dissenting: In my opinion the judgment appealed from should be affirmed both as to the Chicago Title and Trust Company stock and as to the Delta and Pine Land Company stock.
The burden of proof on the issue of whether there had been a completed gift of these stocks by Benton to his daughter was on the plaintiff. It may be that a less quantum of proof will satisfy that burden and make out a prima facie case where the alleged donor is a parent and the alleged donee a child, than would be required where such a relation does not exist, but even in the latter situation, the burden of proof still rests with the one asserting the gift. In my opinion, where shares of corporate stock are purchased by a parent and issued in the name of his daughter, as in the case at bar, the mere fact of that relationship between the parties, does not make out a prima facie case in favor of a completed gift, nor give rise to a presumption that a gift took place or was necessarily intended. There is a distinction between the purchase of corporate stock in the name of another and the purchase of real estate in that manner. It does not follow from the fact that, where a father buys real estate and has the deed conveying title made out to a child, a gift of that real estate to the child will be presumed (Hartley v. Hartley, 279 Ill. 593), that the same rule applies in the case of the purchase of personal property such as shares of corporate stock. It is true, as counsel for plaintiff points out, that the rule which raises a presumption in favor of a gift, where such a purchase and conveyance of real estate are shown, is a rule of intention and not of conveyance. But it is also true that the question of what the rules of conveyance are may have a material bearing on the question of a purchaser’s intention. In this connection, the United States Circuit Court of Appeals has said that: “Stock in a corporation is a chose in action, and the certificates are the evidence of its existence and of its amount. They bear some analogy to the title deeds of real estate (Com. v. Compton, 137 Pa. St. 138, 20 Atl. 417); but they are far more commanding and useful in. the handling of the stock they represent than are title deeds in the handling of the land they describe.” Allen-West Commission Co. v. Grumbles, 129 Fed. 287. In the case of a conveyance of real property, there can be no actual delivery of the thing sold. It was attempted, at least in a symbolic way, in early times, when the parties went upon the land and the seller handed a clod of earth to the buyer. But the law has substituted for that the system of the recording of deeds. And now where one buys real property and has the conveyance made to another, and such conveyance recorded, it will be presumed that in taking those steps the buyer intended them to have the effect the law imports, and that delivery has taken place. In the case of a stranger, a resulting trust will be presumed, and in the case of a parent and child or husband and wife, it will be presumed a gift was intended. But, in my opinion, we have a different situation in the case of such a purchase of personal property, even where it consists of a chose in action, like stock in a corporation. It is true that a share of stock in a corporation consists of an aliquot part of the property of that corporation and that the certificate one holds for that share is not the stock itself but merely represents it. But the actual share of stock is an intangible thing. It cannot be handled or ever seen or described by metes and bounds, as in the case of real property. The only way that stock may be handled is by means of the certificate, which represents it. In the case last cited the court said: “Because the stock in a corporation is transferred by means of the delivery, or by means of the indorsement and delivery of the certificates, the latter by a sort of mental substitution came to be thought of and dealt in as the stock itself. The stock of corporations is ordinarily transferred on the books of the company only by the surrender of the certificates and the issue of new ones to the grantees. Hence assignments, bills of sale, conveyances, without the accompanying possession and delivery of the certificates, are much less effectual or available to command the title, the dominion or the control of the stock than the mere possession of the certificates themselves. The indorsement and delivery, or the mere delivery, of the certificates, without entry of the transfer upon the books of the corporation, is generally held to constitute a valid sale of the stock between vendor and vendee, or a completed gift of it between donor and donee. Such an indorsement and delivery of the certificates generally enables the holder to enforce a transfer of the title to the stock upon the hooks of the corporation.” Later on in that opinion the court says: “Again, a recorded deed of real estate, or a recorded brand of cattle, in the name of the donee, without a delivery of the subjects of the gifts, may well be sustained, because the donor, by placing the record title in the donee, places the property irrevocably beyond his dominion or control. * * * But ‘if an owner of shares of stock in a corporation, intending to give them to A., should take the scrip to the office of the company and surrender it, and receive new scrip in the name of A., has he by this change of title on the books of the company, * * * without any delivery thereof to A., accomplished a valid executed gift of the ownership of the shares to his intended donee? We should say clearly not.’ In re Crawford, 113 N. Y. 560, 567, 21 N. E. 692, 5 L. R. A. 71. The reason for the difference between a gift executed by a recorded deed of real estate and one unexecuted by a failure to deliver certificates of stock is that the record title to real estate controls and draws to it the possession and dominion of the property and its title deeds, while, on the other hand, the possession of certificates of shares of stock commands the dominion and control and the record title of the stock. * # * If the subject of the gift is a chose in action, such as a bond, a note, or stock in a corporation, the delivery of the most effectual means of reducing the chose to possession or use, such as the delivery of the bond, the note, or the certificate of stock, if present and capable of delivery, is indispensable to the completion of the gift.”
