demanded of the bank the appropriate entry of the transfer on its books. Baum then being in failing circumstances, and indebted to the bank in a sum greatly exceeding the value of the stock, it refused compliance with Sather's demand. Soon afterward Sather died, and in April, 1888, said shares and certificate were by decree of court distributed to the plaintiffs in trust under the will of said deceased. Meanwhile, on March 10, 1887, the bank sold and transferred to the firm of Greenebaum & Co., at a large discount, the indebtedness held by it against said Baum. On July 3, 1888, plaintiffs produced to the bank the proofs of their ownership of the stock as trustees under Sather's will and demanded registry of the transfer on the books, which the bank refused unless plaintiffs would pay the balance of its claims against Baum above the amount received from Greenebaum & Co. The stock was then worth two hundred dollars per share, and dividends had been declared and had become due thereon since September 13, 1886, amounting to eleven hundred and ten dollars. Plaintiffs brought this action for the conversion of the stock and such dividends, laying their damages at thirteen thousand four hundred and seventy dollars. Afterward, and before the trial, the value of the stock rose to two hundred and eighty-one dollars per share. These facts, among others, being found by the court, or admitted by the pleadings, the court held that there had been no conversion by defendant, and rendered judgment in its favor.

It appears from the opinion of the learned judge of the court below, accompanying the findings, that the judgment went upon the ground that from the nature of corporate shares there can be no actual conversion thereof; that the fiction of a constructive conversion of such property can be indulged only when, under the rules of law, the owner is entitled to consider himself deprived of the same; and that here the rules of law. forbid such result, since the effect would be to vest the bank with the property in its own shares, contrary to

the policy of the law. The argument in this court in support of the judgment follows quite similar lines. It is not claimed that defendant had the legal right to refuse plaintiff's demand for registry of the transfer, its lien having been lost by the sale and transfer to Greenebaum & Co.

We are not convinced that there is any fiction in ascribing the term "conversion" to the defendant's refusal; but, however this may be, there is at the present day no difficulty in applying the remedy which was afforded by the common-law action of trover to a case where the owner of corporate shares has been wrongfully deprived thereof, even though his possession of the certificate evidencing his title has not been disturbed. (Payne v. Elliott, 54 Cal. 339; 35 Am. Rep. 80; see People v. Williams, 60 Cal. 1; Dodge v. Mejer, 61 Cal. 405.) "It may be stated as a rule," says an eminent author, though he dissents from its principle, "that where a corporation refuses to allow a transfer of shares upon its books, the assignee may treat this as a conversion of his shares, and sue the company for their value." (Morawetz on Corporations, sec. 217.) Such is the law as declared and enforced in this state. (Kimball v. Union Water Co., 44 Cal. 173; 13 Am. Rep. 157; Fromm v. Sierra Nevada etc. Co., 61 Cal. 629.) A suit in equity where registration of the transfer may be compelled or damages recovered as an alternative may be preferable, but it is not exclusive of the remedy invoked in this action. (Morawetz on Corporations, secs. 216-21; Cook on Stocks and Stockholders, secs. 289-92.)

The argument that the corporation becomes the owner of the shares converted, and hence that its stock is reduced otherwise than in the manner provided by law (Civ. Code, sec. 359), and hence further that such conversion is legally impossible because contravening the policy of the law, has no great force. If necessary to save itself from loss, the bank might have contracted for and have received the title to these shares in payment of Baum's debts to it, and the transaction would

have been perfectly legal. (Ex parte Holmes, 5 Cow. 426.) With the same purpose in view the bank, apparently in good faith and under claim of right, refused the registry, and this had the undesigned effect of converting the shares; and it is not perceived how acquisition of title by this means can, though wrongful as regards the plaintiffs, be more obnoxious to public policy than by contract in the case supposed. The authorized capital is not reduced, for the shares are not extinguished, but may be reissued. (Cook on Stocks and Stockholders, sec. 314; Morawetz on Corporations, sec. 434; Bank of San Luis Obispo v. Wickersham, 99 Cal. 655.) Cases may arise where no conversion by the corporation should affect the status of a stockholder in his relations to creditors of the corporation, but no such consideration is here presented. (2 Thompson on Corporations, 2055, et seq.)

Baum being indebted to the bank at the time of Sather's demand for entry of the transfer in 1886, the bank's refusal at that time was justified (Jennings v. Bank of California, 79 Cal. 323, 12 Am. St. Rep. 145), and there was no conversion until the similar demand on July 3, 1888. Several years elapsed between the commencement of the action and the trial, and there is no finding that the action has been prosecuted with reasonable diligence; the measure of damages for the conversion of the shares is, therefore, their value at that time with interest. (Civ. Code, sec. 3336.)

