dissented; they entertaining the same view held by Judge Williams that the statute applied to pledges as well as absolute sales.
The reasoning of Judge. Thayer, incorporated into the opinion of this court, is accepted as indicating the objects and purposes of this statute. Analyzing it, there are found these purposes: (a) To provide a place of record for stock transfers to show of record the muniment of title of the purchaser; (b) to provide, in connection with another statute, a convenient record of the shareholding in the corporation as a basis for' taxation (and it may be added for the information of the assessing officer); (c) to provide a convenient record for ascertaining who have control of a corporation, and who are responsible for its management; (d) to provide a record of stockholders from which information can be obtained to enforce liability, in cases where stockholders are liable when a corporation becomes insolvent.
Therefore, it cannot be said of this statute, as it was of section 728 in Byers v. Engles, that it was a registry statute whose sole purpose was to prevent fraud by secret conveyance; subject-, ing it to a liberal construction,, and enabling the court to look beyond the mere letter of the act, and incorporate into it a meaning not appearing on its face, in order to effectuate its sole purpose. This act has objects and purposes beyond a registry act to prevent fraud by secret conveyances, and these objects are par.t of the corporation system of the State. The dominant thought in the corporation' system of this State is publicity in all corporate affairs.
The initial action to form a corporation consists in public record of its object, its capital, the stockholders, and amount owned by each, and the amount paid into the treasury. Annually it must file a full statement of its financial condition, its stockholders and amounts owned by each, and this must be spread at length on the county records. The books of the corporation shall be open in the county in which it does business for the inspection of any stockholder, who shall have access to the same, and shall have the right to examine them at least once a year. The stock is only transferable on the books of the corporation. As an integral and harmonious part of this system, all transfers of stock are to be certified, and the certificate deposited with and recorded by the county clerk, and no transfer shall be valid against, creditors of a stockholder until it is so deposited. This' latter clause serves another useful purpose in enabling creditors to ascertain the holding of their debtors, and establishing a basis of credit for the stockholder. Real estate ownership is easily ascertained and difficult of concealment, and the necessity of ownership of corporate stocks being fixed by public record is apparent.
The,argument is strongly pressed that public policy requires a construction analogous to Byers v. Engles to enable corporate stocks to circulate freely, like commercial paper. The court can only deal with questions of public policy as they may be discernible in the legislation under construction. It seems clear that the public policy in regard to corporation affairs is in favor of absolute publicity of all corporate business. This insures immunity from secret infirmities, and vests the title on a public record, instead of an uncertain question of fact in each case, and thereby gives these securities á value commensurate with their worth, and not depreciated by the uncertainty of the title.
Therefore it is held that section 1338 must be construed as it reads, and creditors of a stockholder will prevail over unregistered transfers, even when knowledge of them is actually possessed by the creditor.
2. The sufficiency of the levy on the shares in controversy is questioned. In Deutschman v. Byrne, 64 Ark. 111, the court laid down the governing rule for liens on corporate stocks, and held there could be no valid levy without a substantial compliance with the statute. The court held on the facts herein that there was at the time of the levy a substantial compliance with the statute, and there is no error in that finding. The creditors attempted persistently to have a literal compliance, and the action of the secretary alone prevented it. As soon as the secretary could be brought into court, he was required to disclose the information he should have given in the first instance, and then the general levies were made definite and certain before the order of sale. The same certainty is not required in an attachment levy as is required in an execution levy and sale, because the attached property is subject to further orders of the court before exposed to sale, and a levy sufficiently definite to identify it will hold it until the court can act.
3. The Park Hotel Company was organized with a capital stock of $200,000, of which Hogaboom subscribed for all" except sixteen shares, and paid in $50,000. Subsequently there were increased issues of stock, $200,000 in all, and Hogaboom subscribed and paid for all of it. About the time of the organization subscription lists for stock therein were signed by various parties, some of whom are appellees here. They did not appear in the articles, but shortly after the organization paid the corporation pursuant to their agreements, and the corporation issued stock direct to them. It was levied on here as Hogaboom’s, but the court set aside the levy, and these creditors appeal on this branch of the case. Whoever signs an unconditional subscription list, which is accepted as such, that party becomes a stockholder, entitled to the privileges and subject to the liabilities of a shareholder. He can be compelled by the corporation, its creditors, or the other subscribers, to comply with his agreement, and he has a right, when he pays pursuant to his agreement, to the status of a stockholder, and to have his stock issued to him. 1 Thompson, Corporations, §§ 1136-1141. These parties paid their money, and were entitled to and did receive their stock as original issue. They could not have been compelled to have taken stock assigned them by Hogaboom, if it had been offered that way, and it was not assigned by him actually or constructively, and therefore the statute in question can not affect this stock. What the effect of the subscription of Hogaboom to all the unpaid stock had as between the stockholders or the corporation are not questions here. There was no transfer, and the statute is inapplicable.
F. J. Allen, Moses P. Hays and Abner Gile purchased direct from the hotel company certain stock, and paid to the hotel company the face value thereof. This is evidenced by certificates numbered 18, 39 and 41. The company evidently treated the stock which appeared in the articles in Hogaboom’s name, above the $50,000 he paid for, as treasury stock, and issued it to its subscribers as they paid in their subscriptions and to these purchasers thereof. It is manifest that this was not a regular way of proceeding, and it presents questions of difficulty as to Hogaboom’s status if the corporation sought to compel him to pay in the subscription to this stock, and it presents questions as to the status of these parties as stockholders. Those are not questions for decision here. The only question here is whether these parties acquired their stock through a transfer from Hogaboom which was not recorded as required by statute. The trial court found these particular certificates were issued direct to these parties on direct payment to the company therefor, and not derived from any transfer from Plogaboom. That takes them ■ without this statute.
Jackson had 160 shares transferred to him, and sent certificate of transfer to the circuit clerk’s office, where it was recorded. No record was made in the count}»- clerk’s office. In Garland County the offices of circuit and county clerk are separate. The rule in Oats v. Walls, 28 Ark. 244, that where a party seeks the advantage of the registry laws, and takes his instrument to the proper officer, and deposits it with the proper fees for recording with the person in charge of the office, he will be protected against defaults of the officer, is invoked. It is clearly inapplicable. The duties and functions of the clerks are defined by statute, and one clerk has no more authority in the other office than the sheriff or assessor. Such filing is wholly ineffectual.
The case is reversed as to sustaining the levy on certificates 18, 39 and 41, and in all other things is affirmed.
Battue and Riddick, J. J., dissent.