233 F. 799 | E.D.N.Y | 1916
Since the opinion rendered herein on the 7th day of February, 1916, a further reference has been supplemented by testimony taken in open court, in order to place upon the record the precise standing under which the various securities relating to the Graff, Richardson, Spooner, Nixon, Carpenter, and Lewis claims herein came into the hands of Stringer & Co., and under which they were held when they passed into the hands of Winslow & Co. as collateral security for Stringer & Co.’s loans.
In so far as the precise shares of stock or collateral have been traced into the hands of Winslow & Co., and back again into the hands of Stringer & Co. or of the trustee, and in so far as these particular shares which, had come from Mrs. Lewis were unaffected by any acts which would constitute an estoppel against Mrs. Lewis and in favor
Examination of the four accounts at earlier dates makes it apparent that at different times Stringer & Co. had the right to use the collateral then held in the hands of Winslow & Co. as security for the indebtedness of each of the four claimants. It would seem that a careful analysis of the books might show that at least two of these four claimants had a surplus, and that Stringer & Co. had no need to use their stock as collateral at the time it was deposited with Winslow & Co., but these are the claimants who consented to such use.
The effect of these consents signed by the claimants Richardson and Graff is seriously disputed by them, but all these questions can now be dismissed, for the stipulation entered into between the four makes it unnecessary to apportion the fund other than according to the amount of their claims, as they all are entitled to receive the fund as against the general creditors, in such proportions to the net balance of each creditor (after being credited with the amount of benefit received from
If any of these creditors had been indebted to Stringer & Co. for more than the value of their stock, at the time of the original deposits of their stock with Winslow & Co., or if the circumstances attending their claim had -been such that the trustee in bankruptcy could defeat their alleged right to trace the proceeds of their stock and to claim those proceeds at the hands of the trustee, then he should have presented those facts, and the attorney for Mrs. Lewis certainly had the right to contest any of these claims in that sense. Even though by previous decision (as by the present memorandum) she was not given equal rights with the four claimants upon the basis on which their f claims were reported by the special commissioner, she nevertheless had the right to attack each claim or ito hold the trustee responsible if her own rights were affected by his action. She should have had notice of the various steps, and hearings in the proceeding, and if she were able to defeat any of the four claimants, and there should be a surplus after the payment of the remaining claims, then she might be entitled to some interest therein as against the trustee and the general creditors.
It is contended by the attorney for Mrs. Lewis that these four claimants cannot trace their respective stocks as an entirety into the proceeds of the collateral by Winslow & Co., and that no one of these claimants can show that at all times Stringer & Co. were bound to hold it intact, and not to substitute other collateral in its place. These claims seem to be correct. It is also contended by the attorney for Mrs. Lewis that the four claimants have not only failed so to do, but it is also urged by her that these four claimants cannot claim the surplus of the entire fund as created by Winslow & Co. upon the sale of the collateral. She contends that each of the claimants must trace his particular stock as an entirety into the surplus, and also, if any particular stock were wiped out by Winslow & Co. and the proceeds applied to the general Stringer indebtedness, to the extent of paying it in full, that the remaining stock, which had escaped such application, would be free from the claims of those whose stock had been previously used.
These contentions were sufficiently disposed of in the previous memorandum, and the court sees no reason to change its opinion from that then expressed. The claimants will be held to have equal rights, in looking upon the surplus from the Winslow & Co. transaction as the proceeds of one sale of all the Stringer collateral, even though some of the items were disposed of upon succeeding days. The court will also hold that none of the four claimants (Graff, Nixon, Spooner, and Richardson) have been shown to have so lost the right to share in the surplus of their stock after application by Winslow & Co. that they cannot obtain the benefit of Mrs. Lewis’ stock when used to make that collateral sufficient. <
The proceeds in the hands of the trustee from the Winslow & Co. transaction will therefore be divided pro rata between the claimants Graff, Spooner, Nixon, and Richardson. Mrs. Lewis will be held to have only a general claim of debt from the sale of her stock against such funds as may be liable therefor.
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