*1 by a this rule The defendant invoked pend- stay against it proceedings motion to ing suit request that did not arbitration. stayed. against be as its codefendant The fact that the action stayed is not Company Southern Pacific is, proceed arbitration might pending think, significance. I without defendant, the urged It is also that the appellant herein, provisions of waived the agreement by failing the arbitration “immediately” required ceed The its terms rules. only applicable arbitration clause disputes “which cannot amicably settled the interested between parties”. “immediately” refers word obligation to the date but to date “dis- when it is ascertained that the pute” amicably. cannot Until settled controversy determined could to was not be go amicably obligation settled forward with the arbitration did.not arise. proceed not a failure of the seller , stay of its an action waiver
brought by party. the other Kulukundis Corp., 2 Shipping Cir., Amtorg Trading Co. v. F.2d 978. appellant stay as to denying The order
pending should be reversed. arbitration FRANKLIN.
BAIRD v. YORK YACHT CLUB v. SAME.
NEW Nos. Whittlesey, Jr., Granville New York Appeals, . Second Circuit. Circuit Court City Leisure, (Donovan, & Lum- Newton 25, 1944. Feb. bard, Hope, Jr., A. Theodore S. and John Morhous, City, all of New York brief), Mary plaintiff-appellant Stevens Baird. City Greenough, New York William Greenough & Eagle, Day and (Patterson, O’Connell, City, New York all of Harlin
J. plaintiff-appellant brief), for New Yacht Club. York Embree, Dean of New William York Hope, City (Milbank, Tweed Lawrence Bennett, Perkins, N. Edward all of City, brief), York for defend- ant-appellee. *2 Sol., Freeman, Securi- rea- V. Asst. Fund. But there no Milton Commission, suppose Phila- Ex- son and to ties of that action Counsel, Knudsen, change have delphia, (Orrin Pa. on November C. would Division, brought W. plaintiffs. relief Trading and to Richard or the and Rodin, Ex- good ground On the other Atty., and hand there is Victor Securities Philadelphia, believing only have change Commission, that it would not both of Pa., brought plaintiffs Ex- no relief brief), to on Securities and salvage would have change prevented curiae. of Commission amicus Gratuity Fund loans since the additional N. SWAN, AUGUSTUS Before to undoubtedly Richard were save made to HAND, CLARK, Judges. and Circuit his prevent exposing name and of a major scandal. Judge. HAND, Circuit AUGUSTUS N. George suggested It is further that esti- majority opinion court In the a liquidating broth- mated the value his facts judgments affirmed. The must be $500,000. estate at But er’s this estimate opinion and Judge are stated in CLARK’S false was shown to been based on have repeated. need not be here statements Richard as to the value distilling his record business. As the We accede to the view that stands, every believe there is reason to duty Stock violated when November, hope- 1937, Richard that in disciplinary against take failed to action lessly insolvent obtained and that he Richard November on loan brother means of after there was that reason to believe statements because of lat- false and plaintiffs’ securi latter had converted the exposure ter’s belief that would averted justify judgment in But to favor ties. money if enough he furnished redeem plaintiff, such a breach of either Gratuity Fund. Whether damage must in can have resulted money procured would or could have more traced to breach. no sub We see speculation. for Richard is a He matter of between duties stantial resemblance surely would not Richard’s have done so bailees or other fiduciaries and those dealings with had customers’ securities Exchange. Stock The duties exposed exposure been after there property safeguard over former are to the loans ceased to be made. they which control. have some In the case of there was proof plaintiffs presented their duty except dealings investigate theory they had claims valid mem financial conditions against Stock account expel members suspend bers against of its action failure take believe been it had reason to had November just inconsistent with of conduct failure. was the their loss result ap principles equitable of trade. It possible were tried The cases pears from the record that reason recovery theory could have all pledges unauthorized the securities hoped for. The allowed prior November been converted damages they proof introduce possession and were then They showing burden of desired. had the pledgee banks so remained for some breach of that the was the cause thereafter, though times all at certain time they their loss. We think failed have pledgor and were returned to