Court Opinion

ID: 6429701
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:07:05.159262+00
Date Added: 2024-06-11T15:52:08.384213
License: Public Domain

Braley, J.
If the bankrupt firm acted solely as agents in the purchase of the stocks, the right of the trustees to participate in the distribution of the fund must be postponed until the demands of the several claimants are satisfied. Upon reading the evidence it appears to have been substantially uncontroverted that, not being members of the Boston Stock Exchange, the bankrupts when their customers desired to buy certain copper stocks employed a member to make the purchase. The claimants respectively gave orders to buy a certain number of shares of these stocks to be carried on a margin. In each instance upon receipt of the order to buy accompanied with the money required, without disclosing the name of the customer, the order immediately was transmitted by telephone to the plaintiff, who was a member, and by whom it was executed. Of the claimants, Baldwin and Collins knew, but Mrs. Con ant and her agent were ignorant with whom the firm dealt, yet all understood that because they were not members Berry and Company were unable to buy the stocks on the floor of the exchange. When notified from time to time that further advancements had become necessary to maintain the margin, on making payments the money went into the general funds of the firm by whose check the amount due then was paid to the plaintiff. There is no evidence that books of account were kept by Berry and Company in which they entered the names of these customers with the date, price of the stock and number of shares bought by each, nor does it appear that they received any compensation for their services. Until their assignment for the benefit of creditors the plaintiff rendered monthly statements, and supposed and believed that he was dealing with them as principals. His books contained itemized accounts in the name of one of the members of the firm of the various purchases and sales, but after their failure upon notice from two of the claimants he closed the account, leaving a balance, out of which, if entitled to recover anything, it is conceded by the trustees they should be allowed their respective claims. It is from these facts that the legal relations of the parties must be ascertained. In substance the bankrupts with the knowledge of the several *135claimants, not being able to buy personally in a regular way the stocks desired, were employed to buy from other brokers, and selected the plaintiff. At no period was it contemplated that Berry and Company should become principals, and the plaintiff their agent, but they were expressly engaged to act for the claimants, by whom, as required, the money for margins was supplied, and neither the fact that commissions were not shared nor the failure to disclose their agency worked any change in the character of their original employment. The remaining amount necessary to purchase was advanced by the plaintiff who afterwards carried the stocks, and with whom, and not with the bankrupts, the claimants sustained the contractual relation of debtor and creditor, Rice v. Winslow, 180 Mass. 500, 502. While the money received before transmission was mingled with their own, so that its identity being lost specific payments could not be traced, this conversion conferred no authority to use these funds to speculate in stocks for the benefit of themselves, as they could not act legally in the double capacity of buyers and sellers. Commonwealth v. Cooper, 130 Mass. 285, 288. Instead, upon his employment, the plaintiff became the agent of the principals of the bankrupts even if undisclosed by them. Eastern Railroad v. Benedict, 5 Gray, 561, 562. Byington v. Simpson, 134 Mass. 169. If before such knowledge a settlement had been effected he would have been discharged, but upon their disclosure the money could be recovered by the principals to whom it belonged. Barry v. Page, 10 Gray, 398. Foster v. Graham, 166 Mass. 202. See Cushman v. Snow, 186 Mass. 169, 173, 174. The trustees, having succeeded only to such rights as the bankrupts had, stand no better and have failed to prove that they are entitled to the money. King v. Cram, 185 Mass. 103,104.
By proving her claim in bankruptcy Mrs. Conant is not barred from recovering, for, if she mistakenly supposed such right existed, this is insufficient to prevent her from intervening in these proceedings for the collection of her debt. Snow v. Alley, 156 Mass. 193,195.
The findings of fact made by the single justice are amply sustained by the evidence, and the final decree should be affirmed.

So ordered.