Hinman, C. J.
The attaching creditors, who are the real parties in interest in this cause, assume that by a course of decisions in Connecticut, stock in a corporation is held to be so peculiar in its nature and character that no transfer can be made of it, or even any equitable interest acquired in it, as against attaching creditors, unless by an actual transfer made upon the corporation books, or recorded in them, in the mode prescribed by the charter or by-laws of the institution ; and the cases of The Marlborough Manufacturing Co. v. Smith, 2 Conn., 579, Northrop v. Newtown & Bridgeport Turnpike Co., 3 id., 544, and Northrop v. Curtiss, 5 id., 246, subsequently sanctioned by more modern cases in our reports, as is claimed, are relied upon in support of the position. The first two of these cases, and the case of The Oxford Turnpike Co. v. Bunnel, 6 Conn., 552, do undoubtedly decide that, in actions at law, in cases where the legislature in the act of incorporation either prescribe the mode of transferring stock, or authorize the company to do it in their by-laws, and the company do in their by-laws prescribe a mode as the only one to be pursued, that mode must be followed, or the legal title will not pass by an assignment which would be good at common law had no particular and exclusive mode of transfer been prescribed. These cases, and others to the same effect, being actions at law, conversant only with what at the time was considered the strict legal title to corporate stock, have necessarily no controlling force in a case depending upon equitable instead of legal principles. And although the case of Northrop v. Curtiss was upon a bill in chancery praying that the [34]*34legal title to certain, shares of stock might be transferred to the plaintiff, who claimed the equitable title thereto, yet the case itself shows that the plaintiff relied not only upon what he considered an equitable as distinguished from a legal assignment of the stock to himself, but more particularly upon the fact that the party from whom he claimed to have derived his title, such as it was, had only an equitable interest in the stock to assign, and therefore could not create in the plaintiff as his assignee any better title than he himself had in it; and it was upon this last ground that he insisted that the intervening attaching creditors took nothing, because, as he claimed, the debtor’s equitable interest was not the subject of an attachment. The court was of opinion that the debtor had a valid legal title at the time his stock was attached and taken in execution, and therefore that the plaintiff’s title, derived from him subsequently to the attachment, was of no validity, and on this ground dismissed the bill. It appears to us, therefore, that there is nothing in any of these cases that ought to control our determination of the present case, contrary to the strong equitable claim of the plaintiff, as shown in the facts found by the court, whatever may be thought of some of the remarks made by the judges in giving reasons for the decisions. On the contrary, the cases themselves, so far as they decide that there can be no legal transfer of stock except upon the books of the company, or by an assignment actually recorded on those books, may be regarded as authorities showing that the plaintiff has no legal title to the stock and is therefore justified in applying to a court of equity for relief.
Shares in the stock of a corporation are the subjects of sale, mortgage or pledge, and are liable to attachment and execution like other personal property. And when the question is between a vendee and an attaching creditor of the vendor, as to which of them has the better title, and it appears, as it does here, that the instrument of transfer or assignment was executed prior in point of time to the service of the attachment, then, if the vendee’s purchase was made in good faith and for a valuable consideration, as to which no question is made in [35]*35this case, it would seem that in equity his title ought to prevail, provided he has done all that the law requires of him, and all that it was possible for him to do, in taking such possession as the nature of the property is susceptible of. In regard to chattels there must be a substantial change of possession accompanying and following the sale, or it will, unexplained, be conclusive evidence of a fraudulent trust, which will render the sale void as to creditors. Possession being the usual indication of ownership in personal chattels, the law looks upon the purchaser’s neglect to take and hold possession of the property purchased as evidence that the sale was fictitious, and therefore, as to the vendor’s creditors, treats the property as still his, notwithstanding the sale. So in respect to the assignment of ordinary choses in action, there must be notice of the assignment to the debtor — the assignment conveying but an equitable interest in the thing, and notice to a trustee being in equity the ordinary and only practicable mode in which an assignee can protect his interest. And in the case of the purchase of stock in a corporation, there must be such a transfer of it as the legislature in the charter or by statute prescribes ; and notice of the assignment of choses in action, and the transfer required by statute of corporate stock, stand in lieu of the taking and retaining of the possession of personal chattels sold, being the only possession the nature of the property admits of. These elementary principles, for which surely no authority need be cited, it is necessary to bear in mind in considering a case of this sort; since, if a good reason is shown for not giving notice of the assignment of a chose in action, as was the case in Bishop v. Holcomb, 10 Conn., 444, or for the failure to procure a transfer of stock on the books of a corporation, as in this case, which would have been sufficient to excuse the taking possession of personal chattels sold, then upon the same principles upon which the taking possession in the latter case would be excused, it would seem that the act which is ordinarily required in order to perfect an assignment of a chose in action or of stock in a corporation ought in equity certainly to be also excused.
