225 F. 889 | S.D.N.Y. | 1915
'ídie claimants urge that the doctrine of Re Hollins, supra, is wholly inconsistent with any logical application of the doctrine of Gorman v. Littlefield, supra. They say that, if the presumption exists, it is one of fact, arising from the probability that a broker has done what is honest, and that the Supreme Court put the doctrine upon that very ground. If, they add, the stock was intended to become the customers’ as soon as the broker bought it, obviously no subsequent pledge can affect their rights in it as between him and them. If, they conclude, it should be urged that his subsequent pledge be thought to be evidence of his prior intent, when he bought it, to buy it for himself, not them, the answer is that his subsequent pledge was not inconsistent with an intent to buy for them, for he had the right to pledge customers’ shares which they held on margin, at least for the amount of the margin. Once you assume that purchases of the necessary issues of stock are intended for customers, why, they ask, should you think them any the less so because you afterwards find them exactly where j-ou would expect to find them, were your assumption true?
All such arguments, however, must be addressed only to the Circuit Court of Appeals, and can gain no hearing in this court. It therefore follows that, in all cases where the bankrupts did not have free. and clear in their box an amount of stock equal to the claims of all cus¡omers, none-of the customers may reclaim any part of what they did have on hand, nor any part of the equity in such loans as had among their collateral the remaining shares. This disposes of the clauiis of Joseph j. Ives, Patrick Ruddy, Pauline A. Búchholz, and Jared T. Kirtland.
McClair’s Case falls with Quinn’s. McClair has not actually traced his certificate .099 bought on May 27, 1912, into the shares held by the American Exchange National Bank. On the contrary, it was delivered elsewhere. Plence, though he had a credit balance, he does not. fulfill the condition realized in Ex parte Bamford, supra, and Ex parte Pippey, stipra; he cannot trace or identify his stock.
The claim of Van Thyn and Vrieslander also> falls in the same category as Ruddy, except for the point of waiver. That can make no difference in the result, because it does no more than give to those who can trace their property the right to that property. As there is no property to reach, it cannot create what does not exist.
Apparently, therefore, while the customer has no property in the certificates in the hands of others, the broker has not converted the stock, if there remain enough in such hands subject to his control to answer his obligations. If it appeared that there always was enough stock on hand, then there would never be a conversion, and we should be presented with the strange anomaly that while, under Ex parte Nevin, supra, the broker had never converted the stock, yet under Re -Hollins & Co., supra, the customer had no- property in ány of. the stock at hand. Such a situation, if -it ever arise, would apparently present the necessity of yielding one doctrine or the other. However, that dilemma is not raised in the case at bar, because it does not appear that the bankrupts always had enough stock on hand, but only that they might have had. Since, under Ex parte Nevin, supra, the burden rests upon the customer to show the date of the conversion and since he has nbt shown it as of any given date 'before July 30, 1914, the master did the only thing open to him and took the value as of the date of bankruptcy. I do not forget that consistently, under Ex parte Nevin, supra, no conversion whatever has been shown. Logic would require that Gott should get neither stock nor any allowance for the value of the stock at any time; but there are limits of injustice to wfiich consistency should not drive us, and this is one of them. Some value must be taken quite arbitrarily, and I can see no other which is less arbitrary than that- adopted.
Greenberg’s claim falls with Ruddy’s.