Board of Trade of Chicago v. Johnson, 264 U.S. 1 (1924)
U.S. Supreme CourtBoard of Trade v. Johnson, 264 U.S. 1 (1924)
Board of Trade of City of Chicago v. Johnson
Argued November 2, 1923
Decided February 18, 1924
264 U.S. 1
1. Decisions of state courts defining property rights do not bind the federal courts in bankruptcy when contrary to the policy and proper construction of the Bankruptcy Act. P. 264 U. S. 10.
2. A membership in the Chicago Board of Trade, which, under the rules of the association, the owner may sell to any person eligible to membership approved by the Board of directors, subject to the right of his co-members to prevent the sale or transfer until he satisfies his debts to them, is incorporeal property, the possession and control of which, for the purpose of disposition in accordance with the rules, pass to the member's trustee in bankruptcy under § 70a(5) of the Bankruptcy Act. Pp. 264 U. S. 8, 264 U. S. 12.
3. The right of the trustee in bankruptcy to have the membership sold, as against the Board and members claiming the right to present transfer until debts owed them by the bankrupt are paid, may be determined by the district court in a summary proceeding. P. 264 U. S. 11.
4. Where the rules provided that a membership in an exchange might be transferred with the approval of the directors if there were no unsettled claims upon the owner and if the membership was not in any way impaired or forfeited, and directed that, prior
to transfer, the application therefor should be posted 10 days, when, in the absence of objection, "it shall be assumed the member has no outstanding claims against him," held that failure of creditor members to object to a purposed transfer during the 10 days, or withdrawal of objections made, did not estop them from objecting soon after the owner of the membership went into bankruptcy, the directors not having approved the transfer meanwhile. P. 264 U. S. 14.
5. Members of an exchange having claims under contract made with a co-member acting as agent of a corporation held entitled under the rules of the exchange to object to a transfer of the membership by the owner's trustee in bankruptcy until their claims against the corporation were satisfied. P. 264 U. S. 15.
6. The right of a member of an exchange under its rules to prevent by objection a transfer of the seat of another member until satisfaction of a debt owed the one by the other held in the nature of a lien upon the membership at its creation assertable after the membership passed to the debtor's trustee in bankruptcy. P. 264 U. S. 15.
283 F. 374 reversed.
Certiorari to a decree of the circuit court of appeals which affirmed, upon petition to review, a decree of the district court in bankruptcy, adjudging that a seat of a member in the Chicago Board of Trade was property passing to his trustee in bankruptcy free of all claims of other members, and ordering that it be held for transfer and sale for the benefit of the general creditors.