May v. McQuillan

Gbant, J. (after stating the facts). ■ The proofs fail to establish that McQuillan acted in bad faith, and that he transferred his stock in order to avoid liability. There is nothing unusual in the transaction which casts suspicion upon his honesty. The memorandum agreement of August 3d between Simpson and McQuillan was not an absolute agreement on the part of either to trade. On the contrary, it was optional with either one to refuse to do so, upon the forfeiture of $50 to the other party. It is obvious that the title to none of the property which was the subject of the trade passed until the arrangement was carried out on the afternoon of August 7th by the actual delivery of the deed, the payment of the money, and the delivery of the certificate of stock. The transfer upon the books of the bank was not conclusive evidence of ownership, but only prima facie evidence. 23 Am. & Eng. Enc. Law (1st Ed.), 782. Mr. Simpson did not become the owner of this stock until the exchange of the papers and the payment of the money on the afternoon of August 7th. The -title to the stock must therefore, of necessity, have been in McQuillan. There is no such thing as suspension of title when one stockholder transfers his stock to another. The title remains in the old stockholder until it passes to the new. The statute' (2 Comp. Laws, § 6135) makes the stockholders individually liable for the benefit of the depositors of the bank. The statute means the actual stockholders at the time the bank suspends. Under this and similar statutes courts have, [396] with comparative unanimity, held that this liability was not limited to the stockholders of record at the time of the suspension, but that stockholders who had previously transferred their stock for the purpose of avoiding liability were still liable as stockholders. For the same reason, one cannot, after suspension, relieve himself from liability by transferring the stock of which he was then the actual owner. It is true that no certificate is essential in order to transfer title to the stock. 2 Thomp. Corp. § 2377; Zane, Banks & Banking, § 52; Cook, Stock, Stockh. & Corp. Law, § 258. The certificate is only authentic evidence of title, but is not the stock itself, or essential to the existence of the stock. Pacific Nat. Bank v. Eaton, 141 U. S. 227 (11 Sup. Ct. 984). In this case, if, without any certificate or any previous transfer upon the books of the bank, McQuillan had actually sold and transferred his stock to Simpson, the title would have passed, and Simpson could have enforced the surrender of the certificate held by McQuillan, and compelled the bank to recognize him as owner by the proper transfers upon its books and the issue of a certificate, unless it had a lien upon it for the debts of McQuillan. We are cited to no authorities, and find none, similar in their facts to those in this case, or which shed any light upon it. We are, however, of the opinion that the depositors of the bank, under the statute, are entitled to the liability of the real stockholders at the time of the suspension, and that the records of the bank do not conclusively establish who are stockholders. The learned circuit judge gave a wrong reason for a right conclusion. The decree is affirmed, with costs. Hooker, C. J., Moore and Montgomery, JJ., concurred. Long, J., did not sit.