Equivest, a partnership, owned 10,000 shares of

Altec International, Inc. Equivest pledged these

shares to secure loans by Lloyds Bank. Sometime

after pledging the stock, Equivest transferred benefi-

cial ownership of 350 shares of Altec stock to Thorn

Hoffman and 350 shares to John Erikson. Thereaf-

ter, in 1988, Altec elected to be treated as a Sub-

chapter S corporation, which necessitated that

shareholders return their old stock certificates in

exchange for new stock certificates. Neither Erikson

nor Hoffman had certificates to return because their

stock had been pledged by Equivest to Lloyds Bank.

Altec had knowledge that Erikson and Hoffman were

the beneficial owners of 700 shares of Altec stock.

However, Altec distributed cash dividends to Equi-

vest, the registered owner of the 10,000 shares

during the period from 1988 until March 14, 1990.

Equivest defaulted on its loan to Lloyds Bank and

Lloyds sold all of the pledged stock, including

Hoffma's and Erikson's 700 shares, at public

auction. Hoffman and Erikson contend that Altec

should have made all cash distributions to them as

shareholders, not Equivest. Altec contends that it

complied with the UCC by making distributions to

the owner of record. Do you think the distribution

should have gone to Hoffman and Erikson or to Equivest? [

Hoffman v. Altec Int'l Inc., 546 N.W.2d162 (Wis. App.)]