The Birmingham age-herald., 1905-04-21
SENSATIONAL TURN IN SULLY'S AFFAIRS Were His Transactions in Ma
 lure of Gambling? MAY NOT OWE SINGLE CENT If Referee coxe's Contention Is Upheld By Judge Holt the Whole
 Case Will Be Re-
 opened.
MAY NOT OWE SINGLE CENT

New York, April 20-MacGrane Coxe' referee in bankruptcy in the Daniel J.. Sully case, today sent to Judge Holt or the United States district coult an opin- ion which, if approved by the court, will reopen the Sully case entirely and bring up for adjudication several important and almost sensational points
 The opinion is given upon the applica- tion of two sets of petitions, one from Edwin Hawley and Frank H. Ray, who have been sued by Suliys trustees in bankruptcy for certain sums alleged to have been lost through participation with Sully in alleged cotton pools, and the others from creditors who are not mem bers of the cotton exchange.
 Three questions were brought up;
 First whether $1,0o0 900 paid on Saturday. March IS, 1904 was a preference. and if so, illegal; second, whether the Friday s prices or Saturdays prices should deter mine the amount the Sully estate owes, and third, whether transactions on the cotton exchange are gambling transac- tions The opinion of the referee is that the case should be reopened. If Judge Holt decides in favor of this it would reopen the whole question, and if the claims are decided it will make an im- mense difference in the amounts due. If it is proved that cotton exchange trans actions are gambling transactions Sully is solvent and will not owe cent.
 Referee Coxe in his report said.
 Coke Makes Report.
 "I think that the petitioners have a direct pecuniary interest in showing if they can, that upon proper determina- tion of the law and the facts, there would be sufficient assets in the estate to preclude any right to recovery against them, and this is the only proceeding in which such a determination can be had, and that they must therefore be held to be parties with interest within the mean ing of the bankruptcy act.
 Large sums of money 1t Is alleged were paid by bankrupts by way of margins within four months, and within very few days of the bankruptcy, and it is not unreasonable that creditors who have not received such sums should desire to ex- anime into the facts with a view to ascer- taining whether such payments have not been such as are known as preferential payments under the bankruptcy act. It does not seem to me negotiable to permit a judicial investigation into this matter.
 The reference then quoted the rule of the New York stock exchange which pro- vides that when a member announces his inability to meet his obligations, his con tracts shall be settled as the average quotations for like contracts on that basis unless the notice of failure is given within an hour of the time of the closing of the exchange. In which case the average quo tation for contracts on the subsequent day shall be the basis of settlement. The referee says the trustee in bankruptcy, and opposing creditors, aver that the Sully notice of suspension was given after 2 D. m., while the petitioners on the other hand claim the notice was sent to the superintendent of the exchange before 2 p. m.
 Referee Coxe adds:
 Saturdays Prices Were Higher.
 "The petitioners ask to be permitted to attack the legality of the rule. and also to show that even under the rule the aver age price at which these cotton contracts should be settled should really be its average price of Friday The average price of Friday was very much lower than the average price of Saturday. The bankrupt had on his hand large amount of cotton against the contractors If, therefore, they were to liquidate these contracts at the higher price for the cot ton on March IS. 1t would follow that there would be much less money owing by them, if anything, than would be owing by them if the settlements were made on the average price of Saturday March 19.
 Tt is manifest that under this rule a tremendous power Is given to the super intendent of the exchange. It seems to me that such a rule. franght with such important consequence to so many peo- pie, if 1t Is to be maintained at all, should be maintained on a strict compli- ance with it's terms and that petitioners here have an equitable right to be heard to show If they can that 1t has not been compiled with. and that by such non-com- pliance their property rights have beer detrimentally affected.
 Counsel for the trustee argued that the only statements in the petition which touched upon the illegality of the ex. change claims and the question of wager ing are made on information and belief and therefore should not be considered For the reasons stated I am forced tc the conclusion that the petitioners hert are entitled to the reief they ask" 4 sps..rz.sszt, .s. ,u..,nrx.easezsz