PRENTICE, J.

H. H. Bunnell and C. W. Scranton, under the name of Bunnell Scranton, were for more than twenty years bankers and brokers, having their office in New Haven. In their banking department they received deposits and conducted a private banking business in the usual manner. In their brokerage department they bought, sold and exchanged stocks, bonds and other securities or evidences of title to personal property of various kinds, upon their own account and for others, upon commission, after the usual custom of stockbrokers in this state and the state of New York. By far the largest part of their business consisted in executing the orders of their customers to buy and sell upon margins. Many persons so dealt with them, and among them were the plaintiffs. The firm and its individual members also dealt in the market upon their own account.

On May 16th, 1891, Bunnell died. Four days later his surviving partner made an assignment in insolvency of the partnership estate and likewise of his individual estate. The defendant is the trustee upon both estates, which are now in process of settlement.

At the time of the assignment Bunnell Scranton, by reason of the orders of their margin customers and of their own margin dealings, were in some manner carrying various stocks and securities. A few of them were in their own hands, others in the hands of pledgees from them, and others still in the hands of their New York agents, who held them as security for advances to the insolvent firm. The firm kept an account with each of their customers, in which they charged the purchase price of all stocks and securities ordered by them, the commission thereon, and interest on debit balances, and credited the selling price of what was ordered sold, margins paid, and dividends received. A settlement of these accounts, after crediting to each customer the market price of stocks and securities not closed out, shows a credit balance to the plaintiffs. These customers we will, for convenience sake, call creditor customers. A like settlement shows that other customers, whom we will call debtor customers, were indebted to the firm. Before this final credit is made, the accounts of all, save one or two customers, show an apparent indebtedness. The stocks and securities of the various kinds carried as aforesaid were not sufficient to fill the orders of all the firm's customers.

The plaintiffs desire to pay their debit balances and redeem the stocks and securities which they have ordered bought. The defendant contests their right so to do. They have therefore united in the present action, which is amicable in its character, for the purpose of obtaining the advice of this court upon the questions which relate to the contention between the several plaintiffs and the defendant.

The record sets out in full the details of the dealings of each customer, the state of his account at the time of the assignment, the various kinds and amounts of property called for by his orders, the kinds and amounts of property carried by Bunnell Scranton as the result of these orders, and the manner in which that property was holden in sub-pledge.

We are not asked to determine all the questions which might upon the facts arise between the plaintiffs themselves. As between themselves they profess to be able to make a satisfactory distribution of the property which may fall to their share and of the burdens it must bear. We are therefore left to the consideration of those questions only which grow out of the rights or interests of the trustee as against the plaintiffs. These questions relate — (1) to the plaintiffs' claimed right of redemption; and (2) to the conditions, if any, upon which redemption may be made.

Since the appointment of the trustee most of the stocks and securities which were being carried by Bunnell Scranton have, pursuant to an agreement made by the parties in interest, been sold and turned into money, which is now held in lieu of the property sold and under the same conditions. The questions presented by the record relate to the situation as it was when Bunnell Scranton assigned, and we shall treat of the facts as they then were and as they in legal contemplation continue to be.

The mode of dealing between Bunnell Scranton and their customers, and by Bunnell Scranton in the execution of the orders of their customers, is set out in the record, with a careful attention to detail, as follows: —

The course of business of Bunnell Scranton in receiving and executing orders from customers was as follows. The customer desiring to deal in stocks or other property was required to sign and deliver to Bunnell Scranton an order, upon a printed blank supplied by them, of which the following is a copy:

When stocks were ordered to be purchased upon margin, the certificate or other evidence of title of the property thus ordered to be purchased was not delivered to the customer, but was held and made use of as hereinafter set out.

It was understood between the customer and Bunnell Scranton that the certificates of the property should not be delivered to the customer until the price thereof, with interest thereon and commission, was paid. It was also understood that Bunnell Scranton might, under certain circumstances, sell the securities thus carried to protect themselves from loss. Subject to such right, it was agreed that the brokers would carry the property for the customer at the risk of such customer, and that they would sell the same forthwith, upon the order of the customer, and account to him for the proceeds; or, upon payment in full of the purchase price of the property, and all sums due for interest and commissions, that they would deliver to the customer a certificate or other proper evidence of title to the property. This is the usual agreement between brokers and their customers when stock is dealt in upon a margin.

While the firm of Bunnell Scranton continued in business they never failed to respond to any order or request to deliver or sell certificates of stock or other property which they had purchased for their customers.

They received for their services as brokers one eighth of one per cent of the par value of the security bought or sold, and received no other profit from the transaction. They kept an account with each customer, on which he was credited with all cash payments, including payments by way of margin, and with the proceeds of all sales, less commissions, and with dividends when paid upon stocks carried for him, and was charged with the full price of securities ordered and carried, with the commissions added and with interest on such price.

All orders for the purchase or sale of stocks (except as may hereinafter appear) were executed by Bunnell Scranton through Prince Whitely and W. S. Lawson Company, two firms of brokers and members of the stock exchange in the city of New York; and this fact was well known to the plaintiffs and to the customers generally of Bunnell Scranton.

Such orders were so executed in the following manner, to wit: — the firm of Bunnell Scranton were required to place and keep in the hands or under the control of said Prince Whitely and Lawson Company, respectively, money and marketable securities by way of margin, in amount equal to a stipulated per cent of the par value of the securities ordered by Bunnell Scranton and bought or sold through said New York brokers respectively. The margin required by Prince Whitely was ten per cent, and that required by Lawson Company was five per cent. Thereupon Bunnell Scranton, when they received orders from their customers to buy or sell securities or other property, ordered by telegraph Prince Whitely or Lawson Company to buy or sell on the account and at the risk of Bunnell Scranton the various securities or property which they had by their customers been so ordered to buy or sell.

The New York brokers did not deal with or know the customers of Bunnell Scranton, but dealt with Bunnell Scranton exclusively; although they knew that Bunnell Scranton were in the brokerage business, and understood generally that a large proportion of the orders of Bunnell Scranton to them were in fact in execution of orders received by that firm from their customers.