But we do not see how appellant can, in this action, recover the dividends prayed for. The theory of the complaint is that respondent at a certain time, converted the stock. Appellant would therefore be entitled, upon his own averment, to recover the value of the stock at that time, with legal interest thereon since that date. Such is the measure of damages established in this state, except where, under certain circumstances not existing here, the highest market value at any time between conversion and the verdict may be recovered (Civ. Code, sec. 3336); and it matters not what the rule

may be elsewhere. Now, the value of the stock, as such, is alleged to have been at that date two hundred and six dollars per share, amounting to twelve thousand three hundred and sixty dollars; and there is no provision for adding to the measure of damages for property converted, dividends, or other incidents. If, under the circumstances of this case, appellant could recover the dividends as a separate cause of action, he could do so only after a demand made for the same, which was not averred. (Bills v. Silver etc. Min. Co., 106 Cal. 9; Opinions of Beatty, C. J., and Garoutte, J., and cases there cited.)

There is no necessity for a new trial. The judgment is reversed, and the cause remanded with instructions to the court below to render judgment for plaintiff in the sum of twelve thousand three hundred and sixty dollars, with interest thereon from July 3, 1888.

MCFARLAND, J., concurring.-I concur in the judg ment solely on the authority of previous decisions of this court, and particularly Kimball v. Union Water Co., 44 Cal. 173, 13 Am. Rep. 157, and Fromm v. Sierra Nevada etc. Co., 61 Cal. 629. If the question were an open one, I would hold, with the court below, that the refusal of a corporation to make a transfer on its books of shares of stock from one stockholder to another is not a conversion of such stock by the corporation.

[Sac. No. 18. Department One.—March 31, 1896.]

J. E. SHOOBERT ET AL., APPELLANTS, v. ANTONIO MANUEL DE MOTTA, RESPONDENT.

CHATTEL MORTGAGE-DOMESTIC ANIMALS-TITLE TO OFFSPRING.-The rule that a chattel mortgage of domestic animals extends to the increase of the animals during the life of the mortgage, whether the terms of the mortgage includes such increase or not, can only apply where the mortgage passes title to the property mortgaged. It does not apply in this state under the provisions of the Civil Code by which the mortgagor is not divested of the title to the mortgaged property, by the execution of the chattel mortgage, but still remains its owner, while the

mortgagee has only a lien thereon, but the mortgagor, who retains the possession of the mortgaged property, is entitled to whatever income or profit may be derived from the use of the property, and is the owner of the offspring or increase of domestic animals mortgaged, which are be gotten and born after the execution of the mortgage, and prior to its foreclosure.

APPEAL from a judgment of the Superior Court of Tulare County and from an order denying a new trial. W. W. CROSS, Judge.

Dixon L. Phillips, and Robert Harrison, for Appellants.

The thirteen hundred head of lambs in controversy, being the natural increase of the band of sheep described in plaintiffs' mortgage, were, in law, mortgaged to the plaintiff. (1 Cobbey on Chattel Mortgages, secs. 365, 366; 3 Am. & Eng. Ency. of Law, 186; Arkansas Cattle Co. v. Mann, 130 U. S. 78; Meyer v. Cook, 85 Ala. 417; Dyer v. State, 88 Ala. 225; Cahoon v. Miers, 67 Md. 573; Forman v. Proctor, 9 B. Mon. 124; McCarty v. Blevins, 5 Yerg. 195; 26 Am. Dec. 262; Evans v. Merriken, 8 Gill & J. 39; Fonville v. Casey, 1 Murph. 389; 4 Am. Dec. 559; First Nat. Bank v. Western etc. Co., 86 Tex. 636; Edmonston v. Wilson, 49 Mo. App. 491; Jones on Chattel Mortgages, secs. 149, 150; Civ. Code, sec. 2955.)

Bradley & Farnsworth, for Respondent.

The lambs in question were not included in the property mortgaged, because they were conceived at least two months after the execution of the mortgage; also because, under our statute, the mortgage must expressly so covenant, in order to include the increase when that is the intention. (Cobbey on Chattel Mortgages, sec. 365; Jones on Chattel Mortgages, sec. 150; Thorpe v. Cowles, 55 Iowa, 408; Civ. Code, sec. 2955.)

HARRISON, J.-June 22, 1893, one Cascalia executed a mortgage to the plaintiffs' assignor upon a band of sheep which were then in Kings county, consisting of seventeen hundred ewes and ten hundred and fifty lambs. The sheep were afterward removed to Tulare county,