People ex rel. Bosqui v. Crockett

Burnett, J., delivered the opinion of the Court—Terry, C. J., concurring. Mandamus, to compel defendant Crockett, as president, and Pay son, as secretary, of the Sacramento Talley Railroad Company, to transfer to the relator, on the books of the company, one hundred and twenty-seven shares of stock.

On the twenty-eighth day of January, 1857, W. A. Palmer was the owner of the shares, and on that day transferred them to the relator, for a valuable consideration. Previous to the assignment, Palmer had executed to the company his note, for five thousand five hundred and seventy-three dollars and eighty-one cents, which was still unpaid. On the thirtieth day of January, 1857, the board of directors passed a by-law, to the effect that no transfer of stock would be made upon the books of the company, until all indebtedness of the assignor had been liquidated. On the sixth day of February, 1857, the relator requested a transfer to be made to him, which was refused by the company, except upon condition that the relator would pay the note of Palmer. The District Court ordered a peremptory mandate, and the defendant appealed to this Court.

The twentieth section of the amendatory act of 1854, page eighty-four, provides that transfers of stock may be made by endorsement and delivery of the certificates, signed by the pro-j)rietor; “ but such transfer shall not be valid, excej>t as between the parties thereto, until the same shall have been entered in the book of stockholders.”

The only question in the case, arising under this provision, and the former adjudications of this Court, is, whether the company had any interest in, or lien upon, the stock, at the time the tranfer was made. The transfer is only invalid as against a third party, who has some legal and valid existing claim upon the property. If the company had no such interest, then the transfer was good as between the parties, and, being good as be[115]tween them, the company could not rightfully object to the demanded transfer.

The company had no lien by express agreement, or by its charter; and no lien could exist at common law. (Angell & A. on Cor., § 355.) How, then, did the company acquire the alleged lien? The by-law was passed two daj^s after the transfer. Could it have a retrospective operation ? We think not.

Under the provisions of the fourteenth section, the board had the right to pass such a by-law, to operate prospectively. But whether such a by-law would affect even future purchasers of stock, without n otice, is a question not arising in this case. When the charter itself does not give the corporation this lien, and when the purchaser has no notice of the by-law, it has been much doubted whether the lien of the company can be sustained. (6 Pick., 329; 1 Harrington’s Del. Rep., 27; 8 Ser. & R., 73.) In the case of Tuttle v. Walton, (1 Kelly’s Ga. Rep., 43,) where the liability of the stockholder was stated in the certificate, and was created by an express by-law, the lien of the company, for debts due to it, was sustained against a subsequent purchaser having notice.