By its bill in this case appellee sought to secure the benefit of certain dividends on one hundred shares of the capital stock of the Chicago City Railway Company, (originally issued to Sarah T. Peek) and. of another one hundred shares which she, by reason of the first one hundred shares standing in her name on the books of the company, was permitted to subscribe for.
The first one hundred shares were given by Sarah T. Peck to her husband, John T. Peck, and by her indorsed and delivered to him. He pledged it to appellee to secure his individual indebtedness and other indebtedness of the firm of Peck & Bausher, of which he was a member. After the pledge was made, no transfer on the books of the company having taken place, his wife continued to draw the dividends until June 19, 1883. While the stock was thus held in pledge the railway company twice increased the amount of its capital stock, and permitted the stockholders to subscribe for the new stock by paying only a fraction of its value. On these terms Mrs. Peck subscribed for additional shares of stock, of which her estate still holds ninety-nine shares which were issued by reason of her name appearing on the boobs of the company as the owner of the one hundred shares pledged to appellee.
The court below found the bank was entitled to the benefit of the dividends collected by Mrs. Peck, and to the ninety-nine shares of new stock, upon payment to the executor of the amount which she paid for the new stock.
Appellant makes several objections to the decree.
1. It is urged that the stock was Mrs. Peck’s property, standing merely as a surety for the debts, and was released upon the renewal of the notes by the bank. This point would be sound if the stock really belonged to Mrs. Peck, and the bank had notice of her title (Price v. Reed, 15 N. E. Rep., 745) but her answer states that she gave the stock to her husband in consideration of certain real estate which he conveyed to her. That must be accepted as conclusive on the question of title.
2. The renewal of the loans from time to time, appellant contends, were, in law, payments, and the stock, without any right to previously accrued dividends, was left as security for each note as though it were a fresh transaction. To support this point appellant relies on Fridley v. Bowen, 5 Ill App. 191. In that case, however, the lender made no renewals, but at each maturity of.the loans new loans were made, and the old notes were paid out of the proceeds of the new loans* the creditor treating each transaction as a new discount. The court there said that each successive discount was a new loan, constituting a new indebtedness, wholly separate and distinct from the former. But here the evidence shows thatthe original indebtedness was continued, although represented at successive dates by new notes. A mere change in the form of the indebtedness or renewal of the note representing the same does not release the security, unless such was the intention of the parties: Rogers v. School Trustees, 46 Ill. 432; Citizens National Bank v. Dayton, 116 Ill. 257; Flower v. Ellwood, 66 Ill. 438.
3. There was no satisfactory proof that the bank acquiesced in the collection of the dividends by Mrs. Peck, nor can it be plausibly claimed that she received the new stock by the tacit consent of appellee. There can be no acquiescence without knowledge, either actual or constructive. The bank had no notice that she was receiving the- dividends, or in fact that there were any dividends, and so far as the new stock is concerned the bank had no notice of any intention to issue it until after it was issued.
“A pledgee is entitled to collect a cash dividend upon stock, and to bold it as he holds the stock itself. If he omits to obtain a transfer upon the books of the corporation, the corporation is of course justified in paying the dividends to the pledgor; but he is a trustee of the pledgee therefor, and must account to him.” Jones on Pledges, Sec. 398.
That the same rule applies to the issue of new stock at less than its value, when the same is issued as a privilege to the then stockholders, is manifest. One receiving stock under such circumstances, impliedly represents to the corporation that he is a stockholder. If he has in fact parted with his title, no wrong is inflicted on him by a decree that he shall surrender the new stock to the person to whom the original stock has been assigned.
This disposes of all the points that we think require attention. The record is free from error and the decree is affirmed.
Decree affirmed.