Upon the receipt of such telegram from Bunnell Scranton the New York brokers, in execution of such order, in their own name and behalf, and not disclosing that they were so executing the orders of Bunnell Scranton, bought of or sold to some other broker and member of the stock exchange of the city of New York the security or property which they had been so ordered by Bunnell Scranton to buy or sell.

The rules of the stock exchange require that all purchases or sales made by the brokers belonging to said exchange shall be actual, bonâ fide transactions, and in every instance such transactions were actual transactions, and were accompanied by the actual delivery of certificates, with an assignment and power of attorney for transfer, executed in blank, or other evidence of title, and the property was paid for on delivery. One exception, however, occasionally occurred in the course of dealing, to wit: — if the brokers during the day's business in the stock exchange bought of another broker stock or property, and also sold to the same broker stock or property of the same kind, in settling these transactions at the end of the day they did not deliver to him certificates or evidences of title for the full number of shares of such stock sold to him, and receive from him certificates or evidences of title for the full number of shares thereof bought of him, but, following what was the custom of brokers under such circumstances, delivered to him or received of him, as the case might be, certificates or other evidence of title for such number of shares only as would balance their dealings on that day in that kind of stock or property. If the number of shares bought of such broker and the number of shares sold to him were the same, then the transactions were settled by an exchange of checks, they giving to such broker their check for the purchase price of all stock bought of him, and receiving from him his check for the purchase price of all stock sold to him, and no certificate or other evidence of title of that kind of stock passed between the parties.

Whenever any order of Bunnell Scranton was so executed by Prince Whitely or by Lawson Company they notified Bunnell Scranton by sending them a telegram, and afterwards a written report, stating the date, kind and amount and price of the securities so bought and sold, and the name of the broker from or to whom such purchase or sale was made.

Whenever a telegram was received from either of the New York brokers announcing the execution of an order Bunnell Scranton were accustomed to mark upon the telegram the name of the customer on whose account such order was executed; and in like manner when the written report containing the same announcement was received the name of such customer was marked on the letter. From these memoranda the charges and credits were made upon the books of the firm in the account of such customer.

For their services the New York brokers charged Bunnell Scranton a commission of one sixteenth of one per cent of the par value of all securities bought or sold.

Each of said New York brokers, Prince Whitely and Lawson Company, kept a general account with Bunnell Scranton, upon which the price of all securities so bought, together with the commissions and interest upon balances, was charged, and the proceeds of securities sold, dividends received upon securities carried for them, and all cash payments, including payments made by way of margin, were credited.

The certificates and evidences of title of property thus bought by the New York brokers, by order of Bunnell Scranton, upon a margin, were not delivered to Bunnell Scranton, but were received and held or made use of by the New York brokers in the manner hereinafter set out. It was understood between Bunnell Scranton and the New York brokers that such certificates and evidences of title to property should not be delivered to Bunnell Scranton until the purchase price thereof, with interest thereon and commission, was paid. It was also understood that the New York brokers might, under certain circumstances, sell the securities thus carried, to protect themselves from loss. Subject to such right it was agreed that the brokers would carry the property for Bunnell Scranton at the risk of Bunnell Scranton, and that they would sell the same forthwith upon the order of Bunnell Scranton and account to them for the proceeds; or, upon payment in full of the price at which the property had been purchased, and all sums due for interest and commissions, that they would deliver to Bunnell Scranton a certificate or other proper evidence of title to the property. This is the usual agreement between brokers and their customers when stocks are dealt in upon a margin.

During the whole course of their business with Bunnell Scranton, which had been continuous with both firms for many years prior to the assignment of Bunnell Scranton, there had never been a case where the New York brokers had not complied with the order or request of Bunnell Scranton to deliver in New Haven any stocks or other property which they had previously reported that they had purchased, and at all times from the beginning of their business with Bunnell Scranton to the present time they have been able to meet all their obligations.

When the New York brokers purchased securities upon the order of Bunnell Scranton, as aforesaid, they entered upon their books the number of the certificate or other evidence of title delivered to them, but thereafter they did not keep separate or distinct such evidences of title from others of the same kind received in the course of business in executing orders of other customers; and they used for the purpose of delivery upon sales made by them in the course of their business, such as were most convenient for them to use, without regard to any right of the customer in or to any particular certificate or evidence of title, and without regard to the fact that the particular stock represented by any given certificate or evidence of title was purchased upon order of one customer or another. Except as may be hereinafter specially found, the certificates and other evidences of title of property in the possession and control of the New York brokers at the time of the assignment, as hereinafter set out, and held for and on account of purchasers on margin for said firm, were not the same which were received upon the execution of such orders of Bunnell Scranton. The custom of the brokers in the above respect is in accordance with the general custom of brokers.

It is the custom of brokers at their pleasure to pledge or hypothecate the certificates or other evidences of title delivered to them in the execution of orders to buy stocks on margin, for the purpose of raising money to carry on their business, and Prince Whitely and Lawson Company were accustomed to and did pledge and hypothecate, at their pleasure, the certificates and evidences of title received in executing the orders of Bunnell Scranton.

It sometimes happened in the course of their business that the brokers were ordered by a customer to sell stock or property which they were not carrying for him, and which was not furnished to them by him for delivery. In such case it was their custom to borrow the requisite certificate of another broker, and to use the same to deliver in execution of such order to sell. But if the brokers were carrying sufficient of such stock or property for some other customer, they in such case used the stock so carried, and delivered the same in execution of such order to sell; and it thus happened that, until an equal amount of such stock was bought back or replaced by borrowing, they did not have in their possession or control sufficient of that particular kind of property required to enable them to make delivery to the person for whom they were bound to carry such stock on margin.

With the exception that the above occasionally occurred, Prince Whitely and Lawson Company at all times had and retained in their possession, or had in the possession of banks where the same had been pledged by them in such manner that they could control and at all times redeem the same, sufficient of the particular kinds of property required to enable them to perform their contracts with Bunnell Scranton and their other customers, which property they so held and controlled for that purpose; and said brokers were at all times so situated that if at any time they had not so in their possession or control sufficient of any particular kind of property, they could at once obtain the same by buying or borrowing.

In some few instances, as will hereinafter appear, Prince Whitely had in their actual possession at the time of the assignment of Bunnell Scranton certain certificates which had been so received by them at the time of the execution of orders of Bunnell Scranton. Such identical certificates were not so held because of any contract or understanding with Bunnell Scranton, other than that which governed the general dealings of the parties as herein set out.

