Henry Clews v. Malcolm Jamieson, No. 245

CourtUnited States Supreme Court
Writing for the CourtPeckham
Citation45 L.Ed. 1183,21 S.Ct. 845,182 U.S. 461
PartiesHENRY CLEWS, Charles M. Foster, and James B. Clews, Petitioners , v. MALCOLM M. JAMIESON, Roland C. Nickerson, Harry F. Billings, et al
Decision Date27 May 1901
Docket NumberNo. 245

182 U.S. 461
21 S.Ct. 845
45 L.Ed. 1183
HENRY CLEWS, Charles M. Foster, and James B. Clews, Petitioners,

v.

MALCOLM M. JAMIESON, Roland C. Nickerson, Harry F. Billings, et al.

No. 245.
Argued April 17, 18, 1901.
Decided May 27, 1901.

Page 462

The petitioners and complainants, being residents of the state and city of New York, commenced this suit in equity in the United States circuit court for the northern district of Illinois against certain of the defendants composing the governing committee of the Chicago Stock Exchange, to recover funds deposited with them in trust, and also to recover damages against other defendants composing the firm of Jamieson & Company, brokers belonging to the exchange, alleged to have been sustained by the complainants by a violation by those defendants of their contract to purchase and pay for certain stock sold them by the complainants. Still other defendants composed the firm of Schwartz & Company, the brokers who effected the sales of the stock for the complainants, no recovery being sought against them. All of the defendants were residents of the state of Illinois. The circuit court after a hearing gave judgment for a dismissal of the bill for want of any privity of contract between complainants and defendants, Jamieson &

Page 463

Company, against whom a money recovery was sought. On appeal the circuit court of appeals for the seventh circuit affirmed the judgment of dismissal, and in the opinion discussed only the question whether or not the contract sued on was a gaming one and in violation of the statute of Illinois on that subject, §§ 130 and 131 of the Criminal Code hereinafter set forth. It held that the contract violated those sections, and that the bill was properly dismissed for want of equity, and it therefore affirmed the decree of dismissal. The complainants thereupon petitioned this court for a writ of certiorari, which was granted, and the case brought here.

No important question arises upon the pleadings, with the exception that it was set up by way of defense that the complainants had an adequate remedy at law, and the facts upon which the defense is rested are sufficiently adverted to in the opinion. The pleadings admit the sales and purchases of stock which were all made subject to the rules of the exchange. The case was referred to a master to take testimony and to report the same to the court with his conclusions thereon, and it was subsequently brought to a hearing upon the master's report and the testimony taken before him and upon a stipulation as to facts, entered into between the parties. The facts reported by the master are, among others, the following:

There has existed in the city of Chicago since the year 1882 a voluntary association known as the Chicago Stock Exchange, composed of brokers having places of business in the vicinity of the exchange, and who are elected to membership therein in accordance with the provisions of the constitution and by-laws; the association is governed by a governing committee composed of the president of the exchange ex officio, and twenty-four members, and every member is required to sign the constitution and by-laws, or assent thereto in writing, and obligate himself to abide thereby and by the rules theretofore or thereafter to be adopted.

Article 17 of the constitution provides as follows:

'Sec. 1. No fictitious sales shall be made. Any member contravening this section shall, upon conviction, be suspended by the governing committee.

Page 464

'Sec. 2. Any member who shall make fictitious or trifling bids or offers, or who shall offer to buy or sell any stock or security other than government bonds at a less variation than 1/8 of 1 per cent shall, upon conviction, be subject to suspension, or such other penalty as the governing committee shall impose.'

Article 29 is as follows:

'Any member of this exchange who is interested in or associated with, or whose office is connected directly or indirectly by wire or other method of contrivance with, any organization, firm, or individual engaged in the business of dealing in differences or quotations on the fluctuations in the market price of any commodity or security without a bona fide purchase or sale of said commodity or security in a regular market or exchange, shall, on conviction thereof, be deemed to have committed an act or acts detrimental to the interest and welfare of the exchange.'