the them presented this and have claims show repledged day secure same during the damage resting specula on the merest We can see no likelihood that other loans. chances tion with all reasonable expulsion suspension of Richard practical realization. Whitney when conversions came judge record On the the trial would Exchange on officers notice justified any finding have been 24, 1937, would have in damage suffered plaintiffs for benefited the the securi least contrary. (“Fifth” found to the then all converted and in the ties Law.) “Sixth” Conclusions of pledgees. hands day their with an tiffs argued proof, offer opportunity brother, George, might presented have advanced unchecked. such mon- Under ey there can be no circumstances basis sufficient to se- redeem the judgment as was done case of trial and the is affirmed. new (dissenting, immediately CLARK, put Judge Circuit loan it out on another part judg- opinion, from some from the other source. ment). maintained for the benefit of the of deceased families appeal judgment *3 This dis- from a fund, amounting members an to invested Mary missing complaints Stevens of $2,000,000 securities, some in cash and Club in Baird New York Yacht and The known Gratuity as the Fund. Under brought against actions New York Constitution fund Exchange of this Exchange latter liable Stock to hold the by was managed “acting seven trustees plaintiffs’ for the loss agent as Exchange.”1 These for Whitney. The embezzlement Richard president trustees joint consisted of the and the for actions consolidated below Exchange treasurer of the elected trial Civil Pro- five Federal under Rules of trustees, cedure, following including, 42(a), chairman, rule as Edward Henry Simmons, president of 723c, Harriman section been consolidated the Exchange mem- from to 1930 and purposes The named appeal. ber of its Ex- Law Committee and of Gov- is the treasurer (cid:127) erning (on Committee which he had served change, representing the is sued as twenty-four members, years), and, pursuant New York General to Williams, Consol.Laws, Blair Law, who was a c. member of Associations Exchange’s Business 29. Committee Conduct district Jurisdiction and Governing he (on Committee which based the Securities thirty-two years), served for 78aa. 15 U.S.C.A. § Whitney, who was the broker selected to Whitney partner in was senior execute transactions for Whit- the fund. New Stock firm York too, ney, president had served as of the Whitney & a and owned seat Co. 1930-1935, time and at this Exchange. From 1928 until March was a long standing member of 8, 1938, plaintiff he was treasurer Committee, Governing as well other as of Club, position New York Yacht which committees Exchange. of that a meet- At made him lawful custodian of se- 1937,, trustees November gave owned the Club and him attend, which Whitney did not de- was sole thereto. access As broker for $200,000 cided that block of railroad Mary Stevens during tiff Baird the same which bonds had been Whit- delivered to period, Whitney was also entrusted with ney for previously sale two months large number of her securities. For some sold, but should be returned. There- time before and until upon the clerk trustees announced January Whitney, involved in that, bonds, in addition railroad speculations liquor in the stock of a com- Whitney possession, despite had in his pany, criminally hypothecating had been $700,000 clerk, five demands the securities of both without $221,000 other bonds and some in cash knowledge loans made consent for belonged Fund. to the personally. January to him On paid other he off loans for which securi- Simmons and the trustees were collateral, news, exceedingly surprised at ties stood at time but day long repledged give later in the same it had custom them accountings Public & National Bank meticulous' Trust the trustees Company and the York Trust with the Com- his transactions securities and pany Simmons, new loans Fund. made himself. cash of This part immediately telephoned Whitney was all of the vicious circle which caught Whitney & Co. afternoon, was about three as the threat of o’clock dis- in; Whitney impended. As closure one creditor was not started him, Rodewald, press reached, pay he was partner, forced to collateral, off, loan redeem the latter stated the securities and then the “voluntary gift” Constitution the New York from member. Exchange, 1934, XXIII, By Art. Income was to be Art. XXII, pledged itself over the trustees to the make turned treasurer “voluntary gift” family yearly pay- each de- reduce the $20,000, by ceased member ments the members. collections member, per sum, turn, $15 day. following probable worth ard of net had a