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respective boards. No provision was made in the
order as to the manner of sale,— whether it should
be a public or private sale. Thereafter the re-
ceiver reported to the court that ke had sold the
seats to one H. L. E. Meyer for the sum of f 2,-
200. This sale was confirmed by the court, the
amount realized from the sale was credited on
the judgment, and the appellant was directed to
execute and deliver assignments of the two seats
within five days thereafter, said assignments to
be deposited, pending the appeal, with the clerk
of the court. Appellant excepted to the order
appointing the receiver, and directing him to sell
the seats, and also excepted to the order direct-
ing the execution and delivery of the assignments,
but no objection was made to the order confirm-
ing the sale.

As stated by appellant, two questions are pre-
sented here for consideration :

1. Did the seats or any interest therein consti-
tute property within the reach of the appellant's
judgment creditors?

2. If they did, was the order appointing a re-
ceiver, and the order directing the appellant to
execute assignments of all his right, title, and
interest in and to the seats a proper mode of
reaching that property?

On the first question presented there is an
apparant confiict of judicial opinions. In Thomp-
son V. Adams, 93 Pa. St. 55, the cqurt said : ^'The
seat is not property in the eye of the law; it
could not be seized in execution for the debts of
the members. It is the mere creation of the
board, and, of course, was to be held and enjoyed
with all the limitations and restrictions which
the constitution of the board chose to put upon it."
In Pancoast v. Gowen, Id. 71, the court said : ''A
seat in the board of brokers is not property sub-
ject to execution in any form. It is a mere per-
sonal privilege, perhaps more accuratety a license,
to buy and sell at meetings of the board. It
certainly could not be levied on and sold under a
fl. fa. The sheriff's vendee would acquire no title
which he could enfore." It may be said, before
passing to the authorities cited on the other side
of the question, that in Thompson v. Adams "the
plaintiff below was not a member but had fur-
nished the money by which Richards obtained a
seat.'' He therefore contended that he was the
equitable owner of the seat, and that the defend-
ant had no right to apply the proceeds to debts
due by Richards to other members, in pursoance
of the terms of the oonstitution of the club. The
question for the decision of the court there was
whether or not plaintiff was entitled to the pro-
ceeds of the seat, eidier in full otparipoMtu with
the other creditors of said Ricluurds, who at the
time of his decease were members of the board,
or whether the claims of such monben wen

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Vol. 28.



par&moant to the plaintiff^s until the former were
gatisfied. The court decided that the seat ^*waa
to be held and enjoyed with all the limitations
and restrictions which the constitution of the
board chose to put upon it.^' And in Pancoast ▼.
€k>wen it did not appear whether there were any
claims against the seat by members of the board,
but **the answers of the garnishees admitted that
Houston, the defendant in the judgment, owned
a seat in the stock exchange, against which there
were no claims by the members of that body at
the time the attachment was issued, but they
alleged that claims had since been presented.''
In the case before us it is not claimed that the
defendant was, at the time of the proceedings in
the court below, indebted to any of his associates
in either board.

In Hyde v. Woods, 94 U. S. 523, the court de-
cided that the proceeds of a sale of the seat in the
hands of members of the board, after payment of
the preferred claims of members of the board,
could be reached by the assignee in banluruptcy,
and of the person whose seat had been sold.
While this was the only matter for decision be-
fore the court, Mr. Justice Miller, speaking for
the court, said : **There can be no doubt that the
incorporeal right which Fenn had to his seat
when he became bankrupt was property, and the
sum realized by the assignees from its sale proves
that it was valuable property. Nor do we think
there can be any reason to doubt that, if he had
made no such assignment, it would have passed,
subject to the rules of the stock board, to his as-
signee in bankruptcy. ♦ ♦ ♦ Though we have
said it is property, it is incumbered with condi-
tions when purchased, without which it could not
be obtained. It never was free from the con-
ditions of article 15, neither when Fenn bought,
nor at any time before or since* That rule
entered into and became an incident of the prop-
erty when it was created, and remains a part of
it, into whose hands soever it may come.''