Articles 16 and 17 of the by-laws read as follows:

'Article XVI.

'Sec. 1. In any contract either party may call at any time during the continuance of the same for a deposit of $10 per share upon the par value of the securities bought and sold; and whenever the market price of the securities shall change so as to reduce the margin of said deposit, either way below the $10, either party may call for a deposit sufficient to restore the margin to $10, and this may be repeated as often as the margin may be so reduced. In all cases where deposits are called they shall be made within one banking hour from the time of such call.

'Sec. 2. In case either party shall fail to comply with the demand for a deposit in accordance with the provisions of this article, the party calling, after having given due notice, may report the default to an officer of the exchange, who shall repurchase or resell the security forthwith in the exchange, and any difference that may accrue shall be paid over to the party entitled thereto. The notice above referred to shall be either personal or shall be left in writing at the office of the party to

Page 465

be notified, or in case he has no office, then by public announcement whenever the exchange may be in session.

* * * * *

'Article XVII.

'Should any member neglect to fulfil his contract on the day it becomes due, the party or parties contracting with him shall, after giving notice as required by § 2 of the preceding article, employ an officer of the board to close the same forthwith in the exchange by purchase or sale as the case may require, unless the price of settlement has been agreed upon by the contracting parties. In case of a failure of a creditor to close the contract as above, the price shall be fixed by the price current at the time such contract ought to have been closed under the rule. In all cases where an officer may be directed to buy or sell securities under this rule, the name of the member defaulting, as well as that of the member giving the order, shall be announced. No order for the purchase or sale of securities under this rule shall be executed unless made out in writing over the signature of the party giving the order, who shall state the reason therefor; and it shall be the duty of the officer who executes the order to indorse thereon the name of the purchaser or seller, the price and the hour at which the contract is closed, and hand the same to the sccretary of the board, who shall within twenty-four hours ascertain whether the party for whose account the order was given has paid the difference, if any, arising from the transaction; if not, the secretary shall report the default to the president. The duty devolved upon the officers of the exchange under this rule shall be performed without charge. No party shall be permitted to supply offers to buy or sell securities closed for his account under the rule; and when a contract is closed under this rule, any action of the defaulter, direct or indirect, by which the prompt fulfilment of such contract is delayed, hindered, or evaded, to the detriment of the other contracting party, shall subject the offending party to suspension for not less than thirty days in the discretion of the governing committee, by a vote of two thirds of the members present at the meeting.

Page 466

When contracts are closed out under the rule, any member supplying the bid or offer, and not duly receiving or delivering the stock, as the case may be, renders himself liable to prosecution under this article. Should any stock thus sold not be delivered until the next day, the contract shall continue, but the defaulting party shall not be liable to pay such damage as may be assessed by the arbitration committee. The same rules as to notice, time, and places that govern defaults in other contracts shall apply to borrowed securities, which, on nondelivery or receipt, must be borrowed or loaned in open market, except in case of actual default in receiving or delivering after notice to close the loan; then the same are to be bought or sold, as the case may be, for account of the defaulter in the manner provided in this article.'

The rules of the clearing house in regard to buying or selling for 'the account' (under which these transactions were had) read as follows:

'Clearing House Bules.

'Sec. 1. Under the following regulations transactions may be made for 'the account' in any securities listed for that purpose dealt in at the exchange.

'Sec. 2. Deliveries of cash, stock, or transactions for 'the account' shall be made on the last day of each month. Provided, however, should the last day of any month occur on a holiday, or on a day when the exchange is closed for business, then in that case deliveries shall be made on the first business day preceding.

'Sec. 3. All purchases and sales 'for the account' shall be entered upon the blanks furnished by the manager sealed for that purpose, and said blanks properly filled out, balanced, accompanied by a proof-sheet, and signed, must be delivered to said manager before 9:45 A. M. It shall be the duty of the manager to compare and examine the statements rendered, and to report, should any errors be found, to the parties making such errors before 12 M., by written notice, which must be called for at the manager's office. Parties in error must at once proceed to adjust the same and correct their statements. All balances

Page 467

due from members as shown by the statements shall be paid by certified check drawn to the order...

