Belton v. Hatch

• Decision Date: 05 June 1888
• Citation: 109 N.Y. 593,17 N.E. 225
• Parties: BELTON v. HATCH.
• Court: New York Court of Appeals Court of Appeals

109 N.Y. 593

17 N.E. 225

BELTON

v.HATCH.¹

Court of Appeals of New York.

June 5, 1888.

Samuel R. Taylor, for appellant.

James C. Carter, for appellee.

GRAY, J.

PlaiLtiff, as the assignee of one Des Marets, formerly a member of the New York Stock Exchange, sues to recover the proceeds received by that organization from the sale of the membership, or, as it is sometimes technically termed, the seat of said Des Marets. It is alleged by plaintiff in his complaint that Des Marets, for many years a member of the New York Stock Exchange, in October, 1883, became insolvent, and, under the laws governing that body, was suspended; that subsequently its governing committee determined that the failure was caused by doing business in a reckless and unbusiness-like manner, and resolved that Des Marets was ineligible for readmission, and, in December following the failure, the stock exchange, pursuant to its constitution and by-laws, disposed of his membership and seat for the sum of $25,000; which sum it retained and refused to pay over to plaintiff, who demanded it as Des Marets' assignee. The complaint also alleges that the New York Stock Exchange is an unincorporated association, organized and located in New York city; that its members have voluntarily established certain rules, conditions, and articles of association, or copartnership, which are designated as their constitution and by-laws, which are signed and consented to by the members, and which govern them, their officers and committees, and which control in the conduct of the transactions and concerns of the association, and are binding and obligatory upon the members. The answer of the defendant, after admitting the allegations of the complaint which I have mentioned, sets forth much of the constitution and by-laws of the exchange, and alleges the distribution of the proceeds of the sale of Des Marets' membership to have been made among his creditors in the exchange pursuant to their provisions. The plaintiff demurred to this portion of the answer, on the ground that it was insufficient in law upon its face. Although this matter was not stated as a separate defense, totidem verbis, yet, as it was affirmative in its nature and constituted the defense and justification of the association in disposing of Des Marets' membership, and in retaining the proceeds arising from such disposition, we shall not consider the demurrer as improperly interposed, and will dispose of the questions raised by these pleadings. Their decision involves the legal relations to each other of the members composing the association of the New York Stock Exchange, and the extent and validity of the powers reserved by its constitution and by-laws, and conferred upon its officers and committees, in the management of its affairs, and in the control over a member. The New York Stock Exchange is a voluntary association of individuals, united, without a charter, in an organization for the purpose of affording to the members thereof certain facilities for the transaction of their business as brokers in stocks and securities, and a convenient exchange or sales-room for the conduct of such transactions. It cannot be said to be strictly a copartnership, for its objects do not come within the definition of one. A copartnership results from a contract between the parties, by which they agree to combine their property, or labor, or both, in some common enterprise and for a common profit, to be shared in the proportion stated in their agreement. The objects of a voluntary association of brokers do not, however, involve any such combination, or any communion of profits from the business transacted by the members. Like a business club, its principal object is the promotion of the convenience of its members, by furnishing facilities which aid them in doing their business, and are therefore of benefit to them. It may be said, however, that the rights of the associates are not substantially different from those of partners, so far as their rights in the property of the association are concerned. The interest of each member in the property of the association is equal, but it is subject to the constitution and by-laws, which are the basis on which is founded the association. They express the contract by which each member has consented to be bound, and which measures his duties, rights, and privileges as such. It seems most clear...