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and the cause remanded, with direc- times, or that some of them were paid tions to grant the prayer of such peti- only in part, or not at all. The notes tion, subject, however, to such obliga- were all pledged to secure the same tion of contribution as may be deter- indebtedness. The fact that some of mined in omnibus proceedings, or them fell due at earlier dates than otherwise; enforcement of the order others creates no equity in favor of for delivery of the bonds to appellant those which fell due last. ... The to be stayed in the discretion of the various parties selected a common district court until payment of such agent, and this agent used its power contribution, if any, as may be so to place them all under a common determined."

liability, thus virtually making them In McBride v. Potter-Lovell Co. all sureties for itself. It might be (1897) 169 Mass. 7, 61 Am. St. Rep. that under such circumstances the 265, 47 N. E. 242, it appeared that a pledgee would prefer to hold one and corporation held certain notes of the exonerate another, and it would have plaintiffs for sale, and was to remit to power to do so, in the first instance, them the proceeds, less its commis- by proceeding to collect of one, but sions for selling the same. The Pot- not of another. But where several ter-Lovell Company also held notes of different parties have thus been exothers of the defendants, which it had posed to loss by the fraud of their received from them for sale. Instead common agent, it is more equitable of selling the notes mentioned for the that the burden of the loss should be benefit of the several makers, the shared pro rata. Under such circumcompany at different times wrongfully stances equality is equity, without and fraudulently pledged all of them respect to the time of the maturity to a bank as security for its own debts of the notes. The demand by the to the bank, all the notes being North Star Boot & Shoe Company for pledged for the same debts. The bank, the return of its note was also imbeing a bona fide holder for value material. It was no more fraudulent without notice, collected enough of to pledge this note after such demand these notes from time to time as they than it would have been to pledge it fell due, including the notes of the before a demand. All the notes being plaintiffs and some others, to satisfy pledged as security for the same inits claims against the Potter-Lovell debtedness, the whole loss in conseCompany. All of the various persons quence thereof is to be borne by all whose notes were thus fraudulently the makers, in proportion to the pledged stood on the same footing, amounts of the notes so pledged." except that the notes were pledged at In the case of Re Irving Whitehouse different times, and fell due and were Co. (1923) 291 Fed. 700, the statement collected at different times, and except of facts by the court was, in part, as that one of the parties demanded the follows: “The bankrupt was a stockreturn of its note from the Potter- broker, a greater portion of his busiLovell Company before the same was

being marginal transactions. pledged, and never paid the same, in Upon an order for the purchase of whole or in part, to the bank. It was specified securities and payment of not held that the loss was to be borne by less than 20 per cent of the purchase the makers of the notes in proportion price, the bankrupt advanced the balto the amounts of the notes pledged. ance and held the security as colThe court said: “These differences lateral, obtaining the right to repledge do not vary the equitable rights and the same, and thereupon borrowed liabilities of the parties as among from Hutton & Company, New York themselves. The liability to contrib- brokers, the necessary amount to comute does not depend on a contract be- plete the purchase, and repledge the tween the parties who are held liable security, it having on deposit with to contribute, and is not affected by Hutton & Company a considerable the fact that notes were pledged and amount of security; and upon receivfell due and were paid at different ing an order to purchase listed stock





on the New York Exchange, it was fully paid and the partially paid seforwarded to Hutton & Company in its curities, since the sale in either event own name, and its account debited, was complete and title vested, and and the purchased security was added unpaid securities being held as colto the bankrupt's collateral, and the lateral does not change the status. account of the customer was debited It is unnecessary to determine whethby the bankrupt to the difference be- er Lane and Theis had traced their tween the marginal deposit and the stock into the fund in issue, in purchase price. Some purchasers paid view of the conclusion arrived at; the in full, and permitted the stock to re- holders of a particular security being main with the bankrupt, who treated in a separate class.

