American Press Ass'n v. Brantingham

The. defendants Brantingham and Thaxter each claimed to be individually entitled to 400 shares of the capital stock of the plaintiff corporation. Thereupon this action of interpleader was brought. Each of the defendants answered the complaint setting up her asserted right to the shares. The cause was tried; the plaintiff discharged from liability and on the issues joined between the defend*436ants' a decision was rendered favorable to the claim of Mrs. Brantingham. By the terms of the judgment entered on that decision, Mrs. Brantingham is declared to be the owner, and entitled to the possession of the shares and to the amount of certain dividends and accrued interest thereon. The judgment also, provides that the plaintiff be discharged of and from all claims of the defendants or either of them. The defendant Thaxter appeals from the whole of the judgment according to the text of her notice of appeal; but she is precluded from attacking it so far as the plaintiff is concerned, for she expressly stipulated on the trial that the relief prayed for in the complaint should be. granted.

The 400 shares involved in this action are represented by two certificates, one No. 1087 for 250, and the other No. 1119 for 150 shares. They are part of 1,510 shares which originally belonged to one Joseph Thorne. On May 5, 1896, all of those 1,510 shares were transferred on the books of the plaintiff to Eunice E. Huff. On the trial of the present action it was shown that 704 of the 1,510 shares, including those represented by certificates 1087 and 1119, remained untransferred from Mrs. Huff and still standing, in her name on such books.

On October Í2,1897, an action was begun in the Supreme Court by May Thorne Brantingham against Eunice E. Huff individually and as executrix, and against other persons, in which action Mrs.Brantingham claimed to be entitled to the shares and to other property. Mrs. Huff answered in that action and the issues joined therein were tried at Special Term in the second judicial -district in May, 1900. The cause was submitted on the pleadings and proofs, and on the 22d day of Augiist, 1900, a decision was rendered by the court in favor of Mrs. Brantingham. An interlocutory judgment was entered appointing a referee to take proof and report as to property acquired by Eunice E. Huff from and transferred to her voluntarily and without consideration by Joseph Thorne in his lifetime, and also as to what disposition, if any, had been made by Mrs. Huff Of such property. The interlocutory judgment also contained " an injunction prohibiting Mrs. Huff from transferring, disposing of or. interfering with such property. The referee made his report, dated February 8, 1900, in which he .found, among other'things, that there remained standing in the name of Mrs. Huff, untrans*437ferred, on the books of the company, 704 of the 1,510 shares of stock. On the 27th day of March, 1901, final judgment was entered against Mrs. Huff, by which she was required forthwith, upon service of a copy of the decree on her attorneys, to transfer, assign and set over to Mrs. Brantingham the 704 shares, and to deliver to her the certificate or certificates representing the same.

As we have seen, those 704 shares still stood in the name of Mrs. Huff wheh the present action was on trial. Certificate No. 1087 bears date September 19, 1899. A power of attorney and assignment in the usual form indorsed thereon is signed Eunice E. Huff and bears date August 3, 1900. The blank spaces therein are unfilled. Certificate No. 1119 bears date June 6,1900. A power of attorney and assignment in the same form, with blank spaces, is indorsed thereon and is signed Eunice E. Huff, but is without date. Both powers purport to have been executed in the presence of the same subscribing witness. The two certificates had at some time been delivered to Mrs. Thaxter, for she deposited them with the clerk of the court, pursuant to the requirement of an order duly made by the court. When they actually came into her possession, whether before or after the interlocutory or final decree in Mrs. Brantingham’s suit against her, does not appear.

One of the contentions of the defendant Brantingham is that Mrs. Thaxter, having taken the assignment of the shares pending the suit against Mrs. Huff, is bound by the decree in which it was adjudged that Mrs. Brantingham was the real owner, but that contention cannot prevail. It was clearly stated by Judge Earl in Leitch v. Wells (48 N. Y. 585, 613) that the doctrine in equity of notice by lis pendens does not apply to shares of corporate stock, and in Holbrook v. New Jersey Zinc Co. (57 N. Y. 632) the remarks of Judge Earl in that regard are approved by the whole court. In. this case, moreover, there is not sufficient to show that Mrs. Thaxter became the assignee of the shares pending suit. She may have received them after the decree was entered. On the other hand, her claim to protection as the holder of negotiable instruments, with all the presumptions attaching thereto, is .also inadmissible.. Stock certificates are not such instruments, although in the hands of holders for value and without notice they are invested with some *438of the characteristics of negotiability. The effort has been made frequently to induce the courts to put such certificates on the footing of negotiable instruments, and there are dicta of judges which show an inclination to go to that extent. It is to be noticed, however, that in such cases the rights of dona fide holders were recognized and enforced, and the facts showing that such holders parted with value and acted in good faith in taking the certificates were affirmatively shown, as in Fifth Avenue Bank v. Forty-second Street & G. S. F. R. R. Co. (137 N. Y. 231). The law on the subject as it is now settled in the State of New York is fully and clearly stated by Andrews, Ch. J., in Knox v. Eden Musee Co. (148 N. Y. 455). When in this case Mrs. Brañtingham’s ownership as against Mrs. Huff was proved, at least the obligation was imposed upon Mrs. Thaxter to show that she had acquired the certificates in good faith. The principle announced in Weaver v. Barden (49 N. Y. 286), that a purchaser of shares of corporate stock must show as against the claim of- the true owner that he took without notice and for a valuable consideration actually paid, lias not been overruled.

The foregoing considerations lead to an affirmance of this judgment unless prejudicial error was committed on the trial in rulings of the court on matters of evidence. Counsel for Mrs. Thaxter argues now that such error appears in the record. Mrs. Brantingham’s ownership of the shares was proven by the judgment in her action against Mrs. Huff. The introduction in evidence' of the judgment roll in that action' was objected to. The court admitted it as against “ the defendant Huff.”- Mrs. Huff is not a party to this, the present, action. There was nothing misleading in the statements or rulings of the trial judge. It was not announced that ulterior effect would not be given to the evidence. It was received to define the status of Mrs. Huff, the assignor of Mrs. Thaxter. Had Mrs. Huff been a defendant in this case, it might be urged with some plausibility that the court had limited the effect of the evidence to one defendant and thus ruled that the other was in no way to be bound by it. We cannot infer from the declaration of the judge that the defendant Thaxter, in consequence of it, refrained from showing that she was a purchaser in good faith and for value paid. Indeed the whole record shows that her reliance *439was upon the proposition that it was incumbent upon Mrs. Brantingham to show that she (Mrs. -Thaxter) was not a purchaser in good faith. ■

The judgment should be affirmed, with costs.

. Ingraham, Hatch and Laughlin, JJ., concurred; Van Brunt, P. J., dissented.

Judgment affirmed, with costs.