fer as attorney of the stockholder. It was held that this was a substantial compliance with the by-law. When the stock ledger of a bank shows the name of the proprietor, the date of the transfer, the number of shares transferred, the name of the transferor, and the value of the shares, it is a sufficient "entry in the books of the bank," within the statute of Maine.2 Under the Kansas statute requiring stock to "be transferred only on the books of the corporation, in such manner as the by-laws may prescribe," in a case in which the company had failed to provide by by-law for the regulation of transfers, it was held, that the corporation had kept a sufficient record, under the statute, by making a memorandum of the transfer in a stock book on the stub of the old certificate, with a reference to the number of the new certificate issued in its place, where the stubs contained a memorandum of the date of issue, number of the certificate, number of shares, and the name of the person to whom it was issued, and a new certificate was always issued when a transfer was made; and that a stockholder, who had sold his stock and permitted his name to remain on the company's books as a stockholder, could not avoid individual liability for corporate debts. on the ground that no by-law prescribing the manner of transfer had been enacted.3

§ 2377. Issue of New Certificates Unnecessary but Usual. We have seen that a stock certificate is only evidence of the title of the shareholder, and is not necessary to constitute him such.1 For the same reason it is not necessary that the transferee should obtain a new certificate, which is but additional evidence of his title; he becomes legally entitled to the shares when they are formally transferred to him on the company's books without the issue of a new certificate.5 A consequence of this principle

1 Chambersburg Ins. Co. v. Smith, 11 Pa. St. 120.

Rev. Stat. 1840, ch. 76, § 12; Skowhegan Bank v. Cutler, 52 Me. 509.

3 Plumb v. Bank of Enterprise, 48 Kan. 481; s. c. 29 Pac. Rep. 699.

4 Ante, § 1140.

5 Agricultural Bank v. Burr, 24 Me. 256; Same v. Wilson, Id. 273; Chou

teau Spring Co., v. Harris, 20 Mo. 382; Haegele v. Western Stove Co., 29 Mo. App. 486, 492; Davenport Bank v. Gifford, 47 Jowa, 575. The record of transfers of stock upon the books of a bank was held sufficient, as between the assignee and the bank, to work a change of ownership, without new certificates: Keyser v. Hitz, 133 U. S.

is that if A. transfers his shares to B., and the transfer is duly registered on the books of the company, but no new certificate is issued to B., and A. thereafter undertakes to transfer the same shares to C., and the company does issue a new certificate to C., C. thereby gets no title to the shares; the certificate not being the shares themselves, but a mere evidentiary paper. For a sim

ilar reason, if the transferor retains the certificate in his own possession, this will not prevent the legal title from passing to the transferee by way of gift, although he may have no knowledge of the transfer.2 But while the new certificate is not necessary to the title of the transferee, it is an important muniment of his title, without which his shares would become practically non-vendible. He may therefore have the aid of equity to compel the corporation to issue it to him.3

sary.

§ 2378. Surrender of the Old Certificate not Strictly NecesBy parity of reasoning it may be concluded that a surrender of the old certificate is not necessary to the passing of a good title to corporate shares, though the corporation, for its own protection, will always insist upon this being done. A transfer of stock upon the books of the company to a bona fide holder for value, carries the title to the stock, although the certificate previously issued is not surrendered at the time of the transfer. The rules of the company as to the mode of making transfers of its stock, requiring a surrender of the certificate,

138, 149; s. c. 3 L. ed. 531. Cf. New York &c. R. Co. v. Schuyler, 34 N. Y. 30; Pacific Nat. Bank. v. Eaton, 141 U. S. 227; s. c. 35 L. ed. 702; 10 Rail. & Corp. L. J. 132; 11 Sup. Ct. Rep. 984; Thayer v. Butler, 141 U. S. 234; s. c. L. ed. 711; 11 Sup. Ct. Rep. 987. 1 Houston &c. R. Co. v. Van Alsstyne, 56 Tex. 439.

edge of the transfer; she lived in the family of T., and was, in all respects, treated and regarded as his daughter. It was held that the transfer on the books of the corporation vested in F. the legal title. Robert's Appeal, 85 Pa. St. 84. Compare, post, §§ 2390,

2399.

