Opinion
Appeal from the District Court, Fifteenth Judicial District, City and County of San Francisco.
This was a proceeding to obtain a peremptory writ of mandate against the defendant, as Secretary of the Kern River Gold and Silver Mining Company, commanding him to transfer to J. R. Mead, the relator, upon the books of the company, thirty shares of the capital stock thereof. On the trial it appeared by the evidence that on the 13th of June, 1865, the thirty shares of stock in question were owned by one A. Staples; and that on that day he assigned the same and delivered the certificate thereof to Messrs. Goddard & Co. in pledge and as collateral security for certain advances and credits given him by said Goddard & Co., and amounting in the aggregate to thirty-seven thousand dollars. That Goddard & Co. held the stock in this manner until the 27th of December, 1866, when they assigned said indebtedness of Staples to them (of thirty-seven thousand dollars) to A. M. Ellsworth, S. R. Ellsworth, and A. DeLand, and also assigned and delivered to said parties therewith and at the same time said thirty shares of stock held by them as collateral to secure the payment of such indebtedness; all of which was lone with the knowledge and consent of Staples. On the following day, Staples, for the consideration of twenty-five hundred dollars (which sum was paid to him by them), sold to said Ellsworth and DeLand all of his right, title, and interest in said thirty shares of stock, and his right to redeem the same from said pledge. Subsequently, and on the 28th of February, 1867, a writ of execution was issued out of a Justice's Court, and levied upon all right, title, and interest of said Staples in said thirty shares of stock; and on the 6th of March, 1867, such right, title, and interest of said Staples in said stock was offered for sale at public auction, and J. R. Mead, the relator, became the purchaser thereof for the sum of seven dollars and fifty cents, and he obtained a certificate of sale therefor. That at the time of and before said sale, said Mead, the purchaser, had notice of all the foregoing facts relating to the history of the transfers and sale of said stock by said Staples and Goddard & Co. That subsequently said Mead presented a certificate of sale of said interest of Staples in said stock to the defendant, and demanded a transfer of the said thirty shares of stock to him upon the books of said company, and the defendant refused to make the transfer.
The Court below issued the writ as prayed, from which the respondent appealed.
COUNSEL:
The Court erred in granting a peremptory writ, because the evidence shows that said Staples had no interest in the stock at the time of the levy, and relator took no higher right than Staples, the judgment-debtor, had at the time of the attempted levy and sale.
It is well taken upon principle, because it is a rule of almost universal application, that a purchaser of the legal title to property, with notice of an equitable title thereto outstanding in a third party, is bound by such equity, and takes the legal title subject thereto; in other words, that such purchaser simply steps into the shoes of the seller or vendor, and acquires no higher or greater right than the seller or vendor had; and if such equitable title could have been enforced against the seller or vendor, it could as against such purchaser. And we see no reason why this principle is not applicable to the case at bar. The relator became the purchaser with notice of all the facts, and was not thereforea bona fide purchaser for a valuable consideration. (Weston v. B. R. and A. W. and M. Co., 6 Cal. 425; U. S. v. Cutts, 1 Sumner, 133; U. S. v. Vaughn, 3 Bin. 394; Sargent v. Express Marine R. R. Co., 9 Pick. 201; Bank of Utica v. Smalley, 2 Cow. 770.)
Keeney & Churchill, for Appellant.
Jarboe & Harrison, for Respondent.
JUDGES: Sanderson, J. Mr. Justice Sawyer and Mr. Justice Rhodes expressed no opinion.
OPINION
SANDERSON, Judge
Upon the merits, this case is not distinguishable from Weston v. The Bear River and Auburn Water and Mining Co., 5 Cal. 186; the same case on a second appeal, 6 Cal. 425; and Naglee v. Pacific Wharf Co., 20 Cal. 529. In those cases the statute in relation to the transfer of stock in incorporated companies (Stats. 1853, Sec. 9, p. 87) has received a construction from which, upon the principle of stare decisis, we cannot now depart.
It was held in those cases, that transfers of stock which have not been entered on the books of the company, as provided in the statute, are nevertheless valid as against all the world, except subsequent purchasers in good faith, without notice. The case shows that the relator purchased, with notice that the stock in question had been previously hypothecated, and afterwards sold by the defendant in the execution, and that at the time of the levy he had no property whatever in the stock.
Upon the authority of the cases to which we have referred, the order of the Court below must be reversed.
So ordered.