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Mastellone v. Argo Oil Corp.

Supreme Court of Delaware

July 5, 1951


Action by Amedeo Mastellone against Argo Oil Corporation for conversion of stock. The Superior Court, New Castle County, 76 A.2d 118, granted summary judgment for defendant and plaintiff brought error. The Supreme Court, Tunnell, J., held that conversion of stock purchased by plaintiff under certificate assigned in blank by registered owner occurred when corporation issued new certificate to registered owner on theory that certificate originally issued had been lost or destroyed and that three-year statute of limitation began to run against cause of action for conversion at that time, though plaintiff did not apply for transfer of stock to his name or learn of conversion until several years later.

Judgment affirmed.

Demand for delivery of property and refusal to surrender it are not necessary to constitute conversion of property if it is clear from other circumstances, such as consumption, sale, destruction or other disposition of property, that the tort has been committed.

Page 380

[46 Del. 103] Arthur G. Logan and Samuel R. Russell, (of Logan, Marvel & Boggs), of Wilmington, for appellant.

William S. Potter and James L. Latchum (of Berl, Potter & Anderson), of Wilmington, for appellee.

TUNNELL, Justice, and TERRY and CAREY, Judges, sitting.

TUNNELL, Justice.

On the 11th day of August, 1925, Argo Oil Company, a corporation of the State of Delaware, issued to A. A. Hall & Company certificate No. T02759 for ninety shares of its capital stock. On the 3rd day of January, 1927, A. A. Hall & Company assigned the said certificate in blank, the signature being duly guaranteed. What happened to the certificate after January 3rd, 1927, and prior to May 3rd,

Page 381

1929, is not completely reported in the record. On the 3rd day of May, 1929, the said certificate was sold by a New York broker, whose identity is not here material, to the plaintiff-below, appellant, hereinafter referred to as the ‘ plaintiff’ . From May 3rd, 1929, until April 22nd, 1948, the plaintiff made no application to have the shares transferred to his own name, leaving them registered on the books of the company all the while, so far as he knew, in the name of A. A. Hall & Company. Although dividends were paid on these shares at least once each year from 1934 to 1948, inclusive, the plaintiff never received any such dividend. The defendant, in fact, never knew the plaintiff as a stockholder or a person claiming ownership of stock until it received a letter from plaintiff, dated April 22nd, 1948, asking for transfer of the shares to plaintiff's name.

On the 9th day of November, 1936, Argo Oil Company, together with another corporation in which we have no interest, merged, the surviving corporation being Argo Oil Corporation, the defendant-below, appellee, hereinafter referred to as ‘ defendant’ . A. A. Hall & Company, being a stockholder of record, received notice of the merger proceedings, but could not locate its certificate No. T02759. On the 30th day of December, 1936, A. A. Hall & Company, upon affidavit that the certificate could not be surrendered because it was lost or destroyed, and upon execution of a bond with surety, made payable to Argo Oil ‘ Company’, obtained a substitute certificate for ninety shares, being certificate No. 571.

[46 Del. 105] The above-mentioned bond was executed December 30, 1936, but, nevertheless, contained a recital indicating that Argo Oil ‘ Company’ had ‘ agreed to issue’ a new certificate. This bond was executed by A. A. Hall & Company and by a surety. There is in the record affirmative evidence indicating that certificate No. 571 was issued directly from the defendant corporation to A. A. Hall & Company, and indicating that no Argo Oil ‘ Company’ certificate was in fact issued to replace certificate No. T02759.

Certificate No. T02759 may have been lost or stolen, but it had not been destroyed, because from May 3rd, 1929, it had been, and still is, so far as this record indicates, in the possession of the plaintiff. Certificate No. 571 was in due course traded by A. A. Hall & Company until the shares it represented came into the ownership of one Anne B. Hall. The date of issuance of certificate No. 571 is not in the record, but it had to be by or before the 21st day of January, 1937, for on that date, upon a transfer of the shares, certificate No. 571 was surrendered and a new certificate issued.

When the plaintiff, in 1948, tried to obtain a certificate in his own name, the defendant refused to make the transfer and by letter to plaintiff recounted the facts substantially as above outlined. There being no possibility of obtaining the ninety shares from Anne B. Hall, who had acquired her stock in a legal manner, and the corporation refusing either to pay damages for the conversion or ...

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