Each petiit in the same way as with Hutton & tioner is, therefore, entitled to reCompany, while others deposited their cover the pro rata of the fund as the security to cover the marginal de- security held by him bears to the total posit, which security was deposited of such security sold by the receiver with Hutton & Company with the secu- issued by the same obligor. rity purchased. Some securities in- The amount due from the respective dorsed in blank were delivered to the holders of named securities which bankrupt for safe-keeping, or for has not been paid shall be deducted sale, and the securities were forwarded from the amount due each and reto Hutton & Company, to bankrupt's tained by the trustee. I do not think account. When stocks purchased were that Lane or others are estopped from paid for in full, the purchasers did asserting this claim because they filed not press for delivery, and the bank- a general claim.” The foregoing holdrupt, instead of modeeming such stock ing, however, was reversed by the from the lien pledge, permitted it to circuit court of appeals, the court sayremain with Hutton & Company, and ing: “Respondents argue that petifor some time prior to adjudication tioners should bear the burden equally the bankrupt converted, and caused to with other persons whose securities be converted, securities of customers were included in the Hutton pledge, to its own use. On August 3, 1921, a and that there must be equal contribureceiver was appointed for the bank- tion among all such persons. rupt by the state court. On this day The principle that joint contribution Hutton & Company held as collateral may be enforced applies only in cases deposited by the bankrupt, $48,000, to where the situations of the parties secure an indebtedness of $37,690.01. are equal, as 'equality among persons The securities, upon the order of the whose situations are not equal is not court, were directed to be sold by the equitable.' Petitioners have identified receiver, and the surplus, after the their properties in the pledge. No payment of the indebtedness due to persons except those now before the Hutton & Company from the bankrupt, court have claimed any interest in was paid to the receiver.

The the fund here involved, in that they petitioners assert preferred claims did not appear in response to the against these several stocks. The show-cause order. Petitioners, theretrustee contends that the preferred fore, are not bound to deliver to the claim should be denied, and the fund trustee, and thus put themselves in distributed to all of the creditors in the attitude of contributing jointly in proportion to their respective claims." bearing the burden of the pledge with The court, in holding that each peti- those whose equities are inferior to tioner was entitled to a pro rata dis- theirs. It follows that the trustee tribution, said: “There are several cannot claim more than could the classes of claimants, but I think, under other customers, whose equities are the stipulation, those holding securi- inferior." See Re Irving Whitehouse ties of the same class stand in the Co. (1923) 293 Fed. 287. same relation to the fund which they Thompkins v. Morton Trust Co. claim. As between the claimants (1904) 91 App. Div. 274, 86 N. Y. Supp. there is no difference between the 520, affirmed in (1905) 181 N. Y. 578,

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74 N. E. 1126, may be referred to, in Hatch & Foote had, and unless there this connection. In that case it ap- is some principle upon which these peared that a firm of stockbrokers defendants can insist that this estophad pledged for its debts stock of a pel, which existed in favor of the Morcustomer which had been left with it ton Trust Company, can be enforced for safe-keeping, and also other se- for their benefit, certainly Hastings curities left with it by other cus- was entitled to these shares of stock tomers, on which it had a lien for which Hatch & Foote had simply apadvances. The securities were pledged propriated for their own use, without without the knowledge or consent of right or authority. The loan to the the owners. The stock deposited for Morton Trust Company has been resafe-keeping was not sold by the paid. That is alleged and not displedgee. Following the referee's re- puted. It is in no position to assert port, a judgment was entered which, any interest in this stock as against in effect, held that such stock should Hastings. That loan was paid by the be sold and the proceeds added to the sale of securities pledged to secure amount in the hands of the Morton it, in which the plaintiff and the indi. Trust Company, and should be divid- vidual defendants, other than Hast. ed among the plaintiff and the sev- ings, had an interest, and I can see no eral defendants whose securities had ground upon which this gives to these been used to realize sufficient to repay defendants any right to appropriate the loans made by the Morton Trust Hastings's stock." Compare RhineCompany to Hatch & Foote. On the lander v. National City Bank (1898) appeal no case or bill of exceptions 36 App. Div. 11, 55 N. Y. Supp. 229. was made, but the defendant Hastings The case of Re McIntyre (Pippey's appealed from the judgment entered Appeal) (1910) 104 C. C. A. 419,