In Clute V. Loveland, 68 Cal. 254, 9 Pac. Rep.
133, this court said : *^The rules expressly author-
ise each member to dispose of his seat, subject
)iowever, to the condition that before the pur-
chaser can participate in the proceedings of the
board he must be elected a member thereof. The
power to dispose of the seat includes the power
to dispose of it absolutely or conditionally. If a
member should sell his seat to one who should
not be elected a member of the board, it cannot
be doubted that such purchaser would take, sub-
ject to the conditions imposed by the rules of the
association, the interest of the seller in the prop-
erty of the association. * * * Whether the
disposition be absolute at the beginning, or sub-
sequently becomes so through judicial preceed-
ings, die result is the same." It is true, in that
ease there was an agreement between the parties,
Clute and Loveland, by which the latter mort-
gaged his seat to the former as security for the
repayment of monejrs due from the one to the
otter. But this particular feature of the case, if

the seat is property, is not enough to distinguish
it in principle from the one before us. The con-
stitution and by-laws of the association seem to
regard the seats as property. Article 13 of the
constitution provides that a member in good
standing "shall have the right to dispose of his
privileges in the board, and to nominate a suc-
cessor to fill the vacancy occasioned by his retire-
ment, * * * but the board reserves the right
to reject any nominee. In the event of the death
of a solvent member, the board will dispose of
the vacant seat to the best advantage for the
benefit of his widow and children, or those per-
sons who shall be designated by him in his last
will and testament," etc. Whenever a member
has been deprived of his privileges, or surrenders
his membership, it is provided that his seat may
be sold, and the president of the board, as trustee,
shall hold the proceeds ^Ho discharge the obliga-
tions due by such person to members of the board,
and any surplus remaining shall, after having
satisfied all other claims against him, be delivered
to the delinquent, or to any person authorized to
receive the same."

In Londheim v. White, 67 How. Pa. 467, the
court said : *^It must be conceded, I think, in the
light of all the decisions, that a seat or member-
ship in the stock exchange is property, and
should be applied in the same manner as other
property of a debtor to the payment of his debts.
It may be surrounded and clogged with conditions
and restrictions, but still it is property available
for the payment of debts, and can be made avail-
able for that purpose, subject to and by an ob-
servance of those restrictions and conditions. *

* *. This question has been passed upon so
frequently by the courts as to make it no longer
doubtful or debatable." In Bank v. Murphy, 60
How. Pr. 426, the court, referring to the conten-
tion that such a seat is not tangible property, said :
^<If such a result may be attained the effort of
active imagination cannot circumscribe the asso-
ciations human ingenuity will ])roduce to thus
transmute veritable assets into intangible, and yet
most substantial and valuable, shadows." Judge
Ghoate, in the United States district court, South-
em district. New York, upon an application for
an order requiring a bankrupt to make a transfer
of his seat in the New York Stock Exchange to
the assignee in banlmiptcy, or to such person as
the assignee may procure as a purchaser of the
seat, said : *^It (the seat) is a part of the bank-
rupt's business assets, or more generally of his
property, which it was the primary design of the
bankrupt law to distribute among his creditors,
and that the peculiarities which distinguish this
from other property are, in view of the evident
purpose and scope of the bankrupt law, mere
technicalities— cobwebs, which the law is strong
enough to break dirough." In re Ketchum, 1 Fed.
Rep. 842. See, also, Powell v. Waldron, 89 N. Y.

We conclude, therefore, that the weight of au-
thority and the better reasoning support the prop-

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No. 20

ositioQ that such a seat or membership is property,
and should be applied, as other property of a
debtor, to the payment of his debts. To hold that
it cannot be thus applied would establish a rule
giving to the members of such associations the
power to invest fortunes under the name of li-
censes and privileges, and by their constitutions
and regulations to establish a law of exemption
for the ^ame.