Upon the execution of the orders of Bunnell Scranton by the New York brokers the price of the security sold or bought was, if sold, credited, or if bought, charged, in the margin account of Bunnell Scranton, and separate payments and separate deposits by way of margin were not made by Bunnell Scranton on account of the different purchases made upon such orders.

Occasionally during the continuance of this business between Bunnell Scranton and Prince Whitely and Lawson Company the margin which Bunnell Scranton had with Prince Whitely or Lawson Company was more than the stipulated per cent of the current securities which had been ordered bought or sold by Bunnell Scranton, and therefore Prince Whitely or Lawson Company, upon the request of Bunnell Scranton, sent to Bunnell Scranton a certificate of stock or other evidence of title, and thus reduced the margin of Bunnell Scranton with the New York brokers. Whenever such margin with Prince Whitely or Lawson Company was reduced below the required per cent, Bunnell Scranton replenished such margin by check or draft drawn to the order of the New York brokers on the banks where Bunnell Scranton kept on deposit the cash received in carrying on their banking and brokerage business.

Whenever any certificates or evidences of title of the stocks or property carried by them for their customers came into the actual possession of Bunnell Scranton they held, pledged and made use of the same in the same manner that the New York brokers held, pledged and made use of the certificates and evidences of title received by them in the execution of orders of Bunnell Scranton, as hereinbefore set out. No particular certificate or other evidence of title of property carried on margin was kept or held by Bunnell Scranton for delivery to any particular customer.

The finding, which we have thus far quoted, thus sets out at length the history of the transactions between Bunnell Scranton and the plaintiffs, their customers, which has culminated in the situation before us. It is apparent that a solution of its problems will be largely determined by the construction which is to be placed upon the contract between the parties, and upon the relation or relations sustained by them to each other as the result of their dealings.

That the contract between Bunnell Scranton and the plaintiffs was an illegal one, and that their relations were such as are forbidden in law, is not contended. The decisions of this court have removed this question from the do main of doubt. Hatch v. Douglass, 48 Conn., 116; Ingraham v. Taylor, 58 id., 503.

The defendant's contention is, that the relation between Bunnell Scranton and their customers was a contract relation pure and simple, and that the contract was such that no right, title or interest in or to any of the securities ordered by a customer upon a margin and not in fact delivered to him ever vested in him, for the reason that the contract was wholly executory, dependent and conditional. The claim of the defendant's brief is that the contract was merely one to deliver upon payment in full by the customer. That this statement of the contract is intended to be exhaustive and not merely expressive of the salient feature of the undertaking of the parties, clearly appears from the extended discussion given to the subject. The contract thus interpreted resolves itself into one of comparatively simple terms. The customer, in consideration of his payments, purchased the right to have delivery made to him, at any time at his option, of certain designated stocks or securities, at the price of the day of the agreement. Bunnell Scranton's undertaking was to make such delivery, upon demand and the required payment. The agreement in this form, it will be observed, did not call upon Bunnell Scranton to do anything but to deliver upon demand and condition of payment complied with. There was involved no duty to buy any stocks or securities until delivery was called for, and none at any time to carry any for the fulfillment of the contract.

If we turn to the record to discover what the expressed terms of the contract between Bunnell Scranton and their margin customers were, and what was in fact done, either in execution or by reason of them, we find that the first step in each transaction was the execution by the customer of a written order to buy for his account and risk. The order being accepted, Bunnell Scranton forthwith, through their New York agents, went into the market and bought the stock or securities ordered. They received from the seller the certificate or proper evidence of title and paid the purchase price. The purchase made, Bunnell Scranton at once notified the customer that they had bought for his account and risk. They charged him with the cost. Thereafter, until the transaction was in some manner closed, they continued (save as a course of dealing carried on pursuant to a custom of the business caused occasional temporary exceptions) to hold and carry said shares or securities, or an equal amount of other like shares or securities, ready for delivery when required. The risk attending this carrying was the customer's. He paid interest upon the moneys furnished by Bunnell Scranton to pay for the stocks or securities bought by them. The right at any moment to command a sale and have an accounting for the proceeds was his. He received an accounting for the dividends. Bunnell Scranton were entitled to no benefit or profit from the transactions excepting their commissions. This mode of dealing, in the execution of orders of the kind in question, was in accordance with the uniform and recognized custom of the stock market in Connecticut and New York, where the parties dealt.

The difficulties attending an attempt to harmonize this language of margin-purchasing orders, and the uniform conduct of the parties in their execution, with the contract as the defendant asks that it be interpreted are apparent. The orders, in unmistakable terms, directed purchases of stocks and securities for the account and risk of the customer, and Bunnell Scranton advised the customer that they had been so bought. The defendant is compelled, in justification of his definition, to say that this use of language was false and misleading, and that no buying was, in fact, by the contract contemplated or required.

There was in every instance, conformably to the language of the order and notice, an actual and immediate buying and acquisition of the stocks and securities designated. The defendant says that this conformity of practice with the language of the order was accidental. He insists that the buying was the voluntary and gratuitous act of Bunnell Scranton, and not the result of any obligation upon them to buy. He says that they bought only because they were prompted so to do by "ordinary business prudence," in order that they might be protected from the fluctuations of the market. This explanation is good as far as it goes. But there is still left unexplained and apparently unexplainable the uniform practice of charging to the customer the cost of that which the broker's business prudence alone prompted him to procure to enable him to fulfill his contract without risk to himself, and the willingness of the customer to pay interest upon the investment which was not for him or in his interest. If this payment of interest by the customer was voluntary, it would seem that it must have been made under the impulse of a generosity as striking as it was universal. If it was agreed, it would seem that the thing which justified it, to wit, the purchase which caused the expenditure, must have been within the scope of the agreement.