cash would be returned the $500,000. no ad- Whitney himself around There were Later afternoon prom- two developments ditional week or until a called back confirm Rodewald’s however, later, Williams, sit- By day, when Blair who was ise. noon the next Instead, Whitney ting Conduct a Business been taken. the time on action had day investigation misuse another Committee called on Simmons to ask for firm, grace. request peremptorily wa's asked This customers’ securities another down; perhaps Simmons if incident went turned so Whitney, Morgan brother, P. George reported should not be Committee. J. replied his defalcations and told him of Simmons George in. taking and the trouble he was Rich- everything care and that *4 brother, Rich- agreed good Whitney liquidated, for his & make ard Co. was to be him: returned to Simmons and said to “gossiped ard should not be every- right; “Everything I will have was, is all about.” No action taken. * * * tomorrow; I you thing fact, over for when both Williams Simmons and my been brother questioned by over to talk were later chairman of * * this, by Sim- George Satisfied the Business Conduct Committee on the delay. requested granted matter, mons then particle neither what revealed a they knew. Whitney’s visit, Prior second how- ever, reported occur- Simmons had January, Around the middle Redmond, rence to Roland counsel began rumors to circulate im- about the trustee, Exchange, collapse and to his fellow pending Whitney & of Richard Redmond, Blair Williams. when advised Co. Some of these reached the ears brother, that Richard had been to see his chairman of Conduct the Business go advised Committee, Simmons to over himself and Exchange a Stock who ordered George, try talk to to discover Whitney order to questionnaire be sent to any question if there was Rich- Mr. ques- “about firm month. The answer to the Whitney being February 21, ard in his able to continue received tionnaire was did, analysis day.” preliminary business the next and and an This he immediate by Whitney operating & George he was Co. Whitney reassured showed that was things capital requirements right. were all than with less Simmons testified point that at this Exchange. Accountants were then sent he knew that danger office, reported firm’s back evi- being sus- pended morning; Whitney the next of misuse customers’ securities. dence comp- had used Gratuity report the cash confirmed This Fund personal president own and per- troller of the affairs without trustees; from mission ordered that misconduct money charges up had borrowed drawn over week-end restore from presented Fund of March 5. brother These because he had not proper Governing Committee on March assets to raise such sums at a bank; day Co. following and George’s the effect of Thereupon, financial closed the banks merely assistance had its doors. been to sub- George plaintiffs’ stitute as a creditor in Gratuity Fund, payment, pledged immediate and without demanded changing Rich- position nonpayment ard’s asset sold the securities satis- slightest. in the Blair Williams, claimed cognizant who was the loans. The loss the faction of of all $105,184.13, Club transpired, events New York Yacht that had The also testified Baird, $98,758.50. Mary that he realized that Stevens meant position was in no financial to restore the is a vol- New York cash or securities to the Fund or even dealing untary association individuals raise loan to cover the amount. organization based in securities day, signed by The next mem- each Whit- a Constitution ney pledged ber, whereby returned the himself to abide securities and cash to Simmons. day Then on all following, by regu- and rules and the Constitution Day, Thanksgiving adopted thereto. ob- and Richard One lations expressed had a financial of the association as jects conference. Simmons was called in and then in told that force Constitution just equitable prin- & Co. liquidated, and to be inculcate mote and Rich- provisions (d) 8(c) business, vio- and ciples of trade and Fund Gratuity by ex- certain punishable securities of the lation of this aim was trustees, Rules pulsion without Exchange.2 The consent of the improper statements used of transmit false Exchange provided that the mails to violation securities, account in failure of a customer’s use 78j Act, 15 10(b) U.S.C.A. § cus- full paid earmark securities tomers, (b); until any pro- that from November willful violation of on or about continuously March Act vision of the Securities thereunder, willfully violated regulation rule failing action to- to take comprise inconsistent conduct expulsion, suspension, dis- wards the equitable principles of trade.3 cipline Whitney for his