Upon the other question raised we think there
can be little doubt. In Bank v. Robinson, 57 Oal.
520, it was held that proceedings supplementary
to execution are intended to take the place of the
creditors* bill, and in such a proceeding 4t was
proper to order the execution debtor to make an
assignment to a receiver of his patent right to an
invention. It was always the rule in a proceeding
known as a *^creditors* bill,*' as we understand it,
to appoint a receiver after the execution had been
returned nulla bona. Note to Ward v. Beebe, 15
Abb. Pr. 373; Stoors v. ICelsey, 2 Paige, 417;
Hadden v. Spader, 20 Johns. 554; Londheim v.
White, 8upra; In re Ketchum, supra. Freeman,
referring to such seats says: ^*They have been
spoken of by the courts as property, and it has
l>een said that on bankruptcy they would pass to
the assignee, subject to the rules of the stock
board. If this be true, they must be subject to
execution in some mode, perhaps by creditor's
bill, or by proceedings supplemental to execution,
in which a receiver could be appointed and a
transfer to him compelled.*' 1 Freem. Ex'ns (2d
ed.) § 110; 2 Freem. Ex'ns (2d ed.) § 419; Code
Civil Proc. § 564, subd. 4.

No claim was made in the court below that a
better price could have been realized for the seats
than was obtained through the sale by the re-
ceiver, and, as stated before, no objection was
made to the order of the court confirming the sale
of the seats for $2,200, nor has any appeal been
taken therefrom

The orders are affirmed.

NOTB.— Ad attempt will be made in this note to cite
the principle authorities touohiDg upon the question
as to whether a seat In a stock exchange Is liable for
its owners' debts.

Cases in the Affirmative.-'The United States Su-
preme Court held, in the case of Hyde v. Wood8,i that
a membership In the stock exchange of San Francisco,
was property, subject only to the rules of the
exchange. The same question arose in the Superior
Court of New York in 1877 in Bitterbaud v. Baggett,'
and the same view was taken by the court as in the
above case. Also in Grocers Bank v. Murphy, 60 How.
Pr. 420. Beach, J., observed in this case, with refer-
ence to the contention of counsel, that a seat in an ex-
change is not tangible property and cannot be reached
by creditors. **If such a result may be attained, the
efforts of an active imagination cannot circumscribe
the associations, human ingenuity will produce to thus
transmute veritable assets into intangible and yet most
substantial and valuable shadows." In 1880, in the
United States District Court, for the Southern District
of New York, reported as In re KetcKuniy 1 Fed. Rep.

1 94 U.S. (4 Otto), 6».
l4Abb. (N.O.)67.

840, a case in bankruptcy, in which there was an »p*
plication for an order requiring the bankrupt,
Ketchum, to make a transfer of his seat in the New
York Stock Exchange to the assignee in bankruptcy,
or to such person as the assignee might procure as a
purchaser, the court sustained the motion and made
the order. The court, Choate, J., says: *'I think the
case cannot be distinguished in principle from the case
of Gallagher v. Lane, 19 N. B. B. 224, in which It was
determined that a Washington market lease was prop*
erty that belonged to the assignee. • • • The seat
has a pecuniary value, which the rules of the sodety,
as interpreted and applied in practice, permit the
holder to realize by a sale and transfer. There is no
practical difficulty in effecting a transfer of this right
or interest for a pecuniary consideration, subject to the
condition that the debts of the present holder tomem«
hers are first paid, and the right or privilege is to all
interests and purposes a business right or privilege,
useful for business purposes only. I see nothing in
the rules of the exchange which renders it impossible
for the seat to be disposed of by the assignee in bank-
ruptcy, with the co-operation of the bankrupt, subject
to the condition above mentioned. The equity of the
creditors is as obvious as in the case of the market
lease. This seat In the board was actually used as a
part of the business capital of these bankrupts as stock
brokers. To suffer the bankrupts still to hold it,
virtually withdraws several thousand dollars in value
of their business assets from the creditors." The same
view was taken in Londheim v. White.'

In Clute V. Loveland,^ it was held that a member of
the San Francisco Stock and Exchange Board might
pledge or mortgage his seat, and that the lien therebv
created might be enforced and the seat sold, subject to
the conditions imposed by the rules of the association.

