Opinion
October 27, 1964 —
November 24, 1964.
APPEAL from a judgment of the circuit court for Marquette county: ROBERT H. GOLLMAR, Circuit Judge. Affirmed.
For the appellant there was a brief by Rogers Owens of Portage, and oral argument by Harlan B. Rogers.
For the respondents there was a brief by Wheeler, Van Sickle, Day Goodman of Madison, for the Adams-Marquette Electric Co-operative, Inc., and Callahan Arnold of Columbus, for Walter G. Dahlke, Harvey M. Dahlke, Irene I. Elliott, and the Westfield Milling Electric Light Company, and oral argument by Floyd E. Wheeler and Carroll B. Callahan.
Plaintiff commenced this action on March 18, 1963, pursuant to sec. 183.16, Stats., to require the issuance to him of a certificate for 42 shares of the common stock of the Westfield Milling Electric Light Company (hereafter called Westfield). The certificate which is sought is to be in place of Westfield certificate No. 52 for 42 shares, which was allegedly issued to the plaintiff on March 28, 1921, and since then has been lost or destroyed.
Motions for summary judgment were filed on July 29, 1963, and affidavits and briefs were filed at that time. The facts are essentially agreed on; it is the inferences that can be drawn from these facts that are disputed.
The affidavits show that Westfield was organized in 1905. In 1917, there were 300 shares of common stock issued and outstanding, and in that year, the appellant's father, Gustav E. Dahlke (sometimes spelled "Gustave" in this record) acquired 292 of such shares. At that time, he and his wife, Alvina Dahlke, were the parents of six minor children:
Walter, born November 25, 1898 Harvey, born July 16, 1900 Irene, born February 16, 1902 Verna, born August 27, 1903 Howard, born July 7, 1905 Wayne, born September 19, 1907Gustav and Alvina Dahlke later adopted a grandchild, Drexel Journey, who also is a defendant in this action.
The record shows that Gustav Dahlke, upon acquisition of the majority shares, became president and general manager of the company and remained in that capacity until his death in 1949. During that period, he made numerous gifts of stock to his children, and it is one of these transactions which is in dispute.
In 1917, when Gustav purchased the 292 shares of Westfield stock, he made a gift of 10 shares (certificate No. 39) to his oldest son, Walter, and five shares (certificate No. 40) to his son, Harvey. After their gifts, he held the following certificates totaling 277 shares:
Certificate No. 41 150 shares 42 50 43 25 44 25 45 10 46 5 47 4 48 8 --- 277 sharesOn September 20, 1919, Gustav purchased the remaining outstanding eight shares of Westfield stock and gave plaintiff these eight shares by issuing to him certificate No. 49.
As of March 27, 1921, the ownership of the 300 shares of Westfield stock was as follows:
Gustav E. Dahlke 277 shares Walter G. Dahlke 10 Harvey M. Dahlke 5 Wayne D. Dahlke 8 --- 300 sharesThe disputed transfer was dated March 28, 1921. If appellant's version is correct, Gustav Dahlke made the following gifts on that day:
Certificate No. 50 10 shares to Harvey M. Dahlke 51 15 shares to Howard G. Dahlke 52 42 shares to Wayne D. Dahlke 53 10 shares to Irene I. Elliott 54 10 shares to Verna L. Gilmore — 87 sharesThese certificates were apparently signed by Harvey M. Dahlke, secretary, and Gustav E. Dahlke, president. Some of these certificates have been surrendered; some are still outstanding. If issued, certificates 50 through 54 would represent a total gift of 87 shares. However, it is clear that at the same time Gustav Dahlke relinquished the following certificates:
Certificate No. 42 50 shares 45 10 46 5 47 4 48 8 — 77 sharesUnder appellant's view, Gustav Dahlke gave away or attempted to give away 10 more shares than he surrendered to the corporation.
