Reilly v. Absecon Land Co.

Leamtng, V. C.

Some courts have held that a sale of corporate stock accompanied by a delivery of the certificate and usual power of aftornejq without further steps toward completing the transaction by notice of the transfer to the company or by causing an actual transfer to be made on the books of the company, is presumptively fraudulent, and therefore invalid as against judgment or attaching creditors of the assignor. A different rule, however, must be regarded as settled in this state. Our courts have uniformly held that such a sale is valid as against creditors of the assignor, and that the sale gives the assignee a precedence over subsequent judgments, executions and attachments procured by creditors of the assignor. The provisions touching transfers on the books of the company are held to be intended for the protection of the company. It is manifest that such provisions cannot be easily considered as intended to have the effect of recording statutes for the protection of creditors of stockholders, for the public at large is not entitled to access to the stock books of our corporations. Broadway Bank v. McElrath, 13 N. J. Eq. (2 Beas.) 24; Hunterdon County Bank v. Nassau Bank, 17 N. J. Eq. (2 C. E. Gr.) 496; Mt. Holly, Lumberton and Medford Turnpike Co. v. Ferree, 17 N. J. Eq. (2 C. E. Gr.) 117; Prall v. Tilt, 28 N. J. Eq. (1 Stew.) 479; Matthews v. Hoagland, 48 N. J. Eq. (3 Dick.) 455, 490. As a valid title to the stock had passed from Wills to complainant at the time the attachment against Wills was issued, it necessarily follows that there could be no interest in Wills subject to attachment and no title conferred by the attachment sale.

It is urged in behalf of the corporation that it should be protected, as it has issued a certificate to the purchaser at the sale under the attachment and a subsequent certificate to defendant Stewart. I cannot see that the corporation is in danger of loss. The purchaser at the sale under the attachment knew, in the light of the adjudications already cited, that his purchase was void as against any bona fide purchaser of the stock prior to the date of the levy of the attachment. Defendant Stewart also knew that the interest which he was purchasing had been acquired under the attachment proceedings, and defendant company was indemni*74fled against loss by reason of the certificate issued to him. But inasmuch a? the provisions touching a transfer on the books of the corporation are for the protection of the corporation and some danger of loss to the corporation may exist, I think it proper to impose terms upon complainant to the effect that he indemnify the corporation against loss arising from the issuance of the certificates now sought by complainant. The long delay of complainant in presenting his certificate for transfer on the books of the corporation seems to make these terms appropriate.

There was no statutory authority for the direction given by the officer holding the writ requesting the company to issue a new certificate to the purchaser, and that direction can afford no obstacle to the enforcement of complainant’s rights at this time..

This court will exercise jurisdiction to compel a transfer on the books of a corporation in a case of this nature on the theory that complainant is the equitable owner and seeks to consummate a legal title. Archer v. American Water Works Co., 50 N. J. Eq. (5 Dick.) 33, 50.

I will advise a decree for complainant, pursuant to the prayer of the bill, -with terms imposed as above stated.