Summary
In Platt v. Jones (96 N.Y. 24) it was held that a membership in the New York Stock Exchange was, in a certain sense, property, and that it passed to the assignee in bankruptcy of the owner.
Summary of this case from People ex Rel. Lemmon v. FeitnerOpinion
Argued April 18, 1884
Decided April 29, 1884
Chambers, Boughton Prentiss for appellant. Will Man for respondent.
Richard M. Bruno for creditors of bankrupts.
At the time the firm of Davidson Jones was put into bankruptcy in 1878 by proceedings instituted against the members thereof by their creditors, they owned what is commonly called a seat in the New York Stock Exchange, the title to which stood in the name of the defendant Jones. The seat was included in the schedule of their property made in the bankruptcy proceedings and was estimated to be worth $6,000. The plaintiff was, under section 5044 of the Revised Statutes of the United States, appointed assignee in bankruptcy, and an assignment of all the property and estate of the bankrupts was executed to him by the register in bankruptcy, in December, 1878. By such assignment the plaintiff, as such assignee, became by operation of law vested with the title to all the property and estate, both real and personal, of the bankrupts. Subsequently, in 1879, the bankrupts were duly discharged. The defendant Jones has continued, notwithstanding the assignment executed to the plaintiff, to use and enjoy all his privileges as a member of the Stock Exchange; and this action was commenced by the plaintiff for the purpose of enjoining and restraining the defendant from using and occupying his seat or membership in the exchange, and to compel him to execute and deliver a proper instrument of assignment and transfer of the same, and all his right, title and interest therein to the plaintiff, or to such person or persons as shall be designated by the court upon such terms, and in such manner, as shall be required or directed, and by and for and on account of the plaintiff as such assignee.
The court at Special Term granted the plaintiff the relief claimed, and upon appeal to the General Term, the judgment of the Special Term was reversed and a new trial granted. The sole question for our determination is, whether upon the facts alleged by the plaintiff in his complaint, and found by the court at Special Term, he was entitled to any relief against the defendant.
It appears by the constitution and by-laws of the Stock Exchange which were put in evidence, that persons can become members of the Stock Exchange and obtain what are called seats therein, only upon election in accordance with the constitution and by-laws of the Exchange; and that a new member elected is required to pay an initiation fee of $20,000. It also appears that membership in the Exchange may, subject to the conditions contained in the constitution and by-laws, and in the mode therein prescribed, be transferred; and a member thus admitted by transfer is required to pay an initiation fee of $1,000. The transfer can in no instance be made to any person without the consent and approval of the Exchange, in the manner specified in the constitution and by-laws. It was found at the Trial Term that a seat or membership in the Exchange was then of the value of $30,000. The constitution and by-laws also provide that each member is required to pay certain dues, and that such dues are a prior lien upon the seat or membership of the member, and the proceeds thereof; and such proceeds are also made liable for satisfying the claims of other members of the Exchange before the balance can be paid to the legal representatives of the member.
There can be no doubt that a seat or membership in the Exchange is, in a certain sense, property. It has great value to the owner or possessor, and may, under the conditions prescribed in the constitution and by-laws, be transferred and transmitted and converted into money. ( Grocers' Bank v. Murphy, 60 How. Pr. 426; Ritterband v. Baggett, 4 Abb. N.C. 67; Powell v. Waldron, 89 N.Y. 328; In re Ketcham, N.Y. Daily Reg., Feb. 9, 1880; Eliot v. Mer. Ex. of St. Louis, 28 Alb. L.J. 512; In the Matter of Werder, id. 176; In re Gallaher, 19 N.B.R. 224; Hyde v. Woods, 94 U.S. 523.) The question as to the character of the property of such a seat is so fully discussed in the authorities cited that nothing more is necessary to be added.
But the property in the seat, whatever it was, as between the defendant Jones and the plaintiff, passed by the assignment in bankruptcy, and as between them vested in the plaintiff as fully as it was before possessed by the defendant. By that assignment the defendant was as fully and completely divested of his property in the seat or membership as he could be by any paper or instrument which he could execute; and he could do nothing more to vest complete, perfect title as against himself in the plaintiff.
