Opinion
No. 23933.
June 11, 1935. Rehearing Denied July 30, 1935. Application for Leave to File Second Petition for Rehearing Denied January 21, 1936.
(Syllabus.)
1. Corporations — Shares of Stock in Domestic Corporation Transferable by Indorsement and Delivery of Certificate.
Shares of stock in a domestic corporation are personal property, and may be transferred by indorsement and delivery of the certificate.
2. Same — Bona Fide Purchaser of Shares From Undisclosed Trustee.
A bona fide purchaser of shares of stock in a domestic corporation who, for a valuable consideration, purchases from an undisclosed trustee thereof without knowledge, actual or constructive, of the trust, is protected in his purchase.
3. Same — Surrender by Bona Fide Purchaser of Certificates of Shares for Cancellation — Duty of Corporation to Issue New Shares.
Where there has been a sale of certificates of stock in a domestic corporation to a bona fide purchaser, for value by an undisclosed trustee thereof, the corporation, upon surrender of the certificates of shares, properly assigned, for cancellation, is required to cancel the same and to issue new shares to the purchaser thereof.
4. Same — Court not Authorized to Direct Corporation to Issue Shares in Amount Violating Constitutional Provision.
A court is without authority to direct a corporation to issue shares of stock of the corporation in excess of those authorized to be issued under the provisions of section 39, art. 9, of the Constitution of Oklahoma, imposing restrictions upon the issuance of corporate stock.
5. Same — Qualifications of Stockholders Voting Shares of Stock.
Under the provisions of section 5339, C. O. S. 1921, shares of stock may be voted as shown by the books of the corporation at least ten days prior to the election or vote taken. A person holding certificates of shares of stock in trust for another is not authorized to vote those shares of stock until ten days after they have been transferred on the books of the corporation, unless he holds a proxy from the owner thereof.
6. Same — Restrictions on Corporation Purchasing or Holding Shares of Its Own Stock.
Under the provisions of section 5320, C. O. S. 1921, a corporation may not purchase or hold shares of its own stock without the unanimous vote of the stockholders thereof, unless the purchase is made from the surplus profits of the corporation.
7. Same — Restrictions on Officers Purchasing and Holding Stock on Responsibility of Corporation.
Neither the secretary, treasurer, nor general manager of a corporation has authority to purchase or hold shares of stock of that corporation and thereby make the corporation responsible therefor without the unanimous consent of the stockholders, unless the purchase thereof was made from the surplus profits of the corporation.
8. Same — Transfer of Stock to Secretary-Treasurer of Corporation to Be Voted by Him Held not Transfer to Corporation in Trust so as to Hold it Responsible for Misappropriation of Stock by Him.
Where the president and vice president of a corporation sign the assignment and power of attorney on the backs of the certificates of shares held by them and deliver those certificates so signed to the secretary-treasurer of the corporation, who, at the same time, is general manager of the corporation, to be voted by him, without the unanimous consent of the stockholders of the corporation, they cannot thereafter contend that that was a transfer of the stock to the corporation in trust for them and thereby hold the corporation responsible for the misappropriation of the stock by the secretary-treasurer and general manager.
9. Same.
Where the president and vice president of a corporation own stock in the corporation, and, desiring to conceal from the public their ownership thereof, sign the assignments and powers of attorney on the backs thereof and deliver the certificates of shares to the secretary treasurer and general manager of the corporation to be held for re-issuance to them with power to vote the same at any vote or election of the corporation, the corporation, in the absence of the unanimous consent of the stockholders to such an arrangement, is not liable for the damage sustained by the misappropriation of the stock by the secretary-treasurer and general manager through the sale by him of such stock to an innocent third person for a valuable consideration.
Appeal from District Court, Oklahoma County; Lucius Babcock, Judge.
Action by S.P. Render against the Capitol Hill Undertaking Company. Judgment for defendant, and plaintiff appeals. Affirmed.
John R. Guyer, for plaintiff in error.
Billups Billups, for defendant in error.
