Merchants & Mechanics Bank v. Boyd Co.

Beck, J. 1. If a transferee of stock, having authority himself to transfer and assign the same, becomes the debtor of another and pledges the stock to secure the payment of the debt, the pledgee would have the right to collect the dividends paid upon this stock in liquidation of the affairs of the corporation and in effecting a dissolution of the corporation, upon giving notice to the corporation issuing the stock. But if such dividends had been paid out to the original holder of the shares of stock, and in whose name the shares stood upon the books of the company, before the corporation or its officials received notice of the change of ownership or of the transfer, it would not be liable to the pledgee or assignee of the stock. And in so far as the petition in this case seeks to recover dividends of the character indicated, paid out before notice of the pledgee’s rights, it is demurrable. 2. But in so far as the petition seeks an accounting and the establishment of the pledgee’s right to participate in the undistributed property and [756] assets of the corporation, not subject to claims of higher dignity, it is not demurrable; and the court erred in dismissing the case generally. July 21, 1915. Equitable petition. Before Judge Cox. Calhoun superior court. June 24, 1914. Hatcher & Hatcher, for plaintiff. Pope & Bennet and Pottle & Hofmayer, for defendants. Judgment reversed. All the Justices concur.