Bowring v. Prime

JAMES, J.

Appeal by the plaintiff from an adverse judgment.

Section 324 of the Civil Code provides that upon the refusal of any officer of a corporation to transfer shares of stock when required, such officer “shall be subject to a penalty of four hundred dollars, to be recovered as liquidated damages, in an action brought against him by the person aggrieved.” Defendant herein was at the time material to the action the secretary of a corporation. The plaintiff was the transferee of certain shares in the same corporation and held certificate bearing proper indorsement of transfer. He presented the same at the office of the corporation and to the defendant, its secretary, who was in charge of the office, and requested the transfer to be made. At that time an action had been brought against the plaintiff and the transferor of the stock. Writ of attachment had been issued and served upon the defendant as secretary of the corporation. When the request for transfer of the stock was made by the plaintiff, the secretary communicated by telephone with the attorney for the plaintiff in the attachment suit and was advised by that attorney not to transfer the stock—that he had no right to do that. Defendant informed plaintiff of the situation and refused to make the transfer. Six days later the plaintiff served upon the defendant secretary a formal demand in writing requiring him to make the transfer requested. The defendant testified that thereupon he told the plaintiff that the situation was the same and that he did not think he could transfer it until he got further advice from the attorney; that he did consult with the attorney and that at the time summons in this action was served upon him, which was five days after the written demand had been delivered by the plaintiff, he was preparing or had prepared a letter to the plaintiff, which was dispatched that day, in which he stated his willingness

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to make the transfer. The trial court determined, in effect, that the defendant had a reasonable time as secretary of the corporation to investigate his rights and liabilities, and that he acted within such reasonable time by offering to make the transfer, and that no recovery of the penalty could be had.

[1]

It is admitted that the fact of an existing attachment will furnish no ground for refusal on the part of the secretary of a corporation to make transfer of stock and issue new certificates therefor. Our supreme court has directly decided that question in an opinion by the court in bank, which was filed on December 15, 1917, and several months prior to the making of the demand in this ease.