Court Opinion

ID: 8791423
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:52:59.000784+00
Date Added: 2024-06-11T17:03:22.644105
License: Public Domain

HOUGH, District Judge
(after stating the facts as above). [1] This claim is the legitimate aftermath of Gorman v. Littlefield, 229 U. S. 19, 33 Sup. Ct. 690, 57 L. Ed. 1047, if that decision logically follows Richardson v. Shaw, 209 U. S. 365, 28 Sup. Ct. 512, 52 L. Ed. 835, 14 Ann. Cas. 981, and Sexton v. Kessler, 225 U. S. 90, 32 Sup. Ct. 657, 56 L. Ed. 995. That there is such logical sequence Justice Day’s opin*320ion asserts, and it seems to me plain enough. All these controlling cases fully accept the “grain elevator” doctrine respecting stocks, so that a customer who finds any stock of the kind he bought on his broker’s premises can claim what he finds, for it is “unnecessary * * * to put his finger on the identical certificates purchased for him.” This right is helped out by that “presumption in favor of fair dealing” so much dwelt on in the higher courts, though said presumption is productive of cynic smiles even in counsel advancing the same in courts nearer real life — as it is seen in stockbrokers’ shops.
Putting together these controlling fictions, it is difficult to see what exclusive right any customer can have in any given certificate until he gets it in possession; but that claim still awaits decision. If there were 280 (or more) shares of Copper in the receiver’s hands, the Gorman Case would be plainly applicable; but there are only a hundréd, and that fact is said to entail both a difference and distinction. It is true that Day, J., twice refers to the presence of shares sufficient to satisfy the demand of the petitioner Gorman — as if that fact were significant. It was significant, after the fictional presumption had been made, that what the brokers had on hand was acquired because they intended to replace the misappropriated shares of Gorman. If they were going to replace any shares, acquiring the exact amount taken is quite significant of intent to make good the wrong done. But if by dwelling upon number of shares on hand anything more than this was meant, the logical symmetry of the fictions on which the decisions rest is seriously impaired, to say the least. If stock purchasers dealing in a given stock at a given broker’s are entitled to regard his aggregate purchases as so much grain in a bin (at least until he allots the stock in specie, if there is such a thing), and if they are entitled to presume that when he wrongfully takes from the bin, any subsequent acquisition of “stock-grain” is intended to fill up the bin again, what difference can it make that, when the broker is surprised by bankruptcy the bin is full, or half full, or as here, 10-28 full?
Again it was urged that Gorman’s Case did no more than relax the rules of identification. Gorman was refused any stock in this court, because he could not identify as his the stock on hand, but the very ground of decision in the Supreme Court is that no identification is necessary — the presumption of restitution plus the physical presence of some stock, supplies the lack — “in the absence of countervailing proof.” To call what occurred in Gorman’s Case identification is playing with words. Nor is there here any countervailing proof. Indeed, this record is more favorable to Hollins’ customers in Copper than was the evidence in Gorman’s Case. It is uncontradicted that on November 7th Hollins had on hand 100 shares “for account of their long customers.” They were used to “carry” Schatzkin. That they emerged from that transaction in different certificates, but unchanged in their relation to Hollins, needs no exposition in a community much too familiar with transactions such as have here been outlined.
In short, if one deals with facts instead of fictions, it is true that any customer who had applied for his Copper before bankruptcy would have gotten these 100 shares, or the proper part thereof. The effect *321of bankruptcy is that all apply together, and so all must share pro rata. Landau’s account has been liquidated and he is still in debt, therefore he has no claim. Bamberger’s situation is interesting but microscopic. It is known exactly what became of the paper called a certificate which Hollins purchased for him. The pledge was lawful and consented to. Bamberger never paid for that stock, unless the receiver’s liquidation is payment. Unless he somehow pays he can get nothing. The receiver’s liquidation does not suit counsel, even partially; perhaps because it may deprive Bamberger of rights against any surplus in the Bank of Commerce loan. As Bamberger will not come upon this fund on the only basis admissible, he is relegated to his rights elsewhere.
[2] Duel may recover 35.714 shares' and Wiener 17.857 shares. Their several indebtedness may be set off against the shares not recoverable. The fractional shares must be adjusted in cash at 70%.