Case ID: f_258/html/0231-01.html
Source: Caselaw Access Project
Author: {"author": "\n      PER CURLvm.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In re JARMULOWSKY et al. In re SPECTOR.
    (Circuit Court of Appeals, Second Circuit.
    May 14, 1919.)
    No. 161.
    1. BANKS and Banking <&wkey;80(6) — SeySrAA Lefosits — New yoiac fcMCATom
    Banking Law N. Y. § 156, giving persons making deposits for safe-keepJ ing or transmittal preferred claims against certain funis upon a private banker’s insolvency, does not prevent sucb depositor from recovering money which lie can trace and identify. •
    2. Bankbüvtít &wkey;?.140(3) — Assets or- Bankrupt — New York Statute.
    Trasteo in bankruptcy oí a private banker «¡-mot retain money given bankrupt for transmita 1. although Banking t <-w, N. Y. § 156, gives depositors for transintftal preferred claims against certain of banker's assets and authorizes them to also share pro ’'ata with general creditors.
    Petition to Revise Order of the Distriit Court of the United States for the Southern District of New YorR
    In the matter of Harry Jarmulowsky and Rouis Jarmulowsky, individually and as copartners under the firm name and style of S. Jar-mulowsky. From an order granting- the application of Reib Spector for payment of a preferred claim, the trustee appeals.
    Affirmed.
    See, also, 249 Fed. 319, 161 C. C. A. 327, R. R. A. 1918E, 634.
    ’ The bankrupts were private bamceis, a business in part regulated by statute in the state of New York. On tt> day before they suspended business and passed into the hands of the stab superintendent of banking (and thence into bankruptcy), they received from i ue petitioner herein $288, for which they gave a receipt, setting forth that tin money was to be forwarded to a definite person at a specified place in Europe subject to conditions” on the back of said written receipt. Of these conditions the first was: “It is previously understood that we act as agents only for the sender.”
    Bankrupts never forwarded the money, and it was admittedly in possession of the bankrupts on the day of failure, and so ultimately passed to the trustee in bankruptcy.
    Application having been made for the repayment of this money, the trustee set up as a defense seen ■ 156 of the Banking Law of New York, viz.:
    “In case of the failure suspension of any such private banker, the claims of persons for mono, on deposit or delivered for safe keeping or transmission shall be preferred ago uwt the proceeds of any securities deposited by such banker with the superin ¡undent and against such assets as shall be shown by the books of such bau! or., or by other legal evidence, to have been derived from the investment of sec-;, deposits, or from the investment of any permanent capital segregated and set aside for employment in his business as such banker. The depositen-, shall also share pro rata with general creditors in the proceeds of any other issets belonging to such banker.” Consol. Laws, c. 2.
    The court below granted an order for repayment, and the trustee took this appeal.
    Julius B. Baer, of New York City, for petitioner.
    Samuel F. Hyman, of New York City (Jacob J. Resser, of New York City, of c ounsel), for trustee in bankruptcy.
    Before WARD, ROGERS, and HOUGH, Circuit Judges.
   PER CURLvm.

That the Jamrulowskys in receiving this money acted in a fiduciary capacity, and that the person intrusting such money to them tnuy on tracing the same into the possession of the trustee in bankruptcy reí-,.ft it in solido, is sufficiently shown by our recent decision in Re 254 Fed. 770, - C. C. A. _.

As to the statute"relied j,.. may paral out that there is in this record no evidence wliatevra- that ike bankrupts ever deposited any securities with the superintendent of 'banks or possessed any investments of the kind contemplated by the act; but, assuming the existence of such deposit or investment, we are of opinion:

1. The statute was not intended to and does not take away from persons dealing with a private banker as “depositoi-s” or ‘“transmitters” any rights or privileges, legal or equitabk. r-Mch by general law they possessed prior to the passage of said act. i ¿¡fees' exclude all creditors from participation in certain specified assets, until the claims of depositors and transmitters are satisfied.

The granting of such priority or preference is by statute mad condition for the lawful transaction of the business of private ba 1 ing; but such preference cannot of itself deprive a man of the ri.;,'1 of tracing and claiming his own money when found in the possession of an unfaithful fiduciary — which is all that has occurred in the present instance.

2. Assuming that this petitioner as a transmitter is entitled to the statutory preference, the granting of'the application below remov - ed him from competition with other creditors similarly situated in respect of the assets described in the statute.

In so far as the trustee represents such preferred creditors, he is benefited by the order complained of; in so far as he represents general- creditors, neither they nor he, as the'ir representative, have any right to keep funds which are identified as the very money of petitioner below.

Order affirmed, with costs.