Farmers' National Gold Bank v. Wilson

Ross, J.: On the 2d of January, 1879, one Shartzer was the owner and holder of eight shares of the capital stock of the Home Mutual Insurance Company, a State corporation. On that [604]day he executed to the plaintiff an assignment of the certificates of the stock, together with a power of attorney authorizing the assignee to cause the proper transfer of the stock to be made on the books of the company. The assignment was made as collateral security for the payment of Shartzer’s note for five hundred dollars, with interest, executed by him to the plaintiff. Plaintiff neglected to have the stock transferred on the books of the company, and on the first of November following, the defendant Wilson, having no knowledge of the assignment, commenced an action against Shartzer to recover a considerable sum of money due to him from Shartzer, in which action a writ of attachment was duly issued and levied by the defendant, Desmond, as Sheriff, upon the stock, which stood on the books of the corporation in Shartzer’s name. Subsequently, Wilson recovered judgment in his action, and in due time an execution was issued thereon and placed in the hands of the Sheriff, who was proceeding to sell the stock, when the present action was commenced to enjoin the sale. The value of the stock, according to the pleadings in the case, exceeds the amount of the indebtedness from Shartzer to the plaintiff; and as it is also found that the assignment of the stock was only as collateral security for that indebtedness, it results that Shartzer retained an interest in the stock. This interest is undoubtedly subject to sale by Shartzer. Why it is not also subject to forced sale under legal process against him, we are unable to see. It is quite true, under the rule long settled in this State, that the assignment to the plaintiff, notwithstanding the fact that the transfer was not entered on the books of the corporation, was valid as against all persons except a subsequent purchaser in good faith, without notice, within which exception the defendant Wilson does not come. Likewise, it is true, under the same rule, that a purchaser at the execution sale under the Wilson judgment, without notice of the previous assignment to the plaintiff, would take the stock discharged of the plaintiffs lien. (See Weston v. B. R. & A. W. Co., 5 Cal. 186; S. C., 6 id. 425; People v. Elmore, 35 id. 655; Parrott v. Byers, 40 id. 614; Winter v. Belmont Mining Co., 53 id. 429.) But if the latter result should occur, it would be the fault of the plaintiff. It had it in its power at • the start to avoid all danger by doing what it ought to have [605]