These are not the only inexplicable features of the situation under the contract as sought to be interpreted. It is said that the margin broker buys under the dictation of "ordinary business prudence," that he may not be subjected to risks attending changes in the market. It would be natural to expect that an occasional customer, at least, would be actuated by the same prudence. The defendant, however, would have us believe that the hazards of the market, which have frightened all brokers into a rigorous conservatism, have been without effect upon the customer, so that he cheerfully assumes all the risk attending a carrying of stocks and securities which he has not called for and to which the broker has resorted for his own benefit solely. The conduct of the broker in its turn is no less strange. The stocks and securities are his, but he generously accounts to the customer, who has no interest whatever in them, for the dividends and income, and graciously permits him to direct a sale at any time and to command an accounting for the proceeds.

We are convinced that the defendant's statement of the undertaking of the parties does not satisfy the requirements of the situation. Clearly it is incomplete in detail, or wrong in its fundamental principle.

If we look for judicial sanction for the proposition of the defendant we find none outside of the Supreme Court; of Massachusetts, and no present authority there for the precise interpretation here contended for. In Hayes v. Wood, 15 Gray, 375, which was decided in 1860, before the stockbroker was as familiar a figure as he is to-day, and before the law governing his calling was as well established, that court devoted a few lines only to this subject, but gave countenance to the defendant's claim in that it said of a margin-purchasing contract that it was strictly a conditional one, to deliver so many shares upon the payment of so much money, and that until the money was paid the right to have performance did not accrue.

In the later case of Covell v. Loud, 135 Mass., 41, the court made it clear that it did not regard the statement of the contract in Hayes v. Wood exhaustive, but simply as expressive of its distinctive feature. It apparently did not intend to adopt a new position as respects what was the distinctive feature of the contract, since it cited approvingly the language of the former case; but it did, in plain terms, state that there was incorporated into the contract an agreement on the part of the broker "to purchase and hold or carry" for the customer. In neither of these cases is the matter under consideration treated at any length, and it is not altogether easy to gather from them just what the court's construction of the undertaking of the parties in its full scope was. If we interpret their language aright, their doctrine is, substantially, that the broker in margin-purchasing contracts like those under consideration, agrees, in consideration of the customer's payments, to purchase certain stocks or securities and hold or carry them, or an equal number of like shares or securities, ready to be delivered to the customer when required by him, and upon demand and payment therefor to deliver the same to him.

This enlarged construction of the contract, in so far as it brings within its scope what by established usage is done in its execution, obviates to that extent, of course, the inconsistencies which we have commented upon as existing between obligation and performance. Doubtless the construction might be so far elaborated as to embrace within the terms of the contract all the features which characterize the course of dealing under it. The result, however, would not then be to remove the difficulties attending the situation. The inconsistencies and incongruities, to be sure, would no longer arise from without, but they would still continue to exist within the contract and be as inexplicable as ever. The contract would become one inharmonious and inconsistent in its parts. So long as the interpretation of the contract preserves as its distinctive feature the principal proposition that the customer purchases merely the right to have delivery to him in the future, at his option, of stocks or securities at the price of the day of the agreement, and its corollary that the customer derives no right, title or interest in the stocks or securities until final performance, the difficulties in the way of harmonizing the situation are bound to exist. The fundamental difficulty grows out of the necessary attempt in some way to transform the customer, who enjoys all the incidents and assumes all the risks of ownership, into a person who in fact has no right, title or interest, and to create out of the broker, who enjoys none of the incidents of ownership, and assumes not a particle of its responsibility, a person clothed with a full title and an absolute ownership.

The details of the transactions between the plaintiffs and Bunnell Scranton, from their inception down to the point where the stocks and securities were purchased and procured, were precisely those which characterize stock-brokerage dealings in their commonly accepted form. Had delivery to the plaintiffs followed no one could fail to recognize the transactions thus far as the usual ones between customer and broker. In this situation, if the plaintiffs had simply handed back to Bunnell Scranton the stocks or securities so delivered, to be held by the latter as security for any indebtedness from the former to the latter, whether incurred in the purchase or otherwise, until such time as that indebtedness and the interest thereon should be paid, these latter transactions would have been unmistakable ones of pledge. These two relations of customer and broker, and pledgeor and pledgee, together with their nature and incidents, are well understood. Wherein does the combination in succession of these two relations fail to satisfy the conditions existing between Bunnell Scranton and the plaintiffs? Clearly in no possible particular unless it be either because there was no delivery, in the first instance, to the plaintiffs as buyers, and no redelivery by them to Bunnell Scranton as pledgees; or, because Bunnell Scranton enjoyed certain privileges with, or exercised certain rights over, the purchased property which do not belong to pledgees.

That the omission of the superfluous acts of delivery and redelivery cannot operate to effect radical changes in the legal relations of the parties seems too apparent for argument. The law seeks substance, not forms. It never requires the performance of a needless act. The juggle of a pass from Bunnell Scranton through their customer back to them again would have satisfied in technical detail all the requirements of the completion of a purchase and the inception of a pledge. The result was obtained by omitting this useless performance which the law regards the parties to have waived. It is a well recognized principle of law that formal manual delivery is not a necessary pre-requisite of a pledge. "If the pledgee has the thing already in his possession, the very contract transfers to him by operation of law a virtual possession thereof as a pledge the moment the contract is completed." Markham v. Jandon, 41 N. York, 235; Brown v. Warren, 43 N. Hamp., 430; Providence Thread Co. v. Aldrich, 12 R. Isl., 77; Story on Bailments, § 297.

The privileges which Bunnell Scranton enjoyed and the rights which they exercised over the stocks in their hands, which are inconsistent with the ordinary privileges and rights of a pledgee, may be said to have been: —

1. That they did not retain the identical shares bought for each customer and keep them separate and apart from the general mass of like stocks carried by them.

2. That they exercised the right to repledge at will; and

3. That they occasionally, by reason of their short sales for other customers, reduced their carrying of certain stocks below the requirements of their customers.

It is well established that a pledgee of stocks is entitled to have them transferred upon the books of the corporation into his own name. First Nat. Bank v. Hartford Life Annuity Insurance Co., 45 Conn., 22; General Statutes, § 1924.

