Brown v. Smith

Ames, J.

According to the written agreement, which beai the same date as the notes in suit, and which was apparently a part of the same transaction, the defendant was bound to transfer the stock in question to the plaintiff as collateral security for the notes. In pursuance of this agreement, and before the first ol the notes had become due, the defendant execute! an instru* ment purporting to be a transfer of one hundred and sixty shares of the stock to the plaintiff, and also produced a certificate to the effect that the defendant was the owner of those shares. It appears from the bill of exceptions that these papers, namely, the agreement, the certificate and the transfer, were by mutual agreement deposited with a third person. We must infer that the parties knew what these papers were, and it does not appear that the plaintiff made any suggestion that they were not in conformity to the contract, or that the transfer was insufficient or informal, or that he had not received the collateral security to which he was entitled! As a part of the transaction in which both parties were concerned, they were admissible.

This proceeding was apparently intended as a transfer of the stock as collateral security for the notes, and we must infer from the bill of exceptions that it was so understood by both parties. But, under the option allowed by the agreement to the defendant, it was contingent and uncertain, until the maturity of the notes, which of the two parties was to be the ultimate owner of the stock. If the defendant saw fit to pay the notes, the transfer of the stock would have to be cancelled, which could conveniently be done by returning the papers to him. If, on the other hand, he did not pay the notes in money, the plaintiff was bound to accept the stock in full satisfaction, in which event all the papers would belong to him. It was competent for the judge, sitting without a jury and trying the facts as well as the law of the case, to find as a fact that the third person, with whom the papers were deposited, was the agent and trustee or representative of both parties. He may have been considered as holding the papers in trust, as collateral security for the plaintiff until the maturity of the notes, and as the absolute property of the plaintiff, if the notes were not paid at maturity. No new or additional transfer was necessary in that case, for the stock had already been effectually transferred; and the contingency which was to change this transfer from a conditional to an absolute one had occurred. If the depositary was, on the happening of that contingency, the agent and representative of the plaintiff, no formal tender of a transfer or conveyance to the plaintiff was necessary. He was already in possession, by his agent, of all that the defendant was bound to deliver; and the judge had a right to find as a fact, upon the evidence, that the plaintiff waived or dispensed with any further performance on the part of the defendant. It does not appear that the depositary assumed any trust or obligation, except to hold the shares for the benefit of whichsoever of the parties might ultimately by the terms of the contract prove to be the owner of the shares, and it is difficult to see for what other purpose he was needed.

The objection that the transfer could only be upon the books of the corporation, if open to the plaintiff at this stage of the case, is in our opinion untenable. It was sufficient to convey a title, as between the original parties, which the plaintiff could at any time have perfected by having it recorded in the books of the corporation, and taking a new certificate in his own name. We have no doubt that the defendant was rightfully permitted to support the paper evidence of his right to the stock by testifying that he had paid for it in full. Exceptions overruled.