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Page 379
82 A.2d 379 
7 Terry 102, 46 Del. 102
MASTELLONE
v.
ARGO OIL CORP.
No. 2 November Session, 1950.
Supreme Court of Delaware.
July 5, 1951.
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 to
furnish equivalent stock, this action of
trover was brought for conversion of the
plaintiff's shares.
The merger agreement contained
the following language pertaining to
exchange of stock certificates: 'On and
after November 5, 1936, certificates
representing said shares of stock in Argo
Oil Corporation shall be delivered to each
shareholder in Argo Oil Company by the
Secretary of Argo Oil Corporation upon the
surrender to said Secretary at the office of
the company, 1104 First National Bank
Building, Denver, Colorado, of certificates
representing an equal number of shares in
Argo Oil Company.'
[46 Del. 106] Further, stock
certificate No. T02759 contained on it,
among other language, the following
descriptive clause relating to the entire
issue of capital stock of the said company:
'* * * transferable on the books of the
Company in person or by attorney upon
surrender of this certificate properly
endorsed.'
In the court below three defenses
were pleaded, but we are concerned only with
the one interposing the Statute of
Limitations,
Page 382
Rev. Code 1935, § 5129, as amended, 46 Del.
Laws, c. 115. On that defense defendant
moved for summary judgment on the pleadings,
admissions, and a deposition, and in due
course the trial court granted the motion.
In respect to the summary judgment so
granted, plaintiff has sued out this writ of
error.
The plaintiff's first argument is
that the issuance of stock certificate No.
571 was not a conversion of the ninety
shares represented by stock certificate
T02759. The reasoning by which this
conclusion is reached depends upon
acceptance of several successive
propositions. To begin with, plaintiff
asserts that Argo Oil Company first issued
to Hall what plaintiff calls a 'replacement'
certificate, which Hall, in turn, presented
to the corporation, in exchange for which
the corporation issued stock certificate No.
571. Further, plaintiff asserts that a
defunct corporation such as Argo Oil Company
had no power to do anything at all, and,
therefore, the replacement certificate which
he says was issued was without legal effect.
Next, plaintiff says that the defendant
corporation could not issue a stock
certificate in exchange for any other
certificate unless a valid certificate for
the shares in question was first physically
surrendered. This last point in the series
is, in turn, based upon a double foundation:
the above-quoted language of the merger
agreement as to surrender of stock and the
similar language appearing on stock
certificate No. T02759. In summary,
plaintiff says that since no valid
certificate was surrendered because the
valid one was elsewhere, that is, in the
plaintiff's possession, and no other valid
one could have been issued by Argo Oil
Company after its existence had been
terminated, therefore, the transaction that
took place was no conversion at all, but
only a [46 Del. 107] voluntary gift of
ninety shares of stock to A. A. Hall &
Company.
The trial court overruled this
argument. It found as facts that Argo Oil
Company issued a replacement certificate and
that defendant corporation issued stock
certificate No. 571 in exchange therefor.
The trial court, however, considered that no
legal defect underlay such a transaction. It
held that while a defunct corporation could
not carry on the business purposes for which
it was created, nevertheless, termination of
corporate existence did not deprive the
general public of the power to trade in the
property represented by the remains of the
corporate structure, and that the statutory
provisions contained in Section '60', Rev.
Code 1935, § 2092, of the Delaware
Corporation Law, did not go so far as to
prevent a corporation from complying with
the demands of stockholders and issuing
certificates from time to time to reflect
the current status of ownership of shares
therein.
Upon this record we cannot find
with the trial court that Argo Oil Company
in fact issued any stock certificate or any
replacement certificate. That it may at one
time have planned to do so, to be sure, is
suggested by a recital in a bond to which
this defendant was not a party. On the other
hand, there is direct evidence that Argo Oil
Company did not in fact issue the
certificate.
Nevertheless, we have concluded
that no finding of fact on this point is
required, for we are unable to accept
plaintiff's indispensable premise that
defendant could issue no valid certificate
without surrender of a valid certificate. We
are of the opinion that if a corporation is
indifferent to the consequences, it can
convert a stockholder's shares without bond,
affidavit, surrender of certificate or
anything else. We believe that this portion
of the case is controlled by the provisions
of Sections 70 and 71 of the Delaware
Corporation Law, appearing in Revised Code
of Delaware, 1935, as paragraphs 2102 and
2103, respectively. These two sections of
our Code provide in detail the procedural
steps to be taken by stockholders in a
Delaware corporation[46 Del. 108] who may
have been unfortunate enough to have
certificates of stock lost or destroyed.
They provide first for application to
management for the issuance of replacement
certificates, and failing favorable action
by management, for resort to the courts on
petition for a rule to show cause why new
certificates should not be issued. Upon a
proper showing, it is mandatory for
Page 383
a Delaware corporation to issue a
certificate of stock in such circumstances.
The only discretion afforded by the statute
concerns the terms of issuance. Management
may or may not require the posting of a bond
adequate for its protection, although the
courts lack the power to dispense with that
requirement against the corporation's will.