3 National Bank v. Watsontown Bank, 105 U. S. 217; post, § 2425, et seq.

4 New York &c. R. Co. v. Schuyler, 38 Barb. (N. Y.) 534; s. c. aff'd, 34 N. Y. 30. See also Moores v. Citizen's Nat. Bank, 111 U. S. 156, 167. Compare Bond v. Mount Hope Iron Co., 99 Mass. 505; s. c. 99 Am. Dec. 49.

while they may be insisted upon by the company, cannot be allowed to have the effect of impairing the rights of third persons who are ignorant of them.1 The corporation must require the surrender of the old certificate at his own peril. The certificate being a continuing affirmation by the corporation that the person therein named is entitled to the number of shares therein named of its capital stock, it is evident that the corporation, by allowing the transfer to be made on its books while the certificate is outstanding, may put it in the power of any one into whose hands it may fall to injure an innocent third person by transferring it to him for value. Such a taker of the certificate could not be admitted to the rights of a shareholder, but he would have an action for damages against the company.3

§ 2379. Old Certificate must be Properly Indorsed. If the corporation takes up the old certificate when it is not properly indorsed and cancels it and makes the transfer on its books to the new transferee, it does so at the peril of having to answer in damages to the real owner of the shares for their conversion in case the transferee had no right to have the transfer made to him."

§ 2380. Change of Title when "Received for Record.” Where a by-law of a corporation provided that no transfer of shares should be of any avail until received for record by the clerk, who should enter thereon the time he received it, which should bear date accordingly, it was held that a sale or pledge, accompanied by a letter of attorney to make the transfer, conveyed no title until the transfer was received for record by the clerk. The change of title, in such cases, takes place when the transfer is received for record, and the transfer bears date from that time.5

§ 2381. National Banks: Transfer on the Books Necessary. The title to and ownership of stock in a national bank can only pass by a transfer on the books of the bank.6

§ 2382. Transfer under a General Assignment for Creditors. The legal title to stock held in corporations situated in Louisiana does not pass, under a general assignment of property, until the transfer is completed in the mode pointed out by the laws of Louisiana regulating such corporations. But the equitable title will pass if the assignment be sufficient to transfer it by the laws of the State in which the assignor resides; and if the laws of the State in which the corporation exists do not prohibit the assignment of equitable interests in stock, such an assignment will bind all persons having notice of it.1

§ 2383. [Kentucky.] Record not Constructive Notice. - A conveyance of shares in a corporation is not within the recording acts, and a record does not charge with constructive notice.2

§ 2384. When the Transfer must be by Deed. Many of the English statutes and articles of association provide that transfers of shares can only be made by deed. Where a statute required the conveyance of shares to be by writing duly stamped and under the hands and seals of both parties, and afterwards called such writing a "deed or conveyance," and in another place a "deed of sale or transfer,” — it was held that such a conveyance must be by deed; and, accordingly, that an instrument purporting to transfer shares in the company, executed by the proprietor of such shares, with the name of the purchaser in blank, and handed over by him to the plaintiff, by whom, on the same sale of such shares to the defendant, the defendant's name was inserted, as the purchaser, was void.3

SECTION

2397. Unregistered transfers not valid against third parties without notice.

2398. Danger of failing to obtain a transfer.

2399. Illustration.

2400. Not good against subsequent purchaser in good faith without notice.

SECTION
2401. Otherwise as to purchaser at
judicial sale with notice.

2402. Transfer in blank is a symbol-
ical delivery.

2403. Sale of shares and subsequent sale of interest due thereon. 2404. Decisions under particular statutes.

2405. Decisions on special transactions.

§ 2387. Corporation Looks Only to Its Books.— The general rule is that a corporation looks only to its books for the purpose of ascertaining who are its shareholders and entitled to the rights of such. Only those whose names are registered on its books as shareholders are entitled to vote at its elections,1 to receive dividends,2 and otherwise to exercise the rights of members. It has also been held, that holders of corporate stock, not enrolled as such on the company's books, are not entitled to petition for a dissolution of a mining or manufacturing corporation, under the Ohio statute, for failure to pay the annual dividend of 6 per cent. upon paid-up capital stock. The pledgee of stock, holding by the assignment of the certificates simply, will not be granted an injunction to restrain the corporation from holding a meeting, for the purpose of increasing the corporate debts, and to restrain the assignors from voting on the stock at such meeting, where it is not shown that the proposed increase of indebtedness is ultra vires. But while it is sometimes said that a transfer of stock in a corporation, not entered on the books of the company in accordance with its by-laws, is not binding on the corporation, either with or without notice aliunde of the transfer;5 yet this,

owner of record of the stock or his personal representative. Brisbane v. Delaware &c. R. Co., 25 Hun (N. Y.), 438; to the same effect Smith v. American Coal Co., 7 Lans. (N. Y.) 317.

3 Armstrong v. Herancourt Brew. Co. (Ohio C. P.) 26 Ohio L. J. 39.

4 Becher v. Wells Flouring Mill Co., 1 McCrary (U. S.), 62; s. c. 1 Fed. Rep. 276.

5 Stockwell v. St. Louis Mercantile Ins. Co., 9 Mo. App. 133; citing Wag.