In re Toole

• Decision Date: 10 November 1920
• Docket Number: 37.
• Citation: 270 F. 195
• Parties: In re TOOLE et al.
• Court: U.S. Court of Appeals — Second Circuit

270 F. 195

In re TOOLE et al.

No. 37.

United States Court of Appeals, Second Circuit.

November 10, 1920

Wollman & Wollman, of New York City (H. Wollman, of New York City, of counsel), for appellants.

Zalkin & Cohen and Taylor, Knowles & Hack, all of New York City (R T. Knowles, of New York City, of counsel), for bankrupts.

Before WARD, ROGERS, and MANTON, Circuit Judges.

WARD Circuit Judge.

Logan &amp Bryan and Stout & Co., both members of the New York Stock Exchange, each claim a fund of $7,701.08, proceeds of a check of Stout & Co. to the order of Toole, Henry & Co., now in the hands of the trustee in bankruptcy of Toole, Henry & Co. also members of the New York Stock Exchange, as a separate fund awaiting the decision of the controversy between the rival claimants.

Judge A. N. Hand dismissed the petition of Logan & Bryan, and directed the trustee to pay over the fund to Stout & Co. Logan & Bryan have taken both a petition to revise and an appeal from this order. The claim, being a reclamation by a third party of his own property in the hands of the trustee is a controversy arising in bankruptcy proceedings, and the proper remedy is appeal under section 24a, and not a petition to revise under section 24b of the Bankruptcy Act (Comp. St. Sec. 9608).

April 2, 1919, Logan & Bryan delivered to Toole, Henry & Co. certificate No. C40667 for 100 shares of Central Leather stock, indorsed in blank, together with a bill for the purchase price $7,537.50. This was a cash transaction, and the messenger, in accordance with the usual practice of stockbrokers, left the certificate and bill with Toole, Henry & Co., and subsequently returned for their check, which was refused, because in the meantime a receiver in bankruptcy of that firm had been appointed.

April 1, 1919, Stout & Co. had loaned Toole, Henry & Co. certificate No. 40436 for 100 shares of Central Leather stock, with interest at 4 per cent., to be returned the next day, and to be secured in the meantime by deposit of collateral in the amount of $7,702, which was the agreed value of the stock plus the price of the stock transfer stamps. After banking hours on that day Toole, Henry & Co. sent as collateral to Stout & Co. their check for $7,702, which Stout & Co. deposited in their bank; it then being too late for certification.

April 2, Toole, Henry & Co. delivered the certificate No. C40667 to Stout & Co. in return for the certificate they had borrowed the day before, and Stout & Co., supposing that the collateral check of Toole, Henry & Co. for $7,702 had been paid, and not knowing of their insolvency, nor of the appointment of a receiver, sent them their check, dated April 2, for $7,701.08, the amount of the collateral with interest at 4 per cent. In point of fact,...