Court Opinion

ID: 8318862
Source: CourtListenerOpinion
Date Created: 2022-10-17 20:11:22.251395+00
Date Added: 2024-06-11T16:45:00.654720
License: Public Domain

By the Court.—Sedgwick, Ch. J.
The plaintiff is the receiver of the property of a partnership. One of the partners, Edward C. Fox, had been a member of Stock Exchange. His seat had been bought with part*298nerskip money. He became insolvent, and was suspended under the rules of the Exchange. Under those rules his seat had been sold, and the plaintiff has the right to the proceeds of the sale that Fox would have had in the circumstances.
There are three articles of the constitution of the Exchange which relate to the disposition of the proceeds of a sale of a seat. The respondent denies that one of these controls this case, inasmuch as it was made after the suspension of Fox. This appeal will be determined irrespective of this subject, and the other articles alone will be considered.
These articles are: “If any suspended member fails to settle with his creditors, within one year from the time of his suspension, his membership shall be disposed of by the committee, and the proceeds paid, pro rata, to his creditors in the Exchange; ” and that passed after-wards : “ If any suspended member fails to settle with his creditors and apply for re-admission within one year from the time of his suspension, his membership shall be disposed of by the committee on admission, and the proceeds paid, pro rata, to his creditors in the Exchange.”
The complaint claims that by conspiracy between Fox and certain members of the Exchange, persons claiming to be creditors have filed with the committee on admission “ claims to said proceeds upon debts or demands against said Fox, which are wholly or partly fictitious, and wholly or partly have no foundation in fact, and do not come within the preferences established pursuant to the constitution and by-laws of the Exchange; and that the N. Y. Stock Exchange, its officers and members, threaten to pay said fraudulent and fictitious claims to the injury of the plaintiff.”
The relief asked is an accounting of the proceeds of sale, a judgment “ directing the payment to this plaintiff, as receiver, of the sum received by said N. Y. Stock Exchange, or said James D. Smith as President, or of such part thereof as the said receiver may be entitled *299to receive,” and that during the pendency of this action, the defendant as such president, and all the officers and members of said Stock Exchange, having custody or control of the said fund may be enjoined and restrained from in any way or manner disposing of, or parting with any part or portion of said fund.
Under the articles that have been quoted, the committee on admission have competent and legal power and authority to pay, out of the proceeds, the claims described by the articles, but of course no other claims. A threat by any officer or member of the Stock Exchange, even if by chance such individual were a member of the committee, would not tend to show that the committee, as such, threatened to make an improper distribution of any part of the money. It does not appear that the committee have taken any action, or made any declaration on the subject. It is to be presumed that their action will be legal. The supposed admissions of the answer on the subject of what power in this regard the committee have, do not extend to what the committee propose to do, or intend to do, as a •committee.
The complaint does not demand that the committee act upon the subject, but demands that they shall not act. The plaintiff has no right to any part of the fund, until the committee has exhausted its power. And the complaint does not allege that no part of the fund could be paid validly by the committee.
Not applying what has been said to any part of the cause of action, excepting the.demand for an injunction, and applying it to the order of injunction, I am of opinion that the injunction infringes the right of the committee on admission to proceed in a proper way to make a proper disposition of the fund.
Order reversed, with $10 costs, and disbursements to be taxed.
Freedman and Ingraham, JJ., concurred.