Case ID: ny-super-ct_49/html/0279-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

JOHN H. PLATT, as Assignee, &c., Respondent, v. EDWARD R. JONES, Appellant.
    
      Hew York Stock Exchange—right of membership—rights of assignee in bankruptcy therein.—Eguity.—Injunction.
    
    Defendant held, in his own name, as part of the assets of a firm of which he was a member, a seat in the New York Stock Exchange, a voluntary unincorporated association, which seat was by the by-laws unassignable without the consent of two-thirds of the committee on admissions of said association, it being also provided therein that all unpaid dues of membership and claims of other members'should be a lien on said seat. [ Said firm made an assignment in bankruptcy of all its assets, and the defendant continued thereafter to hold and use said seat for his own bene(i fit. The assignee, after demanding the said seat of defendant, which was refused, brought this action to enjoin him from using or interfering with it, and to compel defendant to do all such acts, and execute all such instruments, as mightabe specified by plaintiff, to the. end that said, seat might be disposed of, and the proceeds applied to the trust, etc. The association was not made a party to the action, and it did not appear that plaintiff had made any contract of sale with a third party, and that defendant or the Stock Exchange had refused to perform any acts necessary to transfer or confirm the title to said seat ; nor was it claimed that, except as above, defendant had been guilty of any interference with plaintiff’s rights.
    
      Meld, that no equitable cause of action was shown; that defendant had done nothing which impaired the property rights of plaintiff or prevented; him from disposing of whatever rights he had; that no one could become a transferee of said seat under these existing circumstances; and the Stock Exchange not being a party, it will not be assumed that it will refuse its assent to a transfer for the benefit of the assigned estate in a proper case.
    
      Further held, that the right of membership in said association was incorporeal, and the fact that defendant continued to use it did not affect the' value of the property claimed by plaintiff, or prevent him from receiving any profits to which he was entitled ; also, that there was no possibility that the non-payment of dues or any other lien caused by defendant, could affect plaintiff’s rights.
    Before Sedgwick, Ch. J., Truax and Ingraham, JJ.
    
      Decided, June 2, 1883.
    Appeal by defendant from judgment entered on decision of judge.
    The facts appear in the opinion.
    
      Man & Parsons, for appellant.
    
      Chambers, Boughton & Prentiss, for respondent.
    —-By the assignment (§ 5044, U. S. R. S.) all the property of the defendant vested in plaintiff (Comegys v. Vasse, 1 Pet. 193; French v. Carr, 7 Ill. 664; Kinsee v. Winston, 4 Br. R. 21). Defendant’s membership in the Stock Exchange and right to the “ proceeds ” thereof was property within the above section and decisions, and passed by tho assignment to plaintiff (Re Ketcham, 1 Fed. Rep. 840; U. S. Cir. Ct.; Hyde v. Woods, 4 Otto, 523; Gallagher v. Lane, 19 Bankr. R. 224; Grocers’ Bank v. Murphy, 60 How. 426; Ritterband v. Baggett, 4 Abb. N. C. 67; Powell 
      v. Waldron, 89 N. Y. 331-2; Sewall v. Ives, 61 How. 54). It is not merely a “ personal privilege,” but the constitution itself makes the membership and its “proceeds” property as regards the Exchange, and as to its members, and also as to the legal representatives of deceased members, and to voluntary transferees of members,—why, then, is it not also property as to creditors of members ?
    The mere fact that the property in the seat and its proceeds is vested in the plaintiff, and that defendant is using it without plaintiff’s consent, is sufficient ground for the injunction. Moreover, defendant may incumber it with claims on contracts with other members of the Exchange, or with dues to the Exchange itself; also, plaintiff must secure an actual vacancy in the Exchange before he or any transferee from him can apply for election.
    The assignment in bankruptcy not having been sufficient under the rules of the Stock Exchange, the defendant should be required to make such further act of assignment as is required by those rules to put the property in plaintiff’s possession. As it is impossible for plaintiff to predetermine who will be accepted by the Exchange as transferee of the seat, or what form of transfer will be required, the decree is correct in its present general form (Re Ketchum, supra; Grocers’ Bank v. Murphy, supra; Ritterband v. Baggett, supra).
    