It was held in Durkee v. Stringham,^ where certain
parties associated in the formation of a Joint stock
company for the purposes of holding (in the name of a
trustee) and improving leal estate, and manufacturing
lumber, etc, and to that end, fixed the nominal amount
of their capital stock and apportioned the same, issu-
ing transferable certificates therefor to the several
parties in Interest, that these certificates represented
an interest in the real and personal property of the
association, which a court of equity would protect, and
which could be sold or mortgaged by the owner like
other specieH of property; which sales or pledges had
the effect to convey or incumber his proportion of the
Joint property, subject to the indebtedness of the asso-
ciation and the equitable rights of the other parties.*
And it was held in Eliot v. Merchants Exchange,' that
certificates of membership in the Merchants Exchange
of St. Louis are property, and are liable for the debts
of the owner, and may, by creditor's bill, be subject to
the payment of a Judgment creditor. And, further-
more, that a debtor member of the exchange may, in a
proceeding in which he and the exchange are Joined,
be restrained from disposing of his certificate of mem-
bership, and may be compelled to transfer the certifi-
cate to such purchaser, at sheriff's sale, as possesses
the qualifications of membership in the exchange.

Cases in the Negative.— It was held in 1880, in Pan-
coast v. Gowan,7 that a seat in the Philadelphia Stock

« 67 How. Pr. 467.
4 68 Oal. »4.

• 6WI8.1.

• 14 Mo. App. 884. See also Powell v. Waldron, 89 N. T.
828;/nr« WeMer, 15 Fed. Rep. 800; The State v. QtL
Medical Society, 88 Ga. 636; Jones v. Fisher, 3 W. Bep.
890; Weaver v. Fisher, 110 lU. 146.

7 98 Penn. 66.

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Vol. 28.



BxchaDge is not property subject to execution io any
form, on the ground that it is a mere personal privi-
lege or license to buy and sell at the meetings of the
board. And a like view was taken in Thompson v.
Adams.8 "Scrutinizing the Pennsylyania cases closely,
it cannot be strictly said that they are authorities for
the negative of the above proposition. In both cases,
whatever was said by the court as to the property
nature of exchange memberships, was obiter dicta.
An analysis will clearly indicate this: Thompson
loaned Richards money, wherewith the latter pur-
chased a seat in the Philadelphta Stock Exchange, an
unincorporated association. ' Some time thereafter
Richards died, being indebted to several members of
the board, when his seat was duly sold, subject to a
by* law of the association, and the proceeds applied
toward the extinguishment of his indebtedness to
fellow-members. Thompson and Richards were both
members of the exchange. Thompson contended that
be was the equitable owner of the seat, and was en-
titled as such to the entire proceeds of the sale. The
supreme court decided that he was not, and that there
was nothing unlawful or unreasonable in the regula-
tion under which the seat was held.

In the other case, Panooast had obtained a judgment
against one Houston, who was also a member of the
Philadelphia Stock Exchange. Pancoast garnished
€k>wen and others, comprising the exchange. The pro-
ceedings were instituted in the light of a Pennsylvania
statute, providing for a levy upon stocks belonging to,
and debts due a judgment debtor. The garnishees
answered that Houston did own a seat in the exchange,
against which there were no claims by the members of
that body at the time the garnishee process was issued,
but alleged that the seat was owned, subject to certain
conditions imposed by its rules and regulations, and
that the seat was the property of the exchange until
all questions of claims against its owner by members
of the association were settled. The board claimed
that until it had some means of knowing that all such
debts had been fully settled, or that none existed, that
It could not be lawfully garnished or attached, or the
seat sold. The court held that had there been left in
the hands of the defendant any balance, after paying
the debts due to the members, it could properly be
reached. What was really before the court in both
cases, was not whether a seat in the exchange was
property, but the validity or invalidity of certain by-
laws, and what was their obligatory force. The learned
judges were willing to vest the property question upon
their judicial dictum, simply, and to treat the matter
as a foregone conclusion— a self-evident proposition.

In Barclay v. Smith,* on the other hand, the Illinois
Supreme Court albeit viewing the Pennsylvania decis-
ions as stare deeisia, et non quieta movere, neverthe-
less, seem to recognize their meagerness in the matter
of reason and authority. This is evidenced by Justice
Craig's studied and ingenious argument. But with all
due respect for the learned court, their logic will
hardly stand the test of analysis." lo And it has been
held in New York, that where the constitution of a
stock exchange under which such member binds him-
self in respect to the manner of his transaction of
business, and of his righ^to continue in membership,
provides that, when one has lost his membership or
seat, the proceeds of the sale of such seat may, by force

8 Id. 06.

• 107 III. 849.

