
    The Cleveland City Railway Co. v. First National Bank of New York.
    
      Consolidation of constituent companies — Section 8381, Revised Statutes — Proceedings to effect consolidation — Lawful for directors of such constituent companies to agree — That such companies shall enter consolidation free from, debt — Sale of stock apportioned to one company to pay debts — Distribution of remaining stock among holders in said company— • Agreement between holders of majority of stock in said companies respectively — Solder of shares as pledgee — Not stockholder till stock transferred on company’s books — Rights of pledgee — Consolidated company not liable for conversion of pledged stock of constituent companies, when — Restriction of transfer — Certificate of stock — Law of corporations — Consolidation.
    
    
      1. Under Section 3381, Revised Statutes, which authorizes the directors of the constituent companies of a proposed consolidation to enter into a joint agreement for the consolidation, •prescribing the terms and conditions thereof, the mode of carrying the same into effect and the manner of converting the capital stock of each of the constituent companies into that of the new company, with such other details as they may deem necessary to perfect the new organization and the consolidation of the companies, it is lawful for such directors to agree, as part of the terms and conditions of the proposed consolidation, that the constituent companies shall come into the consolidated company free from debt; and that of the stock apportioned to one of the constituent companies enough shall be sold to pay the floating indebtedness of that company, and the remainder distributed among the holders of the preferred and common stock of such company, in proportion to the relative value of such preferred and common stock.
    2. Where the directors of two constituent companies made it a part of the terms and conditions of the consolidation that, as to all property matters between the two companies which were not specifically adjusted in the agreement of consolidation, they should “be adjusted pursuant to a memorandum of agreement entered into by the holders of more than a majority of the stock of said constituent companies,” previously entered into, such agreement by the stockholders was thereby made part of the consolidation agreement, and stockholders who signed the latter agreement, as directors must he held to have been cognizant of, and to have assented to the said agreement by the stockholders, and they and those claiming under and through them are bound by a distribution of stock which was made in pursuance of such stockholders’ agreement and such' directors’ agreement for consolidation.
    3. A person who holds shares of stock in pledge, although the shares are assigned in blank by the registered owner, does not become a stockholder until the shares are transferred to ' 'him on the books of the corporation; and a mere pledgee, who has not become a registered stockholder, is not entitled to participate' in, or to be notified of, the proceedings to effect a consolidation of two or more companies.
    4. Where it was agreed by the directors of the constituent companies that certain shares of the capital stock of the consolidated company should be distributed to one of the constituent companies, to be disposed of by that company so far as necessary tcf liquidate its floating indebtedness, the remainder to be distributed among the holders of the stock of that company, which agreement was assented to by the pledgors of such shares, but without the knowledge of the pledgees, and was performed by the consolidated company by delivering the shares to “agents and proxies” of the constituent company and its stockholders, designated by .them to carry out the agreement of consolidation in regard thereto, the consolidated company is not liable for the conversion of such pledged shares after théy passed into the possession of such agents and proxies; nor is such a distribution of shares of its capital stock'by the consolidated company a violation of the. provision contained in the certificates of shares in the constituent company that they were transferable on the books of that company only on the surrender of the certificates.
    (Decided June 23, 1903.)
    Error to tbe Circuit Court of Cuyahoga county.
    This action was instituted in the court of common pleas of Cuyahoga county hy the First National Bank of New York, defendant in error, against the Cleveland City Railway Co., the plaintiff in error, to recover damages for the alleged wrongful conversion of certain shares of the capital stock of the plaintiff in error, which, the Bank claimed that it was entitled to recover under the terms of a certain agreement of consolidation between the two constituent companies of the plaintiff in error. A judgment was rendered in the court of common pleas for the Bank in the sum of $22,082.34, which was affirmed by the circuit court. This proceeding in error is prosecuted to reverse these judgments. The material facts of this case are practically undisputed and are as follows:
    In May, 1893, the Cleveland City Cable Railway Co. and the Woodland Avenue and West Side Street Railway Co. each operated and owned lines of street railway in the city of Cleveland, Ohio. On May 10, 1893, stockholders of both companies, owning more than two-thirds of the stock of each, entered into a preliminary agreement for consolidation, fixing the name of the proposed consolidated company, the amount of its capital stock, the share thereof of each constituent company, and the manner of converting the stock of each into that of the new company. This agreement also contains the following provisions:
