Northrop v. Newtown & Bridgeport Turnpike Co.

Hosmer, Ch. J. This is an action on the case, brought to recover dividends, made on one hundred shares of stock, in The Bridgeport and Newtown Turnpike Company, which the plaintiff claims, as being his property. A verdict was rendered for the plaintiff, in the sum of 293 dollars, 25 cents ; and the defendants moved for a new trial. The stock was formerly owned by Beebe Hiñe, and the plaintiff claims it, by purchase. On the 27th December, 1814, Iline made to the plaintiff a written assignment in pais, of the shares, for the expressed consideration of 2000 dollars, and therein requested the clerk of the company, to transfer them from his name, to the name of Northrop. Admitting the assignment to have been delivered to the plaintiff, or another person for his use, I will, first, enquire, whether the stock embraced in it, was transferred, by the delivery. If the stock were not the subject of any peculiar [550] provisions relative to its transfer, the delivery of the assignment, of course, would operate a conveyance of the property. The legislature, however, in the charter of the Turnpike Com-panyj has prescribed the mode in which alone the stock must be conveyed ; and it is not to be disputed, that it cannot be transferred in any other manner. I hey have directed, that “ the shares in said company, shall be transferable only on the books of said company, and in such manner, as said company shall, by their by-laws, direct^ On recurrence to the by-laws, it appears, that “ the board of directors, were to prescribe the form of transfer, to be registered, by the clerk, on the books of the company; and the shares were made assignable and trans-ferrable ; but no assignment or transfer was to be valid, unless made in the form prescribed by the directors, and registered by the clerk.” In pursuance of this by-law, the directors of the company, adopted A form, by which, the shares were “ to be assignedand by this, the stock is to be transferred expressly, with all the privileges, and subject to all the burdens, thereunto appertaining and this prescribed form, was the uniform mode of transfer, until the execution of the assignment by Bebee Hine. It is evident, that the assignment of stock in The Bridgeport and Newtown Turnpike Company, must be made in the mode thus authoritatively declared ; and that the method of conveyance at common law, is entirely superseded. The distinguishing features, attending a legal assignment of the stock in The Newtown and Bridgeport Turnpike Company, are, that it must be in the form prescribed, and régistered on the books of the company ; and any mode essentially variant from this, is not according to law, and operates no transfer. The case of the Marlborough Manufacturing Company v. Smith, 2 Conn. Rep. 578. demonstrates the precise exactness, with which the assignment of stock must be made. A question here arises, at what time the transfer shall be considered as being complete ,• and in deciding this point, it is necessary to attend to all the provisions of the law, on this subject ; as the construction cannot be duly made, by concentrating the attention on a particular part. The legislature, in the act of incorporation, has explicitly enacted, “ that the shares in said company, shall be transferrable only on the books of the company.i"* - It follows conclusively, that they cannot be assigned, merely by a deed or writing, executed and deliver [551] ed. The by-laws of the directors, and the form prescribed, must be construed with reference to this fundamental provision ; for if they are not conformable to it, they are wholly void, and without effect. They authorise an assignment by a writing; but expressly declare, that no transfer shall be valid, unless it is registered on the company books, by the clerk. Instead of providing, as the directors did, in the case of the Marlborough Manufacturing Company v. Smith, that the assignment should be made on the books, which, according to the court’s construction in that case, required, that there should be a written transfer on the books, signed by the assignor ,• they have taken a different course. They require, that there be a writing, duly executed, and afterwards registered, on the books of the company; but, as by law it is necessary, that the transfer should be made on the books, it is the fair construction of the by-law, that until the actual registration of the assignment, nothing has effectually been done to convey the property. This, although varying from the mode practised by other companies, in effect, is similar to the signing a transfer on the books; and the registration of a deed of assignment, to commence its legal operation after it has been recorded, is virtually the same. For, the scope and object of the legislative provision on this subject, was, to render the purchase of stock secure to any person, if, at the moment of his pyrchase, the company books did not furnish evidence, that it had previously been transferred. It must be admitted, either that the construction I have given the by-law of the company is correct; or that the by-law is illegal, and the stock of the company locked up, without the possibility of transfer. It is scarcely necessary to add, that an assignment in writing, on which the clerk enters “ received for record, ” is not thereby registered or recorded. Nothing short of copying it, at full length, on the books of the company, either fulfils the words of the by-law, or renders it a transfer on the books. It follows, necessarily, from the principles assumed, and, I trust, established, that the assignment, by Beebe Hine, was of no avail, until it was actually registered on the company books at full length. From the motion, it appears, that the superior court founded their determination on this principle; that the stock was assignable, by a deed or writing delivered, as at common law; and that the registering of it by the clerk, if done without negligence, and within a reasonable time, effectually conveyed it. [552] They considered the assignment as operating by virtue of the delivery ; and that its subsequent registration was required, as it is in case of a grant of land, to give notice of an antecedent conveyance; whereas the transfer of stock on the books of a company, operates not by giving notice of an antecedent con-r J\ . ’ , 5 „ , . • , veyance, but is a fact essentially necessary to originate a title ; before the happening of which registration, no title has been, or can be, transferred. Under the influence of a principle not warranted by law, the charge of the court, by necessary consequence, was materially erroneous. The assignment, if it were duly delivered, and due diligence was used to lod^e it with the clerk of the turnpike company, was considered as operating from its date ; and the priority of the five attachments served by Charles S. Masters, before the assignment was given to the clerk to be registered, was denied, unless it had been agreed by Hine, that the attaching creditors should first bé satisfied. In respect to the claim of Noble, the jury were informed; that although it should appear, that his attachment was entered for record before the entry was made on the transfer, by the clerk, (which was claimed to be the fact,) it could not be let in, if the assignment had before been delivered to the plaintiff, unless there were fraud or neglect. And in relation to the attachment of James Nichols, which was served on the stock after the assignment had been actually copied in the company books, the jury were instructed, if the transfer by Hine was not fraudulent, and had been received for record, and an entry to this effect had been made on it, by the clerk, that it superseded the attachment. The charge given to the jury would have been entirely correct, if the principle on which it is founded had been legal ⅝ but the principle was erroneous, and, of consequence, the direction was altogether unwarranted bylaw. On these grounds, I advise a new trial. Whether the assignment was defective, by reason of variance from the form prescribed, as no question has been made on this subject at the bar, and the decision of it is not necessary, in this case, 1 shall omit to express an opinion. The other Judges were of the same opinion, except Chapman, J., who gave no opinion, having been of counsel in the caase. New trial to be granted.