Arthur Duel v. Harry Hollins No 352 Wiener, Levy Company v. Harry Hollins No 353
| Decision Date | 05 June 1916 |
| Docket Number | Nos. 352 and 353,s. 352 and 353 |
| Citation | 60 L.Ed. 1143,36 S.Ct. 615,241 U.S. 523 |
| Parties | ARTHUR B. DUEL, Appt., v. HARRY B. HOLLINS et al., Individually and as Members of the Firm of H. B. Hollins & Company, Alleged Bankrupts, and A. Leo Everett, Receiver. NO 352. WIENER, LEVY, & COMPANY, Appts., v. HARRY B. HOLLINS et al., Individually and as Members of the Firm of H. B. Hollins & Company, Alleged Bankrupts, and A. Leo Everett, Receiver. NO 353 |
| Court | U.S. Supreme Court |
Messrs. Frederick W. Longfellow and Lewis L. Delafield for Arthur B. duel.
Messrs. Stuart McNamara and Carl A. De Gersdorff for Wiener, Levy, & Company.
Messrs. William C. Armstrong and Charles K. Beekman for Harry B. Hollins et al.
Hollins & Company, brokers and members of the New York Stock Exchange, went into bankruptcy November 13, 1913.
On October 13, 1912, they purchased for appellant Duel 100 shares of Amalgamated Copper Company stock—'Copper'—and received certificates therefor which they subsequently disposed of by deliveries on account of sales for customers.
October 25, 1912, they purchased for one Bamberger 30 shares of 'Copper,' received a certificate therefor, and pledged this for their own benefit with the National Bank of Commerce.
February 25, 1913, they purchased for appellants Wiener, Levy, & Company 50 shares of 'Copper' and received a certificate. About June 13, 1913, this passed out of their control 'for and in behalf of another customer.'
Prior to November 1, 1913, they were directed to purchase for one Landau 100 shares of 'Copper,' and their books charge them as carrying this number for his account.
At the close of business November 7, 1913, they were responsible to customers for 280 shares of 'Copper'—Bamberger 30, Duel 100, Wiener, Levy, & Company 50, Landau 100; and they held in actual possession—'in the box'—only two certificates for 50 shares each. November 10, 1913, they used these in making delivery on a short sale. On the same day that sale was 'covered,' and on the 11th they received and placed in their box a certificate (No. 29,373) for 100 shares.
When bankruptcy occurred (November 13th) their entire liability to 'long' customers on account of 'Copper' arose from purchases of 280 shares as above narrated; and they actually held only certificate No. 29,373, received two days before. To secure their own loans they had on pledge with Kings County Trust Company and National Bank of Commerce, respectively, certificates for 50 and 30 shares; and they also had an outstanding short sale of 100 shares.
In the deposition of Allaire, bankrupts' cashier, it is said:
'The said certificate No. 29,373 was never marked or otherwise identified by Hollins & Company as the property of any particular person or customer, or placed in any envelop bearing any indication that the said stock was held for the special account of any particular customer or person, and no memorandum appears upon the books or records of Hollins & Company to the effect that said stock was purchased or held for the special or particular account of any one customer or person.
* * * * *
'It was the practice of Hollins & Company to use certificates of stock on hand in making deliveries thereof, indiscriminately and without regard to particular certificates or certificate numbers, excepting only cases where customers deposited certificates of stock standing in their own names as margin for their own accounts, where such certificates were usually retained in kind, but at no time from the 1st day of November, 1913, until and including the 13th day of November, 1913, were there any certificates for Amalgamated Copper stock standing in the name of any customers.
'Certificate No. 29,373, representing 100 shares of Amalgamated Copper stock, was not purchased or received for the account of any member of the firm of Hollins & Company, or for the personal account of said firm as a whole, but was received from the Stock Exchange Clearing House in the usual course of business as representing the balance of Amalgamated Copper stock due said firm on balance on said date.'
The record indicates that all transactions in question were made in pursuance of the usual contracts for speculative purchases and sales of stock upon margins.
By timely petitions appellants claimed that, in adjusting their accounts for final settlement with bankrupts' estate, they were entitled to have allotted to them respectively 100/280 and 50/280 of the 100 shares of 'Copper' represented by certificate No. 29,373. The district court, southern district of New York (212 Fed. 317), sustained their position and ordered accordingly, but the circuit court of appeals reached a different conclusion and reversed the order. 135 C. C. A. 312, 219 Fed. 544.
The facts of the present case differ in some respects from those presented in Gorman v. Littlefield, 229 U. S. 19, 57 L. ed. 1047, 33 Sup. Ct. Rep. 690; but we think a logical application of principles there approved requires disagreement with the circuit court of appeals and approval of order in the district court.
In view of our former opinions it must be taken as settled: That bankrupts and their customer stood in the relation of pledgee and pledgeor. That in their dealings stock certificates issued by same corporation lacked individuality, and, like facsimile storage receipts for gold coin, could properly be treated as indistinguishable tokens of identical values. That, as between themselves, after paying amount due brokers, the customer had a right to demand delivery of stocks purchased for his account; and such delivery might have been made during insolvency without creating a preference. Richardson v. Shaw, 209 U. S. 365, 52 L. ed. 835, 28 Sup. Ct. Rep. 512, 14 Ann. Cas. 981; Thomas v. Taggart, 209 U. S. 385, 52 L. ed. 845, 28 Sup. Ct. Rep. 519; Sexton v. Kessler & Co. 225 U. S. 90, 56 L. ed. 995, 32 Sup. Ct. Rep. 657; Gorman v. Littlefield, supra.
Summing up the doctrine of Richardson v. Shaw concerning legal relationship between...
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