    “Each of the respective companies hereto, shall pay off all of its floating indebtedness on June 1, 1893, so that when said consolidation goes into effect on such date, each shall be free and clear of all indebtedness beyond the two million dollars of bonds assumed as above stated, except such indebtedness incurred for new material and equipment in the regular course of business, which has not yet been delivered, and such equipment and material as has already been delivered to provide St. Clair street with electricity, which indebtedness the Cleveland City Railway Co. is to assume, and also to assume all contracts by the Cleveland City Cable Railway Co, for equipping St. Clair street with electricity, and also all contracts made by the Woodland Avenue and West Side Street Railroad Co. for new rails, cars, material, etc.
    “The undersigned stockholders of the Cleveland City Cable Railway Co. hereby appoint, and irrevocably designate Frank DeH. Robison and John J. Shipherd as their agents and proxies to carry out this agreement and perfect said consolidation, and they are hereby authorized to attend any and all stockholders’ meetings of the Cleveland City Cable Railway Co. called for the purpose of carrying out the terms of this agreement, and to vote all the stock standing in the name of each of the undersigned, in such manner as they shall find necessary to carry out and ratify all of the purposes of this agreement, and each of the undersigned stockholders in said company hereby agrees to deliver to said two persons, or their chairman, at such time as they may designate, all of the stock held by him, to be exchanged for stock of the consolidated company, in proportion to the respective holdings of each as each shall be entitled to receive the same.
    “The method of organization of the consolidated company, and all of the details with reference to it, and the working out of the settlement and adjustment of the details of this agreement, are left by all of the undersigned to said * * * Frank DeH. Robison and John J. Shipherd, committee for the stockholders of the Cleveland City Cable Railway Co., to be agreed upon and to be to the satisfaction of each of said committees.”
    On May 11, 1893, the directors of the two companies entered into an agreement of consolidation pursuant to statute (section 3381), and in accordance with the preliminary agreement of stockholders, fixing the amount of the capital stock of the new company at eighty thousand (80,000) shares of the par value of one hundred dollars ($100) each. The provisions of said agreement relating to the disposition of this stock are as follows:
    “Seventh — Said shares of capital stock shall be distributed as follows:
    “(1) To said the Woodland Avenue and West Side Street Railroad Co., party of the first part, fifty-one thousand seven hundred and fifty (51,750) shares, to be distributed by said company among its stockholders as they are respectively entitled to receive the same.
    “(2) To the Cleveland City Cable Railway Co., party of the second part, eighteen thousand two hundred and fifty (18,250) shares, to be disposed of by-said company, so far as necessary, to liquidate its floating indebtedness, and the remainder to be distributed among the holders of the common and preferred stock of said company, in proportion to the present relative value of such preferred and common stock.
    “(3) Ten thousand (10,000) shares of said ■ stock to remain in the treasury of the company, to be issued by the board of directors, according to law, at such time and in such manner as the interests of the company may require.”
    Said agreement also contains the following provisions :
    “Ninth — Each of the constituent companies, parties hereto, is to pay off and discharge all of its floating and current indebtedness now existing, and each of said companies shall be entitled to receive all of the receipts of its present lines until and including May 31, 1893, so that on June 1, 1893, the consolidated company shall be entirely free and relieved from all such floating and current indebtedness, and not obliged to pay any of the same, except such indebtedness incurred for new material and equipment in the regular course of business which has net yet been delivered, and such equipment and material as has already been delivered to provide St. Clair street with electricity, which indebtedness the Cleveland City Railway Co. is to assume, and also is to assume all contracts by the Cleveland City Cable Railway Co. for equipping St. Clair street with electricity, and also all contracts made by the Woodland Avenue and West Side Street Railroad Co. for new rails, cars, materials and equipment. All claims held by each of the constituent companies hereto against other street railroad companies in the city of Cleveland, Ohio, are hereby assigned to the consolidated company, and the consolidated company, upon collecting the same, shall account to the stockholders of the constituent company entitled to receive the same for all net amounts received on account of such claims. The Cleveland City Railway Company assumes all liabilities against each of the constituent companies for injuries heretofore committed by them. The adjustment of all other property matters remaining between the two constituent companies and the consolidated company shall be adjusted pursuant to a memorandum of agreement entered into by the holders of more than a majority of the stock of said constituent companies, bearing date May 10,1893.”
