WEST COAST SAFETY FAUCET COMPANY v. WULFF. [133 Cal. 315, 65 Pac. 622.]

EXECUTION SALE OF CORPORATE STOCK.-A PUR CHASER, at an execution sale, of the shares of a corporation, standing on its books in the name of the judgment debtor, is entitled to have the certificate of such shares reissued to him as such purchaser, if, at the time of the purchase, he acts in good faith and without notice that the outstanding certificate has been assigned or pledged. (p. 171.)

A PLEDGEE OR ASSIGNEE OF CORPORATE STOCK CAN PROTECT HIMSELF AGAINST a purchaser at an execution sale only by causing a reissue of the certificate, or by serving notice on the corporation that he holds the certificate as such assignee or pledgee. (p. 171.)

CORPORATE STOCK.-IT IS NOT ESSENTIAL TO THE VALIDITY of an execution sale of shares of stock in a corporation that the sheriff have manual possession of the certificate at the time of the sale, or that he should deliver it to the purchaser. (p. 171.)

EXECUTION SALE OF CORPORATE STOCK-REMEDY OF PURCHASER.-After an execution sale of corporate stock pledged as collateral security, of which fact the purchaser had no notice, the pledgee may be compelled to surrender it so that it may be reissued to the purchaser, and this procedure applies to an execution issued out of a justice's court. (pp. 171, 172.)

F. A. Berlin, for the appellant.

Robert Ash, for the respondent Wulff.

A. L. Black, for the respondent company.

316 CHIPMAN, C. Plaintiff brought the action to compel defendants to answer and to cause their respective rights to certain shares of plaintiff company to be determined. The cause was tried on an agreed statement of facts, and defendant Wulff was adjudged to be "the holder and pledgee of certificate No. 61 for one hundred shares of the capital stock of the West Coast Safety Faucet Company, and entitled to have the same transferred on the books of said corporation to his name." Defendant Lake appeals from the judgment and from the order denying his motion for a new trial.

The essential facts were, that one Straut owned the shares in 1896, and the certificate stood in his name then, and ever since, on the books of the corporation. In October, 1896, he indorsed the certificate to defendant Wulff as collateral security, into whose possession it passed and has since remained. In 1897 defendant Lake brought an action against Straut in the justice's

court of the city and county of San Francisco, and caused a writ of attachment to issue therein, directed to the sheriff, who duly served the same upon the secretary of said corporation. Lake obtained judgment in January, 1898, and caused execution to issue thereon, and it was duly levied by leaving with the secretary of the corporation a copy of the writ, and a notice that the said stock was levied upon in pursuance of the writ. The sheriff duly sold the shares at public auction, pursuant to execution, in March, 1898, and Lake became the purchaser, and he thereupon made demand for a transfer of the shares and issuance of a certificate therefor to him. Wulff had not up to this time demanded any reissue of the stock to him, nor had he notified the corporation that he held the certificate as pledgee or otherwise. Lake first knew of the claim of Wulff, and that he held the certificate as pledgee, in January, 1899.

1. It is settled law in this state that one who purchases at execution sale shares of a corporation, standing on the books of the corporation in the name of the judgment debtor, is entitled to have the certificate of such shares reissued to him as such purchaser, if at the time of the purchase he acts in good faith, and without notice that the outstanding certificate has been assigned or pledged to some person other than the judgment debt

In order that an assignee or pledgee of a certificate may protect his rights, as against a purchaser at execution 317 sale, he must cause a reissue to him of a certificate, or he must serve notice on the corporation that he holds the certificate as such assignee or pledgee.