    The decree herein merely disposes of defendant’s seat or membership as defendant himself should voluntarily have disposed of it, by declaring it vacant in law and making it vacant in fact; thus putting plaintiff in position to request the Stock Exchange to fill the vacancy and dispose of the seat as provided by their own constitution when a vacancy occurs.
   By the Court.—Sedgwick, Ch. J.

—It is unnecessary to state the pleadings. The court found, as facts, that the plaintiff had been made assignee in bankruptcy of a firm composed of the defendant and one Davidson; that part of the assets of the firm, when they became bankrupt, “was a seat or membership in the association, in the city of New York, known as the New York Stock Exchange,” which had been purchased in the name of the defendant; that at the time of such purchase the defendant “ became a member of said association, and entitled to the rights of membership, and sat in said association; which seat and rights of membership defendant took, and has ever since continued to hold, in his individual name;” that said seat or membership is of the value of $30,000 ; that plaintiff has demanded of defendant said seat or membership, and all right and title therein ; but said defendant refused, and still neglects and refuses, to comply with said demand, but has at all times since the filing of the petition in bankruptcy held, possessed and enjoyed, and still continues to hold, possess, and enjoy, the same ; that by the constitution and by-laws of said Stock Exchange all dues of a member thereof to the said Exchange are a prior lien upon the seat or membership of such member, and the proceeds thereof ; and such proceeds are also made liable for satisfying the claims of the other members of said Exchange before the balance can be paid to the legal representatives of such member; that by reason of such holding and possession by defendant, there is danger of his incumbering said seat or membership, under the constitution and by-laws of said Exchange, as aforesaid, or that claims for liens or incumbrances thereupon may arise.

The court further found that in and by the constitution and by-laws aforesaid, said seat or membership is transferable, and the defendant, as such member, has the right to transfer his membership under the provisions of said constitution and by-laws. The court did not find what were the conditions of the transferability referred to. The articles in evidence show that a limitation of the' transferability was, that the transferee must be approved by two-thirds of the committee on admissions.

The findings of law were, that by the assignment to the plaintiff as assignee in bankruptcy all the property, right, title and interest of said defendant and his firm “in and to, said seat or membership in the New York Stock Exchange, and the proceeds thereof, passed to, and became and now are, vested in the plaintiff as such assignee,’’ and that the same are property ; that any and all use and occupancy and enjoyment of said seat or membership, and the rights and privileges thereunder, by defendant, are in contravention of plaintiff’s rights as such assignee ; that defendant should be directed and required to do every such act, matter and thing, as shall be lawful and necessary on his part to put plaintiff in such possession and control of said seat or membership, and the rights and privileges thereunder, that the same may be disposed of, and the proceeds thereof realized by, for, or on account of, said plaintiff;. that plaintiff is entitled to judgment that all the right and interest of the defendant in and to the. said seat or membership, and the proceeds thereof, are vested in plaintiff as assignee ; that defendant be enjoined from using, occupying or enjoying, or in any manner interfering with, said seat or membership, or the rights and privileges thereunder, or the proceeds thereof; and that said defendant, upon the request of plaintiff, forthwith execute such instrument or instruments, and do and perform such actor acts of surrender, assignment or transfer, to plaintiff, or to such person as shall be specified by plaintiff, as shall be necessary to be done, performed or executed on the part of the defendant, to the end that said seat or membership may be disposed of, and the proceeds thereof realized by, for, or on account of, said plaintiff, as assignee as aforesaid.