    This agreement of consolidation was duly executed, ratified by more than two-thirds of the stockholders of each constituent company, and duly filed with the secretary of state as provided by law.
    On June 16, 1893, the Cleveland City Railway Co. issued stock certificate No. 2 for 51,750 shares of its stock to * * * for 18,250 shares of its stock to Prank DeH. Robison and John J. Shipherd, trustees, being the share of the Cable Co. stockholders.
    Mr. Robison was president and Mr. Shipherd was vice-president and treasurer of the Cable Co. Both were directors of that company; and immediately upon the consolidation both were made members of the directory and the executive committee of the new company. Mr. Robison was also made vice-president, and Mr. Shipherd, treasurer and transfer agent of the new company.
    The floating debt of the Cable Co., at the date of consolidation, June 1,1893, was such sum as, with interest to December 1, 1894, amounted to $420,318.86.
    The firm of Taintor & Holt was, during the time of the proceedings resulting in consolidation, composed of the following individual members: George H. Holt, G. E. Taintor, and G. D. l’Huillier; they were directors of the Cable Co. and joined in the execution of the consolidation agreement.. Mr. Holt was one of the vice-presidents, and Mr. l’Huillier was assistant secretary of the Cable Co.
    On June 1, 1893, 100 shares of preferred Cable Cp. stock stood in the name of George H. Holt, and 200 shares in the name of Giles E. Taintor, both of whom were members in the firm of Taintor & Holt, as above stated.
    In addition, on the same date, Taintor & Holt held 13,300 shares of common stock, equivalent, on the basis of five shares of common stock to one of preferred, to 2,650 shares of preferred. This stock stood on the books of the company in the name of G. Á. Schriefer, a clerk in the office of Taintor & Holt, but was admitted, upon the trial, to belong to the firm of Taintor & Holt. The jury rendered a special finding to the effect that the firm of Taintor & Holt were the owners .of the 300 shares of preferred stock, subject to its pledge to the plaintiff hereinafter referred to.
    In 1891, Taintor & Holt borrowed of the defendant in error $25,000, and pledged with it as collateral security said 300 shares of preferred stock, indorsed in blank,which certificates of stock have remained in the possession of the bank since that date. Power to transfer was also indorsed upon the certificate, but that power was never executed, Taintor & Holt remaining the registered owners of the stock on the books of the Cable Co. By the terms of these certificates they were transferable only upon the books of the company. On November 7, 1898, said Taintor & Holt and the bank jointly made demand upon the Cleveland City Railway Co. for the issuance of a certificate of stock for Taintor’s alleged proportion of the 18,250 shares, and offered to pay the portion of the floating debt chargeable thereto. A like demand was made on the same date on behalf of the said Holt and the bank jointly. Both the said demands were refused.
    On November 15,1898, the bank took an assignment of said stock from Taintor & Holt, and agreed to prosecute this action and account for any surplus recovered after payment of its debt.
    Dividends paid upon the stock of the new company from June 1, 1893, to October 1, 1898, amounted to $10.25 on each share of stock outstanding.
    The certificate for 18,250 shares was, after its issuance and delivery to Robison and Shipherd, trustees, indorsed by them in blank and deposited with the Savings & Trust Co., the registrar of the consolidated company, and new stock charged up against it as issued by Shipherd. All the stock covered by this certificate had been issued against it by Shipherd on September 21, 1893, except twelve shares which were issued to M. A. Hanna, president, trustee, January 15, 1895, to balance the account. A large amount of this stock was wrongfully converted by Shipherd to his own use, and it is claimed that the portion of stock to which the bank claims it was entitled, by virtue of the 300 shares pledged with it, was a portion of the stock thus wrongfully converted.
    All of the stockholders of the Woodland Avenue Co. received their proportionate shares of the new stock covered by certificate No. 1.
    On June 29, 1893, stock of the new company to the amount of 1995 shares was issued to Mr. Schriefer, for and on behalf of Taintor & Holt, and sent by Mr. Shipherd to them, without the delivery of any of the certificates of the Cable Co.; but some time in 1896, 9975 shares of the common stock held in his name-were returned to Mr. Shipherd by Taintor & Holt.
    At the time of the delivery of this stock, no part, of the floating debt was paid by Taintor & Holt; nor has any of the floating debt of the Cable Co. charged to all the stock held, at the time of the consolidation, by Taintor & Holt, viz.: 300 shares of preferred and 13,300 shares of common, been held. No shares of the new company were ever issued for the balance of the preferred and common stock held by Taintor & Holt.
    At the time of consolidation there were outstanding 10,000 shares of preferred and 30,000 shares of common stock of the Cable Co. The relative value of the common stock, as fixed by a committee appointed by the stockholders, to-wit, Shipherd and Robison, was as five shares of common to one of preferred.
    