As pointed out by the author of the article on “Gifts of Corporate Shares,” in 20 Illinois Law Be-view, 8, referred to in the majority opinion, the English courts hold that a transfer of such shares, on the books of the corporation, coupled with proof of a donative intent, will constitute a valid gift, without delivery of the shares to the donee. But there are two lines of decisions in the American courts, one following the English cases and the other holding the contrary. An example of the former line of American decisions is to be found in Roberts’ Appeal, 85 Pa. St. 84. The majority of the American courts hold as the court did in Allen-West Commission Co. v. Grumbles, supra, that either an actual or constructive delivery of certificates of stock is indispensable to the completion of a gift of such stock. Among the cases so holding are Besson v. Stevens, 94 N. J. Eq. 549; In re Bauernschmidt’s Estate, 97 Md. 35; Getchell v. Biddeford Sav. Bank, 94 Me. 452; In re Crawford, 113 N. Y. 560; Crouse v. Judson, 84 N. Y. Supp. 755; Jackson v. Twenty-third St. Ry. Co., 88 N. Y. 520; Walker v. Walker, 66 N. H. 390; Cummings v. Bramhall, 120 Mass. 552; Grady v. Wheaton, (R. I.) 100 Atl. 881; Casteel v. Flint, 112 Iowa 92, 83 N. W. 796; Breitenbach v. Schoen, 183 Wis. 589, 198 N. W. 622; Jones v. Jones, (Mo. App.) 201 S. W. 557; Hatcher v. Buford, 60 Ark. 169.
In Besson v. Stevens, supra, the court said:
‘1 Stockholding has a dual aspect. On the one hand, it involves a contractual relationship between corporate entity and the stockholder, and on the other, it involves the ownership of property, — of an interest in the corporate property. * * * Considering the matter from the property aspect — the transfer of the stockholder’s ownership of property or interest in corporate assets — the transaction is one ..solely between transferor and transferee. The corporation has no interest in the thing from this standpoint, — it is an outside party entirely. Either before or since the act of 1916 (Uniform Stock Transfer Act) hereinbefore referred to, the change of ownership is complete upon the delivery by the transferor to the transferee of the certificates duly assigned. Matthews v. Hoagland, 48 N. J. Eq. 455, 486. Thereafter the corporation is a mere agent, so to speak, of the transferee, to perfect his legal title, supply him with the evidence thereof , and perfect his relationship to and with the other stockholders. Conversely, it seems to me, where the transferor delivers nothing to the transferee, but delivers the certificate and assignment to the company, the latter is simply the agent of the transferor to accomplish the delivery to the transferee. That is not done until the delivery of the new certificate to the transferee (although it might conceivably be done by delivering the old certificate and assignment to him). Until that is done the change of ownership is not complete ; until it is done there is no relationship between the corporation and the transferee; and until it is done the transferor can, at least in the case of a gift, stop the agent’s action in the matter just as well as he could stop his own hand half extended toward a manual delivery of a gift of a watch or a dollar bill. It is not done when the new certificate is delivered by the corporation, not to the transferee but back to the transferor. Until the delivery of the new certificate to the transferee, the transferor has not stripped himself completely of dominion and control, nor as nearly completely as possible under the circumstances and nature of the thing given. His retention of possession of and control over the new certificate deprives the transferee of complete dominion and control. The latter could not sell or transfer the stock to anyone else, even though he might vote and receive dividends thereon. Hence, even though so intended, it is not a legally valid and sufficient act of delivery. I think, perhaps, it is somewhat clearer if looked at from another angle. Suppose testator, after receiving the new certificate from the company, had changed his mind and decided that he wanted the stock for himself; that Elsie (the alleged donee) had demanded the certificate from him and he refused to give it to her. There is no doubt in my mind that Elsie’s claim of ownership, in whatever court or by whatever form of action asserted, would not be sustained.”