The interpretation which plaintiff puts upon
the language in the merger agreement and
that on the stock certificate would be quite
irreconcilable with the statute. Surely a
stock certificate cannot be surrendered if
it is 'lost or destroyed'. There might be
serious question as to whether any
provisions in the merger agreement or on the
stock certificate contrary to the provisions
of Sections 70 and 71 of the Delaware
Corporation Law would be valid. However, we
find no such contrary connotation. To us, it
appears that the language in the merger
agreement and on the stock certificate
contemplates the statute and is entirely
consistent with it. The language simply
assumes the usual facts of existence and
accessibility of all certificates. It does
not refer to the occasional instances of
loss or destruction of certificates. That
relatively unusual situation is covered by
the statute and implied in the language of
the merger agreement and the stock
certificate.
We are not concerned by any
problem which presumably could arise if a
trial were allowed and if it should be
developed at the trial that the facts accord
with the assumed circumstances most
favorable to plaintiff, namely, that Argo
Oil 'Company' did issue a certificate and
that the defendant corporation never
received any bond, affidavit, or any formal
writing of demand. Our reasoning is clearly
not to be affected by the presence or
absence of any certificate issued by Argo
Oil 'Company'. [46 Del. 109] It is
sufficient for us that defendant issued a
new certificate in lieu of the old one.
Plaintiff could have relied upon his
certificate and sued for compulsory transfer
of his shares, or he could have regarded the
act as conversion and sued for the tort. His
property was given away to someone else who
had no right to receive it. Requiring an
affidavit, as we have already pointed out,
was a discretionary matter with the
management. Likewise, it is discretionary
and quite immaterial whether any bond was
required or not. The only importance of a
bond would be to determine whether the
surety company or the defendant would have
the financial burden to bear if timely suit
were brought for the tort.
Having decided that a conversion
took place when stock certificate No. 571
was issued, we are next confronted by the
contention that the Statute of Limitations,
which under our law begins to run when the
cause of action 'accrues', does not begin to
run in a situation of this kind until the
person whose property has been converted has
knowledge of the commission of the tort.
Some principles of fairness appear at first
view to commend that argument, but precedent
saves us from a serious problem. It is well
established in common law jurisdictions
generally that ignorance of the facts is in
the ordinary case no obstacle to the
operation of a Statute of Limitations. There
are, of course, certain well defined
exceptions, such as infancy, incapacity,
certain types of fraud, or concealment of
the facts which would have disclosed the
tort; but plaintiff has not pointed to any
authority, and we have found none,
indicating that this case falls within any
of the known exceptions to the rule. We
again approve the Vice-Chancellor's view of
the law on this point as expressed in Wise
v. Delaware Steeplechase & Race Ass'n,
Del.Ch., 39 A.2d 212; affirmed Del.Ch., 45
A.2d 547, 165 A.L.R. 830. There is no
suggestion of concealment or fraud in this
case. Plaintiff's long-maintained ignorance
of what happened to his stock, therefore,
gives him no aid.
In deciding, as we have done,
that ignorance of a conversion [46 Del. 110]
does not impede the operation of the Statute
of Limitations, we acknowledge that other
courts have indicated a contrary opinion.
Holly Sugar Corporation v. Wilson, 101 Colo.
511, 75 P.2d 149. Sharon v. Kansas City
Granite & Monument Co., 233 Mo.App., 547,
125 S.W.2d 959;
Cleveland Mahoney Railroad Co. v. Robbins,
35 Ohio St. 483. Nevertheless, we find
the Delaware rule
Page 384
to be as we have here described it, and we
believe ours to be the rule in the majority
of common law jurisdictions. 37 Corpus
Juris, 969, 54 C.J.S., Limitations of
Actions § 205.
Plaintiff has also earnestly
pressed the argument that the tort of
conversion is actually not committed until
there has been a demand for the delivery of
the property and a refusal to surrender it.
In some instances, as for example, when a
man lends a chattel to another, it would be
wholly unconscionable to permit the bailor
to sue and recover judgment and costs of
conversion against the bailee until the
court could be convinced that there had been
an actual effort to withhold the property.
Therefore, in such a case, in the absence of
a demand and refusal, the court could not
give the plaintiff judgment in trover. On
the other hand, if a person should consume,
sell, destroy, or otherwise dispose of the
article loaned, there would be no purpose in
demanding its return. The law generally
never requires that a person go through the
motions of doing what would be futile or
demanding that another do what he has put it
out of his power to perform. To us the
purpose of the 'demand and refusal' rule, in
those cases where it applies, is simply to
settle whether there has been a conversion
or not. If from other circumstances it is
clear that the tort has been committed, the
question needs no such further settlement,
and the court moves on to whatever other
questions are in the case, usually the
assessment of damages. This court
established precedent for our view
Drug, Inc. v. Hunt, 5 W.W.Harr. 339, 169 A.
87, but we especially admire Judge
Woolley's statement of the rule as it
appears in his Delaware Practice, Vol. 2,
Section 1520.
In our opinion there is no
requirement in a case such as the [46 Del.
111] one before us that there first be a
demand and refusal to transfer. The
conversion was committed when stock
certificate T02759 was cancelled on
defendant's books and the new certificate
No. 571 issued for the same stock. The
conversion occurred on or before the 21st
day of January, 1937, and the operation of
the three-year Statute of Limitations began
immediately. Plaintiff's right of action in
this case expired at the latest by the 20th
day of January, 1940. This suit was not
instituted until the 5th day of May, 1949.
A decree will be entered
affirming the judgment of the Superior
Court.
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