Strout v. Natoma Water & Minning Co.

Burnett, J., delivered the opinion of the Court—Terrv, C. J., concurring. The facts necessary to explain the decision of this case, were substantially these:

1. On the fifteenth day of October, 1853, John R. Prindle executed a note to Adams & Co., for one thousand five hundred dollars, and pledged to them, as collateral security, two shares of the stock of said company, of about the value of one thousand eight hundred dollars. There was, however, no transfer of the stock upon the books of the company.

2. On the thirty-first day of January, 1854, Bruce Herrick sued Prindle, and attached the stock. Judgment was recovered for four hundred and twenty dollars and costs; and on the thirty-first of March, 1854, Herrick assigned the judgment to Adams & Co.

8. After the levy of the attachment, Prindle endorsed the certificate of stock to Adams & Co., and on the eleventh day of February,' 1854, the secretary transferred the stock to Adams & Co., upon the books of the corporation, subject to Herrick’s attachment against Prindle.

4. On the tenth day of July, 1855, James Duffy sued Adams & Co., and attached the stock as their property. Judgment was obtained against Adams & Co. on the twenty-eighth of August, 1855, execution was issued, and the stock was sold by the sheriff the fourth of September, 1855, to the highest bidder, when Ralston and Wallace became the purchasers, for nine hundred and thirty dollars.

5. On the tenth of September, 1855, Strout obtained a judgment against Adams & Co., upon which execution was issued the fifteenth of October, 1855, and levied upon the Herrick judgment ; and on the twenty-second of the same month, the judgment was sold by the sheriff to the highest bidder, and plaintiff became the purchaser, for fifteen dollars. On the same day, plaintiff caused an execution to be issued on the Herrick judgment, under which the said shares were sold by the sheriff, and the plaintiff became the purchaser, for four hundred dollars.

This suit was brought to compel a transfer of the shares to the plaintiff, and to recover the dividends previously received by Ralston and Wallace. The defendants had judgment in the Court below, and the plaintiff appealed.

In the case of Weston v. The Bear River and Auburn Water [80]and Mining Company, (4 Cal., 186,) it was decided by this Court that no transfer of shares in the capital stock of a corporation is good as against third parties, unless such transfer be entered on the books of the corporation. It was held in that case, that “ the Legislature intended to protect the public from the fraud which might be perpetrated by a sale or hypothecation of the certificates passing the legal or equitable title, while the books of the company induced credit to the vendor, by holding him out to the world as the owner of such stock.”