Ralston v. Bank of California

The Court. Defendant is a corporation engaged in the business of banking, and having a capital stock divided into thirty thousand shares, of the par value of one hundred dollars each. One J. Baum owned sixty shares of such stock, and held a certificate therefor, which provided that no transfer of the stock described in the certificate would be made upon the books until payment of all indebtedness due to the bank from the person in whose name the stock might stand on such books. In 1881, Baum transferred said certificate for value to Peder Sather, who, on September 13, 1886, [212]demanded of the bank the appropriate entry of the transfer on its books. Baum then being in failing circumsiiances, and indebted to the bank in a sum greatly exceeding the value of the stock, it refused compliance with Sather’s demand. Soon afterward Sather died, and in April, 1888, said shares and certificate were by decree of court distributed to the plaintiffs in trust under the will of said deceased. Meanwhile, on March 10, 1887, the bank sold and transferred to the firm of Greenebaum & Co., ata large discount, the indebtedness held by it against said Baum. On July 3, 1888, plaintiffs produced to the bank the proofs of their ownership of the stock as trustees under Sather’s will and demanded registry of the transfer on the books, which the bank refused unless plaintiffs would pay the balance of its claims against Baum above the amount received from Greenebaum & Co. The stock was then worth two hundred dollars per share, and dividends had been declared and had become due thereon since September 13, 1886, amounting to eleven hundred and ten dollars. Plaintiffs brought this action for the conversion of the stock and such dividends, laying their damages at thirteen thousand four hundred and seventy dollars. Afterward, and before the trial, the value of the stock rose to two hundred and eighty-one dollars per share. These facts, among others, being found by the court, or admitted by the pleadings, the court held that there had been no conversion by defendant, and rendered judgment in its favor.

It appears from the opinion of the learned judge of the court below, accompanying the findings, that the judgment went upon the ground that from the nature of corporate shares there can be no actual conversion thereof; that the fiction of a constructive conversion of such property can be indulged only when, under the rules of law, the owner is entitled to consider himself deprived of the same; and that here the rules of law forbid such result, since the effect would be to vest the bank with the property in its own shares, contrary to