      
      Messrs. Squire, Sanders & Dempsey, for plaintiff in error.
    The bank is bound by the terms of tbe consolidation agreement.
    The provisions of tbe consolidation agreement were sucb as tbe directors were authorized to make. Tbe statute gave them tbe broadest powers. Tbe agreement they were authorized to make was — to prescribe tbe terms and conditions for the consolidation, tbe mode of carrying tbe same into effect, tbe name of the new company, tbe number of directors and other officers thereof and their places of residence, tbe amount of capital stock of tbe new company, tbe number of shares and amount of each, the manner of converting tbe capital stock of each of tbe constituent companies into that of tbe new company, with such other details as they may deem necessary to perfect the new organisation and consolidation of the company.
    
    It was therefore proper for tbe directors of tbe constituent companies to provide:
    First — That tbe constituent companies should come to tbe new company free of debt.
    Second — That, of tbe stock going to tbe Cable Co., enough should be sold to pay tbe debt of that company.
    Third — For tbe method by which this should be done, viz.: By tbe delivery of tbe stock in bulk to tbe officers and agents of tbe stockholders as trustees, and to whom tbe stockholders bad agreed to deliver tbe stock held by each respectively, to have tbe same transferred into their proper share of tbe stock of tbe new company after tbe payment of tbe debt.
    It is hardly necessary to cite authorities upon tbe proposition that assenting stockholders are bound by the provisions of such an agreement. Bradford v. Railroad Co., 142 Ind., 383; Hale v. Railroad Co., 161 Mass., 443; Railway Co. v. Hellman, 109 Cal., 571; In re The Utica Brewing Co., etc., 154 N. Y., 268.
    Certificates of stock are not negotiable paper, as the Supreme Court of the United States has declared in Hammond v. Hastings, 134 U. S., 401.
    
      Messrs. Hoyt, Dustin & Kelley, for defendant in error.
    A pledgee in possession of a certificate for shares of stock indorsed in blank by the party to whom the same is issued may present such certificate to the corporation issuing the same and demand the issue of a new certificate to himself. If refused, he may sue the corporation as for a conversion and recover the value of such shares at the time of the demand. Railway Co. v. Rawson & Sons, 9 Re., 709; 16 W. L. B., 423 (affirmed by Supreme Court of Ohio, without report, in 25 W. L. B., 87); Railway Co. v. Bank, 56 Ohio St., 351; Bank v. Bank, 37 Ohio St., 215; Cook on Stock & Stockholders, Sec. 581.
    By the consolidation, the railway company became obligated to perform all the obligations of the cable company toward its shareholders and is liable for conversion when it refused to make the exchange demanded by plaintiff bank.
    The certificates of stock in the Cable Co. held by plaintiff contained on their face the representation and statement that the shares represented thereby would be transferred on the books of the corporation only upon the return of the certificate properly indorsed. This declaration constituted a continuing affirmation upon which any lawful holder of the certificate had a right to rely, and his vested interest in such certificate could not he divested by any arrangement between the corporation and the registered owner. Railway Co. v. Robbins, 35 Ohio St., 484; Bank v. Lanier, 11 Wall., 378; Thompson on Corp., Secs. 2601, 2486 to 2489, 2501 to 2505, 2517; Campbell v. Zylonite Co., 122 N. Y., 455; Thompson on Corp., Sec. 2350; Colebrooke on Collateral Securities, Secs. 264 to 267; Sec. 270, et seq.
    