In the Bauernschmidt case, supra, the court said: “There can be no perfected gift where there has been no complete surrender over the thing given.” There was presented in that case the question of whether there has been a completed gift of certain shares of corporate stock by Bauernschmidt to his wife. The court pointed out that the alleged donor “was not only president of the company, but in fact the owner of all its property. He issued and canceled certificates, seemingly, as he pleased. * * * His dealing with the stock and her acquiescence in what he did, and the fact that he could, and did, as the actual owner of all the property which the company possessed, exercise complete control over those 140 shares, show that he had never surrendered dominion over them, or put it . out of his power to revoke the gift of them. * * * There can be no gift which the law will recognize where there is reserved to- the donor, either expressly or as a result of the circumstances and conditions attending’ the transaction, a power of revocation or a dominion over the subject of the gift. There must be no locus penitentice, and there is always a locus penitentice when the supposed donor may at any moment undo what he has done. Brewer v. Bowersox, 92 Md. 570; Whalen v. Milholland, 89 Md. 199. If the donor retains dominion over the thing given, precisely as he had control of it before the alleged gift was made, there is obviously no perfected gift, because there has been no change of possession, and there is still an opportunity to recant. * * * Conceding that he designed to make a gift to his wife of the securities then in the box (in which the securities were kept), still if he was free * * * to do what he pleased with those securities, notwithstanding the terms of the renting, then there was a locus penitentice reserved, and consequently there was no perfected gift, even though in point of fact he did not attempt to exercise the dominion which he retained. It is the existence and not the exercise of the locus penitentice which defeats a gift inter vivos. * * * A gift is more than a purpose to give, however clear and well settled the purpose may be. It is a purpose executed. It may be defined as the voluntary transfer of a chattel completed by the delivery of possession. It is the fact of delivery that converts the unexecuted and revocable purpose into an executed and therefore irrevocable contract.”
The case at bar is similar to the Bauernschmidt case in the circumstance that Benton was the president and principal stockholder of the Delta and Pine Land Company and apparently controlled it and was in a position to do about as he pleased in matters affecting the transfer of its stock.
In Getchel v. Biddeford Sav. Bank, supra, one Moore, in the lifetime of his wife, purchased certain shares in the bank, paying for them with his own money but having the certificates representing the shares made out in his wife’s name. He kept the certificates in his own files, drew the dividends on the stock and receipted for them in his own name. It was not shown that his wife ever had the certificates in her possession or knew that the shares were in her name. After her death, Moore surrendered the certificates to the bank and induced the officers to issue new certificates to him in his own name. The court said that the facts presented did not present a question as to whether the transactions involved, “operated to vest in Mrs. Moore, in her lifetime, the strict legal title to the property. That might be, and yet the actual beneficial ownership remained all the time in Mr. Moore. In such a case she would simply have held that legal title in trust for him and the court could compel her administrator to transfer it to the administrator of Mr. Moore’s estate. Gray v. Jordan, 87 Me. 140. The only question is whether the actual beneficial ownership was transferred to Mrs. Moore, for, if it was not, her administrator cannot maintain a suit against either bank for yielding up the property to the actual beneficial owner. That such ownership was not transferred to Mrs. Moore must be apparent. There was no gift completed by delivery nor was there any complete declaration of trust in her favor, — one or the other of which is essential to vest the property in her. (Citing cases.) The plaintiff urges that, as between husband and wife, it should be presumed that a gift was intended. Their relationship is a circumstance but not a controlling one. Even if a gift was intended, it was not perfected. Kennebec Sav. Bank v. Fogg, 83 Me. 374.”
The decision of the case at bar, announced in the foregoing majority opinion, is apparently based upon a conviction that although the majority of the American jurisdictions have held to the contrary, the decisions on the question, in this State, follow the English rule. In my opinion, such references as have been made to this subject by our courts do not reasonably bear that interpretation. In the case of Colton v. Williams, 65 Ill. App. 466, the peculiar circumstances involved were such as to constitute a constructive delivery of the shares of stock by Gordon to his second wife. As the court there pointed out: “The natural place of deposit of the certificate was in the iron safe in the store (of which the husband was the proprietor), whether the stock was owned by him or her (his wife). That fact, together with the fact that Gordon went to the bank (certain of its shares of stock being the stock in question) with his second wife, and in her presence told the president of the bank that he had given the stock to her and that it was her property and that the bank was to allow her to receipt for dividends; that the husband suggested that there would be no need for the issuance of a new certificate, because the name of his second wife was the same as that of his first, from whom he had inherited the stock; and the further fact that this plan was assented to, and the second wife was recognized by the bank as the owner, and receipted for all dividends on the stock until the death of her husband, with one exception, would seem to make out a constructive delivery of the stock to the second wife. It therefore seems to me that the remark of the court to the effect that “delivery of the certificate was not essential to the transfer” should be treated as dictum.