The decisions of this court on the question will be found in the following cases: Weston v. Bear River etc. Co., 5 Cal. 186, 63 Am. Dec. 117; also, second appeal, 6 Cal. 425; Strout v. Natoma etc. Co., 9 Cal. 78; Naglee v. Pacific Wharf Co., 20 Cal. 530; People v. Elmore, 35 Cal. 653; Parrott v. Byers, 40 Cal. 614; Winter v. Belmont Min. Co., 53 Cal. 428; Farmers' Nat. Gold Bank v. Wilson, 58 Cal. 600; Spreckels v. Nevada Bank, 113 Cal. 272, 54 Am. St. Rep. 348, 45 Pac. 329. The last of these cases points out what must be done by the pledgee, where it is desirable to leave the stock standing in the name of the

owner.

2. Respondent Wulff claims that in the suit of Lake v. Straut, in the justice's court, the plaintiff could, under subdivision 4 of section 542 of the Code of Civil Procedure, attach the interest of defendant, plaintiff should have proceeded of the Code of Civil Procedure.

but that after judgment the under sections 545 and 905 The first of these sections re

lates to the citation of the defendant, and any person having in his possession personal property belonging to the defendant, for the purpose of examining them respecting such property. Section 905 makes applicable to justices' courts sections 714 to 721 of the Code of Civil Procedure, inclusive, which latter relate to proceedings supplementary to the execution. Respondent's contention cannot be sustained. Section 688 of the Code of Civil Procedure expressly provides that shares in any corporation may be attached on execution, in like manner as upon writs of attachment. It was not necessary to the sale of Straut's interest in the shares that they should be in the hands of the sheriff to be personally delivered to the purchaser. The writ of execution is served as is the writ of attachment, which latter is served as directed by subdivision 4 of section 542 of the Code of Civil Procedure. This section and section 688 appear to treat the interest of the debtor in shares of corporations as personal property not capable of manual delivery. When the execution is served, the sale proceeds without manual possession of the certificate by the sheriff. He does not require such possession for the levy, as in the case of personal property under subdivision 3 of section 542 of the Code of Civil Procedure, nor is it 318 sary that he deliver the certificate to the purchaser at execution sale. The certificate might at the time be in the hands of the owner, but the levy and sale would entitle the purchaser to have a certificate issue to him, and for that purpose the court would, upon appropriate proceedings, compel the surrender of the original certificate, in order that it might be reissued to the purchaser. So, also, if it turned out that the certificate was in the hands of a pledgee, of which fact the purchaser in good faith had no notice, the pledgee could be compelled to surrender the certificate, that it might reissue to the purchaser. In some of the cases cited supra, the procedure was the same as in the present case, and sale was made without supplementary proceedings. It was so in Weston v. Bear River etc. Co., 5 Cal. 186, 63 Am. Dec. 117; second appeal, 6 Cal. 425; also in Naglee v. Pacific Wharf Co., 20 Cal. 530, and in People v. Elmore, 35 Cal. 653, and also, we think, in Farmers' Nat. Gold Bank v. Wilson, 58 Cal. 600. Of the regularity of the procedure we have no doubt.

neces

As the case is here on an agreed statement of facts, there is no necessity for a new trial. The judgment and order should be reversed, with directions to enter judgment in favor of defendant Edward H. Lake.

Cooper, C., and Haynes, C., concurred.

For the reasons given in the foregoing opinion the judgment and order are reversed, with directions to enter judgment in favor of defendant Edward H. Lake.

McFarland, J., Temple, J., Henshaw, J.

The Pledge of Corporate Stock, and the rights and liabilities arising therefrom, are discussed in the extended notes to State v. Bank of New England, 68 Am. St. Rep. 542-547; Griggs v. Day, 32 Am. St. Rep. 715. A transfer upon the books of the corporation is not essential to the validity of the pledge, but the pledgee is entitled to have a proper entry of the transaction made upon the books for protection against purchasers or other third persons: Spreckels v. Nevada Bank, 113 Cal. 272, 54 Am. St. Rep. 348, 45 Pac. 329.

Execution.-Corporate stock pledged as collateral security and transferred on the books of the corporation to the pledgee cannot be sold on execution against the pledgor: Feige v. Burt, 118 Mich. 243, 74 Am. St. Rep. 390, 77 N. W. 928.

