tificate of stock to another, but the transfer was not entered on the books of the corporation, it was held the vendor was liable for the assessment, the court saying: "For the purpose of ascertaining those who are liable to it for the amount of the assessment, the corporation can look only to the list of stockholders as their names are registered upon its books. ''62 In an election case, the court said: "A transfer not entered on the books of the company has no validity outside the parties to such transfer, . . . confers on the transferee, as between himself and the company, no right beyond that of having the transfer properly entered. Until that is done or demanded to be done, the person in whose name the stock is entered. . . is the owner to all intents and purposes; and particularly for the purpose of an election." "63 MANNER OF TRANSFER As between the parties, that is the purchaser and the seller, it is sufficient for the seller to indorse his name on the back of the certificate accompanied by a delivery of the certificate, the same as in the sale of a promissory note. It is not prudent and safe, however, to do no more than write the name on the back; the indorsement should state that the vendor sells the shares and authorizes and directs their transfer on the books of the corporation, and be dated (which often is an important matter), and, where practical, contain 62 Visalia & T. R. Co. v. Hyde, 110 Cal. 632, 636, 52 Am. St. Rep. 136, 43 Pac. 10; People's Home Sav. Bank v. Stadtmuller, 150 Cal. 106, 88 Pac. 280. 63 People v. Robinson, 64 Cal. 373, 375, 1 Pac. 156. Distinguished on the "bona fide" clause of a statute now repealed. Smith v. San Francisco & N. P. Ry. Co., 115 Cal. 584, 594-5, 56 Am, St. Rep. 119, 35 L. R. A. 309, 47 Pac. 582. Following the doctrine of People v. Robinson (without citing), Krouse v. Durbrow, 127 Cal. 681, 60 Pac. 438. the name of the person to whom sold; inserting the name is practical in all cases except where stock is sold through a stock exchange. All stock certificates should have a printed assignment on the back thereof. Besides, the seller is vitally interested in having the transfer to the purchase entered at once on the books of the corporation in order to escape liability to assessments by the corporation, either to pay the stock up to par if it is not fully paid, or for the promotion of the business, or to pay the debts of the corporation. It is held in other states that the corporation may require proof of the genuineness of the signature, and, if in doubt as to the competency of the vendor to sell the stock, to demand legal proof of the fact, and require satisfactory evidence of the genuineness of the signature to a power of attorney to sell and transfer stock.64 Such will undoubtedly be declared the rule here when such a case is presented for decision. Anciently, it required the presence of the vendor, making request for the transfer, to warrant the corporation in making the transfer on its books. This trouble was avoided by inserting in the assignment a power of attorney authorizing a person named to make the transfer. It has long been the custom to leave the name of the attorney-in-fact to make the transfer blank, filling in the name of a clerk of the corporation when the certificate is presented for transfer. This is the usual method, and nothing less than this, the signature being duly witnessed, is accepted by stock exchanges in New York and the other eastern states as a "good delivery." A common provision in by-laws, or in the certificate itself (evidently copied from the usual forms and by-laws of corporations in the eastern states), is that 64 Cook on Corporations, sec. 385 et seq. transfers can "only be made on the books of the corporation personally, or by attorney, upon surrender of this certificate." This provision would not be valid so far, if it does to any extent, as it abridges the right of transfer provided in this section by "indorsement by signature" of the owner, etc. No good or practical reason exists for requiring the owner, or his attorney in fact, to personally enter the transfer; all that reasonably could or ought to be required is a genuine signature to the assignment. But a transfer by simple indorsement of the name of the vendor on the back of the certificate is not uncommon in this state, and probably this section and the decisions cited below65 make it sufficient in law, but the practice is loose and not to be commended. The mere possession of a certificate which was issued to a person, afterwards deceased, and unindorsed by the deceased, is not evidence of ownership; these facts are not sufficient evidence that the title passed to the possessor.66 Evidence that certificates (given by an employer to his confidential clerk for the purpose of qualifying him to act as a director in a corporation) were found after the death of the clerk in a private wallet belonging to the clerk in the corporation safe (to which the clerk was the only person who had access), duly indorsed by the clerk, is not sufficient to prove the redelivery of the certificates to the employer; they belong to the estate of the deceased clerk.67 65 Graves v. Mono Lake etc. Mining Co., 81 Cal. 303, 325, 22 Pac. 665, and cases cited. Brittan v. Oakland Bank of Savings, 124 Cal. 282-289, 71 Am. St. Rep. 58, 57 Pac. 84. 66 Nicholls v. Reid, 109 Cal. 630, 632, 42 Pac. 298, and cases cited. 67 O'Neil v. Donahue, 57 Cal. 226. BY AGENT, ATTORNEY IN FACT, ETC. A corporation is bound to know the authority of such special agent, and if the power of the agent to make the transfer is insufficient but the corporation notwithstanding makes the transfer, it is liable for a conversion of the stock. A power of attorney authorizing, among other things, "the exchange of old certificates of stock for new ones in lieu thereof," and concluding with general words giving power to manage and control all property, etc., and to execute all "instruments requisite or proper to effectuate all or any of the premises" is a special, and not a general power, and does not confer power to sell stock of the principal.68 A power of attorney giving authority "to sell, dispose of, transfer and deliver all or any of my interests in the capital stock of any association," etc., and containing the same general concluding clause as in the above case, does not authorize an attorney in fact to transfer the shares to his own name; nor was the indorsement of the certificate by the attorney in fact, without stating for whom he was acting, a sufficient indorsement, and, the corporation transferring the certificates notwithstanding, is liable for conversion of the stock 69 LAW GOVERNING VALIDITY The validity of a transfer of stock is governed by the law of the place where the corporation is created, and not by the law of the place where the negotiations of sale may have been conducted.70 68 Quay v. Presidio etc. R. Co., 82 Cal. 1, 22 Pac. 925. 69 Tafft v. Presidio etc. R. Co., 84 Cal. 131, 18 Am. St. Rep. 166, 11 L. R. A. 125, 24 Pac. 436, reversing same case, 3 Cal. Unrep. 152, 156, 22 Pac. 485. 70 Dow v. Gould etc. Min. Co., 31 Cal. 629, 630-654. TRANSFER WITHOUT INDORSEMENT Where a borrower delivers a stock certificate to the lender as security for the loan, but does not indorse the certificate, the transfer is good between the parties, there being no rights of innocent purchasers or creditors intervening." The court said it is well settled in construing this statutory provision that entry of the transfer on the books of the corporation is not essential to the validity of the transfer except as to purchasers or transferees in good faith for value and without notice; and, while the theory is that the shares of stock are distinguished from the certificate therefor (which is but evidence of title of the holder to a portion of the property, which shares or property are incapable of manual delivery), and that a delivery of the certificate without a transfer in writing which will enable the holder to make a transfer of the stock on the books of the corporation is not a complete delivery, yet there is no reason why the doctrine of "equitable mortgage" should not apply to such a case. PLEDGE OF STOCK Nearly all of the cases involving the power to pledge shares of stock as security for the payment of a sum of money or the performance of an obligation have involved the form or legality of the transfer, and are fully considered in the cases on the subject of transfers cited under Civil Code, section 324, supra. In those cases it will be observed that the laws and decisions of this state differ in some important respects from the general current of authority. No attempt will be made here to cover any of those points already considered; notice will be here taken only of the remaining cases involving other points or general principles. 71 Hall v. Cayot, 141 Cal. 13-17, 74 Pac. 299; Ede v. Johnson, 15 Cal. 53. |