Shares of stock have no individuality, no earmarks. One share does not differ from another share of like stock in form, characteristic or value. Each share represents simply an undivided proportionate interest in the ownership of the corporation. It entitles its owner to a certain right in the management, profits and ultimate assets of the corporation, precisely like that which every other shareowner enjoys. Certificates of stock, which have earmarks, are not the stocks. They are only the evidence of the ownership of the stocks. They are muniments of title like title deeds. They have no value save as evidence of the thing owned, which has nothing individual, distinguishable or peculiar about it. Courts have therefore said that no good reason existed for requiring that a pledgee of stocks should at all times preserve a careful separation of distinguishable certificates connected with each transaction of pledge, and maintain the identity of each certificate distinct and unbroken. They have said that the essential thing was that he hold at all times the required shares of stock ready to be delivered when called for, and in recognition of this fact and of the right enjoyed by the pledgee to transfer the stocks held by him in pledge into his own name, they have held that a pledgee fully preserves the rights of the pledgeor if he at all times until the termination of the pledge retains similar stock in amount equal to that pledged. This has been held of pledges in their ordinary form as well as of those incidental to margin transactions. Nourse v. Prime, 4 Johns. Ch., 490; Morton v. Morgan, 19 N. York, 170; Gilpin v. Howell, 5 Penn. St., 41; Price v. Gover, 40 Md., 102; Hubbell v. Drexel, 11 Fed. Rep., 115; Cook on Stock Stockholders, § 469.

The right to re-pledge for his own debt is clearly one not enjoyed by a common law pledgee. Bunnell Scranton undoubtedly exercised it over the stocks and securities in their hands for the purpose of obtaining the capital required to carry their customers' purchases. They even went so far as to pledge the stocks and securities of one customer en bloc with those of other customers. This course of dealing, however, was in conformity with the established custom and usage in the stock market in Connecticut and New York. When the plaintiffs gave their orders to Bunnell Scranton they understood that the orders were for execution in the New York Stock Exchange. They knew the relation of Bunnell Scranton to this exchange and their mode of transacting business therein through New York houses, members thereof. They must therefore be held to have contemplated and authorized a course of dealing in accordance with the rules and customs of that market. The authorities are not uniform as to the effect of trade usages upon the contractual obligations of parties. We think, however, that the better authority goes to this extent, at least, that when one employs another to deal in a particular market he will be held as intending that the mode of performance should be in accordance with the established customs and usages of that market, as long as the custom or usage is neither immoral, unlawful, unreasonable, contrary to the express agreement of the parties, nor such as to change the intrinsic character of the undertaking. Robinson v. Mollett, L. R., 7 H. L., 802; Nourse, v. Prime, 4 Johns. Ch., 490; Lawrence v. Maxwell, 53 N. York, 19; Samuels v. Oliver, 130 Ill., 73.

In view of the character and necessities of the business undertaken by brokers in carrying for their customers stocks bought upon a margin, and of the purposes which the custom of repledging was intended to serve, we are not prepared to say that it is open to any of the enumerated objections. Courts have commonly sanctioned it. Nourse v. Prime, 4 Johns. Ch., 490; Lawrence v. Maxwell, 53 N. York, 19; Oregon Co. v. Hillmers, 20 Fed. Rep., 717; Dos Passos on Stockbrokers, 357; 18 Am. Eng. Ency. of Law, 707.

This custom therefore became a part of the contract between Bunnell Scranton and their customers. The contract thus gave to Bunnell Scranton the implied authority to re-pledge. Such authority it has long been recognized could be given by a pledgeor. Ogden v. Lathrop, 65 N. York, 158; Price v. Gover, 40 Md., 102; Dos Passos on Stockbrokers, 662; Story on Agency, § 113.

The custom which countenances the practice of using stocks and securities carried for margin-buyers in effecting sales for other short-sale customers, so that the amounts of certain stocks carried are at times reduced below the requirements of the purchasing customers, stands upon a different footing and appears to have less justification. We are not called upon here to determine the question, which might under certain circumstances be an important one, whether such custom is or is not reasonable or consistent with the intrinsic character of a margin-buying contract. The purpose of our present inquiry is to discover what harmony, or want of harmony, exists between the actual course of dealing and the contractual obligations and rights of the parties as a test of interpretation. In this aspect the custom under consideration has little significance, since it would seem to be no less unreasonable and incongruous when followed by one who has contracted "to purchase and hold or carry," than when followed by a pledgee. In any event, although the practice be regarded as one which usage alone will not be permitted to attach to the pledge relation, it appears as the only feature of the whole course of dealing between the parties out of harmony with that relation. So much cannot be said of any other relation.

The leading case upon this subject in New York is Markham v. Jaudon, 41 N. York, 235. The opinion of the court in that case, delivered by Chief Justice HUNT, contains an analysis of the obligations of the parties to a margin-purchasing contract which is so exhaustive and so in consonance with our views, in so far as it relates to the questions involved in this case, that we quote it in full, together with some further pertinent observations of the court, as follows: —

"The broker undertakes and agrees: —

"1. At once to buy for the customer the stocks indicated;

"2. To advance all the money required for the purchase beyond the ten per cent furnished by the customer;

"3. To carry or hold such stocks for the benefit of the customer so long as the margin of ten per cent is kept good, or until notice is given by either party that the transaction must be closed. An appreciation in the value of the stocks is the gain of the customer and not of the broker;

"4. At all times to have in his name and under his control ready for delivery the shares purchased, or an equal amount of other shares of the same stock;

"5. To deliver such shares to the customer when required by him, upon the receipt of the advances and commissions accruing to the broker; or, —

"6. To sell such shares, upon the order of the customer, upon payment of the like sums to him, and account to the customer for the proceeds of such sale.

"Under this contract the customer undertakes: —

"1. To pay a margin of ten per cent on the current market value of the shares;

"2. To keep good such margin according to the fluctuations of the market;

"3. To take the shares so purchased on his order whenever required by the broker, and to pay the difference between the percentage advanced by him and the amount paid therefor by the broker.

"The position of the broker is two-fold. Upon the order of the customer he purchases shares of stocks desired by him. This is a clear act of agency. To complete the purchase he advances from his own funds, for the benefit of the purchaser, ninety per cent of the purchase money. Quite as clearly he does not in this act as an agent, but assumes a new position. He also holds or carries the stock for the benefit of the purchaser until a sale is made by the order of the purchaser or upon his own action. In thus holding or carrying he stands also upon a different ground from that of a broker or agent whose office is simply to buy and sell. To advance money for the purchase, and to hold and carry stocks, is not the act of a broker as such. In so doing he enters upon a new duty, obtains other rights, and is subject to additional responsibilities."