The application of these suggestions to the case in hand [36]*36seems quite obvious. We need not determine whether the written assignment of the stock by Mr. Jarvis passed the legal title or only an equitable title, since it is very clear that in either case it passed all the substantial interest, and left in him, if' any thing, only the technical legal title.
But the respondents claim that, so long as this bare legal title remained, with no knowledge on the part of his creditors that he had made the assignment, it was open to their attachments as his to the same extent as before the assignment. We think this too broad a claim. The ground on which stock sold but not legally transferred is open to attachment by the creditors of the vendor, is, as has been suggested, the same upon which personal chattels sold but retained in the possession of the vendor are liable to attachment by the vendor’s creditors. The principle in each case is, that the retention of possession is a badge of fraud — that is, is evidence of a fraudulent. secret trust. This is the reason given in the recent case of Shipman v. Aetna Ins. Co., 29 Conn., 245, why certain stock, sold by a written bill of sale but not transferred, was held to pass to the trustee in insolvency of the vendor; the trustee being held to have taken precisely as an attaching creditor would have done.
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Hinman, C. J.
The attaching creditors, who are the real parties in interest in this cause, assume that by a course of decisions in Connecticut, stock in a corporation is held to be so peculiar in its nature and character that no transfer can be made of it, or even any equitable interest acquired in it, as against attaching creditors, unless by an actual transfer made upon the corporation books, or recorded in them, in the mode prescribed by the charter or by-laws of the institution ; and the cases of The Marlborough Manufacturing Co. v. Smith, 2 Conn., 579, Northrop v. Newtown & Bridgeport Turnpike Co., 3 id., 544, and Northrop v. Curtiss, 5 id., 246, subsequently sanctioned by more modern cases in our reports, as is claimed, are relied upon in support of the position. The first two of these cases, and the case of The Oxford Turnpike Co. v. Bunnel, 6 Conn., 552, do undoubtedly decide that, in actions at law, in cases where the legislature in the act of incorporation either prescribe the mode of transferring stock, or authorize the company to do it in their by-laws, and the company do in their by-laws prescribe a mode as the only one to be pursued, that mode must be followed, or the legal title will not pass by an assignment which would be good at common law had no particular and exclusive mode of transfer been prescribed. These cases, and others to the same effect, being actions at law, conversant only with what at the time was considered the strict legal title to corporate stock, have necessarily no controlling force in a case depending upon equitable instead of legal principles. And although the case of Northrop v. Curtiss was upon a bill in chancery praying that the [34]*34legal title to certain, shares of stock might be transferred to the plaintiff, who claimed the equitable title thereto, yet the case itself shows that the plaintiff relied not only upon what he considered an equitable as distinguished from a legal assignment of the stock to himself, but more particularly upon the fact that the party from whom he claimed to have derived his title, such as it was, had only an equitable interest in the stock to assign, and therefore could not create in the plaintiff as his assignee any better title than he himself had in it; and it was upon this last ground that he insisted that the intervening attaching creditors took nothing, because, as he claimed, the debtor’s equitable interest was not the subject of an attachment. The court was of opinion that the debtor had a valid legal title at the time his stock was attached and taken in execution, and therefore that the plaintiff’s title, derived from him subsequently to the attachment, was of no validity, and on this ground dismissed the bill. It appears to us, therefore, that there is nothing in any of these cases that ought to control our determination of the present case, contrary to the strong equitable claim of the plaintiff, as shown in the facts found by the court, whatever may be thought of some of the remarks made by the judges in giving reasons for the decisions. On the contrary, the cases themselves, so far as they decide that there can be no legal transfer of stock except upon the books of the company, or by an assignment actually recorded on those books, may be regarded as authorities showing that the plaintiff has no legal title to the stock and is therefore justified in applying to a court of equity for relief.
