Wills v. Investors Bankstocks Corp. , 257 N.Y. 451 ( 1931 )

The opinion of my associate, Judge LEHMAN, in this case has applied to stock certificates the Personal Property Law relating to sales. This, I think, is a mistake. The Personal Property Law applies to the buying and selling of commodities, things that can be manually delivered. Stock is a chose in action, a mere fractional interest in the capital of a corporation. That interest is evidenced by a certificate which certifies the share of the holder. The certificate, however, is not the thing which is bought and sold. Any particular certificate of stock may be delivered to meet the contract of sale. A broker or agent does not buy any particular certificate. (Richardson v. Shaw,209 U.S. 365.) Can title to stock pass without delivery of the certificate of stock? We have given the answer in Le Marchant v. Moore (150 N.Y. 209), where we held that the notification by Evans Company, brokers, to their client in England, that they had purchased stock in compliance with an order, passed title to the stock, although the certificates were held by Moore Schley in New York.

With this background of law, and applying it to the facts in this case, I reach a different conclusion from the prevailing opinion. The plaintiff, Albert C. Wills, lived in Waterbury, Conn., at which place J.S. Schofield Co. maintained a stock brokerage office. They had direct line communication with the defendant corporation, the New York city correspondent. Wills purchased through Schofield Co., AEtna Life Insurance Company stock and Equitable Trust Company stock. The order was given by Schofield to the defendant, the Investors Bankstocks Corporation, which purchased the stock and so informed Schofield. The plaintiff paid Schofield and he paid the defendant in full, so that it had no lien upon the stock for any moneys advanced in that particular transaction. At the time the purchase price was paid Schofield notified the defendant that the stock was bought and paid for in behalf of Wills, the plaintiff, and asked to have the certificates, the evidence of the stock interest, transferred to Wills' name. The defendant wrote back notifying Schofield that it had purchased the stock, held it for Wills and would have the certificates put in Wills' name. The correspondence establishes these facts beyond peradventure of a doubt, as to the AEtna Life Insurance Company stock.

"November 19, 1929. "INVESTORS BANKSTOCKS CORP. "30 Broad Street "New York City

"GENTLEMEN: Through the teletype this morning, we advised you to have twenty shares of AEtna Life Insurance Company stock transferred to the name of Albert C. Wills. To eliminate the possibility of delay in delivery of this stock we are inclosing our check for $1980.00 and hope that you will forward stock to us as soon as transferred so we can make delivery to our client.

"Very truly yours, "J.S. SCHOFIELD CO. "L.A. BOUET "G.H." "November 20, 1929.

"J.S. SCHOFIELD Co. "Waterbury, Conn.

"GENTLEMEN: We acknowledge receipt of your check for $1980.00 covering T-9 of November 19th, and have this day placed twenty (20) shares AEtna Life Insurance Company into transfer in the name of Albert C. Wills, 95 Bank Street, Waterbury, Connecticut, in accordance with your instructions.

"Yours very truly, "INVESTORS BANKSTOCKS CORPORATION "WILLIAM J. AHLBART, "Asst. Cashier."

In my judgment title to the stock passed to Wills. The possession, subsequently, of the certificates by the defendant was the possession of the title-evidence to the plaintiff's property; these certificates were evidence of the stock or the stock interest which the defendant had purchased through Schofield for Wills, the disclosed principal. They belonged to Wills. It is not the certificates which the defendant has converted, but the stock, the fractional interest represented by the certificate. This has the value; the certificate is mere paper.

The Personal Property Law regarding the appropriation of certain goods by a seller to a contract of purchase has no application. I think the defendant has no right to hold these shares of stock, fully paid for, and apply them on a general indebtedness owing to it by Schofield.

The judgment should be affirmed.

CARDOZO, Ch. J., POUND, KELLOGG, O'BRIEN and HUBBS, JJ., concur with LEHMAN, J.; CRANE, J., dissents in memorandum.

Judgments reversed, etc.