Mahaney v. Walsh

WARD, J.

The transfer of the 75 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 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 , 26 N. Y. Supp. 379 , affirmed 145 N. Y. 600 , 40 N. E. 163 ; Schoonmaker v. Vervalen, 9 Hun, 138 ; Beardsley v. Beardsley, 138 U. S. 262 , 11 Sup. Ct. 318. 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 75 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 75 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 owners. The action of trover is founded on the right of property and possession, and any act of the party other than the owner which militates against this conjoint right in law is a conversion. It is not necessary for a manual talcing 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 rights? If he does, that is a conversion.” 4 Am. & Eng. Enc. Law, p. 108.

This definition seems to be sustained by authorities. Boyce v. Brockway, 31 N. Y. 490 ; Caywood v. Van Ness, supra. In the *972 Caywood Case, the defendant, after assigning a bond and mortgage,, obtains possession of them, and assigns them to another person before the first assignment is 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. Board, 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. 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. (Conn.) 23 Atl. 91 . Observe that the only conversion in this case was the assumption of ownership of the ice by the defendant. “Any property of a personal nature is the subject of conversion though it has no value except to-the owner.” Cooley, 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. Elliot, 54 Cal. 341 ; Budd v. Railway Co., 12 Or. 271 , 7 Pac. 99 .

In the case at bar distinct certificates had not been issued for any of the 216 shares embraced in the original certificate, nor had any certificate been issued to Mary Mahaney, or her successor in interest, for the 75 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 75 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 75 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 75 shares-upon the books. In making this transfer of the whole stock, the defendant wrongfully exercised an active dominion over the 75 shares, claimed title to it, and deprived the executor of the substantial benefit and use of those shares. We are of opinion, both *973 upon principle and authority, that this was such a conversion of the stock as justifies this action, and entitled the plaintiff to recover. Cook, Stock, Stockh. & Corp. Law (3d Ed.) § 576, and cases cited.

As we have seen, John C. Mahaney, the executor, in his individual name assigned the 75 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, 48 N. Y. 585 ; In re 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 concur.