Opinion
No. 72-152
Decided February 21, 1973.
Action to compel corporation's transfer agent to register the transfer of certain of the corporation's stock certificates to plaintiff. From judgment dismissing action, plaintiff appealed.
Affirmed
1. CORPORATIONS — Register — Transfer of Stock — Required — Bona Fide Purchaser — No Duty — Plaintiff Informed — Stock — Not Valid — Before Delivery. In action to require transfer agent to register transfer of certain corporate stock to plaintiff, where evidence establishes that plaintiff had been informed that the certificates were not validly issued before he accepted delivery and that he had not acquired them for value and in good faith, plaintiff was not a bona fide purchaser; and thus statute that establishes duty of transfer agent to register transfer of stock to bona fide purchaser did not operate to establish such duty as regards transfer of stock to plaintiff.
2. Stock Cancelled — Transfer — Not — Rightful — No Duty — Transfer Agent — Register Transfer. In action to require transfer agent to register transfer of certain corporate stock to plaintiff, where undisputed evidence established that stock certificates were no longer valid, having been cancelled on the books of the company, the transfer of such cancelled or invalidated certificates does not constitute a rightful transfer; and thus statute which establishes duty of transfer agent to register a rightful transfer did not operate to establish such duty as regards transfer of stock to plaintiff.
Appeal from the District Court of Douglas County, Honorable Robert F. Kelly, Judge.
Costello, Kofoed O'Donnell, Eugene F. Costello, David L. Kofoed, Declan J. O'Donnell, William R. Downhan, for plaintiff-appellant.
Rothgerber, Appel Powers, Donald L. Giacomini, for defendant-appellee.
Division II.
Folsom brought this action to compel Security National Bank, the transfer agent for Beaver Mesa Exploration Co., to register the transfer of stock certificates in that corporation to him. The Bank had refused to do so on the ground that the certificates were not valid, having been cancelled on the books of the corporation. The court, after a trial without a jury, entered judgment dismissing the action. Folsom appeals. We affirm.
The duty of an issuer (and its transfer agent) to register the transfer of its securities is set forth in C.R.S. 1963, 155-8-401, which provides, as pertinent here:
"(1) Where a security in registered form is presented to the issuer with a request to register transfer, the issuer is under a duty to register the transfer as requested if:
. . . .
(e) The transfer is in fact rightful or is to a bona fide purchaser."
The trial court, after making extensive findings, concluded that plaintiff had not satisfied the above conditions of the statute and that the Bank was under no duty to register the transfer.
[1] Folsom contends that the transfer was in fact rightful and that even if it were correctly determined to be wrongful he was still entitled to have the transfer registered because he was a bona fide purchaser. The Bank concedes that under the statute Folsom would be entitled to the registration of the transfer if the transfer were rightful or if Folsom were a bona fide purchaser. See Kaiser-Frazer Corp. v. Otis Co., 195 F.2d 838. However, it asserts that the transfer was wrongful and that Folsom was not a bona fide purchaser.
C.R.S. 1963, 155-8-302 states:
"A 'bona fide purchaser' is a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or of one in registered form issued to him or indorsed to him in blank."
The evidence establishes that Folsom had been informed that the certificates were not validly issued before he accepted delivery and that he had not acquired them for value and in good faith. Therefore, Folsom was not a bona fide purchaser. These findings, being supported by the evidence, will not be disturbed on review. Linley v. Hanson, 173 Colo. 239, 477 P.2d 453; Thiele v. State, 30 Colo. App. 491, 495 P.2d 558.
[2] The Bank's evidence, which was undisputed, established that the certificates were no longer valid, having been cancelled on the books of the company. No evidence was offered by Folsom to contradict the correctness of the company records or to establish that the certificates were in fact valid. Transfer of cancelled, invalidated certificates does not constitute a rightful transfer. Since the transfer was not in fact rightful and Folsom was not a bona fide purchaser, the Bank was justified in refusing to register the transfer.
The above discussion being dispositive of Folsom's right to have the transfer registered, we need not discuss his further contention that refusal to register a rightful transfer would constitute a taking of property without due process.
Judgment affirmed.
JUDGE ENOCH and JUDGE SMITH concur.