Washburn & Moen Manufacturing Co. v. Clarke — 43 N.Y. St. Rep. 709

Majority

p. 709

The Washburn & Moen Manufacturing Company, Resp’t, v. Hudson Clarke, App’lt.

(Supreme Court, General Term, Fifth Department,

Filed January 22, 1892.)

Headnote

JJfAMTrPACTTJRDiG COMPANIES—STOCKHOLDERS.

A person becomes the legal owner of stock in a manufacturing com-

p. 710

party when the transfer or assignment thereof is made to him, and as such is liable for debts of the company accruing subsequently, although his stock is not transferred on the books of the company until after the debt accrued. . '

Appeal from a judgment of this court in favor of the plaintiff and against the defendant for the sum of $1,353.52 damages and costs entered in Monroe county on the 11th day of May, 1891. The action was brought to recover of the defendant, as one of the stockholders of the Eochester Steel Mat Company, the amount of a judgment in favor of the plaintiff against said Eochester Steel Mat Company.

'Eugene Van Yoorhis, for app’lt; Hubbell & Me 6vire, for resp’t.

The single and only question in this case necessary to consider is, whether the defendant was- a stockholder of the Eochester Steel Mat Company, within the meaning of the General Manufacturing Act of 1848, on the 2d day of January, 1889, that being the time when the debt accrued for which the judgment was obtained.

The evidence tended to show, and the trial court found, that on the 1st day of December, 1888, a Mr. Lenher, being then the owner of twelve shares of the stock of said mat company, of the par value of $100 a share, made an absolute assignment of the certificate of said stock to the defendant on that day; and that on or prior to the 28th day of December, 1888, the defendant became a stockholder in said company. The evidence upon which these findings were based consisted of the original certificates of the twelve shares issued to Lenher May 16, 1888, upon the back of which was a written assignment thereof to the defendant in the usual form, dated December 1, 1888 ; and attached thereto was the certificate of a notary public of the county of New York, certifying that Lenher came personally before him on the first day of December and acknowledged the execution of the assignment, and also three letters from the defendant addressed to the Eochester Steel Mat Company, the first one dated December -28, 1888, in which the defendant. states that he has enclosed twelve shares of the capital stock of the mat company, standing in the name of S. J. Lenher, which he wished transferred to him"self; and the letter of January 4, 1889,.in which, in answer to one from the mat company inquiring what his interest in the stock was, he stated that his position is that of owner of the twelve shares “ which I sent to you to have transferred to me on December 28, 1888, and which was transferred to me by S. J. Lenher. for value received, and you will please send me certificate without delay.”

The third letter, of April 6th, made inquiry as to whether there was any dividend due him and informing the company, that he would like an offer for his stock. Other witnesses testified to the admissions of the defendant that the certificate of stock was delivered to him at the date of the notary’s certificate, December 1, 1888.

The contradictive evidence consisted of the oral testimony of

p. 711

the defendant and Lenher; to the effect that the stock was in fact transferred to the appellant on the 28th day of December, 1888,. and that for the purpose of preventing the mat company from offsetting a claim which they had against Lenher to any dividend which may have been declared upon the stock, they induced the notary to ante-date his certificate. And they further testified that the transfer of the stock to the defendant was not an absolute transfer, but that the defendant held it as trustee for his brother simply. The trial court gave credence to the certificate of the officer, the letters of the defendant and his admissions, and disbelieved his testimony and that of Lenher given upon the trial.

We think the- defendant has no just cause to complain of the conclusion at which the trial court arrived. . The certificate was not in fact transferred to the defendant upon the books of the company till the 11th day of January, 1889, subsequent to the time the debt was" contracted, but the appellant being the actual owner of the stock at the time the debt was contracted, he is liable for the debt under §§ 10 and 25 of the gen.eral manufacturing act of 1848. He became the legal owner of the stock when the transfer was made and was from that time entitled to any dividends which might be declared upon the stock. He occupied the place of the prior owner. Morawetz on Corporations, vol. 1, § 304; Brisbane v. D., L. & W. R. R. Co., 94 N. Y,, 204 ; Johnson, v. Underhill, 52 id., 203.

The judgment appealed from should be affirmed, with costs.

Dwight, P. J., and Macomber, J., concur.