Case ID: daly-ny_10/html/0168-01.html
Source: Caselaw Access Project
Author: {"author": "Beach, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Grocers’ Bank, Appellant, against Richard G. Murphy, Respondent.
    (Decided March 7th, 1881.)
    The right of membership in the New York Stock Exchange is property, which a member of the exchange may be compelled to apply towards the satisfaction of a judgment against him.
    Appeal from an order of • this court denying a motion, made in proceedings supplementary to execution, to compel a judgment debtor to apply certain property to the satisfaction of the judgment.'
    The plaintiff recovered a judgment against the defendant on the 18th February, 1880, and execution was immediately issued to the sheriff of the City and County of New York, where the defendant resided. Subsequently, the plaintiff, proceeding under subdivision 2 of section 292 of the Code of Procedure, procured an order, upon the usual affidavit, requiring the defendant to appear before one of the judges of this court to make discovery on oath concerning his property, to be applied toward the satisfaction of the judgment; and it appeared that he owned a seat in the New York Stock Exchange. A motion by the plaintiff to compel the defendant to apply this to the satisfaction of the judgment was denied ; and from the order denying the motion, the plaintiff appealed.
    
      
      Ten Broeck & Van Orden, for appellant.
    
      Rastus S. Ranson, for respondent.
   Beach, J.

If the judgment debtor is alleged to have property which he unjustly refuses to apply towards the satisfaction of the judgment, the statute provides this mode of inquiry, and upon the fact appearing, the judge may order it applied, if not exempt from execution, and not earnings necessary for a family wholly or in part supported by the debtor’s labor. If, therefore, the seat in the Stock Exchange is property, the plaintiff has a right to its application. The learned justice below held it was not, and his conclusion is supported by statements contained in opinions given by the courts of a sister state, whose expressions are entitled to great respect. In Thompson v. Adams (Weekly Hotes of Cases, Vol. 7, No. 18), plaintiff claimed to be the equitable owner of the seat of a deceased member, in the Philadelphia Stock Exchange, he having advanced the money for its purchase, the debt being unpaid. He therefore demanded the whole proceeds of sale, or to share equally with creditors who were members of the board. The court held the moneys applicable, first, in payment of indebtedness to members, which exhausted the fund. Elcock, J., before whom the ease was tried, said, a seat in the board is a species of property, incumbered with conditions. It is not a matter of absolute purchase, for it never was freed from the conditions and duties of the constitution and by-laws.’ Upon appeal the court say: “ The seat is not property in the eye of the law; it could not be seized in execution for the debts of the members.”

In Pancoast v. Gowen (Weekly Notes of Cases, Vol. 7, No. 29), the question before the court was whether or not the seat could be reached by an attachment execution, and it was held, it could not be levied upon, under that process ora fi. fa. The above cases are somewhat fully quoted to show that the question of the seat being property, was not directly before the court, for decision, in either. The first related to the disposition of the proceeds of sale, and the second to the power of certain process to reach the property.

In Ritterband v. Baggett (42 Super. Ct. 556), Hyde v. Woods (4 Otto, 524), and In Matter of Ketcham (Daily Register, February 9th, 1880), the point was clearly involved. These adjudications decide the„seat to be property, and consequently applicable to debts. Justice Choate’s opinion In re Ketcham, supra, exhausts the subject, and little, if aught, can be added here. The learned court below suggests, as one reason for its conclusion, that the right of membership,—the privilege, seat, or whatever else it may be termed,—does not fall within any definition of property. This may be so, and still, if the modes of doing business, in the present time, have given rise to property rights, bearing no similarity to those heretofore existing, and consequently undefined, the law under vvhich the question at issue arises will still apply to them, if upon investigation they are found to possess qualities and characteristics common to recognized subdivisions of property. The controlling feature appurtenant to a seat in the Stock Exchange, is that it may be bought and sold subject to the rules of the association, and in case of the owner’s death a sale is made by the exchange and the proceeds distributed. Herein exists the difference between it and membership of a social club. The latter can neither be bought nor sold. It has no general value, or marketable quality. There is no provision for transfer, and nothing remains after a member’s death. It is in itself but a purely personal right dependent upon election and terminated in every way by demise. There is but one condition common to both,—the necessity for an election. In the former, one desiring membership, and acceptable to the committee on admissions, pays money for the seat, which thereafter represents whatever sum was needful for its purchase. That amount is withdrawn from the assets of the purchaser, and, if the conclusion of the court below is correct, has been, without warrant of law, so changed in character, as to be relieved from the obligation resting upon all property, to wit, liability to creditors of its possessor. If such a result may be attained, the effort of active imagination cannot circumscribe the associations human ingenuity will produce, to-thus transmute veritable assets, into intangible, and yet most substantial and valuable shadows. Thus would follow the nullification of the legal principle which makes the debtor’s possessions liable to his creditors, and honest claimants would be remediless, because of the inefficiency of a statute enacted to facilitate the collection of just demands. There may be minor difficulties in the practical application of the statute, but these in my opinion are easily surmounted. Probably an order appointing a receiver, containing directions for the judgment debtor to do whatever may be deemed needful- to transfer the seat, under the rules of the exchange, would accomplish the result sought. This, however, is properly within the province of the court below. The right existing, the law is sufficiently comprehensive and powerful for its enforcement.

The order must be reversed with costs.

Charles P. Daly, Oh. J., concurred.

Van Brunt, J., dissented.

Order reversed, with costs.