time, to register a transfer of stock when an adverse claim thereto is made.
The position of Plastics in this matter is set forth in the Burkhart affidavit mentioned earlier in this opinion, wherein it is stated that Plastics received notice from Scharps that he claimed ownership of the stock registered in plaintiff's name, and that Scharps had instituted an action in the federal court in Florida for a rescission of the transfer of the shares he had made to plaintiff. The affidavit then concludes with the statement that Plastics, not being able to make a determination with respect to the conflicting claims to the stock, refused to allow a transfer to be made of the certificates in question.
This statement of position by Plastics, on its face, presupposes an adverse claimant dealing at arms length with the corporation of which he is a stockholder. But this Court cannot shut its eyes to the relationship existing between the adverse claimant and his corporation, and the latter's conduct by reason thereof. That Scharps dominated and controlled the actions of Plastics in this case is clear. The corporate entity, Plastics, is, in reality, being used by its president, Scharps, to defeat a transfer of stock in which the corporation has no interest. It was Scharps who ordered Registrar not to register any transfer of plaintiff's stock without the express approval of Scharps. It was Scharps who caused Plastics to give Registrar a corporate indemnity agreement to hold Registrar harmless for any damage it might sustain by reason of its refusal to register a transfer of plaintiff's stock, in which stock the corporate indemnitor had no interest. It was Scharps who instituted the action in Florida, which has since been dismissed. Under the circumstances here existing, Plastics is chargeable with full knowledge of the Scharps claim from its very inception. It has done absolutely nothing with respect to that claim, except to join with Scharps in the Florida action in the unsuccessful attempt to keep the record ownership of plaintiff's shares in plaintiff's name.
There are no disputed issues of material facts in this case that would preclude the granting of a summary judgment. No adequate reason has been presented to this Court in justification of Plastics' refusal to permit a transfer of plaintiff's stock. If it is argued that the Scharps lawsuit in Florida justified a refusal to transfer, that litigation is no longer pending. Other than this lawsuit, the record is barren of any effort made by Plastics to inquire into the adverse claim asserted by Scharps and to take any action with respect thereto vis-a-vis plaintiff's request to have his stock transfer registered on the books of Plastics. A refusal to register a transfer of stock must be based on something more substantial than the mere assertion of an adverse claim, and that "something" is lacking here. O'Neil v. Wolcott Mining Co., 174 Fed. 527, 533 (8 Cir. 1909); Holmes v. Birtman Electric Co., 18 Ill.2d 554, 165 N.E.2d 261, 268, 75 A.L.R.2d 735 (1960).
It is to be noted at this point that counsel for Plastics has informed this Court that in connection with the dismissal of the Scharps action in Florida, leave was given to Scharps to file an amended complaint within twenty days from the order of dismissal, which is dated May 18, 1965. The Court is also informed that it is Scharps' intention to file an amended complaint. Be that as it may, the issue before this Court, as previously pointed out, is limited to a determination of plaintiff's right to have a transfer of his stock registered on the books of Plastics. Whether or not Scharps can establish his claim to that stock as against plaintiff in some other proceeding is another matter, with which this Court is not presently concerned.
If at any time it could be said that there was justification for Plastics' refusal to register a transfer on its books of plaintiff's stock, that time has long since passed. There are no legal restraints against Plastics that would prevent it from making the requested transfer. No adequate reason has been shown why such transfer should not be made. This Court will, therefore, direct Plastics to register a transfer of plaintiff's stock to himself and to his nominee, free of any restrictions, and in accordance with the letter of Milton V. Freeman, Esquire, dated March 10, 1965, addressed to defendant Registrar, and marked Exhibit F annexed to the complaint filed in this action on March 24, 1965.
The motions of defendants for a stay of the action in this Court pending a determination of the Florida action have become moot in view of the disposition made of that matter, and hence they will be denied. The motions of defendants to transfer this action to a federal court in Florida pursuant to 28 U.S.C.A. § 1404(a) will be denied because the action, in the first instance, could not have been brought in that District. Hoffman v. Blaski, 363 U.S. 335, 4 L. Ed. 2d 1254, 80 S. Ct. 1084 (1960).
This opinion shall constitute findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
Counsel for plaintiff, on notice to counsel for defendants, will please submit an appropriate order.
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