The Providence news. (Providence [R.I.]) 1891-1906, 1905-04-21

New York, April H.-Macgrane Cox,
referee In bankruptcy in the Daniel J.
Sully case, yesterday sent 10 Judge Holt
OF the United States District court an
opinion. which, II approved by the court,
will reopen the suily case entirely and
bring up for adjudication several import
ant and almost sensational points.
The opinion is given upon the appl-
cation OF two sets OF petitions one from
Edwin Hawley and Frank II. Ray who
have been sued by Sully's trustee in
bankruptcy for certain sums alleged 10
have been lost through participation with
Sully In alleged cotton pools and others
from creditors who are not members OF
the Cotton Exchange.
Three questions were brought up:
First whether Sl0O0.o00 paid on Satur-
day. March IS. 1904, was a preference and
so illegal; second, whether the Fridays
prices SIS Saturdays prices should de-
termine 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. II Judge Holt
decides in favor, this will reopen the
whole question, and II the claims are
decided Il will make an immense differ
riCc III AHe dillbunls uue.
sULLY SOLVENT, IF"
II It proved that Cotton Exchange tram.
sactions are gambling transactions Sully
IS solvent and will not owe a cent.
Referee Cox in his reports said: II
think that the petitioners have a direct
pecuniary interest I'm showing, If they
can, that upon a proper determination on
the law and the facts, there would be
sufficient assets I'm the estate TO preclude
any right to recovery against them, and
that this is the only proceeding In which
such a determination can be had, and
that they must, therefore. be held TO be
parties in interest within the meaning
Of the Bankruptcy act.
Large sums OF money, 10 is alleged
were paid by the bankrupts by way OF
margins within four months and within
very few days OF the bankruptcy. and
81 is not unreasonable that creditors who
have not received such sums should de-
sire 10 examine into the facts with n
view Of ascertaining whether such pay
ments have not been such as are known
O. preferential payments under the Bank
ruptcy act
1T does not seem to me to be ineauit-
able TO permit a judicial investigation
into this matter"
BEFORE OR AFTER p NJ.
The referee then quoted the rule OF the
Now York stock Exchange, which pro-
vices that when a member announces his
inability 10 meet his obligation his con-
tracts shall be settled at the average quo
taticns for like contracts on that day un-
less the notice Of failure is given within
an hour OF the tine OF closing OF the EX
change. in which cese the average quota
tlcn for contracts on the subsequent day
shall be the basis Of settlement
The referee says the trustee In bank
rGptcy and opposing creditors aver that
the Sully notice OF suspension was given
sfter 2 p. M, while the petitioners. on tho
other hand claim the notice was sent 10
the superintendent OF the Exchange be-
fore p. m.
Referee Cox adds. "The petitioners ask
20 be permitted to cttaclt the legality OF
the rule and also 20 chow that even under
the rule the AVERAGE price at which these
cotton contracts should be settled should
renlly be its average price OF Friday.
THE average price OF Saturday was
very much lower thnn that OF Friday. The
tankrupts had on hand a large amount
o. cotton against the contracts II. there
fo~c they were 90 liquldate these con-
tracts at the hghsr price for the cotton
OF March is. it would follow that there
would he much less money owing by
them. 10 anything than would be owing
BY them II the settlements were made on
the average price OF Saturday. March ~
ENTITLED TO RELIEF
"Tt Is manifest that under this rule a
t-en endous power Is given TO the superin-
t'ndent of the Exchange 1t seems 90 mo
that such q rule. fraught with such i'm
rnrtant consequences 90 80 many people.
A. II Is 20 be maintained at ALL should
- maintained upon n strict compliance
With It's terms ana that petitioners here
Rave an equitable right 20 be heard 10
Bhow. n they can. that IL has not been
romplied with and that BY such non-com-
pliance their property rights have been
tctrlmentaHy affected.
Counsel for thu trustee argued that