unlaw- of Richard the terms of provisions followed These conduct; that, the Act was Act, 15 ful since of the Securities protection of 78f, for the benefit and into enacted inserted registered prerequisite of members of ex- registration as customers Rules as a changes gen- and of such members of the Se- exchange with the national securities plaintiffs, might public, including eral Commission. carry security mem- transactions with applied registration around exchange, shortly registered bers *5 September having before by action by vested with of agreement, required § that executed the 6(b) the amount Act, comply, to recover from defendant 6(a) (1) and of “to the § to powers of their losses resulted within enforce so far as is its of Act. second members, latter’s violation the The compliance by its the with 28, September theory on the same is that the basis of of visions” the Act. On 1934, recovery granted pursuant power should be to the in facts to vested third-party the Act, beneficiaries of 6(d) of ad- tiffs as the the Commission § Se- Exchange agreement filed defendant the judged of with the Rules the to pursu- Exchange Commission “just adequate dealing curities and and to insure fair investors,” 6(a) (1) ant of the Act. granted and the to and § application. complaints below, dismissing sixty-two findings of base district court made Plaintiffs their actions on al- two eight fact and reached of law. distinct theories. conclusions ternate and The first former, 1937, allege 24, Plaintiffs that four of or about is 45, 59, 44, 58, lat- Exchange Nos. and and of York the of Stock clearly Finding Fact ter erroneous. guilty are knew that of unlawful acts and conduct inconsistent that Simmons did not No. November is believe trade, equitable that Richard just and with in that he hypothecated any permitted aggregate securities of the the had to exceed a certain indebtedness Fund, merely percentage felt that his net of by “inability delay capital meaning to raise the within of of § was.caused Act, 15 of credit Exchange Securities full amount balance.” [cash] hypothecated, 45 carries theme with 78h(b), contrary No. this further to the § transactions, government and financial condition in The president, cluding regulation to “advise” members” and tbe “the of the business con might suspend members,” a member who when so ad- of its was vested duct report Governing vised, Governing Committee, to the and to Com- Constitution might expel mittee, president composed member. The and the treasur advisory capa- forty Exchange members, acted an Law Committee and er of the president, city year. association were elected Its ac ten each whom represented largely officer with that carried on Stand tivities affecting general membership, all matters inter- from its Committees empowered, and was “authorized ests the Constitu duties were defined whose discretion, important these, to examine into in its the deal- most for our Of tion. Exchange.” ings purposes member present were the Committee on Constitution, 1934, II, XYI, III, X, Arts. and the Law Committee. Business Conduct charged duty with XYII. former The considering Adopted by Governing relating Rules Cf. to “the busi matters Constitution, Pursuant Committee financial condition conduct ness 2-5, XIY, 1934, XII, XY, accounts,” c. c. c. §§ customers’ and their members n with investigate “dealings, power §3. having Fund suf- shortly March statement his own use without that until before to cover no rea- ficient assets even to raise a loan Williams had Simmons and suspect hyopthecation sonable cause the amount. embezzlement That Penal York 1290(2) under by Whitney, the New securities Nos. People Law, N.Y.C. hold the knowl- Consol.Laws blameless of Meadows, 199 N.Y. 92 N.E. suspect or reasonable cause to equi- just and conduct with inconsistent inconsistent conduct hardly de- equitable principles principles trade table of trade report until after accountants nied. Section refers definition February 23, particular was turned in such conduct the rules of the XII, gist exchanges, that the Stock the conclusions of law and Ch. owed “reckless Rules under the Securities dealing inconsistent unbusinesslike third-party principles. Knowledge of bene- with” those were not 6(a) (1) agreement, and ficiaries of -the implies, necessarily conversion of cash too, of the Stock event the omission knowledge additional proxi- to take action hy- was not illegally securities had been mate cause of losses. contrary (d) pothecated 8(c) clearly shows evidence scope appellate review of basic between transaction restitution is, course, disturbing facts limited to regarded as and Simmons was “clearly Here, those