Barnes v. Schatzkin — 242 N.Y. 555

Majority

p. 555

Earl B. Barnes, as Trustee in Bankruptcy of Thomas H. Cowley et al., Individually and as Copartners under the Firm Name of Thos. H. Cowley & Co., Appellant, v. William Schatzkin et al., Individually and as Copartners under the Firm Name of Schatzkin, Bernstein & Co., Respondents, Impleaded with Others. Earl B. Barnes, as Trustee in Bankruptcy of Thomas H. Cowley et al., Individually and as Copartners under the Firm Name of Thos. H. Cowley & Co., Appellant, v. Lawrence J. Hirsch et al., Individually and as Copartners under the Firm Name of Morris & Smith, Respondents, Impleaded with Others.

Headnote

Bankruptcy — trustee in bankruptcy may not sue upon a claim, which had not existed in favor of the bankrupt and had not arisen in his favor but had been merely assigned to the trustee after bankruptcy.

Barnes v. Hirsch, 215 App. Div. 10 , affirmed.

(Argued February 24, 1926;

decided March 30, 1926.)

Appeal, in each of the above-entitled actions, from a judgment entered December 11, 1925, upon an order of the Appellate Division of the Supreme Court in the first judicial department, which reversed an order of Special Term denying a motion by defendants, respondents, for judgment dismissing the amended complaint and granted said motion. The complaints alleged that Cowley & Co. conducted a bucket shop; that by false and fraudulent representations they induced their customers to deal with them as legitimate stockbrokers and to buy securities on margin and deposit cash and collateral with them; that promptly after buying securities for their customers they sold them for their own account; that they converted to their own use cash and collateral of their customers;

p. 556

that the defendants, members of the New York Stock Exchange, executed orders for Cowley & Co., knowing them to be conducting a bucket shop, and aided and abetted in the fraud and the conversion; that Cowley & Co. became bankrupt and their customers lost the equities in their several accounts; that these customers have assigned their several claims against the defendants to the plaintiff as trustee in bankruptcy of Cowley & Co. The Appellate Division held that the plaintiff was without legal capacity to sue and that the complaints did not state causes of action.

Charles H. Tuttle and Saul S. Myers for appellant.

Harold Nathan and I. Howard Lehman for William Schatzkin et al., respondents.

Lester B. Bachner for Lawrence J. Hirsch et al., respondents.

Judgment, in each case, affirmed, with costs; no opinion.

Concur: His cock, Ch. J., Pound, McLaughlin, Crane, Andrews and Lehman, JJ. Absent: Cardozo, J.