Shares in the stock of a corporation are the subjects of sale, mortgage or pledge, and are liable to attachment and execution like other personal property. And when the question is between a vendee and an attaching creditor of the vendor, as to which of them has the better title, and it appears, as it does here, that the instrument of transfer or assignment was executed prior in point of time to the service of the attachment, then, if the vendee’s purchase was made in good faith and for a valuable consideration, as to which no question is made in [35]*35this case, it would seem that in equity his title ought to prevail, provided he has done all that the law requires of him, and all that it was possible for him to do, in taking such possession as the nature of the property is susceptible of. In regard to chattels there must be a substantial change of possession accompanying and following the sale, or it will, unexplained, be conclusive evidence of a fraudulent trust, which will render the sale void as to creditors. Possession being the usual indication of ownership in personal chattels, the law looks upon the purchaser’s neglect to take and hold possession of the property purchased as evidence that the sale was fictitious, and therefore, as to the vendor’s creditors, treats the property as still his, notwithstanding the sale. So in respect to the assignment of ordinary choses in action, there must be notice of the assignment to the debtor — the assignment conveying but an equitable interest in the thing, and notice to a trustee being in equity the ordinary and only practicable mode in which an assignee can protect his interest. And in the case of the purchase of stock in a corporation, there must be such a transfer of it as the legislature in the charter or by statute prescribes ; and notice of the assignment of choses in action, and the transfer required by statute of corporate stock, stand in lieu of the taking and retaining of the possession of personal chattels sold, being the only possession the nature of the property admits of. These elementary principles, for which surely no authority need be cited, it is necessary to bear in mind in considering a case of this sort; since, if a good reason is shown for not giving notice of the assignment of a chose in action, as was the case in Bishop v. Holcomb, 10 Conn., 444, or for the failure to procure a transfer of stock on the books of a corporation, as in this case, which would have been sufficient to excuse the taking possession of personal chattels sold, then upon the same principles upon which the taking possession in the latter case would be excused, it would seem that the act which is ordinarily required in order to perfect an assignment of a chose in action or of stock in a corporation ought in equity certainly to be also excused.
The application of these suggestions to the case in hand [36]*36seems quite obvious. We need not determine whether the written assignment of the stock by Mr. Jarvis passed the legal title or only an equitable title, since it is very clear that in either case it passed all the substantial interest, and left in him, if' any thing, only the technical legal title.
But the respondents claim that, so long as this bare legal title remained, with no knowledge on the part of his creditors that he had made the assignment, it was open to their attachments as his to the same extent as before the assignment. We think this too broad a claim. The ground on which stock sold but not legally transferred is open to attachment by the creditors of the vendor, is, as has been suggested, the same upon which personal chattels sold but retained in the possession of the vendor are liable to attachment by the vendor’s creditors. The principle in each case is, that the retention of possession is a badge of fraud — that is, is evidence of a fraudulent. secret trust. This is the reason given in the recent case of Shipman v. Aetna Ins. Co., 29 Conn., 245, why certain stock, sold by a written bill of sale but not transferred, was held to pass to the trustee in insolvency of the vendor; the trustee being held to have taken precisely as an attaching creditor would have done.
But it is well settled that this retention of possession in every case is only a badge, that is, is evidence of fraud, to be regarded as conclusive where the retention of possession is voluntary and unnecessary.