erroneous.” initially a whole. The clerk to the Fund however, the basic facts con were not reported both cash and dispute, flict and we have deal missing; Rodewald to be Simmons asked with those final and ultimate inferences both; Whitney return demanded as to states of mind and rea standards of after, and, both, extension for talked inquire, sonable notice or George, with his brother said that *6 he really decide the case. Princess Kuhn v. day. would return both following the Fur- Lida, Cir., Murray 119 F.2d thermore, George Whitney testified that Co., 7 Milling Noblesville 131 F.2d certainly Simmons seemed interested certiorari denied S. securities, return of the as well as the 832. On Ct. the evidence we are unable cash; and Simmons himself was even accept either as fact or the infer law admission, forced into although a similar ences and conclusions drawn dis had he denied hitherto that was ever he undisputed trict court testimony at all worried about the securities. Since (all plain the witnesses called cash and the re- securities thus tiffs), were particularly of Wil Simmons and entity garded as one to be returned to the liams. Hence for the four find contested Fund, knowledge of ings embezzlement we would finding substitute one cash, plus Whitney’s inability re- effect that on about November securities, knowledge Stock Exchange must had turn the have informed Simmons, Whitney very that Whit or at the him given least &ney guilty Co. was incon suspect, conduct reasonable cause to that se- equitable sistent with principles illegally had hypothecated. curities been trade, within meaning of the Se possession Simmons ample also was Act of 1934 and the facts to Whitney indicate that Novem- Regulations Rules Ex the Stock operating ber violation change, in that he had to his converted Act, 8(b) of that a § use belonging own cash Gratuity broker must be in such condition that after Fund, hypothecated had personal loans offsetting his persons indebtedness to all owned Fund, had failed assets, against his “exclusive of fixed as- maintain required the credit balance exchange membership,” sets value of 8(b) Act, of the and had § issued surplus equal he shall have a net at least regard the mails false statements to one-twentieth indebtedness. Sim- Gratuity account, ing in viola Whitney mons realized that had neither 10(b) the Act. tion § capital cash nor sufficient to enable equivalent loan, raising admitted that Simmons he knew on No- and this Whitney’s capital could mean vember con- net 8(b) Gratuity position the cash something balance of terms of § verted 6(b) exchange every meant less than he knew that also testified was that zero. Simmons pass incapable by George regulations, token the loan except in the of wish of nothing did enforcement at the substitute Gratuity exchange itself, Richard’s been of the Fund as would have purpose no in the Act. Day for its inclusion as- George’s Thanksgiving creditor. liqui- probably surely 6(b) (d) intended surance Richard would Sections $500,000 together, date changed around could to be read it clear that latter makes and the require- any, purpose under- Simmons matters of the contemplated liquidation fair ments insure stood that such former is “to assets, as- including fixed dealing all of This and to investors.” $300,000 6(b) sets and some of seats be realized construed worth is Exchange. imposing duty upon an as change ex- the twofold enacting regu- certain rules Williams, finally, knew that Simmons and they seeing lations and of are en- violating forced. mails had used the to submit false statements to the trustees The Stock un- Gratuity Fund. Securities der a take reported disciplinary knew in fact action Whit- hypothecated longer ney had been for the violations Se- various Whitney’s possession, in of November the account curities Rules Act and the of knew of or that Whit- stated which it either $222,000 ney held credit in the cash suspect. some at least had reasonable cause balance of Fund. complete cash balance Its This inaction months for some two “in connection was remained a dereliction of that vio- and a purchase with the or sale of” securities lation of viola- of the Act. The n Fund; clear, for the being question hence statement the false tion further now regarding that sum vio- right was also a direct arises as to whether a of enforce- 10(b). lation of Since Simmons and ment is vested the Act as as acquired knowledge public Williams investing these members of discharge third-party facts in agents 6(a) (1) of their duties beneficiaries of the § agreement Board between the Commission and Fund, Exchange. opinion of Trustees knowledge Our considered conclusively imputed grants that the Act itself tion; of ac- Exchange. unnecessary It is fundamental that knowl- hence it is consider *7 acquired by agent problem. so an is the knowl- the narrower contract Agen- Restatement, principal. edge of his primary purposes of Congress One cy, certainly 272. This is not less § enacting in the Securities Act where, here, governors so of both were protect 1934 general was to the 15 invest- Exchange; mem- Simmons was a public. 