PEOPLE v. GORDON.

[133 Cal. 328, 65 Pac. 746.]

EMBEZZLEMENT.-THE ESSENTIAL ELEMENTS of embezzlement are the fiduciary relation arising where one intrusts property to another, and the fraudulent appropriation of the property by the latter. (p. 175.)

EMBEZZLEMENT.-A CHARGE OF EMBEZZLEMENT IN THE LANGUAGE OF THE STATUTE is sufficient, at least on a motion in arrest of judgment, though it does not allege the circumstances of the felonious conversion. (p. 175.)

EMBEZZLEMENT - UNNECESSARY AVERMENTS.— AN INFORMATION FOR EMBEZZLEMENT, which states that the property was intrusted to the defendant as bailee, sufficiently shows a fiduciary relation, and it is not necessary to aver that the owner or bailor had demanded possession of the property and had been refused. (p. 175.)

EMBEZZLEMENT-CONVICTION FOR, IS NOT CONTRARY TO EVIDENCE OR INSTRUCTION, WHEN.-In a prosecution for the embezzlement of a diamond ring by a bailee, where the owner testifies that the defendant took it from her finger "before she knew it," and declared that he would have it fixed for her as an engagement ring; and that he never brought the ring back, but sold it, a conviction is not contrary to the evidence or an instruction that, if the defendant obtained the ring against the will of the prosecuting witness he should be found not guilty. It was the subsequent felonious conversion that constituted the embezzlement. (pp. 175, 176.)

JURISDICTION

EMBEZZLEMENT UNOBJECTIONABLE EVIDENCE.-If property is intrusted to, and converted by, one who is tried in the county of such conversion for embezzle ment, evidence of what took place in another county, when he

received the property, is not objectionable on the ground that it was without the jurisdiction of the court. (p. 176.)

EMBEZZLEMENT-INSTRUCTION AS TO LARCENY.After full instructions, on a prosecution for embezzlement, as to what constitutes that crime, it is not prejudicial error to add an instruction as to what constitutes larceny. (p. 176.)

A. V. Scanlan, for the appellant.

Tirey L. Ford, attorney general, and A. A. Moore, Jr., deputy attorney general, for the respondent.

329 CHIPMAN, C. Defendant was convicted of embezzlement. He moved in arrest of judgment, which motion being denied, he moved for a new trial. This motion was also denied, and hence this appeal. There was no demurrer to the information. It is not contended that the evidence fails to support the verdict.

1. The motion in arrest of judgment is based upon the ground that the information does not charge a public offense. The information, it is conceded, is in the language of the statute (Pen. Code, sec. 507); but it is claimed that the information is fatally defective, in that it fails to set forth the facts relied on to constitute the embezzlement charged: Citing People v. McKenna, 81 Cal. 158, 22 Pac. 488. This was the case of an information charging fraud, under section 532 of the Penal Code. The complaint failed to aver any of the circumstances constituting the alleged fraud, although following closely the language of the statute. It was held bad, and not sufficient to sustain the conviction. There are obvious reasons why an indictment for obtaining money or other property under false pretenses should aver with particularity the facts relied upon to show fraud, and hence it is that it is insufficient to simply follow the language of the statute in such cases. But the rule of pleading is different, as the reason is different, in the case of embezzlement. The essential elements of embezzlement are the fiduciary relation arising where one intrusts property to another, and the fraudulent appropriation of the property by the latter: Pen. Code, sec. 503. The origin or particulars of the relation need not be stated: 2 Bishop's Criminal Law, sec. 323a. Section 507 of the Penal Code reads as follows: "Every person intrusted with any property as bailee, . . . . who fraudulently converts the same or the proceeds thereof to his 330 own use, . . . . with a fraudulent intent to convert to his own use, is guilty of embezzlement," etc.