The conclusion of the court is that this new relation is that of pledgeor and pledgee.

This doctrine has been adopted and approved by a long line of New York cases, among which are the following: — Stenton v. Jerome, 54 N. York, 480; Baker v. Drake, 66 id., 518; Grumann v. Smith, 81 id., 25; Capron v. Thompson, 86 id., 418; Gillett v. Whiting, 120 id., 402; Willard v. White, 56 Hun, 581.

The Supreme Court of Illinois has held in accordance with the rule in New York. Brewster v. Van Liew, 119 Ill., 554. The text writers have adopted this view. Dos Passos on Stockbrokers, 112; Cook on Stock Stockholders, § 457; Jones on Pledge, 495; 18 Am. Eng. Ency. of Law, 707; Colebrook on Collateral Securities, § 306; Overton on Liens, 205.

It only remains to notice the former decisions of this court. The case of Hatch v. Douglass, 48 Conn., 116, arose out of conditions which, as respects the contract relations of the parties, were precisely similar to those existing between the parties to the present action. In that case, however, the plaintiffs, the brokers, sought to recover from the defendant, their customer, upon a balance of account. The issues did not directly involve any questions as to the ownership of stocks and did not necessitate a definition in precise terms of the relation which the parties bore to each other while stocks were being carried. The opinion therefore contains no designation of the relation. It is however explicit in its determination of what the nature of the employment was, and uses language which admits of no uncertainty as to the court's conception of the relation of the parties. "The defendant," it says, "through his agents, the plaintiffs, actually purchased the stock, and there was an actual delivery — not to the principal, but to the agents for the principal. The plaintiffs advanced the money and held the stock in their hands as security. The plaintiffs were ready at any time to transfer the stock to the defendant upon payment of the purchase money. The import of the finding is, and we must so regard it, that it was an actual and bonâ fide employment of the plaintiffs to purchase stocks, and not a mere formal employment designed to cover a betting operation." It is thus held that the employment was an actual and bonâ fide one to purchase stocks; that there was an actual purchase for the customer; that the brokers were, for the purposes of the purchase, the agents of the customer; that the delivery was to the brokers as such agents; that the brokers advanced the money to effect the purchase; and that they held the purchased stocks as security for such advances. The picture thus drawn of the plaintiffs as the defendant's brokers and subsequent pledgees could hardly be more unmistakable if it had been given its proper name. The court's statement of the elements of the transaction certainly excludes every possibility of a relation wherein the customer is not a buyer and the broker not an agent, and that too an agent of the customer, and wherein the purchased stocks are held by the broker by virtue of an ownership by him and not merely as security. Under the defendant's contention the customer is not a buyer, the broker is a principal and not an agent, and the purchased stocks are the latter's by an absolute title. The more carefully this case is analyzed the more apparent it becomes that it is decisive of the question under discussion, and that its doctrine is in full harmony with that which we here sanction.

In Ingraham v. Taylor, 58 Conn., 503, margin contracts were again under consideration. In their outward form the contracts in that case were like those in Match v. Douglass and in this case. The transactions under them however assumed a totally different character. There was no actual buying. The course of dealing bore none of the earmarks of a bonâ fide employment to purchase. The court was there fore naturally led to give a construction to the contracts which would make them conform to what was in fact done in pursuance of them. It must however be confessed that upon close analysis it is difficult to harmonize the language of the court in Ingraham v. Taylor with the doctrine of Hatch v. Douglass. We are convinced that the latter case expresses the true rule of law, and in so far as Ingraham v. Taylor may be inconsistent with it, and consequently with the principles herein laid down, it is overruled.

We are of the opinion that both reason and authority support the proposition that the relation of pledgeor and pledgee existed between the plaintiffs and Bunnell Scranton at the time of the latter's insolvency as respects the stocks and securities which they were then carrying for the former in the execution of their orders.

From this proposition it follows that the plaintiffs, as pledgeors of the stocks and securities so carried, are entitled to redeem them. The assignment of Bunnell Scranton does not interfere with the exercise of this right. The title to the pledged property was never in the insolvents. The plaintiffs have from the first been its general owners. The insolvent firm had only a special property in it. The assignment and appointment of the defendant as trustee in insolvency have never operated to deprive the plaintiffs of their ownership, nor to convert Bunnell Scranton's interest into an absolute title in the trustee. The defendant trustee is not in the position of a bonâ fide purchaser for value. The creditors of the insolvents did not prior to the assignment have the right to appropriate the plaintiffs' stocks and securities to the satisfaction of their claims. The transfer of the stocks into the name of Bunnell Scranton upon the books of the several corporations did not confer such right. Mowry v. Hawkins, 57 Conn., 453.

The trustee, in his capacity as a representative of the creditors, cannot therefore have acquired it. By the plaintiffs' exercise of their privilege of redeeming the property the creditors of the pledgees are not deprived of any right or advantage they ever enjoyed. Redemption involves payment of the plaintiffs' several indebtednesses. From these payments the creditors obtain every benefit it was ever theirs to hope for.

An attempt on the part of the several plaintiffs to redeem raises legal questions which demand consideration. These questions relate to the necessity of identification, and the character and extent of that identification. The pledge lation implies the possession by the pledgee of some property to which the pledge attaches. A pledgeor seeking to retake his own must be able to identify it. The burden is upon him, not only to establish the contract relation, but to point out the property of which the contract gives him the right to repossess himself upon redemption. In ordinary cases of pledge, where the property given in security is corporeal or consists of certain kinds of choses in action, the means of strict identification are usually at hand. In cases like the present, where the pledged property is made up largely of stocks, the problem of identification becomes complicated by reason of the right in the pledgee to take out in his own name a new certificate and to preserve no separation of particular shares from other like shares held by the pledgee. A strict identification of precise shares is thus oftentimes rendered impossible. Nevertheless, both in law and in fact, shares are being held in pledge. Evidently the rule which demands identification as a pre-requisite to repossession must, when such conditions are encountered, receive such reasonable construction and application as will, upon the one hand, satisfy the purpose of the rule, and upon the other hand do justice to the parties. It will not do to dispense with the necessity of identification. Neither will it do to suffer a permissible practice on the part of the pledgee to deprive a pledgeor of his property.