78b, Section U.S.C.A. § Committee; important ber of Law states “transactions in securities as Williams was a member of Business commonly upon conducted securities ex- charged very Conduct with Committee changes and over-the-counter markets are acting in such cases. interest,” public with affected a national specifically 6(d) prescribes 6(b) places There can no doubt that while protection be § § upon thirty-five the Stock en- investors. Some regulations prescribed force rules and other sections of references to this ideal.4 the Act similar include Any by that section. 2 other construction Section also provision goal meaningless. that another would render the states the statute argument Defendant’s Exchange the control the Securities to make of securities transac- “reasonably complete prior Act did alter tions status effective.” by-laws If aims Rules as these are to followed be then, private investing public club is untenable. of a If all that is to be 4 5, 6(a) (2), 7(d), (a), 19(b), 24, 30,15 (6), 9(b), 19(a), 78e, 9(a) Secs. §§ U.S.C.A. 10(b), 78g 78j 10(a), 11(a), 11(b), 11(e), (a) (2),' (a) (6), 9(c), (d), (b, c), 78i 12 78f (2), 12(d), 12(e), b), (a-c), (1), 12(f), 13(a), (a, (b) (1. 2), (d-f), (b) 78k 781 78m 78n, 14(b), 15(b), 15(c) (3), 15(d), (a), (b), (c) (d), 14(a), 15A(a) (3), (a) (1), 78o 78o-3 15A(b) (4), 7), (c), (h) (2), 78q 15A(b) (3), 15A(b) (7), (b) (3, CM), (a), (1), 78s 15A 78x, (2), 15A(j), 15A(k), (c), 15A(Z), (a, b), 15A(h) 78dd. 17
245 6 protected, Mfg. 162 N.E. effectively Products 248 N.Y. completely § Wanamaker, in- 202 F. granting Armour v. (b) be construed as must ac- any validity 423. Nor ant’s defend jured causes investors individual 16(b), imposed objection that, statutory 9(c), duties since §§ tion enforce the 78p(b), 18(a), 78i(c), sec- and exchanges. two U.S.C.A. §§ 78r(a), in impose express grant specific rights of action tions of Act the upon circumstances, certain maxim “ex- exchange for violations sanctions an pressio 78s, 78ff. unius est alterius” denies 19 and IS U.S.C.A. exclusio are §§ §§ implied 6(b). right permits, 19(a) (1), with- of action under § The former § special exchange Those with mat three sections deal registration an drawal of the regula ters indirectly germane to period months not to exceed twelve suspension they tion of period exchanges; provide securities for a similar ; officer, (3) recovery 19(a) member or more would unrestricted than possible law; pre prescribes they latter more than at common a fine of not Also, $500,000. section, however, can scribe narrow Neither statutes of limitation. directly 28(a), 78bb(a), be said to at all U.S.C.A. inure to the benefit investor, pro states that rights statute defrauded whom “the and remedies reasonably chapter protect effectively and vided fesses to shall addition completely. punitive rights Both and reme- and all remedies other are may measures, compensatory; equity.” As dial rather than may exist law they Supreme very lately future the be of benefit to Court said: has statutory “Some investors, construction come rules nothing do for those already of over- down been the victims to us from hostile sources that were reachings. process legislative toward itself and thought generally wise to restrict very recently we & What said Charles operation permis act to its narrowest Hughes C., Cir., Co. v. S. E. 139 F. compdss. sible However well rules these 434, 437, 438, 2d well be reiterated may deciphering serve at times to aid in 17(a) this case. In determining that § intent, legislative they long have been sub Securities ordinated to will the doctrine that courts 77q(a), permitted re- the Commission to conformity construe the details of an act registration voke the of over-the-counter purpose, dominating general will fraudulently up brokers who had marked light read text in the context will prices by them, of securities sold we interpret meaning the text far so as the that, objective stated of since “the essential fairly permits carry the words so as to out legislation is to those particular generally expressed cases the who do not know market conditions from legislative policy.” Ex Securities and overreachings do,” of those who a con- change Comm. v. Leasing C. M. struction