T. A. JENNINGS, PLAINTIFF IN ERROR,
v.
THE SAUNDERS COMPANY, A CORPORATION, DEFENDANT IN ERROR
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A shareholder sold his claim to unissued stock certificates at an execution sale, but the corporation refused to issue the stock without full payment. The Florida Supreme Court held that the purchaser at execution sale acquired only the rights of the prior holder, taking the stock subject to the corporation's lien for unpaid subscription price.
The purchaser at execution sale took only the rights of the prior holder, subject to the corporation's right to hold the stock until payment was made. Jennings could not compel issuance without paying the full subscription price.
“Even if Sowell was the owner of the legal or equitable title to the unissued shares 'of capital stock, the purchaser at the execution sale took his rights thereunder with full knowledge of and subject to the rights of the corporation to hold the stock until the amount due thereon was paid.”
Establishes the core holding that execution sale purchasers take subject to the corporation's lien for unpaid subscription price
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Join FLexlaw to unlock all legal intelligenceJ. L. Sowell subscribed to 75 shares of The Saunders Company stock at $100 each but never paid for them. Stock certificates were prepared but never co…
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Per Curiam
— An alternative writ of mandamus was issued by the Circuit Court for Escambia County commanding The Saunders Company to transfer certain shares of its capital stock or to show cause for not doing so.
The return shows that in the organization of The Saunders Company, J.
L. Sowell, Jr., subscribed to seventy-five shares of the stock at $100.00, each, but the said Sowell has never paid the corporation for the stock nor made any payment on account thereof, nor has the said stock ever been issued to him; that stock certificates Nos. 9 and 10 were filled in for fifty and twenty-five shares respectively of the stock designed to be issued to the said Sowell in accordance with his subscription and were signed by the president of the corporation, but were never signed by the secretary thereof, nor was the seal of the corporation attached thereto, nor were the said shares of stock ever issued or delivered to the said Sowell; that said Sow-ell delivered to the corporation his note payable June 30th, 1909, for $750.00, due upon said subscription, and the note was held by the corporation for the purpose of issuing the stock should payment therefor be made by Sow-ell in accordance with his subscription; that after the note became due and unpaid, it was agreed between the corporation and Sowell that the subscription and note should be canceled and the stock returned or the claim of Sowell surrendered; that the note was surrendered to Sowell; that at the time of the levy of the execution under which the relator claims, The Saunders Company,.by its secretary and treasurer, made return to the Sheriff that nothing had been paid upon the subscription to the stock by Sowell, and that the company held the note of Sowell for the subscription price, and that T.
A. Jen nings, the relator, purchased the stock under the execution sale with full knowledge that no payment had been made on the stock; that respondent declined to issue the stock to relator unless he paid for the same, which relator declined to do. The court overruled a demurrer to the return, and the relator not desiring to further plead to the return a judgment for the respondent was rendered, and a writ of error thereto was taken by the relator. Even if Sowell was the owner of the legal or equitable title to the unissued shares ‘of capital stock, the purchaser at the execution sale took his rights thereunder with full knowledge of and subject to the rights of the corporation to hold the stock until the amount due thereon was paid. See Section 2556 of the General Statutes of 1906. The relator has “all the rights and liabilities of the prior holder” and no other. Judgment affirmed.
Whitfield, C. J., and Taylor, Shackleford, Cockrell and Hocker, J. J., concur.