Commercial National Bank v. Farmers & Traders' National Bank

Beck, C. J. I. The controversy in this case involves the title and right to three hundred shares of stock of the American Coal Company, a corporation organized pursuant to the laws of this state. The facts, [197] briefly but sufficiently stated to present the questions in the case, are as follows: The Farmers & Traders’ National Bank, defendant in each of the cases which are consolidated, claims title to the stock under sheriff’s sale to it upon a judgment against H. W. McNeil, and another. The stock was owned by McNeil, and stood in his name on the books of the corporation. No. question arises as to the validity of the judgment and regularity of the attachment on which the stock was seized, or of the execution upon which the stock was finally sold to the defendant. E. Clark, the plaintiff in one, and a defendant in the other, of the cases which were consolidated, claims right and title to the stock in question upon these facts: McNeil transferred the stock in question to the Commercial National Bank, the plaintiff in the first cause consolidated, as collateral security, and the bank transferred it to Clark. The first transfer was by an indorsement of the certificates of stock to the bank. This indorsement was filled up with the name of the receiver of the bank, and, after Clark purchased the stock, his name as assignee was inserted, and the receiver’s name was erased. No transfer of the stock on the books of the coal company was made to Clark. The sheriff, upon making the sale of stock to the Farmers & Traders’ Bank, entered upon the stub of the stock certificates, bound with other certificates in a book in the u'sual way, a transfer to the Farmers & Traders’ National Bank. No notice was given to McNeil and the Oskaloosa Tanning Company, defendants in the judgment whereon the execution was issued, or either of them, of either the attachment or the execution. Other facts of the case need not be recited, as' those stated present the controlling questions in the case in the view we take of it. II. It is insisted by counsel for the Farmers & Traders’ National Bank that, the transfer of the stock to the Commercial National Bank and to .Clark not having-been entered upon the books of the corporation issuing the stock, is not valid, except as between the parties, and cannot be set up against the Farmers & Traders’ [198] National Bank. Counsel base this position upon Code, section 1078, as construed and applied by a prior decision of this court. Ft. Madison Lumber Co. v. Bank, 71 Iowa, 270. The correctness of the construction put upon the statute in this case is denied by Clark’s counsel, who vigorously assail the decision. We see no reason .to doubt its correctness, and do not feel called upon to defend it in this case. If the Farmers & Traders’ National Bank had acquired a valid title under the attachment, judgment and execution, we think Clark could not, under the transfer to himself, defeat the title thus acquired by the bank. But if its title fails, then Clark can hold the stock, as there is no creditor or purchaser who can claim it, and the transfer is good as. between himself and McNeil and the Commercial National Bank, the parties thereto. III. We shall now inquire as to the validity of the title to the stock, set up by the Farmers & Traders’ National Bank. As we have seen, the defendants in the attachment and execution were not notified of the levy of these writs. Code, section 2967, is in this language: “Stock or interest owned by the defendant in any company, and also debts due him, or property of his held by third persons, may be attached, and the mode of attachment must be as follows: First. By giving the defendant in the action, if found within the county, and also the person occupying or in possession of the property if it be in the hands of a third person, notice of the attachment. Second. If the property is capable of manual delivery, the sheriff must take it into his custody, if it can be found. Third. Stock in a company is attached by notifying the president or other head of the company, or the secretary, cashier or other managing agent thereof, of the fact that the stock has been so attached. Fourth. Debts due the defendant, or property of his held by third persons, and which cannot be found, or the title to which is doubtful, are attached by garnishment thereof.” Stock in a corporation is levied upon by execution in the same manner as prescribed for attaching it. Paragraph 1 of [199] the foregoing section is applicable to all property subject to attachment, and of course to levies upon stock in a corporation. First Fat. Bank v. Bank, 71 Iowa, 486. It will be observed that paragraph 1, section 2967, of the Code, above quoted, is general, and applies to all classes and kinds of property. The other paragraphs apply to the kinds of property expressed in each. The ruling in First Nat. Bank v. Bank, supra, applies the first paragraph to levies upon real estate. There are stronger reasons for applying it to levies upon corporation stock, which is intangible, and incapable of manual delivery, and cannot be held in visible possession, so that its seizure upon a writ would give notice of a levy thereon. Under the doctrine of the decisions of this court construing the section of the Code above quoted, the Farmers & Traders’ National Bank acquired no title to the stock in question, for the levy of the attachment and execution were void. It cannot, therefore, set up its claim to defeat Clark’s title to the stock. Moore v. Opera House Co., 81 Iowa, 45. Other questions discussed by counsel need not be noticed. These considerations lead to the conclusion that Clark’s title to the stock ought to be established and enforced. The decree of the district court will be reversed, and the cause will be remanded for a decree in harmony with this opinion, or, at the option of Clark, such a decree will be entered in this court. Reversed.