This action was commenced on January 2, 1929, in the district court of Oklahoma county by S.P. Render, as plaintiff, against the Capitol Hill Undertaking Company, a corporation, as defendant. The plaintiff sought to compel the defendant corporation to recognize him as the owner of eight shares of the capital stock in said corporation and to issue and deliver to him a certificate representing said shares.
It appears from the record that in 1923, the plaintiff, S.P. Render, and his wife, J.T. Render, were the owners of 46 shares of stock in the defendant corporation, of which 23 belonged to the plaintiff and 23 belonged to his wife. On or about the 1st day of January, 1924, plaintiff, acting for himself in connection with his own stock and for his wife in connection with her stock, executed an assignment in blank and delivered the certificates of stock to one C.P. Beauchamp, who was then the secretary and treasurer of the defendant corporation as well as its general manager.
Thereafter it appears that Mr. Beauchamp inserted his own name in the assignment and, assuming to own the stock, surrendered the same and caused new certificates to be issued to himself. Thereafter, by assignment, transfer, and reissue, this stock became the property of J.M. Draper and Allen Street.
Between the time that plaintiff and his wife assigned their stock in blank and delivered the same and the time this action was brought, plaintiff acquired a certificate of stock through Beauchamp showing him to be the owner of 15 shares in the defendant corporation.
About the time this action was commenced in the district court of Oklahoma county, a companion case was commenced by the wife of plaintiff to require the defendant corporation to her a certificate showing her to be the owner of 23 shares of stock in the defendant corporation. The two actions were based upon the same theory and involved the same transaction; the plaintiff having handled his wife's stock as her agent in the same manner and at the same time that he handled his own stock.
The case between J.T. Render and the Capitol Hill Undertaking Company was tried in the district court of Oklahoma county and resulted in a judgment in favor of the plaintiff in that action. The case was then appealed to this court and the decision of this court upon the questions therein involved is reported under the style of Capitol Hill Undertaking Co. v. Render, 149 Okla. 133, 299 P. 854. The opinion as prepared for this court by Mr. Justice Andrews carefully reviews the facts in connection with the transaction and announces the rules of law applicable thereto. This court decided that the case should be reversed and remanded, with directions to dismiss the action. After the decision of this court in the case of Capitol Hill Undertaking Co. v. Render, supra, this case was tried in the district court of Oklahoma county and resulted in a judgment in favor of the defendant, Capitol Hill Undertaking Company. The plaintiff brings the case to this court on appeal, appearing herein as plaintiff in error.
The essential facts as disclosed by the record now before us are the same as the facts presented by the record in the case of Capitol Hill Undertaking Co. v. Render, supra. There are some slight variations in the testimony adduced by the plaintiff which are immaterial as far as the result of the litigation is concerned. Some additional evidence was produced by the defendant which was not available at the time the reported case was tried. There is this difference in the two cases which is favorable to the defendant herein: The former case was decided by the trial court in favor of the plaintiff therein and Was decided by this court adversely to the plaintiff, notwithstanding the presumption in favor of the correctness of the finding of the trial court upon all disputed questions of fact, whereas in the case at bar, the decision of the trial court, being favorable to the defendant, carries with it a presumption of the correctness of the finding of the trial court upon all disputed questions of fact, which resumption operates in this case in favor of the defendant.
We have carefully reviewed the record herein and examined the briefs presented and find nothing that renders the rules of law recognized and announced by this court in the case of Capitol Hill Undertaking Co. v. Render, supra, inapplicable. The facts as therein stated being essentially the same as the facts in the case at bar, except for the variations already mentioned, we deem it unnecessary to incumber this opinion by again reviewing those facts or supplementing the same.
The rules of law which governed our decision in the former case are decisive of the issues herein involved, and the syllabus of that case is hereby adopted as the syllabus of this case. The judgment of the trial court is affirmed.
McNEILL, C. J., OSBORN, V. C. J., and BAYLESS and CORN, JJ., concur.