of failing the Act as to sanction Joiner Corp., 64 S.Ct. such action legislation would such “leave little more than a delusion.” snare plaintiffs, Granted a of action in If here were to be construed as then, *8 question final the damages is as to granting right plaintiffs, no of action to and whether Exchange’s duty the breach of purpose “reasonably the avowed com- proximate plaintiffs’ was a cause of losses. plete protection and effective” in- would seem, it Here would broadly in mind the deed be a snare and a delusion. statute, remedial character of the Corp., Smolowe 2 Cir., v. Delendo 136 The fact F. that the statute no 239, 231, 751, 2d certiorari 320 U.S. machinery denied procedure by or in the 56, 64 general as well as the S.Ct. law of right proceed dividual of action can is cause, proximate practical that a result immaterial. well It is established should envisioned as to be whether the Ex- protection members of a class for whose act, change’s reasonably failure to viewed, statutory duty may is created sue probability in monetary resulted in all injuries loss. resulting from its breach and that applicable prin- The classic statement of supply remedy common law will if ciple Garrett, be found in gives is to Davis 6 v. statute none. & P. Texas R. 724, 716, 1456, Bing. Eng.Rep. 130 33, (C. 1459 Rigsby, 482, Co. v. 241 36 S.Ct. 874; 1830): “But we think the real 60 P. answer L.Ed. Strohmeyer Abounader v. is, objection wrong-doer to the no Arpe 309; 243 154 N.Y. N.E. Poultry Pine Grove By- Farm v. Newtown apportion qualify or allowed to his own 246 ,as wrong; happened actually Cayuga Bank, County and that has a loss 99 N.Y. Nat. Brooklyn was in wrongful See, also, whilst his act 2 N.E. 19. operation force, City and which is attrib- Eastern v. District Terminal York, Cir., 1007; act, Bogert, utable wrongful to his cannot set 139 F.2d up possibility 862, p. Trusts an bare (1935) answer to action the Trustees loss, wrongful of a his act if quite question, phase A further had never might done. It admit case, be- particular arises crucial in the shew, a different if he could construction value evidence of cause fact that no hap- not might same loss have plaintiffs’ rights as of below, pened, happened but if it that must have was introduced done; complained act of had not been relying upon tiffs they their contentions but there is no that extent evidence to prima for the shown a facie case present case.” And so here the loss introducing full amount and appear quite simply would dif- majority no A is evidence. plaintiffs ference between what have would the view that received had the its fulfilled showing burden of extent of their duty they actually and what now receive. and, damage aided cannot be' present Translated into it terms case by any theory prima And facie case. appears plaintiffs’ se- to he the value since were not circumscribed in their curities properly duty when the realizable proof by court, they the trial must stand presented act first Exchange, are, judgments case as made. The amounts, any, less the recovered from therefore, affirmed. Whitney’s estate. In other cases there develop might quite an issue of The writer hereof feels constrained when, light Exchange’s ruling dissent from burden regulations, rules and as well as its knowl- of damages the evidence as to remained particular case, in a plaintiffs throughout. notice It is arose; to act or but here claim view that under the circumstances the proof placing it before November prima had shown a facie case time, however, 1937. At damage, placing going the burden of for required Whitney have obligations upon either to meet his ward with the evidence defend suspend. may be ant. He would feel that in event easy upon plain- policy exact worth of the statute such as create respective obligation tiffs’ interests in fiduciary an the upon securi- nature ties at that light Whitney’s time in promptly to act for the bene condition, the might chance that he obtain fit investors dealing particular with a continue, means to or the amount he then member as to whom a to act has been pay liquida- would have been brought able home to
tion; but it seems no more difficult than
putting
then the cases
explana
a burden of
many
problems
fiduciary
ion
similar
on a
applicable.5
become
valuation.
recently
We
a
considered
valuation
This would seem to follow because an in
claim,
Palmer,
v.
Oosterhuis
position
vestor not
is not in a
to know
137 F.2d
stated
and we
the facts
member,
about an Exchange
applicable,
principle
relying par- normally
of
the
ticularly
here
relies
standing
given
leading
v.
case
Gould
him
membership,
particularly in
454;
Cutting Marlor,
Cf.
78 N.Y.
Wall.