In Allen v. Williams, 212 Ill. App. 114, the dictum pronounced in the Colton case is referred to with apparent approval. In that case a judgment had been secured against one Charles A. Allen, and an attempt was made to satisfy the judgment by a levy on certain corporate stock, as the property of the judgment debtor. The son of the latter filed a bill to enjoin the sale of the stock, claiming that it had been transferred to him by his father, by a written assignment. The proof showed that no certificate had ever been issued for this stock; that the son had made many advances of money, aggregating a large amount, to his father, and that in payment for those advances the father had made a written assignment of the stock to his son. There was no evidence to show that the son had ever permitted his father to use the stock in a way that might mislead creditors. The court held that under those circumstances the stock must be considered as the property of the son and not subject to levy under the execution issued on the judgment against the father. There also it may be said that there was at least a constructive delivery of the stock by the father to the son.
The case of Allmon v. Salem Building & Loan Ass’n, 194 Ill. App. 224, also referred to in the majority opinion, cites the Colton case, but not in connection with the point involved in the case at bar. The Colton case is likewise cited on a point not involved here in Shirley Farmers’ Grain & Coal Co. v. Douglass, 130 Ill. App. 285.
Counsel for plaintiff contend that the decision in the Colton case was cited and upheld by the Supreme Court in People v. Lihme, 269 Ill. 351. An examination of the opinion in that case discloses that the Colton case is nowhere referred to by the court, and, in my opinion, it may not be said that the decision in the Lihme case upholds the principle which it is contended the court laid down in the Colton case. The question involved in the Lihme case was whether or not Lihme was a duly qualified director of a certain corporation. An attempt had been made to qualify him as such, by a transfer of a share of stock on the books of the company and the issuance of a certificate in his name representing that share. This certificate was indorsed in blank by Lihme and deposited in the safety deposit box rented by the heirs of one Hegler, who claimed to be the beneficial owners of the stock. The contention was advanced that Lihme was not a stockholder, within the meaning of the statute requiring directors to be stockholders. There it will be seen that Lihme had made a delivery of the certificate of stock, but no transfer of the stock had been made on the books of the company. No question was raised as to the ownership of this stock, as between him and the parties to whom he had delivered the certificate, but the question was as to whether, under all the circumstances, as between him and the corporation, he could be considered a stockholder. The court held that title could pass from him only by surrender of this certificate and a transfer on the books of the company. The court said: “He could confer an equitable title upon an assignee by a delivery of the certificate, with the blank assignment and power of attorney thereon, signed by the appellee, but the legal title would still remain in the appellee until a transfer was made on the books of the company.” In my opinion, that has nothing to do with the proposition involved in the case at bar. It may be that a stockholder remains a stockholder, so as to qualify for election as a director, as long as the books of the corporation show him to be a stockholder, but that is by no means saying that he may accomplish a valid and completed gift of his stock to another, by having his stock transferred to that other on the books of the company and a certificate issued in the name of that other, but retained in his possession and never delivered.
In my opinion, it may not be said that the law of this State has been laid down contrary to the majority rule in this country, which is to the effect that the proponent of a gift of corporate shares may not meet the burden of proof which is upon him by showing merely that the stock has been bought and paid for by the alleged donor, and the certificates have been issued in the name of the alleged donee, but, so far as the evidence shows, had never left the possession of the donor. For that reason, I am of the opinion that the plaintiff in the case at bar failed to prove that Benton had ever executed a completed gift of either of the stocks involved in this case to his daughter.
As to the Chicago Title and Trust Company stock, there is an additional reason why it could not be held that Benton was guilty of conversion. Even if it be conceded that there was a completed gift from him to his daughter, as to that stock, and even if it be conceded further that he was the one who, nearly two years after his daughter’s death, delivered the certificate representing that stock to the company, for transfer to Shedd, the further fact that when it was so delivered it bore the genuine indorsement of his daughter would conclusively preclude any possibility of a conversion on bis part.
For the foregoing reasons, I am of the opinion that the judgment appealed from should be affirmed.