U.S. Supreme Court
Duel v. Hollins, 241 U.S. 523 (1916)
Duel v. Hollins
No. 352, 353
Argued May 4, 5, 1916
Decided June 5, 1916
241 U.S. 523
A bankrupt firm of brokers having, prior to bankruptcy, carried on marginal transactions for several different customers in shares of stock of the same corporation amounting in the aggregate to more than the number of shares of that stock in their possession at the time of the bankruptcy, and none of such shares being identified as the particular shares carried for any of the respective customers, but all of whom demanded their full quota of shares and offered to pay the amount due thereon, held that:
Brokers and their customers stand in the relation of pledgee and pledgor.
In dealings between brokers and customers, stock certificates issued by the same corporation lack individuality; they are, like receipts for coin, to be treated as indistinguishable tokens of actual values.
As between themselves, after paying the amount due the broker on a marginal transaction, the customer has a right to demand from the broker delivery of stock purchased for his account, and such a delivery may be made during insolvency without creating a preference.
The fact that the bankrupt broker in this case did not have sufficient shares of stock of a corporation on hand at the time of his chanroblesvirtualawlibrary
bankruptcy to satisfy the demands of all of his customers entitled to shares of that particular stock held not to prevent such customers from obtaining any of such shares, and require that all of such shares go into the general estate, but held that all of such customers were entitled to such shares, and, on demanding the same and paying the amounts respectively due thereon, should participate pro rata in a division of the shares actually on hand.
The facts, which involve the relative rights of the trustee in bankruptcy of a firm of brokers and various customers entitled to shares of stocks carried on margin by such brokers, are stated in the opinion.