Sexton v. Kessler & Co., Ltd., 225 U.S. 90 (1912)

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

The conduct of businessmen, acting without lawyers and in good faith, attempting to create a personal security for an actual debt should be fairly construed as actually effecting what the parties meant, and so held in this case that an escrow of securities made by a banking firm in New York to secure its drafts upon a foreign bank amounted to a lien on the securities to be preferred to the claim of the trustee in bankruptcy, notwithstanding that the New York firm retained physical power over the securities, as agent for the foreign house, and had the right to substitute other securities for those withdrawn and sold.

Under the decisions of this Court and the courts of New York, a customer has such an interest in securities carried for him by a broker that a delivery to him after the insolvency of the broker is not necessarily a preference under the bankruptcy law. Richardson v. Shaw, 209 U.S. 365.

172 F. 535 affirmed

The facts, which involve the question of whether, under the Bankruptcy Act of 1898, certain transfers of securities b the bankrupt constituted a fraudulent preference, are stated in the opinion.