    Section 3384, Revised Statutes, provides “that all debts, liabilities and duties of either of said companies shall thereupon attach to the new company and be enforced against it to the same extent as if * * * contracted by it.” This statute makes the statement on the face of the Cable Co.’s certificates that new certificates will not be issued until the old are surrendered the obligation of the consolidated company. Therefore, the defendant railway company should have kept unissued the 342 .and a fraction shares of stock for the holder of the 300 shares of preferred stock of the cable road (the plaintiff in this case) until said shares of stock were surrendered.
    By Section 3381, Revised Statutes, the stockholder in the constituent company is entitled to be present at the meeting called to consider the question of consolidation, and, likewise, by section 3383, he has the right to be present at the election of the directors of the new company. While the consolidation provided by our laws has some analogy to a sale, it is more accurately described as a union or amalgamation of two ór more companies. By the consolidation, the property and franchises of the separate companies become vested in the new legal entity; the stockholders in the old companies become, by the consolidation, ipso facto stockholders in the new company, with all the rights attaching to that relation; the old companies have become defunct. Shields v. Ohio, 4 O. F. D., 471; 95 U. S., 319; Railway Co. v. Ham, 114 U. S., 587; Compton v. Railway Co., 45 Ohio St., 615; 1 Thompson’s Com. on Corp., Secs. 395 to 403.
    Constituent corporations are considered in existence simply to preserve the rights and liens of creditors unimpaired. Section 3384, Revised Statutes.
    The rights of stockholders in the consolidated company is governed by Section 3254, Revised Statutes, which in reality, is nothing but a re-enactment of the common law.
    The plaintiff in error claims that the bank is bound by the terms of the consolidation agreement.
    The charter of a corporation is a contract which cannot be changed except by unanimous consent of the stockholders, or in the manner provided by law. At common law there could be no sale of all the property of a corporation without the unanimous consent of the stockholders. It is questionable whether at common law there was any such a thing as we now know as a consolidation. But, in any event, there eoulcL not at common law be a consolidation except by unanimous consent, as a consolidation would materially affect the rights of stockholders. Power of the majority of stockholders and directors to consolidate and the terms and provisions of the consolidation agreement are such only as the statute gives. The statutes are the full measure of the power of the majority and anything incorporated into the consolidation agreement in excess of the statute was not binding. Cook on Stock & Stockholders, Sec. 668; 2 Morawetz on Corp., Secs. 646, 951; 7 Thompson’s Com. on Corp., Sec. 8231; Id., Vol. 1, Secs. 75, 343; Fee v. Gas Co., 35 La. Ann., 416-17. Hale v. Railroad Co., 161 Mass., 443, is a direct authority in favor of our contention. The case, The Utica National Brewing Co., In re, 154 N. Y., 268, is an authority in our favor. What is true of non-assenting stockholders of record is equally true of a pledgee who received his certificates properly indorsed in blank before the consolidation. Fee v. Gas Co., 35 La. Ann., 416; Campbell v. Zylonite Co., 122 N. Y., 455.
    
      Hammond v. Hastings, 134 U. S., 401, is cited to the proposition that certificates of stock are not negotiable. It is hardly necessary to discuss the characteristics of stock certificates in Ohio in the light of a very full consideration thereof in Railway Co. v. Bank, 56 Ohio St., 351; Bank v. Lainier, 11 Wall., 377.
    Had there been no consolidation, the Cable Co. could not have lawfully delivered to Taintor or Holt new certificates without requiring the surrender of the old. Railway Co. v. Bank, 56 Ohio St., 351; Railway Co. v. Robbins, 35 Ohio St., 484.
    The intent of the contract of consolidation must be determined from an examination of the contract itself in the light of all the statutes, including section 3254. This section governs all corporations, including, necessarily, consolidated corporations. There is no authority to delegate to others the duties and responsibilities imposed by this section upon the officers of the company.
    The statutes must all be so construed as to be consistent, if that is possible. In the incorporation of ordinary companies the subscribers to the capital stock are the first stockholders. They meet and elect the first board of directors, voting at such meeting the shares of stock to which they have subscribed and upon which they have paid the preliminary assessments. Upon the election of the first board of directors and not before, the corporation come into existence. Secs. 3239, 3382, Rev. Stat.; State ex rel. v. Insurance Co., 49 Ohio St., 440; Trust Co. v. Floyd el al., 47 Ohio St., 525; Morawetz on Corp. (2 ed.), Sec. 33; Sec. 3383, Rev. Stat.
    By the consolidation statutes the stockholders of the constituent companies become stockholders in the new company. They do not make subscriptions nor do they pay assessments. The act of consolidation, whereby the property of the constituent companies becomes vested in the new company, dispenses with the necessity of subscriptions and assessments. The capital to be contributed by the stockholders has already been contributed. The number of shares to be voted by the stockholders in the consolidated company is determined by their respective holdings in the constituent company , converted proportionately into .the stock of the new company.
   Davis, J.