, on the report of the referee, and based 181 Fed. 955, though a case not stricthis objection to this report on his ly within the scope of this annotation, contention that, on the facts found is frequently referred to in cases inby the referee as to the ownership of volving the rights inter se of owners this stock deposited by him for safe- of securities which have been wrongkeeping with Hatch & Foote, he was fully pledged by a third person. In entitled to it absolutely, and that it that case it was held that a security was not subject to contribution, or owner finding intact his securities, to any claim or interest that either which had been wrongfully pledged the plaintiff or the other defendants and then relieved by a payment of the had, as against Hatch & Foote and the indebtedness through the sale of the Morton Trust Company. The judg- securities of other owners whose ment was reversed on appeal, it being stock had been wrongfully pledged, held that the owners of the stock was entitled to reclaim his securities which had been sold had no right to without contribution. The court said: contribution from the owner of the "The stock was deposited with Mcstock which had been delivered to the Intyre & Company merely as security broker for safe-keeping only, and to protect them against any losses which had been pledged by the latter, from transactions on the market for but not sold. The court said: “As to Pippey's account. The firm had no all the world, except the pledgee who right to pledge them for any of its has actually and in good faith ad- own debts. When it did pledge them vanced money upon the apparent title to the trust company, the day before conferred by the owner of the shares its failure, the firm had no transaction upon his bailee or agent, the owner pending and was itself indebted to is entitled to the stock. Hastings is Pippey. This was a larceny of his entitled to this stock as against Hatch stock.

No one disputes that & Foote. He is entitled to this stock proposition. By reason of the circumas against the respondents, who have stance that when he left the certifiparted with no property or money cate with the brokers it was duly inbased upon the apparent title which dorsed with a transfer in blank


executed by himself, he exposed him- direct the trustee to return his stock self to risk of losing his stock if the to him, or, if it has been sold, to turn person to whom it was pledged in good the proceeds over to him.” faith, for a valuable consideration, The reported case (ASYLUM of St. found it necessary to sell it in order VINCENT DE PAUL V. MCGUIRE, ante, to secure payment of his advances. 1214), says of the foregoing deThat would be solely because Pippey cision that its effect was somewhat would be estopped from asserting his impaired by the fact that the other title against the person who had part- owners whose securities had been ed with value on the faith of the trans- sold and in whose favor contribution fer he had signed. But the pledgee had been adjudged were not present has not found it necessary to sell the on the appeal, and also that it was Pullman stock. It has repaid itself impaired by the decisions in other from other items of the pledged prop- cases. erty. It no longer has any lien on In the case of Re J. C. Wilson & Co. such property. It can no longer avail (1917) 252 Fed. 631, the court reof any doctrine of estoppel. Pippey's ferred to and distinguished the case title to his stock is absolute. He is of Re McIntyre (Fed.) supra, saying, entitled to the certificate which repre- in conclusion: “From the foregoing sents that title.

Instead of abstract it will be seen that the circuit directing the trustees to return his court of appeals had before it only the stock to Pippey, the court has ordered claims of Pippey and Mrs. Hudson. it to be sold and the proceeds put into Both Pippey and Mrs. Hudson had a fund with the proceeds of the 300 traced their stocks, and those stocks, shares International Power Company, having survived the liquidation, were and the 200 shares American Can in existence and available. UndoubtCompany, and the $832.16 surplus edly, the claims of Mrs. Miller and realized by the trust company from Mrs. Stone, for illustration, were equal the securities which it sold to repay in equity to the claim of Pippey As, the $200,000 loan. In this fund Pippey however, those similarly situated with is to share with others whose stock Pippy did not appeal, the circuit court was improperly pledged by the brokers of appeals had no grievance before with the trust company and sold by it on the part of those claimants. it. The amount coming to him would

