In re Tracy

185 F. 844 | S.D.N.Y. | 1911

HOLT, District Judge.

I concur in the conclusions of the special master in respect to ■ all the claims passed upon with the following exceptions: ,

1. Claim of the National City Bank.

The securities sent by the National City Bank to Tracy & Co. on the morning of the failure were left with Tracy & Co. simply to afford them a reasonable time to examine the securities and ascertain whether they were in such a condition as to constitute a good delivery. No title passed by such a delivery. Tracy & Co. were to send certified checks in payment that day, if satisfied with the securities. That afternoon they sent uncertified checks on the Merchants’ Bank, with a written direction to the bank to certify. These checks were apparently delivered shortly before the close of banking hours. .They were not returned to Tracy & Co. that day. The next morning they were presented at the Merchants’ Bank, and a certification requested, which was refused. Thereupon they were tendered back to Tracy & Co., and the securities demanded. Tracy & Co., the day before, had pledged the securities with the Royal Bank of Canada. The special master held that under this state of facts the title had passed. The claim is, as I understand it, that the National City Bank, as soon as it received the uncertified checks, should have refused to receive them, and demanded back the securities, and that, by holding the uncertified checks until the next morning, it waived payment in certified checks and. accepted payment in uncertified checks. Undoubtedly, the City Bank was obliged to act promptly; but I think it acted promptly enough. : The result was that Tracy & Co. never had any title to the securities. Having possession, and apparent title, they could pledge them with the'Royal Bank of Canada, but there was nothing in that transaction which transferred title. They did not sell the securities. They pledged them. The Royal Bank of Canada held simply a valid lien on them. The Royal Bank had the power to sell them in order to foreclose its lien. The bank sold one of the securities, the stock of the North Butte Mining Company, which with other securities satisfied its lien, and returned to the trustee two of the securities, a certificate for 100 shares of the Adventure Consolidated Copper Company and a certificate for 20 shares of the American Locomotive Company. That stock, having been returned to the trustee, stands, in my opinion, in just the same position as though it had never left the possession of Tracy & Co., and I think the City Bank is entitled to recover it.' The stock of the North Butte Mining Company was sold by the Royal Bank of Canada. There is no sufficient evidence, in my opinion, to identify the proceeds. If the claim be admitted that the proceeds were attempted to be deposited in the Merchants’ National Bank, the proof shows that the check .for $21,014.37 was not credited in the account, and that that account in fact was overdrawn. I think therefore that the City Bank cannot recover in respect to that stock.

2. Claims of Skerry, Kampf, and Lester.

I think that the claimants Skerry and Kampf are entitled to priority over Lester. The pledge of the securities of Skerry and Kampf was a pure conversion, while Lester was dealing o'n a margin, and the pledge of his securities was within the implied authority of the brokers. Instead, therefore, of the claims of Skerry, Kampf, and Lester ranking equally, I think that those of Skerry and Kampf should be paid first, and- that then Lester’s claim should come against the residue.

3. Claim o£ Frederic Kropp.

I think that Kropp’s claim to the return of $150 is good. He paid that money in as margin on the morning of the failure, for the purchase of certain stock. The stock was ordered; but the bankruptcy occurred before its delivery, and therefore the contract was avoided by the bankruptcy. I think, under such circumstances, the $150 was held in trust, and should he returned.

1. Claim of William D. Marbourg.

The trustee claims that a mistake has been made in reference to the claim of Marbourg, by which he has been directed to return certain stock which he has not got. If the attorneys for Marbourg and the trustee cannot agree on the facts, that claim will he sent back to the special master to determine that question.

In all other respects, the special master’s report is confirmed.