But the General Term held that the plaintiff was entitled at this time to no relief against the defendant upon any facts appearing. It does not appear that he had applied to the Exchange to have his rights recognized; or that the Exchange had in any way denied his rights, or that he had nominated any person to the Exchange in the place of the defendant, or attempted to have any one elected. Neither does it appear that the defendant had in any way interfered or threatened to interfere with the plaintiff's rights or property, or denied his rights of property; or that he had in any way impaired his rights or done any thing whatever to injure the plaintiff. It is true that he continued to exercise his rights as a member of the Exchange, but that in no way harmed the plaintiff. If the Exchange, notwithstanding the assignment, chose to recognize him as a member and permit him to exercise the privileges of a member, that in no way injured the plaintiff or impaired his rights. If the plaintiff will give the Exchange notice of his title and rights, then the defendant cannot, by any dealings with the Exchange or by any thing he may do in the Exchange in his dealings with other members thereof, create any lien or incumbrance upon the seat, or in any way impair plaintiff's rights of property. It was, therefore, unnecessary, upon any facts appearing at the trial, to restrain the defendant from acting as a member of the Exchange. A judicial declaration that the property, whatever it was, in the seat or membership passed to the plaintiff was wholly unnecessary, because that is undisputed and cannot be disputed.
The court at General Term concluded that the action of the plaintiff was premature; that he should first apply to the Exchange to have his rights recognized, or that he should first procure a purchaser and nominate him to the Exchange and have him elected, and that he should proceed until he came to a point where some obstacle stood in his way which it was necessary for the defendant, as the nominal owner of the seat, to remove, and then, if necessary, to commence an action against the defendant to compel him to execute any paper that might be necessary to complete the transfer of title. We cannot say that the learned court erred in refusing to exercise its equitable jurisdiction at this stage of the case. Whenever a time shall come when, in order to compel a transfer of this title to some person who may be chosen as a member of the Stock Exchange, or who may take from the assignee a transfer of this seat for the purpose of applying to the Exchange for membership, it may be necessary that the defendant should execute some further paper or document, it will be soon enough then to invoke the jurisdiction of a court of equity to compel him to do what he may unjustly refuse to do. The cases above cited recognize the right of the court to interfere and compel action on his part for the purpose of removing any obstruction or obstacle that may stand in the way of a complete realization by the plaintiff of the value of the property transferred to him for the benefit of creditors. The Stock Exchange may, upon demand, recognize plaintiff's rights or the rights of some transferee whom he may select, and in so doing it would violate no rights of the defendant; and the defendant may, at the proper time, upon plaintiff's demand, or upon the demand of his transferee, do what in equity and justice he ought to do. There has yet been no occasion for him to do more than he has done.
We think the learned counsel for the defendant is in error in claiming that the plaintiff should apply to the bankrupt court for relief under section 5104, which provides that "the bankrupt shall, at all times, until he is discharged, be subject to the order of the court, and shall, at the expense of the estate, execute all proper writings and instruments, and do all acts required by the court touching the assigned property or estate, and to enable the assignee to demand, recover and receive all the property and estate assigned wherever situated." That section confers ample authority upon the bankrupt court until the discharge of the bankrupt; but that authority ceases after the discharge by the very terms of the section. And so it has been held in numerous cases. ( In re Jones, 6 N.B.R. 386; Cook v. Waters, 9 id. 155; In re Dean, 3 id. 188, quarto.) After the discharge of the bankrupt and while the discharge is in force, the bankrupt court has no more jurisdiction over him than over any other person. He can be compelled to act then, not summarily by motion or order under section 5104, or any other section of the Bankrupt Act, but simply in some regular judicial proceeding as a party thereto or as a witness therein.
There is no question that a State court would have jurisdiction of such an action as this at the proper time, when sufficient facts shall exist which will require the exercise of its jurisdiction. ( Ward v. Jenkins, 10 Metc. 583; Stevens v. Mechanics' Savings Bank, 101 Mass. 109; Cook v. Whipple, 55 N.Y. 150.)
We are, therefore, of opinion that the order of the General Term should be affirmed, and judgment absolute ordered against the appellant, with costs.
All concur.
Order affirmed and judgment accordingly.