It is respondents' contention that on March 28, 1921, Gustav Dahlke gave away only 77 shares; under this view, there is no discrepancy in the amount he gave away as compared with the amount he returned to the company. According to the respondents' interpretation, the following gifts were made:
Certificate No. 50 10 shares to Harvey M. Dahlke 51 15 shares to Howard G. Dahlke 53 10 shares to Irene I. Elliott 54 10 shares to Verna L. Gilmore 55 5 shares to Walter G. Dahlke 56 12 shares to Wayne D. Dahlke 57 5 shares to Howard G. Dahlke 58 5 shares to Verna L. Gilmore 59 5 shares to Irene I. Elliott — 77 sharesUnder this view, it will be noticed, certificate No. 52 was never issued, even though the stub of certificate No. 52 in the stock record book shows that 42 shares were issued to Wayne D. Dahlke.
Appellant admits that certificates numbered 55 through 59 were issued for the amounts that respondents claim, but he urges that they were issued sometime after 1931.
In 1928, Gustav Dahlke wanted to issue some preferred stock. The public service commission agreed to authorize this if Gustav Dahlke would permanently reduce the outstanding common stock to 250 shares. On September 13, 1928, Gustav Dahlke caused to be canceled certificates numbered 43 and 44 standing in his name, which represented a total of 50 shares, so as to meet the public service commission's requirements. This left Gastav Dahlke with only certificate No. 41 (150 shares).
In 1941, another gift was made by Gustav Dahlke to each of his children. The record shows and it is undisputed that the following certificates were issued:
Certificate No. 60 10 shares to Wayne D. Dahlke 61 10 shares to Howard G. Dahlke 62 10 shares to Walter G. Dahlke 63 10 shares to Verna L. Gilmore 64 10 shares to Irene I. Elliott 65 10 shares to Harvey M. Dahlke — 60 sharesAt the time these gifts were made, the following statement, dated December 31, 1941, appeared in the minute book of the corporation:
"President Gustave E. Dahlke donated sixty shares of stock to the following stockholders: [10 shares to each of the six children]. This leaves a balance of 90 shares for Gustave E. Dahlke."
To make this gift, Gustav surrendered certificate No. 41, which represented 150 shares. Thereafter, the corporation issued to him certificate No. 66 for 90 shares in the name of "Gustave E. Dahlke or Alvina Dahlke."
Gustav Dahlke died in 1949, and his wife, Alvina Dahlke, died in 1959. Just prior to the instigation of this litigation, some of the Westfield shares were sold to the Adams-Marquette Electric Co-operative, Inc., and it was impleaded as a defendant.
On these facts, judgment was entered on March 16, 1964, denying plaintiff's motion for summary judgment and granting defendants' motion for summary judgment dismissing the complaint.
Statute Involved.
"Sec. 183.01 TRANSFER OF STOCK. (1) Title to a certificate and to the shares represented thereby can be transferred only:
"(a) By delivery of the certificate indorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby; or
"(b) By delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign, or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person.
"(2) The provisions of this section shall be applicable although the charter or articles of incorporation or code of regulations or by-laws of the corporation issuing the certificate and the certificate itself provide that the shares represented thereby shall be transferable only on the books of the corporation or shall be registered by a registrar or transferred by a transfer agent."
There are two basic grounds upon which we conclude that the trial court's analysis was correct. First, the history of both the distribution and the retention of the company's stock is more logically consistent with the respondents' position. Secondly, we are unable to locate proof of any donative intent to support the alleged gift.
History of Shareholdings.
At the beginning of this report, we have recited in some detail the historical aspects of the corporate shares starting in 1917. It is our conclusion that a study of such transfers and corresponding retentions of shares demonstrates that Gustav Dahlke did not make a gift of 42 shares to his son, Wayne. If the claimed gift of 42 shares to Wayne is ignored, the other shares transferred to the children on March 28, 1921, total 77 shares; this is the same number which the father, Gustav Dahlke, surrendered on that occasion. Any attempt to arrive at the same total of 77 shares by a process which would include Wayne's 42 shares proves to be tortured and unrealistic.
In 1928, at the time preferred stock was to be issued, Gustav Dahlke cancelled 50 shares of his then 200 shares in order to comply with the regulatory direction concerning a reduced number of outstanding shares. In 1941, Gustav Dahlke gave 10 shares to each of his six children, and this diminution of 60 shares left him with 90 shares, which latter figure is clearly reflected in the minutes of the corporation. It is this number of shares which he owned at the time of his death. All of the foregoing, in our opinion, is reasonably consistent with the trial court's finding that the alleged certificate to Wayne Dahlke for 42 shares was not intended to be issued.
