243 N.Y. 58, People v. Ruskay

Citation243 N.Y. 58
Party NameTHE PEOPLE OF THE STATE OF NEW YORK, Respondent, v. BURRILL RUSKAY, Appellant.
Case DateMay 25, 1926
CourtNew York Court of Appeals

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243 N.Y. 58

THE PEOPLE OF THE STATE OF NEW YORK, Respondent,

v.

BURRILL RUSKAY, Appellant.

New York Court of Appeal

May 25, 1926

Argued May 6, 1926.

COUNSEL

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Martin W. Littleton, Louis B. Eppstein and Percival E. Jackson for appellant.

Joab H. Banton, District Attorney (Felix C. Benvenga and William B. Moore of counsel) for respondent. The evidence establishes the commission of the crime charged in each of its elements. ( Douglas v. Carpenter, 17 A.D. 329; Tompkins v. Morton Trust Co., 91 A.D. 274; 181 N.Y. 578; Strickland v. Magoun, 119 A.D. 113; 190 N.Y. 545; Wood v. Fisk, 215 N.Y. 233; Quincey v. White, 63 N.Y. 370; Knickerbocker v. Gould, 115 N.Y. 533; People v. Crossman, 241 N.Y. 138; People v. Miles, 123 A.D. 862; 192 N.Y. 541; People v. Lovejoy, 37 A.D. 52.)

CARDOZO, J.

Defendant, a stockbroker, has been convicted of the crime of trading for his own account against the order of a customer (Penal Law, § 954).

S. S. Ruskay & Co., in which firm the defendant was a partner, were members of the Consolidated Stock Exchange in the city of New York. On February 17, 1922, they received from one Brunner, a customer, an order for the purchase of 200 shares of Mexican Petroleum stock. They made a contract at once on the floor of the Exchange for the purchase of the shares from Pearsall & Maloney. At that time and for some months past, they were seriously embarrassed for lack of money. The charge is that before Brunner's shares had been paid for or delivered, they sold for their own account on February 20, 200 shares of the same stock to be offset against the purchase. Suspension and bankruptcy followed a few days later. The question is whether the evidence makes out the essentials of the crime.

At the outset there is need to recall the precise wording of the statute. By Penal Law (§ 954) 'A broker, who, being employed by a customer to buy and carry upon margin the stocks, bonds or other evidences of debt of a corporation, company or association, while acting as

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broker for such customer in respect of such stocks, bonds or other evidences of debt, sells for his own account the same kind or issue of stocks, bonds or other evidences of debt of such corporation, company or association with intent to trade against the customer's order, or, who, being employed by a customer to sell the stocks, bonds or other evidences of debt of a corporation, company or association, while acting as broker for such customer in respect to the sale of such stocks, bonds or other evidences of debt, purchases for his own account the same kind or issue of stocks, bonds or other evidences of debt of such corporation, company or association, with intent to trade against the customer's order, is guilty of a felony, punishable by a fine of not more than five thousand dollars, or by imprisonment for not more than one year, or by both. Every member of a firm of brokers, who either does, or consents or assents to the doing of any act which by the provisions of this section is made a felony shall be guilty of a violation thereof.'

Violation of this statute is impossible when once the shares that are to be bought have been delivered to the broker upon his payment of the price. The order has then been executed, and is no longer subject to be neutralized by a cross-order to sell. True, indeed, it is that the shares thus acquired may still be criminally misapplied. If the broker sells thereafter without his customer's consent, or hypothecates unduly, he offends against another section of the statute (Penal Law, § 956) and is guilty of a felony ( People v. Atwater, 229 N.Y. 303).If in so selling or hypothecating he acts with intent to steal, he offends against section 1290, and is guilty of the crime of larceny (People v. Atwater, supra). The defendant is not charged either with misappropriation under section 956 or with larceny under section 1290. He is charged with matching orders to the end that one shall neutralize the other. What is charged has not been proved unless at the time of the order for the sale there

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was something yet undone upon the order for the purchase. Nothing to the contrary is urged by counsel for the People. The points of difference do not touch the construction of the statute. They have their origin in varying interpretations of the significance of evidence.

Deliveries between brokers, members of the Exchange, are effected through a clearing house. Under the rules of some exchanges, clearances are made daily. Under the rules of the Consolidated Exchange, they are made twice a week, Tuesday and Friday nights. In 1922, February 17 was Friday. The clearance sheets that night covered the purchases and sales for that day. They covered also the purchases and sales for February 15 and 16, the other days included in the same clearance period. Balances reported by the clearing house, whether of cash or securities, are settled the next day. Thus, in the usual course of business, the shares covered by the Friday clearance are delivered and paid for Saturday morning. Balances cannot be ascertained, when the clearance is made daily, by choosing the transactions for half a day and excluding those of the other half. For the same reason, balances are deceptive, when the clearance is made twice a week, if the transactions of one day are considered, and those of other days within the same period of clearance are put aside and disregarded.

The People proved that on February 17, 1922, the defendant's firm bought from Pearsall & Maloney 225 shares of Mexican Petroleum and sold on the same day to the same firm 188 shares of the same stock. There is no complaint as to these sales. The prosecution does not urge that they were for the benefit of the firm itself. They were legitimate transactions for the account of other customers. The record does...

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