Houser v. Richardson

GOODE, J.

The circuit court correctly disposed of this cause. As Mrs. Kastle bought the stock first, her right to it was good against Houser, unless she omitted some act which the law exacted of her, to warn others from buying afterwards from the .vendor Young. Appellant says that the maxim qui prior est tempore, potior est jure, is not in force in this State. But the cases hold it is, and enforce it. Murdock v. Finney, 21 Mo. 138; State Savings Ass’n v. Kellogg, 63 Mo. 510; Pritchard v. Toole, 53 Mo. 356; Minor v. Rogers Coal Co., 25 Mo. App. 78; State ex rel. v. Netherton, 26 Mo. App. 414; St. Louis v. O’Neil Lumber Co., 42 Mo. App. 586. In Murdock v. Finney, it was applied to facts much like those we have here. We can hardly conceive of a system of equity jurisprudence from which so just a principle would be excluded. Of course, the proper limitation of the doctrine must be recognized, too; that is, the equities in favor of the rival claimants must be equal. Subject to that qualification, the rule that he whose right is first in point of time must prevail, necessarily obtains; for otherwise, business could hardly be transacted at all. It would be absurd that .a later purchaser should. be preferred to a prior bona fide one who had been in no way remiss. Sales of personalty would cease if a buyer’s title might be defeated by a subsequent vendee. The question is, then, did Mrs. Kastle do what the law required of her to make good her purchase of the share from Young ?

One who takes an assignment of a chose in action, not evidenced by a written instrument, acquires title as against the assignor without taking any further steps; but must give notice to the debtor to make his claim valid against a junior assignee. Heath v. Powers, 9 Mo. 675; Richards v. Griggs, 16 Mo. 416; Murdock v. Finney, supra. And when an equitable owner assigns his interest in a chose, the legal title to which is held by a trustee, the assignee must notify the trustee, to protect himself against the claim of a subsequent assignee. This is the general rule. Heath v. Powers; Richards v. Griggs; Murdock v. Finney, supra; Bartlett v. Eddy, 49 Mo. App. 32; Dearle v. Hall, 3 Eng. Con. Chan. 266. Its purpose is to enable the trustee to furnish information to any person who may ask about the ownership of the equitable estate, and it is the duty of one intending to purchase such interest to inquire of the trustee. Murdock v. Finney, supra; Vattier v. Huide, 7 Pet. 252; Dearle v. Hall, supra. The rule affords an excellent protection against fraud by the duties thus imposed on the respective parties. If the original assignee omits to give the trustee notice of the assignment to him, he negligently leaves the way open for a fraudulent sale to be made to an innocent purchaser, and is therefore postponed; if the latter makes no inquiry of the trustee, he is culpable .in failing to take a reasonable precaution against being swindled, and must suffer the consequences. Applying the rule in this case, it at once appears who is guilty. Mrs. Hastie notified the administrator, Richardson, of her purchase of Young’s stock. In the only talk Houser had with Richardson before buying, he made no specific inquiry about C. H. Young’s shares, but was warned by Richardson that it was rather unsafe to purchase the shares of any of the heirs. Mrs. Kastle did what the law required of her and is therefore safe. The authorities on the subject hold that when the assignee gives notice to the trustee, his right is not only good against the assignor, but attaches to the property itself. Dearle v. Hall, supra; Loveridge v. Cooper, 3 Russ. 30; Martin v. Sedgwick, 9 Beav. 333; Foster v. Cockerell, 9 Bligh, N. S. 332; Stocks v. Dobson, 5 De. G. & S. M. 760. Giving notice to the trustee is in the nature of taking possession by the assignee; or, at least, all he can do towards taking possession or publishing his right. Dearle v. Hall, supra; Feltham v. Clark, 1 De. G. & S. M. 307. The trustee, after notice, holds for the benefit of the assignee.

Appellant’s contention is that Mrs. Kastle should have notified the Globe Printing Company instead of the administrator, but cite no authority in support of that view, and the only authority we have found which bears directly on the question is against it. Etty v. Bridges, 2 Y. & C. C. C. 486. In that case, shares in the Bank of England were owned by a decedent when he died. He had no legal representatives to whom notice could be given by one who took an incumbrance on them, and it was held the incumbrancer should have notified the Bank. But the opinion distinctly states that where there are representatives, they are the proper persons to notify. The same thought is found in Holt v. Dewall, 4 Hare 447.

The point that Mrs. Kastle should have had her bill of sale from Young recorded in the office of the recorder of deeds, is surely not seriously urged. It was not an instrument which the law required to be recorded, and recording it would have been a nugatory act to affect Houser or any one else with constructive notice of her purchase.

It is urged that Houser and not she should take the dividends that accrued on the stock in the administrator’s hands prior to its distribution, because his bill .of sale included future dividends by express words, while hers did not. We don’t think so. In any event he could take only such as accrued after he bought, which was six months later than she did. But the terms of Young’s assignment to Mrs. Kastle made the sale one in praesenti. The dividends paid to the administrator all accrued afterwards. Dividends go to the owner of the stock at the time they are declared to be payable. They arc an incident of ownership and the prime object of it. Central R. & Bag Co. v. Papot, 5 Ga. 342; Waterman v. Alden, 42 Ill. App. 204; Richardson v. Richardson, 75 Me. 570, and other cases collected in note to Rose v. Barclay, 45 L. R. A. 392. Where delivery of the certificate to the vendee was to be made on a day which fell after the declaration of the dividend, it was held, nevertheless, that he was entitled to it. Phinizy v. Murray, 3 L. R. A. 426; see also Black v. Homersham, L. R. 4 Ech. Div. 24; Harris v. Stevens, 7 N. W. 459. The corporation relieved itself of liability by paying the dividends to the administrator, who held the legal title to the stock and was the right person to collect them. But though a transfer of shares has not been recorded, the transferee has a right to the dividends as against the transferer. Cook on Corporations (4 Ed.), sec. 539, and cases cited. As the money was not needed by the administrator to pay debts of Young or the expenses of administering his estate, Young’s transferee was the proper distributee of it. The right to a dividend equitably belongs to him who is the equitable owner of the stock on the day it is declared. Union Screw Co. v. American Screw Co., 13 R. I. 673. This Mrs. Kastle unquestionably was, and hence, the dividends went to her if not required for administration purposes.

The judgment is affirmed,

all the judges concurring.