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172 practice notes
  • York v. Guaranty Trust Co. of New York, No. 256.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 25, 1944
    ...Halsbury's Laws of England (2d ed.) 305. See also Alexander v. Hillman, 296 U. S. 222, 239, 56 S.Ct. 204, 80 L.Ed. 192; Clews v. Jamieson, 182 U.S. 461, 479, 21 S.Ct. 845, 45 L.Ed. 1183; 1 Pomeroy, Equity Jurisdiction, 46 The mere fact that the claim against a trustee is for money does not ......
  • Liu v. Sec. & Exch. Comm'n, No. 18-1501
    • United States
    • United States Supreme Court
    • June 22, 2020
    ...due from the infringer to the patentee." Packet Co. v. Sickles , 19 Wall. 611, 617–618, 22 L.Ed. 203 (1874) ; see also Clews v. Jamieson , 182 U.S. 461, 480, 21 S.Ct. 845, 45 L.Ed. 1183 (1901) (describing an accounting as involving a " ‘distribution of the trust moneys among all the benefic......
  • Kalaris v. Donovan, Nos. 82-1631
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • January 4, 1983
    ...functions--like justices of the peace--were removable at will in the absence of a congressionally fixed term. 83 182 U.S. at 426-427, 21 S.Ct. at 845. In Hennen the Court found that a District Court judge could remove, at his discretion, a clerk of the court since no tenure in office was sp......
  • Thole v. U. S. Bank N.A ., No. 17-1712
    • United States
    • United States Supreme Court
    • June 1, 2020
    ...a century, trust law has provided that breach of "a fiduciary or trust relation" makes the trustee "suable in equity." Clews v. Jamieson , 182 U.S. 461, 480–481, 21 S.Ct. 845, 45 L.Ed. 1183 (1901). That is because beneficiaries have an enforceable "right that the trustee shall perform the t......
  • Request a trial to view additional results
172 cases
  • York v. Guaranty Trust Co. of New York, No. 256.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 25, 1944
    ...Halsbury's Laws of England (2d ed.) 305. See also Alexander v. Hillman, 296 U. S. 222, 239, 56 S.Ct. 204, 80 L.Ed. 192; Clews v. Jamieson, 182 U.S. 461, 479, 21 S.Ct. 845, 45 L.Ed. 1183; 1 Pomeroy, Equity Jurisdiction, 46 The mere fact that the claim against a trustee is for money does not ......
  • Liu v. Sec. & Exch. Comm'n, No. 18-1501
    • United States
    • United States Supreme Court
    • June 22, 2020
    ...due from the infringer to the patentee." Packet Co. v. Sickles , 19 Wall. 611, 617–618, 22 L.Ed. 203 (1874) ; see also Clews v. Jamieson , 182 U.S. 461, 480, 21 S.Ct. 845, 45 L.Ed. 1183 (1901) (describing an accounting as involving a " ‘distribution of the trust moneys among all the benefic......
  • Kalaris v. Donovan, Nos. 82-1631
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • January 4, 1983
    ...functions--like justices of the peace--were removable at will in the absence of a congressionally fixed term. 83 182 U.S. at 426-427, 21 S.Ct. at 845. In Hennen the Court found that a District Court judge could remove, at his discretion, a clerk of the court since no tenure in office was sp......
  • Thole v. U. S. Bank N.A ., No. 17-1712
    • United States
    • United States Supreme Court
    • June 1, 2020
    ...a century, trust law has provided that breach of "a fiduciary or trust relation" makes the trustee "suable in equity." Clews v. Jamieson , 182 U.S. 461, 480–481, 21 S.Ct. 845, 45 L.Ed. 1183 (1901). That is because beneficiaries have an enforceable "right that the trustee shall perform the t......
  • Request a trial to view additional results

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