If we look at the conditions which the claims of the several plaintiffs present we find that nearly every possible contingency exists. These may be classified as follows: —

1. Where it can be shown that the precise certificates of stock or evidences of title originally purchased in the execution of a plaintiff's order were held for him by Bunnell Scranton at the time of their assignment.

2. Where it appears that certain particular certificates of stock or evidences of title were by them being carried in fulfillment of a plaintiff's order, although it may be impossible to establish that such certificates or evidences of title were the precise ones originally purchased in the execution of that order.

3. Where no more precise identification is possible than that Bunnell Scranton were carrying a block of stocks of a particular kind sufficient to satisfy the demands for that kind of stock of all their customers, including themselves.

4. Where it appears that Bunnell Scranton were carrying a block of stocks of a particular kind not capable of the precise identification contemplated in classes one and two, and the whole amount of such unidentifiable shares is insufficient to satisfy the demands of all their margin-buying customers, including themselves, but sufficient to satisfy the demands of all such customers exclusive of themselves either as individuals or as a partnership.

5. Where it appears that Bunnell Scranton were carrying a block of stocks of a particular kind, not capable of the precise identification contemplated in classes one and two, and the whole amount of such unidentifiable shares is insufficient to satisfy the demands of all their margin-buying customers exclusive of themselves either as individuals or as partners.

Classes one and two present no difficulty. The plaintiffs making such identification are clearly entitled to redeem. This identification being a strict one of precise property, it of course follows that it must take precedence of any general identification such as remains to be considered, and gives to the fortunate pledgeor the first right to that which is so identified.

The problem of identification and distribution as related to class three is not a difficult one. If Bunnell Scranton were at the time of their failure carrying a block of certain stock, and the orders of their customers taken together called for them to carry that amount of stock, the identification of that stock as being stock carried for these customers, the requisite amount for each, is clearly reasonable and sufficient. The shares being all alike, and merely representing an ownership of a certain undivided interest in a corporation, the interests of all concerned are satisfied by a distribution to each pledgeor of his proper number of shares. It has been well said in respect of money that substantial identity does not consist in oneness of pieces of coin or bank bills. Farmers' Mechanics' Bank v. King, 57 Penn. St., 202. It may be as truly said of identity of shares of stock that it does not consist in oneness of certificates. It is a familiar principle that a fund impressed with a trust may be traced and preserved for its owner so long as it can be identified. The cases are numerous where it has been held that if money so impressed with a trust is followed into a larger fund, or traced into the deposits of a bank, the identification is sufficient to entitle the owner to take as his own an amount equal to his own so traced. He does not lose his right to recover his own because he cannot select his particular dollars from the other dollars with which they have become commingled. It is held to be enough that he establishes that his dollars are there, although their strict identity is lost in a mass of other like dollars. Knatchbull v. Hallett, L. R., 13 Ch. Div., 713; Nat. Bank v. Life Ins. Co., 104 U. S. R., 54; Farmers' Mechanics' Bank v. King, 57 Penn. St., 202; Third Nat. Bank v. Stillwater Gas Co., 36 Minn., 75; Van Alen v. American Nat. Bank, 52 N. York, 1; Peak v. Ellicott, 30 Kans., 156; Beach's Modern Equity, § 283.

This principle with respect to the requirements of identification applied to the shares of stock carried by Bunnell Scranton leads to the rule of division here laid down.

Class four presents the same problem, modified only by the additional factor that the shares in Bunnell Scranton's hands were insufficient to meet the demands of their customers and themselves together. Bunnell Scranton had the right to do as they pleased with their own. For their customers they were bound to hold and carry the requisite stocks. If they did not have on hand what was called for by their customers' contracts and their own purchases, it will be presumed, in the absence of evidence to the contrary, that the situation arose in a way consistent with their right and duty, and that the stocks on hand were held for their customers. This presumption however must yield to the fact. If it appear that certain shares were at the time of the assignment specifically held by the insolvent firm upon the purchases of or for itself or its members, and thus and not otherwise actually carried, the right thereto of the trustee or administrator of such purchaser and owner would be as clear as that of a plaintiff who is able to make a like strict identification. Should the exercise of this right by the defendant as the representative of Bunnell or Scranton reduce the amount of any kind of stock remaining below that required to satisfy the demands of customers, the distribution would fall under the principles of class five to be considered. Otherwise each customer would take his full quota of stock.

This rule is in consonance with the accepted principles governing the identification and recovery of funds impressed with a trust. Knatchbull v. Hallett, L. R., 13 Ch. Div., 713; Nat. Bank v. Life Ins. Co., 104 U. S. R., 54; Continental Nat. Bank v. Weems, 69 Tex., 489.

Class five presents a less simple problem. Our previous discussion has eliminated certain of its features. There remains the single question as to what shall be done when it appears, after all efforts at precise identification have been exhausted, and after the claims of Bunnell Scranton as purchasers have been cut off, that there remains a block of stock insufficient to meet the demands of all the pledgeors of that stock. There is a shortage which must fall to the loss of somebody. Are there priorities of right as between customers? or must be claims of all fail? or what shall be done to accomplish an equitable result? The customers of Bunnell Scranton, as we have already seen, divide themselves into two classes — creditor customers and debtor customers. It is claimed that the creditor customers have rights superior to those of the debtor customers, and that the former are entitled to first satisfy their claims for stock, for the reason that the stocks of the latter may be regarded as having practically fallen in to the firm. We think otherwise. At the time of the failure of Bunnell Scranton all were alike customers for whom stocks were held by the firm in pledge. The legal relation of all to the stocks carried for them was precisely the same. By the appointment of the defendant as trustee the rights of creditors have become interposed. In the presence of their rights it cannot be said that events which may have succeeded the assignment have operated to give the plaintiffs new and enlarged rights. The situation must be regarded as it existed when the assignment was made. This situation discloses blocks of stock identified as held and carried under pledges for more than one person. None of the stock belongs to Bunnell Scranton. It is not possible to show to whom it share by share does belong. The shares are all alike. We think that the identification is sufficient to justify, and that equity requires, the division of the stock pro rata, among all those for whom Bunnell Scranton were holden to carry such stock. This course fully protects the creditors of Bunnell Scranton. No stock is taken from the assets of the firm to which it was ever by any possibility entitled. It gives the pledgeors their rights, as far may be, and in an equitable manner.