This case was orally argued before one division of the court; but it has been fully considered by the whole court. Only one of the assignments of error will be noticed in this opinion because, on the conceded facts, we are. of the opinion that the court ■of common pleas should have directed a verdict and rendered a judgment in favor of the defendant; and failing to do this it was the duty of the circuit court to reverse the judgment of the court of common pleas and to render a judgment for the plaintiff in error. This conclusion results directly from the considerations following.

By Section 3381, Revised Statutes, the directors of the constituent companies of a proposed consolidation are authorized to “enter into a joint agreement, under the corporate seal of each company, for the consolidation of the companies, and prescribing the terms and conditions thereof, the mode of carrying the same into efect, the name of the new company, the number of directors and other officers thereof, and their places of residence, the amount of capital stock of the new company agreed upon, the number of shares of capital stock, the amount-of each share and the manner of converting the capital stock of each of the constituent companies into that of the new company, with such other details as they may deem necessary to perfect the new organization and the consolidation of the companiesIn prescribing the terms and conditions of the consolidation it is entirely competent for the directors to agree that the constituent companies shall come into the new organization free from debt, although if they do not do so the liabilites of such companies will attach to the new company as provided in Section 3384, Revised Statutes; and the directors are expressly authorized to agree upon the mode of carrying into effect the terms of the consolidation which shall be agreed upon. And further, the directors are not only expressly empowered to agree upon the manner of converting the capital stock of each of the constituent companies into that of the new company, but they are invested with the widest discretion as to the details of the consolidation, which may not be specifically included in the words of the statute.

It was therefore lawful for the directors of the two constituent companies which were consolidated into the Cleveland City Railway Co. to agree, as they did agree, as part of the terms and conditions of the proposed consolidation, that the constituent companies should come into the consolidated company free from debt and that of the stoclr apportioned to the Cleveland City Cable Railway Co., enough should be sold to pay the floating indebtedness of that company, the remainder to be distributed among the holders of the common and preferred stock of the Cable Co., in proportion to the relative value of such preferred and common stock. The directors were also clearly acting within the powers conferred upon them by the statute when they made it a part of the terms and conditions of consolidation that as to all property matters between the two companies which were not specifically adjusted in the agreement of consolidation, they should “be adjusted pursuant to a memorandum of agreement entered into by the holders of more than a majority of the stock of said constituent companies, bearing date May 10,1893;” because not only was it a certain and proper term or condition which might be stipulated for by the parties to the agreement, but it provided “the mode of carrying into effect” the terms and conditions, and it provided “the manner of converting the capital stock of each of the constituent companies into that of the new company,” and because it specifically pointed out and prescribed “other details” which, in the judgment of the directors, were necessary in perfecting the consolidation of the two companies. The agreement by the stockholders, dated May 10, 1893, was thereby read into and made part of the agreement of consolidation by the directors. So that whoever signed the latter agreement as directors must necessarily be held to have been cognizant of, and to have assented to, the agreement by the stockholders; and that is the position in this action of Taintor & Holt, from whom the defendant in error claims to have acquired title to the shares in the Cable Railway Co. which it alleges that the plaintiff in error wrongfully converted to its own use.

