In re Rosett

• Decision Date: 14 April 1913
• Docket Number: 241.
• Citation: In re Rosett, 204 F. 431 (2nd Cir. 1913)
• Parties: In re ROSETT et al.
• Court: U.S. Court of Appeals — Second Circuit

204 F. 431

In re ROSETT et al.

No. 241.

United States Court of Appeals, Second Circuit.

April 14, 1913

Olcott Gruber, Bonynge & McManus, of New York City (L. L. Ernst, of New York City, of counsel), for petitioner.

R. P Beyer, Deputy Atty. Gen., and Morris Cukor and Archibald Palmer, both of New York City, for respondents.

Before LACOMBE, WARD, and NOYES, Circuit Judges.

WARD Circuit Judge.

Moritz and Max Rosett, partners composing the firm of M. Rosett were adjudicated bankrupts, both individually and as a firm in an involuntary proceeding. The firm had carried on the business of private bankers at 197 Stanton street, in this city, and at branches in New Jersey, Pennsylvania, and Ohio. The accounts of all these offices were kept at 114 Liberty street, New York City, where no banking business was done. In accordance with the provisions of sections 25 and 29d of chapter 393, Laws of 1911, amending the General Business Law (Consol. Laws 1909, c. 20), the firm deposited corporate stock of the city of New York of a value of $100,000 with the state comptroller, who, under an order of the District Court, has turned the stock over to the trustee in bankruptcy, who has converted the same into cash. The question in the case is whether this fund is distributable among all the creditors who did banking business with the bankrupts, or only among such creditors as did banking business with them in the city of New York. The referee took the former, and Judge Holt, on a petition to revise, the latter, view. We agree with Judge Holt.

Section 25 provides that no individual or partnership shall engage in the business of receiving deposits of money for safe-keeping, or for the purpose of transmission to another, or for any other purpose, in cities of the first class, except upon certain conditions, among others, the depositing of moneys or securities with the state comptroller and the giving of a bond to him to secure the faithful performance of their engagements in the business. Upon conforming with the provisions of the section, the applicant is entitled to receive from the comptroller a license to do business at the place indicated in it. The section further provides:

'The money and securities deposited with the comptroller as herein provided and the money which in case of default shall be paid on the aforesaid bond by any applicant or the surety thereof shall constitute a trust fund for the benefit of the depositors of the license and of such persons as shall deliver money to such licensee for transmission to another, and such beneficiaries shall be entitled to an absolute preference as to such moneys or securities over all general creditors of the licensee. Such money and securities shall in the event of the insolvency or bankruptcy of the licensee be delivered by the comptroller on the order or judgment of a court of competent jurisdiction to the assignee, receiver or trustee of the licensee designated in such order or judgment.'

Section 29d is as follows:

'Exceptions. The foregoing provision shall not apply * * * (5) to any individual or partnership who would otherwise be

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