Summary
recognizing cause of action for conversion where plaintiff never received stock certificate
Summary of this case from Phansalkar v. Andersen Weinroth Co.Opinion
April Term, 1897.
Henry M. Davis, for the plaintiff.
Richard Crowley, for the defendant.
The transfer of the seventy-five shares of stock from the defendant to Mary Mahaney, the testatrix, conferred upon her the legal title to those shares and no transfer of the stock upon the books of the corporation was necessary as between the defendant and her. But as between Mary Mahaney and the corporation, in order to entitle her to receive dividends and enjoy the benefits of her stock, the proper transfer should have been made upon the books of the corporation. Until that was done the defendant was the nominal owner of the stock and treated as the trustee of the stock for Mary Mahaney. ( Johnson v. Underhill, 52 N.Y. 203; Bank of Utica v. Smalley, 2 Cow. 770; Leitch v. Wells, 48 N.Y. 585.)
A delivery of the stock to Mary Mahaney was not necessary to perfect her title to it. ( Mitchell v. West, 55 N.Y. 107; Caywood v. Van Ness, 74 Hun, 28; affd., 145 N.Y. 600; Schoonmaker v. Vervalen, 9 Hun, 138; Beardsley v. Beardsley, 138 U.S. 262.)
But if delivery were necessary the plaintiff furnished proof that should have been submitted to the jury upon that subject.
Two questions remain to be considered:
First, was there a conversion by the defendant of the seventy-five shares of stock?
Second, did the executor, in executing the assignment of the cause of action to the plaintiff in his individual name, transfer the seventy-five shares, and the claim for their conversion, to the plaintiff?
Conversion has been defined as follows: "Conversion consists as a tort either in the appropriation of the personal property of another to the party's own use and benefit, * * * or in exercising dominion over it in exclusion and defiance of the rights of the owner or lawful possessor * * * under a claim and title inconsistent with the owner's. The action of trover is founded on the right of property and possession, and any act of a party, other than the owner, which militates against this conjoint right in law, is a conversion. It is not necessary for a manual taking to make conversion, nor that the party has applied it to his own use. The question is, does he exercise dominion over it in exclusion or in defiance of the owner's right. If he does, that is conversion." (4 Am. Eng. Ency. of Law, 108.)
This definition seems to be sustained by authorities. ( Boyce v. Brockway, 31 N.Y. 490; Caywood v. Van Ness, supra.)
In the Caywood case the defendant, after assigning a bond and mortgage, obtained possession of them and assigned them to another person before the first assignment was recorded, and it was held that he was guilty of conversion.
Canceling a certificate of membership in a board of trade is a conversion of such certificate. ( Olds v. Chicago Open Board of Trade, 33 Ill. App. 445.)
The courts in several of the States have held that a sale of the chattel-mortgaged property by the mortgagor in possession, in denial of the mortgagee's rights, was a conversion. ( White v. Phelps, 12 N.H. 382; Millar v. Allen, 10 R.I. 49; Ashmead v. Kellogg, 23 Conn. 70; Coles v. Clark, 3 Cush. [Mass.] 399. And see Anderson v. Nicholas, 28 N.Y. 600.)
A curious case arose in Connecticut in an action of trover where it appeared that in August plaintiff bought of defendant a large amount of ice in the latter's ice house; that there was no agreement as to when the ice should be removed; that in December, part of the ice still remaining, defendant wrote that it was about time to cut another crop, and asked when plaintiff could give up the ice house; the plaintiff told the defendant that he could place the new ice above the plaintiff's ice; that defendant covered plaintiff's ice with several feet of new ice; that a dispute arose, and plaintiff made a formal demand for its ice, which was still covered; that defendant claimed title and refused to deliver or agree to deliver. Held, a conversion by defendant. ( Hartford Ice Co. v. Greenwoods Co., 23 Atl. Rep. [Conn.] 91.)
Observe that the only conversion in this case was the assumption of ownership of the ice by the defendant.
"Anything which is the subject of property and is of a personal nature is the subject of conversion, even though it have no value except to the owner." (Cooley on Torts, 447.)
Not only tangible property, but all property of a personal nature which can be converted. Trover lies for paper representative of value, choses in action and corporate stock. ( McAllister v. Kuhn, 96 U.S. 87; Ayres v. French, 41 Conn. 151; Payne v. Elliott, 54 Cal. 341; Budd v. Multnomah St. R. Co., 12 Oreg. 271.)
In the case at bar distinct certificates had not been issued for any of the two hundred and sixteen shares embraced in the original certificate, nor had any certificate been issued to Mary Mahaney or her successor in interest for the seventy-five shares. The whole number of shares remained in the name of the defendant upon the books of the corporation. He would, therefore, be entitled, as between the corporation and himself, to the dividends upon the stock, and such dividends would not be paid to his assignee on the seventy-five shares of stock until her right as a stockholder appeared upon the books of the corporation. Before this could be done, after the death of Mrs. Mahaney, and, perhaps, in anticipation that her executor might procure the necessary transfer on the corporation books, the defendant assigned the whole stock embraced in the certificate, including the seventy-five shares, to an officer of the corporation so that it would be difficult, if not impossible, for the executor to procure any transfer of the seventy-five shares upon the books. In making this transfer of the whole stock the defendant wrongfully exercised an active dominion over the seventy-five shares, claimed title to them, and deprived the executor of the substantial benefit and use of those shares.
We are of opinion that, both upon principle and authority, this was such a conversion of the stock as justifies this action and entitles the plaintiff to recover. (Cook Stock Stockh. [3d ed.] § 576, and cases cited.)
As we have seen, John C. Mahaney, the executor, in his individual name, assigned the seventy-five shares of the stock to the plaintiff. The respondent claims that this assignment conferred no title to the stock upon the plaintiff, as it was not made by Mahaney as executor.
John C. Mahaney was the legal owner of the stock in controversy (though he took it as executor), and he could, by an assignment in his individual name, transfer the stock to the plaintiff. ( Patchen v. Wilson, 4 Hill, 57; Nichols v. Smith, 7 Hun, 580; Merritt v. Seaman, 6 N.Y. 168; Leitch v. Wells, supra; Matter of Callister, 88 Hun, 87; 34 N.Y. Supp. 628, and cases there cited.)
And the assignment of the stock carried with it a transfer of the cause of action for its conversion. ( Birdsall v. Davenport, 43 Hun, 552.)
In the Leitch case a husband who held bank stock as an executor appears to have transferred it in his own name to his wife and she transferred the stock to the defendant. It was held that these transfers conveyed a good title in the stock to the defendant.
In the Callister case a party had given a check as administratrix, and it was sought to bind the estate she represented by that check. It was held that it was the check of the administratrix individually, and did not bind the estate.
In the case at bar had Mahaney assumed to transfer the stock as executor, it would still have been regarded as his individual act. The controversy here is not between the estate and the executor, but it is between the individual holding the stock and other parties.
The point we have last considered was not raised upon the trial, but as a new trial must be ordered in this case we have deemed it proper to consider this question in connection with the others.
The plaintiff's exceptions should be sustained and a new trial ordered, with costs to abide event.
All concurred.
Plaintiff's exceptions sustained and a new trial ordered, with costs to abide the event.