be void as to bona fide creditors, or subsequent purchasers without notice.

In this state it is held that the by-laws of a corporation requiring transfers of stock to be entered upon its books in the presence of its president or secretary, and declaring a lien in favor of the corporation for all debts of the stockholder to it, are intended for the protection of the corporation, and of third persons who may in good faith acquire its stock; but, while the legal title to stock can only be acquired by a transfer made in the mode prescribed, a complete equitable title may be acquired by a transfer in any form or manner appropriate to pass property of this kind, divesting the stockholder of all right and interest, and entitling the transferree to demand that he be invested with the legal title. The statute makes unregistered transfers void as against bona fide creditors and purchasers without notice.'

§ 181a. Arizona.-Transfer of the stock shall not be valid, except as between the parties thereto, until the same are regularly entered upon the books of the company so as to show the names of the person by whom and to whom the transfer is made, the numbers or other designation of the shares, and the date of the transfer.

§ 182. Arkansas.-Stock shall be deemed personal property, and shall be transferred only on the books of the corporation, in such form as the directors shall prescribe; and the corporation shall at all times have a lien upon all the stock or prop

'Planters' & Merchants' Mut. Ins. Co. v. Selma Sav. Bank, 63 Ala. 585; Duke v. Cahawba Co. Nav. Co., 10 Ala. 82, 44 Am. Dec. 472; Abels v. Planters' & M. Ins. Co., 92 Ala. 382, 9 So. Rep. 423. Actual notice of an unregistered transfer is binding and protects the transferee. Birmingham Trust & Sav.Co.v. Louisiana Nat. Bank, 99 Ala. 379, 13 So. Rep. 112. The person in whose name the stock is regis

tered is the true owner in the estimation of the statutes, and it is subject to execution against him. White v. Rankin, 90 Ala. 541, 8 So. Rep. 118; Winter v. Montgomery G. L. Co., 89 Ala. 544, 7 So. Rep. 773; Berney Nat. Bank v. Pinckard, 87 Ala. 577, 6 So. Rep. 364; Hardaway v. Semmes, 38 Ala. 657; Fisher v. Jones, 82 Ala. 117, 3 So. Rep. 13.

2 R. S. 1887, § 242.

erty of its members invested therein, for all debts due from them to the corporation.1

This section has not been passed upon by the Supreme Court of the state, but was interpreted by the Circuit Court of Appeals of the United States in a recent decision; in which it was held that a provision that stock shall be transferable only on the books of the corporation, is intended to prescribe a mode of transfer as between the corporation and a stockholder, in all matters relating to the internal government and management of the corporation, rather than between the stockholder and third parties; and, notwithstanding such provision, a stockholder may divest himself of all beneficial interest in his stock by an assignment and delivery of his certificate, although no transfer is made on the books of the corporation.

Where a stockholder in a corporation has pledged his stock as collateral security, by an indorsement and delivery of his certificate, a creditor, by the levy of an attachment and execution, can only reach the interest of the pledgor therein, and is not aided, except in favor of purchasers at a sale under execution who purchase for value and without notice, by a statute providing that stock shall be transferred only on the books of the company.

§ 183. California.-Whenever the capital stock of any corporation is divided into shares, and certificates therefor are issued, such shares of stock are personal property and may be transferred by indorsement by the signature of the proprietor, or his attorney or legal representative, and delivery of the certificate; but such transfer is not valid, except between the parties thereto, until the same is so entered upon the books of

'Dig. of Stats. 1894, § 1342.

ter v. Belmont Mining Co., 53 Cal.

2 Masury v. Arkansas Nat. Bank, 93 428, 431, per Crockett, J. Fed. Rep. 603, 35 C. C. A. 476.

$ Civil Code, § 324. This provision is substantially a re-enactment of the provisions of the Corporation Acts of 1850 and 1853, regulating the transfer of shares of private corporations. Win

A mortgage of shares of stock is valid without a transfer on the books of the company, as is required by Act of 1853, relative to pledges of stock by delivery of certificates. Ede v. Johnson, 15 Cal. 53.

the corporation as to show the names of the parties by and to whom transferred, the number or designation of the shares, and the date of the transfer.

The courts construing this provision have held that although stock may be attached as the property of the registered owner, after the certificate has been pledged by him, yet if the purchaser at the execution sale buys with notice of the prior hypothecation, he acquires no rights as against the pledgee; if, on the other hand, the purchaser has no notice of the prior hypothecation, his title will prevail against the pledgee.' The provisions of the statute, in the language of the court, apply only to transfers and purchases in good faith without notice. The result is that while an assignment of shares of stock by a mere delivery of the certificate without a transfer upon the books of the corporation is invalid as against an attaching creditor of the registered owner, yet the rights of the latter may be defeated by giving him notice of such prior transfer of the certificate after his lien has attached, or by giving bidders at the sale such notice. This illogical construction, though not fully approved by later cases, has been acquiesced in upon the principle of stare decisis. As against all the

1 Weston v. Bear River & Auburn Water & Mining Co., 5 Cal. 186, 6 Cal. 425, 63 Am. Dec. 117; Strout v. Natoma Water and Mining Co., 9 Cal. 78.