In Pippey's Case, Pippey was be less than his stock. This is prac- claiming his specific Pullman stock by tically applying the principle of gen- virtue of his title, and there was no eral average to the situation. The other claimant before the circuit court pledge is treated as a common adven- of appeals who was similarly situated.' ture, the securities sold as a sacrifice If, however, Mrs. Miller, or Mrs. Stone, for the common benefit, to which all and the others similarly situated, had interests are required to contribute. also appealed, is it to be supposed

We do not think Pippey can be thus that the court would have held that required to contribute. If he had been Pippey could reclaim all of his stock, left undisturbed to prosecute the and others similarly situated must replevin suit, he would have recovered leave the court empty-handed, because the specific piece of property, which of the fortuitous circumstance that he owned, had identified, and was the pledgee, after bankruptcy, had entitled to. By not appealing from the sold the stock of Mrs. Miller and Mrs. original order, and by prosecuting his Stone, for instance, and had not sold claim of his stock in the bankruptcy the stock of Pippey? It is true that court, he did not abandon any of his the opinion of the court uses certain legal rights, nor obligate himself to general language, but that language contribute to the reimbursement of must be construed in respect of the anyone whose stock had been sold. facts before the court. The court was

So much of the order as re- not called upon to adjust equities lates to Pippey's stock is reversed, and between Pippey and others, similarly cause remanded, with instructions to situated, who did not complain.”

The case of Re McIntyre (Fed.) is to be assumed the defaulter insupra, was also distinguished in the tended whatever repayment he made case of Re McIntyre (1910) 104 C. to apply on the entire default, and did C. A. 424, 181 Fed. 960, involving the not intend to prefer the person whose rights of several owners of the same money he first abstracted, by first kind of stock, wherein it was said: making him whole at the expense of “The bankrupts disposed of securities all the others. Bankrupts bought 200 which belonged to several of their shares of a certain stock for a customcustomers, and deposited the proceeds er. They did not keep this stock, but in one of their general bank accounts. used it as they would their own in the Their drawings exhausted their own general transaction of their business. funds therein, and also such proceeds. They did the same with other cusSubsequently deposits were made, and tomers who had bought like stock. at the time of failure there was over When they failed there were 95 shares $11,924.83 balance in the bankrupt's

of this kind of stock among the Bank favor. The proposition presented is

of Commerce collateral, 10 shares this: When trustee has drawn out

were pledged on another loan, and

there were 2 shares in their vault. moneys which belonged to several different persons, and thereafter

They owed their customers 1,651

shares of this variety of stock. We makes a deposit, shall such deposit be

cannot find from the record any satisconsidered as a general restoration,

factory identification of the 95 shares in which all the defrauded cestuis

(or any of them) as being those que trust will share ratably, or is it

bought for this particular customer, to be treated as making good, so far as

rather than those bought for someone it will go, the separate amounts con- else. He is not in the position of verted from each in the order in which

Pippey (see opinion filed to-day in they were abstracted ? We concur Re McIntyre (1910) 104 C. C. A. 419. with the special master and the dis- 181 Fed. 955), and is not entitled to trict judge in the conclusion that it the certificates."

H. C. J.

DENNIS HEALEY et al., Appts.,


Iowa Supreme Court December 11, 1924.

(-Iowa, , 201 N. W. 118.)

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Dams, $ 6 - liability for percolation from milldams.
! 1. One erecting a dam under license from the state is liable for injuries
to land near, but not bordering on, the stream, by percolating water forced
upon it by the pressure due to the raising on the level of the stream by the

[See note on this question beginning on page 1244.]
Trial, § 181 question for jury Trial, 8 325 instruction

general damages caused by defendant's act. admonition.

2. In an action for damages for in- 3. An instruction in an action for jury to real estate by water perco- damages to real property by percolatlating from a reservoir, the jury must ing water, that the jury should decide separate the damages caused by the the case on the evidence and apply percolation and by other causes. the law as given in the instruction,

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