We therefore advise that the plaintiffs are entitled to redeem and possess themselves of such stocks and securities as conformably to the foregoing principles they may be able to thus reasonably identify as being carried for them.

Before the plaintiffs can recover their stocks there must be, of course, a discharge of the several pledges. This discharge implies that the indebtedness of each plaintiff to the insolvent firm must be paid. Unfortunately for the plaintiffs, most of their stocks and securities will not thus become released. They are in the hands of third persons, who rightfully hold them, as security for certain debts of Bunnell Scranton, and from whom they cannot be taken by their general owners until these debts are satisfied. Most of them thus stand subpledged, together with the stocks and securities of other customers, and oftentimes together with the stocks and securities carried by Bunnell Scranton them selves as stock operators. The burden incident to the recovery of these stocks so re-hypothecated, in so far as it exceeds that involved in the payment of the plaintiffs' various debit balances upon the insolvents' books, must be borne in some manner by the property held in pledge. Shall it be averaged upon all the property so held, or are there certain stocks and securities which the plaintiffs may rightfully ask to have first appropriated to this purpose? We have already noticed that the power to re-pledge, as exercised, was impliedly given by the plaintiffs to Bunnell Scranton. The re-pledging was therefore not wrongful. We have also had occasion to observe that all the stocks and securities which Bunnell Scranton were carrying for their outside customers were held by them under like conditions, and that the legal relations of all such customers thereto were precisely similar.

As between creditor and debtor customers there clearly exist no priorities. The question, in so far as it affects the stocks of Bunnell Scranton, presents more complicated considerations. The debts secured by the several pledges are theirs. As against them equity would doubtless give the plaintiffs the right to have an appropriation of the former's portion of the pledged property to the discharge of the pledges before theirs would be used for that purpose. This right, however, is one which should be accorded only as a pure matter of equity. The insolvency introduces into the situation as a new element the rights of creditors, and the plaintiffs' equities must now be determined with regard for their rights. If we look more closely at the circumstances of the pledges we notice that while the debts are Bunnell Scranton's, they were incurred for the benefit, indirectly at least, of the customers. The nature of the business undertaken by Bunnell Scranton's customers through them demanded the use of a large capital. The methods employed were designed to enable the customers to have the benefit of such capital without themselves furnishing it. It was not expected that the brokers would have it. It was understood that it was to be obtained in the way it was obtained. The obligation was, to be sure, that of Bunnell Scranton, but the benefit was, in part at least, the customers.' To secure this benefit, not otherwise easily, if at all, obtainable, the customers were willing that their stocks should be given as collateral. The assignment found them so hypothecated. It found other creditors of the firm. The plaintiffs had, in effect, loaned it the use of their stocks to enable money to be raised to carry their enterprises. The general creditors had perchance loaned it money with which other stocks had been bought. We think that both classes of customers ought to accept the situation as they find it, and that the plaintiffs are not, under the circumstances, entitled to assert as their equitable right that which would necessarily result in giving them a priority over other creditors. The burden incident to the discharge of any pledge made by Bunnell Scranton must therefore be averaged among all the stocks and securities held in such pledge.

The claim of the plaintiff Hooker presents a somewhat different question. At the time of the assignment Bunnell Scranton were carrying no stock or securities bought by them on his orders. He had, however, previously dealt through them upon margins, and was at the time, as the result of such dealings, indebted to them. As security for his margins he had from time to time deposited with them certain stocks of his own. At the time of the assignment these stocks were held by them as security for the balance due them. All of these stocks Bunnell Scranton had hypothecated for their debts. A portion of them were hypothecated, with other stocks belonging to Bunnell Scranton, and a small block of stock carried by Bunnell Scranton for one of their customers. Hooker claims that he is entitled to have the stock thus pledged with his, first applied to the discharge of the pledge, before he shall be required to pay a greater amount than his indebtedness to Bunnell Scranton to accomplish a redemption of his stocks. We think that this claim is well founded. We fail to discover in the record that Hooker ever gave Bunnell Scranton any express authority to pledge his stocks, and we discover nothing from which an implied authority so to do can be in any way inferred. A pledgee, in the absence of authority, express or implied, is not permitted to re-pledge as security for his own debt. Upon the facts appearing in the record, therefore, Bunnell Scranton's action in hypothecating Hooker's stocks must be regarded as wrongful. The stocks pledged with his were all rightfully pledged. They were either stocks of the wrong-doers and debtors, or stocks of a customer who had authorized a re-pledging. The plaintiff's equity is therefore superior to that of the owners of the other stocks, and it is his right to have an application of their proceeds to the discharge of the pledge, before he shall be called upon to bear a burden imposed upon his property by the wrongful act of his bailee. Willard v. White, 56 Hun, 581.

The plaintiff Mrs. Trowbridge is administratrix upon the estate of Peggy Simpson, deceased. Among the assets of that estate were two bonds registered in the deceased's name. Shortly before Bunnell Scranton's assignment she left these bonds with them as brokers to be sold. Accompanying the bonds was a power of transfer signed by her as administratrix. Bunnell Scranton forwarded the bonds to their New York agents, who sold them and received the proceeds. Before Mrs. Trowbridge received the money Bunnell Scranton assigned.

The proceeds of this sale were so impressed with the trust under which the bonds were held by Mrs. Trowbridge, and are so clearly traced by her into the hands of the trustee who now has them, that she is entitled to recover them. In re Strachan, L. R., 4 Ch. Div., 123; Knatchbull v. Hallett, 13 id., 713; National Bank v. Life Ins. Co., 104 U. S. R., 54; Farmers Mechanics Bank v. King, 57 Penn. St., 202; Kip v. Bank of N. York., 10 Johns., 63; People v. City Bank, 96 N. York, 32; Peak v. Ellicott, 30 Kans., 156; Englar v. Offult, 70 Md., 78. Beach's Modern Equity, §§ 283-286.