In re First National Bank

McAdam, J. In May, 1892, John Howard, the owner of certificate No. 29, for fifty shares of the capital stock of William A. Miles & Go., a domestic corporation, being indebted to one Frank Seaman, indorsed the said certificate to the First National Bank of the City of Brooklyn, to secure it for moneys advanced and to be advanced by it to said Seaman. Such advances now amount to about $10,000. No transfer of the stock has ever been made on the books of the company; Seaman is insolvent, and Howard died March 6, 1899. The bank applied to the corporation to be allowed to examine its books to ascertain, among other things, the value of the shares held by the bank as pledgee; the company refused to permit such examination; and the bank now moves for a mandamus compelling the company to permit a representative of the bank to fully examine said books and take extracts therefrom; to the end that the bank may determine the condition of the company and the value of said shares of stock, and what course it should pursue as pledgee to protect itself and the other parties in interest. The statute provides that “No transfer of stock shall be valid as against the corporation, its stockholders and creditors, for any purpose * * * until it shall have been entered in such book as required by this section, by an entry showing from and to whom transferred ” (Stock Corporation Law, Laws of 1892, chap. 688, § 29); that “No person holding stock in any corporation as collateral security * * * shall be personally subject to liability as a stockholder; but the person pledging such stock shall be considered the holder thereof, and shall be liable as stockholder ” (id., § 54);. and that “ Every pledgor of stock standing in his name on the books of the corporation shall be deemed the owner thereof for the purposes of this section.” The General Corporation Law, Laws of 1892, chap. 687, § 20. Hnder these provisions the bank is not a stockholder, and is not entitled to the benefits or subject to the responsibilities therein mentioned. Adderly v. Storm, 6 Hill, 624; Rosevelt v. Brown, 11 N. Y. 148; U. S. Trust Co. v. U. S. Fire Ins. Co., 18 id. 199; Shellington v. Howland, 53 id. 371. The company has in no way recognized the right of the bank as a stockholder, and has declined so to do, and is jus [664] tiffed in the position it has taken. The Steinway case, 159 N. Y. 250, holds that the common-law right of a stockholder with reference to the inspection of the hooks of his corporation still exists in this State, unimpaired by legislation, and that the Supreme Court has power, as part of its general jurisdiction, to enforce the right, in its sound discretion, upon good cause shown. But that decision in nowise helps the bank, for, as before shown, it is not a stockholder in the proper sense of that term. It is true that the pledging of the stock conferred upon the bank, as pledgee, certain legal and equitable rights, but the one invoked is not among them. The company owed the bank no legal duty which it has refused to perform; consequently, the motion for a mandamus must be denied. Motion denied.