
    Condouris v. Imperial Turkish, etc., Co.
    (New York Common Pleas
    General Term,
    March, 1893.)
    An action lies against a corporation for the conversion of its own stock.
    A conversion of a certificate of stock is, in legal effect, a conversion of the stock.
    An attachment lies against a foreign corporation for the conversion of its own stock.
    "When the defendant applies, upon the plaintiff’s papers alone, to vacate an attachment, the motion should he denied if these papers exhibit all the elements of an action for conversion.
    On such motion, in alleging a contract, it suffices to state its legal substance and effect, and if it he in writing, it is not necessary to produce the orignal or a copy.
    Appeal from an order vacating a warrant of attachment issued in favor of plaintiff. The opinion states the case.
    
      
      George E. Blackwell, for plaintiff (appellant).
    
      Abel E. Blackmar, for defendant (respondent).
   Pbyor, J.

The appeal is from an order vacating a warrant of attachment. As the motion to vacate proceeded on the papers upon which the attachment issued, it was in the nature of a demurrer, and, in the disposition of the appeal, we are to assume every fact apparent in those papers.

The grounds of the attachment were that the defendant is a foreign corporation and had converted personal property of the plaintiff.

The facts exhibited are : That, by an agreement in writing, the defendants employed the plaintiff for a year from November, 19, 1891, at an annual salary of $1,200, payable in weekly installments; that plaintiff stipulated to deposit with the defendant a certificate for fifty shares of the capital stock of defendant company, and to leave the same with the defendant as security for the faithful performance of his duties, and in the meanwhile that he would ■ not sell or pledge the stock ; that plaintiff duly performed all the conditions of the said agreement on his part, and on the 19th of November, 1891, duly indorsed, deposited and left with the defendant the said certificate of stock; that the plaintiff faithfully served the defendant as its employee until the 4th day of June, 1892; that ever since the 23d day of April, 1892, the defendant has failed and refused to pay the salary of the plaintiff; that as the president of the defendant company had instructed its treasurer not to pay any further salary to the plaintiff and the defendant wholly refused to keep its agreement in that respect, the plaintiff was obliged to and had determined to seek other employment; that thereupon the plaintiff duly demanded the return of his said certificate of stock, but the defendant refused and still refuses to deliver it to him and has converted it to the defendants’ own use; that the value of said stock is $5,000, and that the action is brought for the conversion of the stock.

That an apparent cause of action is the indispensable condition. of an attachment, is true enough (Reilly v. Sisson, 31 Hun, 572), hut wherein is the statement of fact by the plaintiff insufficient to show a right of recovery in trover ?

The certificate was the property of the plaintiff; it .was-deposited with the defendant as security for the faithful discharge of plaintiff’s duties during the stipulated period of his employment; he did faithfully discharge those duties; nevertheless, the defendant wrongfully refused to pay his salary and declared its purpose to persist in that refusal. This repudiation of the agreement by the defendant authorized the plaintiff, at his election, to treat the contract as rescinded; he did so treat it, and accordingly demanded the return of his certificate, which was refused; and the defendant converted the stock to its own use, to the plaintiff’s damage in the sum of $5,000. Here, beyond question, are grouped together all the elements of an action for conversion.

It cannot be said that non constat but defendant retained the certificate for some past default of the plaintiff, for the allegation is that he faithfully discharged the duties of his employment.

It may not be objected that non constat but plaintiff is still in the service of the defendant; and that so defendant has a right to retain the certificate as security against his future delinquencies; for, the unequivocal averment is that, on the repudiation of the agreement by the defendant, he determined. to seek other employment, and remained with the defendant no longer than the 4th of June, 1892.

It cannot be contended that the plaintiff failed to notify the-defendant of his election to accept its refusal to perform as a rescission of the contract, for the demand of the certificate was the legal equivalent of such notice. But, indeed, notice of his election was not necessary to the rescission. Kipley v. Hazelton, 3 Daly, 329.

It cannot be argued that a certificate of stock or the stock itself, is not the subject of conversion, for the contrary proposition is established by irresistible authority. Anderson v. Nicholas, 28 N. Y. 600; McAllister v. Kuhn, 96 U. S. 87, 89; Budd v. Company, 53 Am. Rep. 355 ; Payne v. Elliott, 35 id. 80; Daggett v. Davis, 51 id. 91, per Cooley, C. J.; Hughes v. Vermont, etc., Company, 72 N. Y. 207.

It cannot be pretended that the stock in controversy was not the subject of conversion, because non constat that the certificate was available for an appropriation of the stock to defendant’s use (Daggett v. Davis, 51 Am. Rep. 91), for the allegation is, that the certificate was duly indorsed by the plaintiff.

But the defendant challenges the sufficiency of the complaint upon three grounds:

1. That the affidavit does not disclose by legal evidence a cause of action; since, not the i/psissima verba but only the substance and effect of the contract between the parties are set forth. The contention is invalid, because, first, non con-stat but that the very terms of the agreement are reproduced in the language of the affidavit; second, an affidavit on attachment need only show a right of recovery, and in pleading a contract it may be stated according to its legal effect. Indeed a verified complaint is itself sufficient as an affidavit. Code, § 3343, subd. 11. The allegation of the affidavit is clearly adequate. Allen v. Meyer, 7 Daly, 229; Lanier v. Bank, 9 Civ. Proc. Rep. 161; Sanders v. Soutter, 126 N. Y. 193.

2. That the right of the defendant to the custody of the certificate was not only as security for the good conduct of the plaintiff, but also to prevent his selling or pledging it during the stipulated period of his employment, namely, for twelve months; and that as that period is not yet elapsed, the defendant may still retain the certificate as a safeguard against such transfer. The meaning of the contract indisputably is, that the plaintiff should not, by a transfer of the title of the stock, make it an illusory security for his fidelity ; and so the defendant’s interest in its possession was commensurate only with the term of his actual employment. Inevitably, the rescission of the agreement and the cessation of the employment determined defendant’s right to retain the certificate.

3. That the refusal of the defendant to deliver the certificate was not a conversion of the stock. If the proposition be true, it is nothing to the purpose, for a conversion of the certificate is actionable, and entitles to damages to the value of the stock. Daggett v. Davis, 51 Am. Rep. 91. The corporation is not in any sense the owner of the shares, those being vested in the original proprietors ” (Denio, J., in Bank v. Bank, 20 N. Y. 501, 505) ; and the conversion of the certificate by the defendant was a conversion of the stock. Anderson v. Nicholas, 28 N. Y. 600; McAllister v. Kuhn, 96 U. S. 87; Budd v. Company, 53 Am. Rep. 355; Daggett v. Davis, 51 id. 91; Arnold v. Bank, 27 Barb. 424, 427 ; Boone Corp. § 122.

It is objected that a recovery by plaintiff and a satisfaction of the judgment, will vest the title to the stock in the defendant, contrary to the statute which forbids a corporation “ to apply any portion of its funds, except surplus profits, to the purchase of its own stock.” But, clearly, here would be no purchase of its stock by the defendant, and no application of its funds to such purchase. The effect of a judgment and satisfaction in assumpsit for refusal to transfer its stock, is to vest the property in the corporation; but this consequence is no answer to the action. Commercial Bank v. Kortright, 22 Wend. 348; and citations in note to the case, 34 Am. Dec. 329; De Comeau v. Company, 3 Daly, 218, 220.

The papers upon which the warrant of attachment issued were sufficient to sustain it; and it should not have been vacated. Allen v. Meyer, 7 Daly, 229 ; Easton v. Malavazi, Id. 147.

Order reversed, with costs.

G-iegeeioh, J., concurs.

Order reversed.  