Realty & Rebuilding Co. v. Fillmore Arcade Co.

California Court of Appeal Feb 23, 1924 No. Civ. No. 4656.Published

Before: Tyler

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Holding. The court held that a stockholder remains liable to corporate creditors if the transfer of their shares is not registered on the corporate books, and the trial court's finding that the defendant failed to exercise sufficient diligence to effect such a transfer is binding on appeal.

Issues

Whether a stockholder is relieved of liability to creditors when a stock transfer is not recorded on the corporate books.
Whether the defendant's additional testimony regarding his efforts to transfer stock was sufficient to overcome the trial court's finding of liability.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The general rule is that a transferor is not released from this imposed burden until his transfer is duly registered upon the corporate boobs.”

“The transfer of shares of stock, therefore, to become effectual between transferor and creditors of the corporation, must be entered on the corporate books”

“the evidence upon the subject as to whether or not Ruef was the legal owner of the shares in contemplation of law is conflicting; and this being so we are bound by the conclusion of the trial court.”

TYLER, P. J.

This is an appeal by defendant Ruef from a judgment for $2,490 upon a stockholder’s liability.

The alleged liability arose as follows: In the month of June, 1906>, Rudolph Spreckels was the owner of certain real property situated on the west side of Fillmore Street in this city and county, and he leased the same to defendants Rea, Kehrlein, and Sullivan. On December 14th following the lessees assigned and transferred their leasehold interest in the same to defendant Fillmore Arcade Company, a corporation. This company accepted the transfer and entered into possession of the leased premises. Thereafter, on April 28, 1908, Rudolph Spreckels, as owner and lessor, conveyed the premises to plaintiff corporation. At the time of the transfer of the lease to the Fillmore Arcade Company Ruef was a stockholder in the latter corporation. Such corporation subsequently became indebted to plaintiff on account of certain rents due under the lease, and this indebtedness became the subject of this action.

The count upon which the cause of action is based is one to recover certain accrued rents which were alleged to be due from the Fillmore Arcade Company to plaintiff for the months of June, July, and August, 1911; and defendant Ruef was sued with other stockholders for his proportion of this alleged indebtedness.

The case has previously been before the supreme court, and the facts are fully set forth in the opinion rendered therein

(Realty & Rebuilding Co.

Rea,

184 Cal. 565 [194 Pac. 1024]). One of the contentions relied upon by Ruef upon the former trial was that he had endorsed and delivered his certificate of shares in defendant Fillmore Arcade Company to his sister, Mrs. Henrietta Sittenfeld, in December, 1908, and was therefore not the owner of any stock in such corporation at the time when the indebtedness here sued upon was incurred or had accrued. The trial court had so found, but upon appeal it was held that the evidence concerning the transfer was insufficient to relieve Ruef from liability to the creditors of the corporation for the reason that it failed to show that Ruef had made proper

[759]

Realty & Rebuilding Co. v. Fillmore Arcade Co.

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TYLER, P. J.

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