Court Opinion

ID: 8828949
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:56:33.257605+00
Date Added: 2024-06-11T17:04:51.962061
License: Public Domain

HOUGH, Circuit Judge
(after stating the facts as above).  The necessary implications of our decision in 280 Fed. 638, go far to dispose of this case. We there affirmed the adjudication as bankrupt of the Exchange, and did so on a creditors’ petition. The stipulated facts in that litigation showed (and they are not now denied) that owing to the guaranty by the tidewater rail lines of all the Exchange expenses, the only method in or by which the association could incur debts or have debtors was by recognizing as creditors those who had consigned more coal than they got, and as debtors those who had gotten more than they consigned; and it furthermore appeared (and is recognized as true by the joinder as defendant herein of the Chemical Bank) that settlement in cash had resulted in the “Liquidation Account,” and such cash was produced by the Exchange drawing drafts on “debit members” as debtors to the Exchange.
In other words, not only could there have been no adjudication, if settlements had taken place only in terms of coal as originally intended, but also if cash settlements had been called for only pool by pool; because no one would have been a creditor of the Exchange in the sense of being entitled to sue upon a general assumpsit, and look to all the assets of the Exchange from whatever source derived as means of judgment satisfaction.
It is true that this plaintiff did not join in the bankruptcy proceedings, but neither did It seek to oppose. The decree of adjudication cannot be collaterally attacked; and whether a suit that assumes and asserts, as does this one, a legal status inconsistent with adjudication can itself be maintained, is a point on which we shall not dwell, but without decision pass to consideration of plaintiff’s argument. "We *671note, however, that we have no desire to depart either from the terms of our previous decision or its legitimate implications.
The already prolonged litigation over this war measure of a coal exchange has largely been before Learned Hand, J., who has repeatedly stated his view that in the beginning, in concept the Exchange was no more than a manager of and for a series of co-operative pools, to which pools the members thereof shipped their own coal; all the coal in the pool being collectively owned by the pool members; who accounted to each other in terms of coal. The Exchange was no more than a means of keeping the accounts, so far as settlements were concerned. With this view of the scheme exhibited by the original rules, and of the contemporary practical construction of them we agree.
If the rules, i. e. the structure and purposes of the Exchange, had remained unchanged from the start, it might perhaps be argued that since the. account of any member in any given pool “shall not have any bearing on his account in another pool” (Old Rule 12), each pool should be considered like a grain elevator containing the hopelessly commingled property of many, and yet each owner be still entitled to call an aliquot portion of the mass his own and treat it and trace it accordingly. Central, etc., Bank v. McFarlin, 257 Fed. 535, 168 C. C. A. 519.
But we have no such state of facts before us, and so need not discuss the point; for it is undoubted that the rules did change, that plaintiff became bound by the changes, and such changes in our opinion radically modified, indeed revolutionized, the Exchange concept or plan as far ás liquidation or settlement was or is concerned.
As Judge Hand has said (274 Fed. at 1010), “The relations between the members are one thing and means of winding up the joint venture another,” but we go further and hold that the proven and indeed admitted means of winding up were intended to and did change the relations between the members quoad winding up.
This is matter of fact, in the sense that we read the new rules and interpret them as meaning what other evidence shows they were meant to mean; such evidence being not contradictory of the rule language.
The Exchange operated Under its original rules until some months after the Armistice; active war was past, and a condition existed that required remedy. To open and close pools in terms of coal was possible only if all consignors had plenty of coal, and were solvent and honest. But coal overdrafts had arisen by the acts or with the permission of commissioners appointed by the Exchange (Rule 9), who by its new form (Rule 22) were given authority to demand that the debits thereby created should be “made good immediately”; this meant made good in coal. But plainly if it were to continue trae that accounts in one pool should have “no bearing” on the same man’s account in another pool (Rule 12), any man could refuse to comply with the commissioner’s demand unless he would profit by compliance; therefore the amended rule (23) restricted the “no bearing” aforesaid to cases where members did not “neglect to make up existing shortages.” That is, if a consignee made up his shortages and all of them, the various pools had no bearing on each other, which was, of course, true rule or *672no. rule; but if He neglected so to dp, then a view or an averaging of all his pool ventures was not only permitted but enjoined. It was always contemplated that ultimate differences should be settled in money under guidance of the commissioner (Rule 10); but when the new code looked forward to the closing of the Exchange, Rule 28 stated it as obligatory “in closing accounts” to settle in money when settlement in coal could not be obtained.
While we cannot read these new rules as meaning anything else than that when pools were at an end, and the coal on hand was disposed of, there should be a general “hotchpotch” settlement with the Exchange, the argument can be and is made that they mean no more than that the Exchange should act as a collection agent for each pool, and collect money for the members of such separate pool.
Such a construction finds no support in the testimony; contemporary construction is always potent evidence of meaning, and the Exchange minutes show the practice was uniformly to consider every consignor’s total of consignments and withdrawals in all pools, and collect in money. The exception to admission of these minutes is without merit; they show what the very men who made the new rules did by way of practically interpreting them.
Judge Hand in the court below has carefully considered the argument that plaintiff’s scheme of settling pool by pool is unworkable. We agree with him in so declaring it; it follows that if another and practical scheme is fairly to be found in the rules, an intent to devise something impracticable is not to be imputed.
Decree affirmed, with costs.