In addition, the reports made to the public service commission and the nonpayment of dividends to Wayne on such claimed shares further suggest the want of a completed gift to the appellant.
Absence of Donative Intent.
"I would sooner trust the smallest slip of paper for truth, than the strongest and most retentive memory ever bestowed on mortal man." Miller v. Cotten (1848), 5 Ga. 341, 349.
The whereabouts of the certificate for the 42 shares claimed by the appellant is not known. There is no proof of an actual delivery of the certificate to Wayne Dahlke. The individuals who are parties to the instant lawsuit were teenagers or in their early twenties when the questioned stock transfer occurred in the 1920's. Understandably, their recollection of such events four decades ago is far from precise.
One fact is forcefully demonstrated by the record: Gustav Dahlke was absolutely in charge of the affairs of the corporation. He was also fully in control of the corporate records, including the stock certificate book. These facts tend to minimize the importance of the entry found on the stub of the stock record book that certain shares were issued to Wayne Dahlke. The appearance of such an entry in the record book does not reflect proof that the necessary donative intent existed. Having complete mastery of the company and its records, Gustav Dahlke could have directed that a certificate be prepared without actually intending to consummate any gift. He could have completed the gift, he chose to do so, but, on the other hand, he was equally free to tear up the certificate. It cannot be presumed that a gift was completed merely because a certificate was prepared in Wayne Dahlke's name.
If delivery had been made, there would have been a completed gift; in the absence of delivery, there was, at most, a contemplated gift. In this respect, the case at bar is comparable to the problem presented in Estate of Heller (1933), 210 Wis. 474, 246 N.W. 683, and is different from the circumstances in Zander v. Holly (1957), 1 Wis.2d 300, 84 N.W.2d 87. In the latter case, this court said, at page 316:
". . . there is a complete gift of corporate stock where the certificate has been transferred at the direction of the owner to the donee on the books of the corporation and a new certificate issued in the name of the donee or where a certificate is issued in the first instance in the name of the donee although the certificate so issued is retained by the donor and not delivered to the donee. These decisions obviate proof of delivery."
However, in the Zander Case, the corporate stock in question was that of the American Telephone Telegraph Company, and once the transfer was made on the corporate books, the donor had taken an irrevocable step to effectuate a transfer. The corporate books being beyond her control, she could not reserve a decision as Gustav Dahlke was unilaterally free to do in the instant case.
Although the appellant urges that it would be unconstitutional to classify differently the gift of stock of a small, closed corporation as opposed to that of a large, publicly owned corporation, we find no merit in such claim.
The appellant further argues that Gustav Dahlke's remaining shares became impressed with a lien in favor of his minor son. The appellant reasons that a trust arose because of the father-child relationship. Stein v. Sorer (1949), 255 Wis. 42, 38 N.W.2d 3. This argument presupposes that there was an intention to make a gift. Since we are persuaded that a donative intent has not been proved, it follows that the claimed trust never arose.
We consider that the analysis of the trial judge is consistent with the historical facts in this case and, further, that the plaintiff, Wayne Dahlke, failed to prove that Gustav Dahlke had a donative intent in connection with the claimed 42 shares. In any event, the findings of the trial court are not against the great weight and clear preponderance of the evidence.
By the Court. — Judgment affirmed.
The following opinion was filed February 2, 1965:
The appellant contends that summary judgment should not have been granted because of the presence of an issue of fact. It is true that the record reflects a factual disagreement as to whether certificates numbered 55 to 59 were prepared in 1921 or at a date not earlier than 1928, and our original opinion recognized this disputed matter.
Even if the certificates were in fact prepared on the dates urged by the appellant, such finding could not support a holding in favor of the appellant upon this record. On the other facts which stand uncontroverted and the applicable law, the respondents were entitled to summary judgment. The presence of an issue of fact which could not, in any event, be determinative of the question in dispute does not preclude the granting of a summary judgment. De Bonville v. Travelers Ins. Co. (1959), 7 Wis.2d 255, 260, 96 N.W.2d 509, 97 N.W.2d 392.
The motion for rehearing is denied, without costs.