10 Law of the Produce Exchange : Bisbee v. Slmonds,
pp. 68 91. In line with the Pennsylvania cases above re •
f erred to, see In re Sotherland, 6 Blss. 086.

of constitutional provision, be appropriated to his
creditors in the exchange, or to any of the corporate
objects of the association, a member who, by offending
against the laws of the exchange, may have forfeited
his seat, has no further interest or title in it or its
proceeds, and the privileges of membership having
only been conferred upon him on condition that all the
rights should revert to the exchange on the happening
of certain events, he, having assented to the rules of
the association, cannot be heard to complain of them
as being against public policy, nor can his assignee.^
It will thus be seen that the weight of authority, in-
cluding all the recent cases, favors the affirmative
view. Solon D. Wilson.

11 Helton V. Hatch, 17 N. E. Bep. 225.


The Supreme Court of Texas recently reversed a
negligence case for the use by counsel for plaintiff in
his opening argument of the following language,
"Gentlemen, these powerful railroad corporations vrill
not do justice to any one unless compelled to do it. If
they were to kill your horse to-day, they would not
pay you anything for it, but they would tell you to
sue, and go to the court for your money, and then they
would fight you with all their power. They will take
any advantage of you they can, no matter how just
your case. Now, I hope you will make them pay the
last cent you can in this case for killing their mother."

The New York Court of Appeals has just rendered
a decision of considerable importance in regard to the
liability of banks on certified checks. The decision
was rendered in the case of Henry Clews & Co. against
the Bank of New York, which had been before the
court twice before, having been tried four times and
each time appealed to the general term. A draft on
the defendant bank fell into the hands of a person
other than the one for whom it was intended, was
presented at the bank and certified ; but the bank on
being notified of the theft, stopped payment of the
draft and entered a note of the matter in its proper
books of record. The draft was raised from $240 to
$2,450 and was by a stranger tendered to the plaintifb
in payment for some bonds. On sending to the bank
to make inquiries, the paying teller having forgotten
to consult the records, said it was all right. When the
draft was deposited by Clews & Co. the bank refused
payment. The bank is held liable for the full amovnt
of the draft.

The Albany Law Journal calls attention to the fact,
which may not be generally known, that Congress on
August 1, of last year passed a law regulating the lien
of judgments of the federal courts, and providing that
those judgments shall be liens in the state in which
they are rendered to the same extent and on the same
conditions only as if rendered by a court of general
jurisdiction of the State; but such judgment need not
be docketed in any state office in the same country
where it was rendered.

Execution by Electricity.— With the new year
the law took effect in this State substituting executions
by electricity for hanging, in the case of all convicted
of murder hereafter committed. There has been what
a daily newspaper calls **a carnival of death and
crime" in New York since the new law took effect.
Whether there is any relation between the change in
the law and this sudden outbreak of homicidal fury it

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No. 20

would be rash at present to say, but the coinddenoe is
at least suspicious. Ooe man was murdered fifteen
minutes after the new year began, and there were a
half-dozen shooting and stabbing affrays within the
first twenty-four hours, some of which will probably
have fatal results. There is little doubt that the crimi-
nal classes look with less horror on the new method
of execution than on the gallows. One of our papers,
with characteristic ^'enterprise," sent an interviewer
through the ''murderers' row" of the Tombs not long
ago, and questioned the men under sentence of death.
With one accord they pronounced in favor of the new
law, and regretted that, if they must die, the law did
not apply to their cases. Is the approval of the crim-
inal classes the best kind of endorsement that a change
in the law can have?— i^. Y, Examiner,


The American State Reports, Containing the
Cases oX General Value and Authority, Subsequent
to Those Contained in the "American Decisions''
and the "American Reports," Decided in
the Courts of Last Resort of the Several States,
Selected, Reported, and Annotated By A. C.
Freeman and the Associate Editors of the "Amer-
ican Decisions." Vol. lY. San Francisco: Bancroft-
Whitney Company, Law Publishers and Law
Booksellers. 1888.

This volume of the American State Reports sustains
the reputation of its predecessors. It contains many
important cases, notably, Sheehy v. Kansas City Cable

Online LibraryAugustus John Cuthbert HareThe Central law journal, Volume 28 → online text (page 119 of 151)