Thum v. Pyke

ON PETITION POE REHEARING.

STOCKSLAGEK, J.

— This is a petition for a rehearing. The first question presented for consideration is the validity of the service of summons in the case of the Ogden Savings Bank against C. Bunting & Co., bankers, in the Utah court. *33The petition for a rehearing presents nothing on that question but what was fully considered on the original hearing, and we "know of no reason for changing our views heretofore expressed.

Counsel contend that the person who first seizes stock certificates by writ of attachment acquires a better title to the property which such certificates represent than a court that has had possession of such property or assets long prior to the attachment proceedings. We cannot assent to that proposition. 'There is no question but that a person who acquires title to paper stock certificates before the property they represent is in the possession of a court of competent jurisdiction in insolvency proceedings acquires a tangible interest in the property. 'That question is not involved in this ease. Here was a corporation organized under the laws of the state of Utah, and •doing business exclusively in the state of Idaho. At least two-thirds of its capital stock was in Utah, and all of its property •and assets were in Idaho. Its entire capital stock was owned by the banking corporation of C. Bunting & Co. The latter •corporation was declared insolvent by the district court of the Fifth judicial district of Idaho, and all of its assets placed in "the hands of that court’s receiver. The intervener, who is the petitioner, was cognizant of all of those facts and proceedings; and, simply because the statutes of Htah declare that •certificates of stock shall be “deemed personal property,” it .sought to make its claim against said insolvent bank out of •500 paper shares of stock that belonged to said insolvent, and pledged to pay a certain debt due to McCorniek & Co. We ¡admit that said shares of stock are personal property, and that the intervener has possession of them. It no doubt may keep -them, and realize what it can out of them. But, as it acquired .said shares of stock after the property they represent had! passed into the hands of a receiver, and after it had subjected itself to the jurisdiction of the court having possession of said property, the courts of this state will not assist it in securing ¡an advantage over other creditors of said insolvent bank. It Is suggested that, if the intervener gained an advantage by its vigilance, it is entitled to such advantage. If, in fact, it has ¡secured an advantage, it has it; but the courts of this state will *34not assist it, under the facts of this case, in making its supposed advantage valuable, when they would not under like facts, assist a creditor resident of Idaho in making an advantage thus obtained valuable. Said stock certificates were pledged as security for the balance due to McCornick & Co. It had been pledged for that purpose, and no other; and, after the property said certificate represented had passed into the hands of a receiver, the Ogden Savings Bank could not tack its claim against the insolvent bank onto said pledged certificates, and make them a pledge for its debt. Counsel suggest it is a strange and foreign doctrine that stock certificates are not worth the paper upon which they are written. In the original opinion in this ease it was suggested that certificates of stock were valueless without the property they represented, and we think that statement is true. If they are, why is the intervener here seeking to get possession of the property that its 500 shares of stock represent? The contention of counsel for the intervener would lead to the conclusion that a creditor of a corporation cannot attach and realize his debt out of the assets or property of the corporation, but must attach such corporation’s stock certificates.

We do not deny the right of a creditor, not a resident of this ■state, to bring his suit in another state against one who has been declared an insolvent 'by an Idaho court, and make his claim out of property that he may find in such other state. Counsel contend that the intervener has done that very thing. If so, why is their client here? The fact is they have not recovered their client’s debt, and it comes into the courts of this state for assistance. They recognize the fact that said 500' shares of stock are of no value unless the courts of this state give them value by doing an injustice to other creditors who-have filed their claims in good faith, in the court that has possession of said property.

Some stress is laid upon the point that the intervener is a stockholder in a corporation that has no creditors (the merchants corporation), but the fact that said corporation was-■owned by and was a part of the assets of the banking corporation at the time it was declared an insolvent is apparently over*35looked or lost sight of. According to the theory of counsel, if all of the assets of an insolvent corporation consisted of another corporation, and the property of the latter corporation in one state and the stock certificates in another state, some small creditor in the states where the certificates were situated could bring suit, levy on such certificates, procure title thereto under execution sale, and then go to the court of the state that had possession of all of the property, and demand and receive the same. We cannot indorse that theory. The fifth district court of this state, having taken said property into its custody prior to the time the intervener obtained title to said stock certificates (conceding that it did do so), will hold said property, and distribute its proceeds to the creditors who have filed and proved their claims in said court. The assignee of McCornick & Co. may recover the balance due on the McCornick & Co. debt, but under the facts of this case the assignee cannot tack its claim onto said pledged stock, and make such stock security for the payment of a debt for which the stock was not pledged.

Counsel say they have relied upon property rights which they had secured through _ courts of competent jurisdiction in the state of Utah. If they have made a mistake as to the law, it may be unfortunate; but as they sought to realize nearly double the amount of their claim against the insolvent, and failed, it would have been better for them to have come into the court that had possession of assets of the insolvent, and share with all other creditors. Counsel refer to unjust discrimination, and suggest that this court will not permit it. That is just what this court will not permit, and is what our decision prevents. It is also suggested that there is no disposition on the part of the intervener to secure money largely in excess of the amount due it. By its complaint in intervention it is shown that its entire claim against said insolvent estate is about $23,000, including the McCornick & Go. claim, and it asks to have turned over to it as its property assets of the alleged value of $40,000. And as a matter of fact the intervener bid in said five hundred shares of stock for $100. Thus it is shown that for five hundred shares, for which it paid but $100, it asks a court of- equity to deliver to it prop*36erty of the value of $40,000, which property had been in the hands of a receiver long prior to the time that it became the owner of said shares of stock. The intervener had the right to come into the courts of Idaho, and share in the assets of said insolvent bank with all other creditors. It declined to do so, and took its chance of making nearly double the amount of its claim by proceedings in the courts of Utah. The courts of Utah have granted it all the relief it asked, and still it is not satisfied. It desires the courts of Idaho to assist it in a manner that they would decline to assist any creditor, resident in Idaho, in recovering a claim against said insolvent bank. That they will not do, and the petition for a rehearing is denied.

Sullivan, J"., concurs. QUARLES, C. J.

— I have carefully read the opinion of my associates denying a rehearing in this case. That opinion is interesting. I am constrained to believe that my associates do not properly apprehend the facts material to a correct decision of this case, and that they have mistaken the law applicable thereto; wherefore, and for the reasons stated in the dissenting 'opinion heretofore filed by me, I am of the opinion that a rehearing should be granted.