transfer. It relates to the transfer of the legal title, and not of any equitable interest in the stock subordinate to that title." And so a judgment creditor buying stock at an execution sale, which he then knows has been previously transferred by an unrecorded assignment of the debtor, acquires no better title than the debtor himself had.'

The mere fact that a certificate of stock, when offered in pledge, is in the name of another person, is not sufficient to charge the pledgee with notice that the stock belongs to the person in whose name it stands, when the latter has made an assignment of the certificate in blank, or has delivered it with a power of attorney in blank.

Such a transfer is moreover complete as against a creditor of the pledgor when the corporation has unjustly refused to make the transfer on its books, and the creditor without notice of the transfer has attached the stock."

'Newberry v. Detroit & Lake Superior Iron Manufacturing Co., 17 Mich. 141; May v. Cleland (Mich.), 44 L. R. A. 163; McLean v. Charles Wright Medicine Co., 96 Mich. 479, 56 N. W. Rep. 68; Weston v. Bear River Co., 6 Cal. 425, 5 Cal. 186, 63 Am. Dec. 117; Blakeman v. Puget Sound Iron Co., 72 Cal. 321, 13 Pac. Rep. 872; Cheever v. Meyer, 52 Vt. 66; Kellogg v. Stockwell, 75 Ill. 68;

Gemmell v. Davis, 75 Md. 546, 23 Atl.
Rep. 1032, 32 Am. St. 416; Guarantee
Co. of N. A. v. East Rome Town Co.,
96 Ga. 511, 23 S. E. Rep. 503; Finney's
Appeal, 59 Pa. St. 398.

Felt v. Heye, 23 How. (N. Y.) Pr.


3 Merchants' Nat. Bank v. Richards, 6 Mo. App. 454; Strange v. Houston & T. C. R. Co., 53 Tex. 162.

§ 180. As already intimated, transfers of stock are in many states regulated by statute. These statutes are quite dissimilar in their terms. They were not all enacted for the same purpose. In some states transfers are made invalid except as between the parties, unless recorded upon the books of the corporation; while in other states transfers by indorsement and delivery of the certificates are made valid, not only between the parties, but as against attaching creditors and the corporation itself. Conflicting decisions in different states are in many cases to be accounted for by dissimilar statutes with reference to which these decisions were made; though it is true that the decisions upon transfers of stock and their effect can not always be reconciled in this way. Similar provisions are not always construed in the same way. It is necessary, therefore, in order to determine the validity and effect of transfers of stock in the different states, to examine the statutes as well as the decisions of these states. For this reason the statutes relating to transfers of stock which have been enacted in several states, and the judicial interpretation of these statutes are stated in detail for the several states.

§ 181. Alabama.'—When, by the charter, articles of association, or by-laws and regulations of a private corporation, the transfer of the stock is required to be made upon the book or books of such corporation, no transfer of stocks shall be valid as against bona fide creditors or subsequent purchasers without notice, except from the time that such transfer shall have been registered or made upon the book or books of such corporation. It is the duty of every private corporation to require the transfer of its stock to be made or registered on the books of the corporation; and persons holding stocks not so transferred, or registered, or holding any stock under hypothecation, mortgage, or other lien, must have the transfer, hypothecation, mortgage, or other lien, made or registered on the books of the corporation, or upon failing to do so within fifteen days, all such transfers, hypothecations, mortgages, or other liens, shall 1 Code 1896, §§ 1262, 1263.

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