And it is to be observed that it is the policy of the law which forbids this retention of possession; and the liability of the property to attachment is in a measure a punishment, either for the actual fraud, or the negligence of the vendor. Hence it is said in the-cases on this subject that “ proof of the payment of a full consideration, or of ihe justice of the debt for which the property is taken on legal process, accompanied with the highest evidence of the honesty of the transaction, will not, in general, be sufficient to repel the legal effect of neglecting an actual removal of the property.” Mills v. Camp, 14 Conn., 219. Kirtland v. Snow, 20 id., 23. The rule therefore is, to a certain extent, punitive in its character, [37]*37creating something in the nature of a forfeiture for the violation of the policy of the law. It is on this ground that the rule is relaxed where there has been no voluntary violation of this policy. If the manual delivery of the article sold, in consequence of its bulk or situation, is impossible, the delivery and taking possession are excused. So where the vendor has used due diligence to make delivery, and the vendee to take possession, the property is not open to attachment; as in the case of Mead v. Smith, 16 Conn., 346, where it was held that a purchaser in New York was to be allowed a reasonable time to come into Connecticut to take possession of the property purchased ; and it is always held that a grantee is to be allowed a reasonable time to get his deed to the recording office. Now whether this principle ought to be applied in actions at law, depending upon rigid legal principles, to the case of the transfer of stock in a corporation, perhaps depends upon whether we regard the dictum in the case of The Newtown & Bridgeport Turnpike Co. v. Northrop, as correct, “ that the transfer on the books of a company does not operate by giving notice of an antecedent conveyance, but is a fact essentially necessary to originate a title.” But we are not called on to discuss this question at this time. It is only necessary to say therefore that the respondents admit that such is not the law generally ; and it is claimed merely to be the law of Connecticut, founded upon peculiar views which have obtained here. But whether it is law or not, so far as regards the bare technical legal title, and to be adhered to in trials at law, we are satisfied that it ought not to be regarded as having the controlling force and efficacy claimed for it in equity. No such ground was taken or suggested in the case of Shipman v. The Aetna Ins. Co., before referred to ; and the late case of The Bridgeport Bank v. The New York & New Haven R. R. Co., 30 Conn., 231, proceeded throughout upon the idea that the plaintiffs had a good equitable title to the stock claimed in that case. In analogy then to the principles which nave been suggested, we think the effort of the vendor to get the assignment perfected on the transfer books of the company, and on failure to accomplish this his effort to make the assignment as [38]*38notorious as possible, constituting not only due diligence but all the diligence on his part that it was possible to exercise, ought to exempt this retention of possession from the condemnation of the law, if a retention of possession ever can be. Indeed the retention of possession was as nearly nominal as possible. Assuming then that the respondents are correct in the claim that this retention of possession involves the retention of the naked legal title also, is this circumstance sufficient to distinguish the case from those cases where the retention of possession by the vendor may be excused or justified ? In the case of the sale of personal property the mere sale is ordinarily sufficient to pass the legal title between the parties before delivery; while here it is claimed that the formal transfer on the books of the company was necessary for that purpose. But ought this distinction to be allowed to deprive the petitioner of her property, when, if it was of any other description, she would confessedly hold it ? Is the distinction so material that the case must rest upon the mere fact that a bare legal title was retained against the desire of the vendor and his utmost effort to convey it ? This certainly is to place the case upon the most technical ground possible, and it would vest in corporations and their officers the power to prevent the transfers of their stock by the holders of it — a power which it is too much to be feared would not always be exercised with the most disinterested motives. It is true there will sometimes be cases where a mere technical title will prevail; but it is desirable, so far as practicable, that the substantial and equitable ownership should be sustained rather than a technical title; and so far as the rule was intended to be punitive in its application, in order to compel a conformity to the policy of the law, there is no reason why a party who lias done all that he possibly could should be made to suffer any penalty. The plaintiff then, having done, or having had done for her, all that could be done, is wholly without fault. Her debt was of as high a nature as the respondents’. She had acquired a perfect equitable title to the stock, and she had taken every possible means to obtain the legal title also. An attaching creditor, while he has rights which have been too long and too definitely [39]*39settled to be disturbed or essentially modified by judicial decision, is yet by the modern policy of our law regarded with less favor than formerly, when attachments and sales on execution were the only compulsory mode of seeming an appropriation of a debtor’s property to the payment of his debts. It is a proceeding, moreover, by which one creditor may gain a preference over others equally deserving, and thus contravene the present policy of our insolvent laws, based upon the more equitable principle of an equal distribution. And it is at best a mode of seizing property without previous notice, which is always injurious and often ruinous to the debtor..
We do not feel, therefore, that we are under any obligation, without any substantial reason being given for it, to place the rights of an attaching creditor above those of a bona fide purchaser, where the utmost diligence has been used, as in this case, by both purchaser and vendor to make the sale and delivery as complete as possible. If the retention of the bare legal title to the stock, so merely formal as it was here, does not furnish a reason for holding the purchase to have been colorable and conclusively fraudulent against creditors, as we think it does not, then it seems quite clear that there can be no other which would subject this property to attachment that would not apply in all its force to any property in the hands of a trustee and subject that also to liability for the trustee’s debts. Eor these reasons we are satisfied that Mrs. Colt is equitably entitled to the stock ; and that the attaching creditors should be enjoined against proceeding to levy their executions upon it. And so we advise the superior court.
In this opinion the other judges concurred ; except Sanfobd, J., who did not sit.