In prescribing the proceedings to effect a consolidation of two or more companies, the statute requires a ratification of the agreement for consolidation by the stockholders; and it virtually defines the term “stockholders” by requiring due notice of the time and-place of the meeting and the objéct thereof, to be given “to each of the persons in whose names the capital stock of the company stands on the books thereof.” Section 3381, Revised Statutes. There is no provision for notice to or requirement of participation by, a person who has a concealed equity in stock. A person who holds shares of .stpck in pledge, assigned in blank by the registered owner, may protect himself by having the stock transferred to him on the books of the company. Until he does so he does not become a stockholder. Henkle v. Salem Manufacturing Co., 39 Ohio St., 547. “If the shares of stock are merely pledged by the assignment of the certificates, the holders would not be entitled to the rights, nor subject to the liabilities of the owners of the shares; they could only become owners by a sale and purchase of the stock pledged, on failure of the pledgee to pay the debt.” Per Nelson, J. Becher v. Wells Flouring Mill Co., 1 McCrary (U. S.), 62. The jury specially found in this case that on June 29, 1893, after the consolidation, Taintor & Holt were still the owners of the stock and that on that date they received from the plaintiff in error all of the stock which they were entitled to receive by reason of their ownership of the Cable Co. stock. It appears therefore, the plaintiff in error having performed its agreement as to the registered and actual owners of the stock, that it is now sought to compel it to perform again, or account for the value of the stock, to a pledgee, who has not shown that it was entitled to more than a mere lien upon the stock at the time of the consolidation.

We return now to the stockholders’ agreement, which contains the following stipulations:

“The undersigned stockholders of the Cleveland City Cable Railway Co. hereby appoint, and irrevocably designate, Frank DeH. Robison and John J. Shipherd as their agents and proxies to carry out this agreement and perfect said consolidation, and they are hereby authorized to attend any and all stockholders’ meetings of the Cleveland City Cable Railway Co. called for the purpose of carrying out the terms of this agreement, and to vote all the stock standing in the name of each of the undersigned, in such manner as they shall find necessary to carry out and ratify all of the purposes of this agreement, and each of the undersigned stockholders in said company hereby agrees to deliver to said two persons, or their chairman, at such time as they may designate, all of the stock held by him, to be exchanged 'for stock of the consolidated company, in proportion to the respective holdings of each as each shall be entitled to receive the same.
“The method of organization of the consolidated company, and all of the details with reference to it, and the working out of the settlement and adjustment of the details of this agreement, are left by all of the undersigned to said * * * Frank DeH. Robison and John J. Shipherd, committee for the stockholders of the Cleveland City Cable Railway Co., to be agreed upon and to be to the satisfaction of each of said committees.”

These stipulations being incorporated by reference in the agreement of consolidation, which was signed by all of the members of the firm of Taintór & Holt, they and their firm must be held to have assented to the appointment of Robison and Ship herd. “as their agents and proxies” for all the purposes therein named, and thereby agreed “to deliver to said two persons, or their chairman, at such times as they may designate, all of the stock held by them, to be exchanged for stock of the consolidated company, in proportion to the respective holdings of each as each shall be entitled to receive the same.” The stock certificates which were pledged by Taintor & Holt to the defendant in error, contained a provision that they were transferable on the books of the company only on surrender of the certificates. The utmost that can be claimed from this is that the duty was imposed on the Cable Co. to not transfer on its books without surrender of the certificates. But transfer on the books of that company was not asked for, nor was such a transfer by that company made. It was agreed by the directors of the constituent companies that 18,250 shares of the capital stock of the consolidated company should be distributed to the Cable Co. to be disposed of by that company, so far as necessary to liquidate its floating indebtedness, the remainder to be distributed among the holders of the stock of the company. The agreement was lawful, it was assented to by Taintor & Holt,, and on the part of the plaintiff in error it was fully performed by the issue of the 18,250 shares of stock to Robison and Ship-herd as “agents and proxies” for the Cleveland City Cable Railway Co. and its stockholders to carry out the agreement of consolidation in regard, thereto. The designation of Robison and Shipherd in the certificate as “trustees” instead of “agents and proxies,” does not alter the legal consequences of the transfer. Hence if there was any conversion of the shares belonging to Taintor & Holt it was not by the plaintiff in error and it is not liable therefor.

It is not for us to determine in this action whether the defendant in error has a cause of action against Robison and Shipherd or either of them, or against Taintor & Holt, or against the Cleveland City Cable Railway Co. It is sufficient now to determine that the plaintiff in error is not liable for the alleged conversion.

Judgments of the circuit court and that of the court of common pleas are reversed and judgment for plaintiff in error.

Burket, C. J., Spear, Shauck, Price and Crew, JJ., concur.  