233 F. 519 | 2d Cir. | 1916
July 30, 1914, the New York Stock Exchange closed and did not reopen until December 12th. December 8, 1914, a petition in bankruptcy was filed against J. F. Pierson, Jr., & Co., stockbrokers, and a receiver appointed. The firm had borrowed of the banks upon securities belonging to the customers properly hypothecated, some of which, or their proceeds, were turned over to the receiver upon the liquidation of the loans. February 4, 1915, an omnibus proceeding was begun before a special master to determine the rights of various claimants thereto, and this is a petition to revise an order of the District Court by four of the claimants.
Claim of Van Thyn to 100 Shares of Central Leather Stock.
May 18, 1914, the bankrupts bought for this customer 100 shares of Central Leather. On the day of the failure, December 8, 1914, there was a debit balance in his account of $1,256.43. On that day there were hypothecated with the banks 335 shares of the same stock, which covered all purchases for customers who were long of it. When the loans were closed out, the banks returned 235 shares to the receiver. Van Thyn, the only long customer making a specific claim for stock, tendered his debit balance and demanded 100 shares.
Claim of Levy for 20 Shares of Southern Pacific Stock.
September 5, 1913, the bankrupts bought for this customer 20 shares of Southern Pacific stock. On the day of the failure they were long 200 shares hypothecated for loans arid had one share on hand. When the loans were closed out, 60 shares and some cash were returned to the receiver. On the day of the failure Levy’s account, after crediting him with the value of his collaterals, showed a credit balance of $1,-487.94, which he tendered to the receiver and demanded 20 shares of Southern Pacific stock, no other specific claim being made.
August 24, 1914, this customer delivered 20 shares of Westinghouse stock to the bankrupts as collateral for his marginal account. On the day of the failure the bankrupts were long 150 shares. When the loans were closed out, 50 shares were turned over to the receiver. Quinn, the only claimant for stock 'specifically, demanded. 20 shares. July 30, 1914, he delivered to the bankrupts 10 shares of United States Steel as collateral. On the day of the failure they were long 921 shares. After the loans had been closed out there were delivered to the receiver 46 shares, against which Quinn’s claim for 10 shares is the only specific claim. Upon the settlement of his account there was a balance to his credit of $265.
Claim of Gott to 20 Shares Sioss-Sheffield and 20 Shares National Enameling Company Stock.
October 6, 1910, the bankrupts purchased for this customer 20 shares of Sloss-Shefiield stock, for which lie paid in full October 12th, leaving the same with them. October 14, 1912, the bankrupts purchased for him 20 shares of National Enameling Company stock. On the day of the failure Gott’s account showed a debit balance of $608.71. Upon the liquidation of the loans this particular certificate for 20 shares of National Enameling Company stock was delivered to the receiver, together with 20 shares of Sioss-Sheffield, out of 40 shares which had been sold short.
Another customer, named Cochran, was also short 20 shares oí Sloss, but made no specific claim. The value of Sloss stock July 30, 1914, when the Exchange closed, was $390.
The special master dismissed all the specific claims against the surplus stock on the ground that the claimants had identified no specific stock, and that no, or not sufficient, stock of the kind claimed was actually “in the box” at the time of the failure to cover them. He understood this to be the effect of our ruling in Re Hollins, 219 Fed. 544, 135 C. C. A. 312, as to the meaning of the decision of the Supreme. Court in Gorman v. Littlefield, 229 U. S. 19, 33 Sup. Ct. 690, 57 L. Ed. 1047. In the case of Gott he awarded to him the 20 shares of Enameling Company stock which had been identified, upon payment of his debit balance, less the value of the 20 shares of Sloss on the day the Stock Exchange closed, viz., $390.
Judge Learned Hand confirmed the report of the special master.
We do not think the rule in Gorman v. Littlefield should be restricted to stock actually in the box on the day of the failure. The reason for the rule would be exactly as cogent if the stock were in some one
The fact that some of the long customers make no specific claim for stock in the surplus cannot enlarge the rights of one who does. In' none of the claims now under consideration was there enough stock on hand to cover all the customers who were long; therefore the order of the District Court was right.
As so modified, the order is affirmed.
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