86 U.S.
247
Whitney’s possession,
highly
statu Richard
to be
publicized
view
the recent
Exchange ac him
tory
repledged. Under
circumstances
and other
reforms
tivities;
pointed
has
repossession
I
Exchange itself
would think
whereas
such
legal
complete machinery
keeping
necessarily
itself
conclusion that
(cid:127)a
for
pro
a re
taking disciplinary
damage
plaintiffs
informed
occurred
and for
up
any
ceedings against
repledging,
sult of
it
a member
fact,
seemingly
if
impropriety.
it
Any
rule
other
show the
Ex
imposes
fact,
most
repossession
at
responsibility upon
little
a
con
change
carrying
formal
and did
out the
and nominal
it,
upon
I am
legal
if
we have found
Act to
stitute
But
dominion.
even
incentive,
wrong
burden,
and even
after
still
as to this
I should
required
a serious
justice
has become
think
trial on
aware of
a new
drift,
condition, for
damage.
it
undoubted
to let matters
the issue of
We have
special
having
power
and its
knowl
it
members
so to
has
order where a case
theory,
did tried on a wrong
themselves
and the record
which,
mind,
my
permit
here—a result
borders
does not
of the determination
immoral,
encourages
questions
justice
in that
actual
involved with
fiduciary
private
Here,
to safeguard
in
to all.6
its own
had the issue
terests
while it allows its beneficiaries
ultimately
decision is
turn been
made
foreseeable,
reasonably
If
a natural
suffer.
this is
event
interpretation
properly
conclusion
record as
be restricted to the
made;
strengthened
novelty
light
im
here
but in
view
first,
special
portance
legal rights
facts:
now deter
24, 1937,
Whitney mined,
at
damage
when
time
fact
rule
liquidating
estimated his
value
appar
brother’s
now announced
was never stated
$500,000,
actually
ently
Rich
by any
parties
the events
show
foreseen
capacity
and,
borrowing
ard
and used
trial
I
suggest
venture
$1,000,000,
deference,
of over
sufficient in actual
is still
somewhat
doubt,
to rescue
par
from its commit
realm
I do not believe the
ment,
deeper
ten times
than
either of
penalty
ties should
suffer
extreme
had; and, second,
these
defeat
final and
irrevocable
28, 1938,
January 26 and
misguessed
of these se
point
our views on a
of trial
back
curities were redeemed and
I
procedure.
came
into
would reverse on
issue.
6 Thus,
627;
Co.,
Machinery
v.
Stewart
Southern R.
v.
Newcomb
York Ice
283, 286,
616,
Corp.,
576,
Cir.,
578;
62
U.S.
S.Ct.
315
849,
86
5
56 F.2d
L.Ed.
Roosevelt
Court,
leaving
disposition
Co., Cir.,
Missouri
v.
State
Ins.
Life
70
8
errors,
939, 944;
Barnett,
Cir.,
lower courts other
F.2d
claimed
held
In re
2
124
complete
1005,1007;
Dye
that
mony
the failure to extract
F.2d
testi-
Benz v. Celeste Fur
petitioner-appellant’s
Dressing Corp., Cir.,
845,
from
&
own. wit-
2
136 F.2d
ground
848;
Co.,
ness
new trial under the
Hubbard v. Manhattan Trust
See, also,
Lear,
Cir.,
51,
circumstances.
Estho v.
2
87 F.
61. At least we should
130,
130,
632;
re-entry
32 U.S.
7 Ret.
make it
8 L.Ed.
clear that on remand for
judgment
Co.,
State
Minnesota v. National Tea
the district court would have
authority
676,
U.S.
60
309
S.Ct.
84
consider a motion under
L.Ed.
Fed
920; Phillips
States,
Procedure,
60(b),
v.
eral Rules
United
312 U.S.
of Civil
rule
480,
800;
Seventy-Sec
61 S.Ct.
85 L.Ed.
made. Perlman v. 322
Unit-
West
Irriga-
Cir.,
Co.,
716,
States v. Rio Grande Dam
ed
ond Street
2
127 F.2d
718-
Co.,
416,
719;
Barnett,
Cir.,
U.S.
tion
184
619;
22
re
2
S.Ct.
124 F.2d
1012;
Irriga-
Rogers
46 L.Ed.
Rio Grande Dam &
v. Consolidated Rock Prod
States,
Co., Cir.,
111;
Co.
tion
275,
v.
United
ucts
114 F.2d
John
Co.,
L.Ed.
S.Ct.
Finefrock
Simmons Co. Grier Bros.
258 U.S.
v. Kenova Mine
Car
22 F.2d
S.Ct.