2

Naglee v. Pacific Wharf Co., 20 Cal. 529, 533; People v. Elmore, 35 Cal. 653; Winter v. Belmont Mining Co., 53 Cal. 428, 432; Brewster v. Sime, 42 Cal. 139; Thompson v. Toland, 48 Cal. 99, 112; Farmers' Nat. Bank v. Wilson, 58 Cal. 600; Brown v. San Francisco Gas-Light Co., 58 Cal. 426; Barstow v. Savage M. Co., 64 Cal. 388, 1 Pac. Rep. 349, 49 Am. Rep. 705; Blakeman v. Puget Sound Tran. Co., 72 Cal. 321, 13 Pac. Rep. 872; Spreckels v. Nevada Bank, 113 Cal. 272, 276, 45 Pac. Rep. 329.

In Winter v. Belmont Mining Co., 53 Cal. 428, 432, Crockett, J., said: "In the case of Sherwood v. Meadow Valley Mining Co., 50 Cal. 412, our attention was not called to the foregoing decisions, nor to the statute regulating the transfer of stocks in private corporations. Without referring to these decisions or to the statute on which they were founded, counsel in the Sherwood case discussed the sole proposition whether a certificate of this character, on general principles of commercial law, was negotiable in the sense in which bills of exchange and other similar instruments are negotiable, and we held they were not, which was the only point decided in that case."

world, except subsequent purchasers for value in good faith and attaching creditors without notice, a transfer not entered upon the books is valid.'

Under this provision a transfer of stock upon the books of the corporation is not essential to the creation of a valid pledge of the stock; but the pledgee has the right to cause a proper entry of the transaction between himself and his pledgor to be entered upon the books of the corporation for his protection, though he is not authorized to divest the pledgor of the rights incident to his ownership of the pledge, by surrender and cancellation of the pledged certificate, and the issuance of a new certificate in the name of the pledgee.'

§ 184. Colorado.'-Corporations other than railroad and telegraph companies are required to keep a book containing the names of stockholders and the number of shares held by them, open for the inspection of the stockholders and creditors of the company; and no transfer of stock shall be valid for any purpose whatever, except to render the person to whom it shall be transferred liable for the debts of the company, unless it shall have been entered upon such book, within sixty days from the date of such transfer, by an entry showing to and from whom transferred; or, in case of the pledge of any such stock, a memorandum be made upon the books of the said company, showing to whom and for what amount the stock has been pledged.

This statute takes from the owner of stock the right to transfer it in accordance with the known rules of the common law. Under it the title to stock in a corporation can only pass against creditors by transfer on the books of the company."

'Parrott v. Byers, 40 Cal. 614; Spreckels v. Nevada Bank, 113 Cal. 272, 45 Pac. Rep. 329; McFall v. Buckeye Grangers' Warehouse Asso., 122 Cal. 468, 55 Pac. Rep. 253.

'Spreckels v. Nevada Bank, 113 Cal. 272, 45 Pac. Rep. 329; McFall v.

Buckeye Grangers' Warehouse Asso., 122 Cal. 468, 55 Pac. Rep. 253.

33 Mills Annot. Stat. 1896, § 508; Session Laws 1893, c. 49.

4

Conway v. John, 14 Colo. 30, 23 Pac. Rep. 170; Supply Ditch Co. v. Elliott, 10 Colo. 327, 15 Pac. Rep. 691.

§ 185. Connecticut.'-When not otherwise provided in its charter, the stock of every corporation shall be personal property, and be transferred only on its books, in such form as the directors shall prescribe; and such corporation shall at all times have a lien upon all the stock owned by any person therein, for all debts due to it from him; and any corporation desiring to enforce such lien may give notice to such stockholder, his executor or administrator, and if there be none, his heir at law, that unless he shall pay his indebtedness to said corporation within three months it will sell said stock; and such corporation may prescribe by its by-laws the manner of giving notice required by this section, but the notice of sale shall in no case be given until the liability has become fixed.

Shares of stock in any corporation organized in this state under the laws of this state, or of the United States, may be pledged by executing and delivering a power of attorney for its transfer, with the certificate of stock therein mentioned, to the party to whom the pledge is made; but no such pledge, unless consummated by an actual transfer of the stock to the name of such party, shall be effectual to hold such stock against any person but the pledgor, and his executors and administrators, until a copy of said power of attorney shall be filed with the cashier, treasurer or secretary of said corporation.

A pledge of stock is ineffectual where a certificate is merely handed over without a power to transfer the stock, although there be a written declaration attached to the certificate, that the stock was thereby pledged for a debt described."

Before the passage of this statute it was held in actions at law that the legal title to stock in a corporation could be transferred only in the mode prescribed by the company's charter or by its by-laws; and if the stock was made transferable only on the books of the corporation, a transfer upon the books was essential, not merely as giving notice, but as the act itself

'Pub. Acts, 1899, c. 50; G. S. 1888, § 1924. See First Nat. Bank v. Hartford Life & Annuity Ins. Co., 45 Conn. 22.

2 Platt v. Hawkins, 43 Conn. 139; and see Dutton v. Conn. Bank, 13 Conn. 493; Shipman v. Etna Ins. Co., 29 Conn. 245.