The association was not made a party defendant. Necessarily, it must participate in any proceeding which would transfer the membership to a third party. No one, under existing circumstances, could become a transferee of the right of membership, under the by-laws ; and the testimony does not show that the defendant could do anything to alter these circumstances. For instance, that a contract had been made by plaintiff with a third party conditionally, and the defendant refused to nominate him to the Stock Exchange. The defendant had done no act which impaired the property rights of plaintiff. He had done nothing, and probably could do nothing, which could interfere with the plaintiff selling such right as the plaintiff has. Therefore no equitable cause of action was shown. To make such a cause of action, it is necessary to show that the plaintiff is possessed of some right which the defendant interferes with, or that the defendant is bound in equity to do something to perfect plaintiffs legal title or to enable him to take possession of his right.

In advance of the actual or threatened interference, or in advance of the plaintiff’s being able to enjoy the right, the defendant should not be called upon in a litigation to take part in what is but an argument as to what will be the rights of a plaintiff in a contingency that may never occur. The general rule is, that equity does not entertain questions that do not pertain to definite and existing obligations of defendants ; or, in a common form, that the plaintiff must have a definite and complete right against the defendant (O’Rielly v. Mutual Life Ins. Co., 2 Abb. N. S. 170; Haynes v. American Popular Life Ins. Co., 36 Super. Ct. 214, which applies this principle as to part of a relief demanded, while it follows Cohen v. N. Y. Mutual Life Ins. Co., 50 N. Y. 624, which recognizes the general principle).

It would occupy too much time to state the difference in the views of the plaintiff and of the defendant, as to the nature of the right acquired by the plaintiff, under the assignment in bankruptcy. In some respects, it would appear that the defendant was certainly right. For instance, he denies that privileges personal to him as a member have ever passed to the assignee. The assignee can never be a member. But, whatever view the defendant has taken or announced, it can never interiore with the. .enjoyment of plaintiff of the right he has.

It is not a benefit to the plaintiff that he should have judgment, that in the future the defendant must execute such instrument as the plaintiff shall specify, to the end that the membership may be sold, and the proceeds thereof realized. Such may be his duty hereafter; if it be, he will be held to its performance when the question of performance arises. Until then, the defendant should not be called to litigate as to present .views in their relation to future emergencies. He had a right to take all the time to consider what his views should be. His views being erroneous now, can hardly give a cause of action.

Ñor was the plaintiff injured by what the defendant actually did, so far as that is embodied in the findings “ that the defendant took, and has ever since continued to hold in his individual name, the said rights of membership and seat in said association,” and “ that any and all use, occupancy and enjoyment of said seat or membership, and the rights and privileges thereunder, by defendant, are in contravention of plaintiff’s rights as such assignee.”

The term “seat” implies more of corporeal property than the facts justify. The word is not used in the constitution or by-laws of the Stock Exchange. The right of a membership is incorporeal. The defendant has gone into the Exchange, and used it for buying and selling. There are many other members. The fact that he has thus acted does not, from any inference on the testimony, affect the title or value of the property claimed by the plaintiff. He makes one more broker than there should be, according to the plaintiff’s interpretation of the constitution; but he collects no fees nor enjoys anything which would go to the plaintiff. It is probably true that he is allowed to do what he does on the assumption and assertion, by himself and the officers of the Stock Exchange, that the assignment in bankruptcy did not so entirely divest him of the original rights of membership that upon his discharge in bankruptcy he had not lawful right to use his former privileges. If he were to continue to act as a broker after the Stock Exchange had permitted the plaintiff to transfer to a third person, the plaintiff • would enjoy all the right he claims. The Exchange not being a party, it is not to be assumed that they will not do what by law they are required to do. Their present assertion or assumption, as to the defendant’s right, or want of right, does not show that in the future they will not, upon proper request, perform every duty to the plaintiff.

There is not any possibility that the non-payment of dues by the defendant will disturb plaintiff’s right. No lien can charge the plaintiff’s right which the plaintiff himself has not given or caused.

I am of opinion that, generally, the judgment is a declaration of defendant’s obligation as to contingencies which have not arisen. It is, not intended to intimate that the plaintiff may not have a cause of action in the future against the defendant and the Stock Exchange, if certain things are done.

Judgment reversed and new trial ordered, with costs to abide event.

Truax and Ingraham, JJ., concurred.