Owens v. Atlanta Trust & Banking Co.

Lamar, J. (After stating the facts.) Whatever may have been the former doubts on the subject (Tuttle v. Walton, 1 Ga. 43), the statute now declares that corporations may. pass by-laws for .the creation of a lien on the shares of the stockholder. Civil Code, § 2825. Within the field of its operations the by-law is automatic. The moment the shareholder becomes indebted to the corporation, that moment the lien attaches. It is good between the company and the stockholder. But it is not good against those who at public or private sale purchase without notice of its existence. Nor is it good against bona fide creditors who without notice advance money on the shares and thereby acquire the position of quasi purchasers. But the judgment creditor does not occupy so favorable a position. He did not buy nor did he lend on the faith of the stock. His rights arise only out of the judgment. That binds the property of the defendant. It can not bind more. Nor can it subject an interest which has ceased to belong to tbe shareholder. Nor when it attaches can it displace incumbrances which have already arisen in favor of the corporation. Freeman on Judgments (4th ed.), § 356. The validity of the by-law hen does not depend upon record or registration. The [523] judgment creditor therefore had no right to complain that he had no notice of its existence, as in cases under the Civil Code, § 2727. As to the stock he is in a position similar to that which he occupies as-to .other choses in action. Civil Code, § 5353. By garnishment he may reach what is due his debtor, but is bound by existing, though unrecorded, counter-claims, set-offs, pledges, incumbrances, or liens (Civil Code, §§ 4711, 4712; Bates v. Forsyth, 69 Ga. 365), whether the latter be created by, contract or by operation of law under the Civil Code, § 2825. Stock in a corporation is a chose in action. In the absence of a statute it would not be subject to levy or sale. By the act of 1822 (Cobb’s Dig. 511, 512) the lien of the judgment against the shareholder attached from the date of its rendition, but had to be kept alive by giving notice within twenty days to the corporation. This policy is reversed by the Civil Code, § 5431.' The lien now does not attach to the stock upon the rendition of the. judgment, but only after notice acting as a sort of garnishment on the corporation, or withholding the lien until levy as under the Civil Code, §3125. Until this notice is received the statute recognizes that the company may make transfers notwithstanding the existence of a judgment against the shareholder. The quasi-negotiable character of stock, the fact that certificates indorsed in blank may and do pass from hand to hand, and the necessity of preserving the rights of that large body of the public who buy and lend on the faith of shares, was no doubt the reason for the change made by the code in the act of 1822. §§ 5430,.5431. But in preserving the rights of pledgees and purchasers, the code likewise preserves the right of any other holder of a lien, whether the same arose by express contract or under the operation of a by-law authorized by statute. This was not a case where the real title or secret equity was in one, and the apparent ownership was in the debtor with credit extended on the faith of such apparent' ownership. Zimmer v. Dansby, 56 Ga. 79; Bell v. Stewart, 98 Ga. 671; Burt v. Kuhnen, 113 Ga. 1143. Nor does it present a question as to the rights, of a purchaser or pledgee (Civil Code, § 1855) who acquired an interest in the stock in ignorance of the judgment. It only involves the rights of the corporation holding alien on the stock at the ¿ime when notice of the judgment was brought home to it. [524] The fact that the plaintiff in fi. fa. was ignorant of the by-law when he obtained judgment and when he gave notice to the corporation did not operate to make the judgment a lien on the ■stock, but only on the interest which the shareholder had. That interest was incumbered by the by-law lien. The judgment was ■subject to that incumbrance. Bank of Culloden v. Bank of Forsyth, 120 Ga. 575; Sewall v. Lancaster Bank, 17 Serg. & R. 285; Angell & Ames on Corporations (11th ed.), § 589; 3 Freeman on Executions (3d ed.), § 348. There was evidence to sustain the finding of the trial judge, that the company had not Waived the by-law lien. The plaintiff having purchased the stock with notice, the court did not err in holding that he could not compel a transfer without payment of the amount secured'by this lien. tJudgment affirmed. All the Justices concur.