
    SPECIAL TERM,
    NOVEMBER, 1877.
    RITTERBAND, Receiver, etc., v. BAGGETT and others.
    I. Corporations.
    1. COTTON EXCHANGE.
    1. Membership in, constitutes property, which is subject to be applied to the payment of the debts of the member.
    3. Restrictions on assignment of membership, by the by-laws, effect of. (a) Notwithstanding a by-law whereby an assignment can be made only to a member, or a member elect, the membership constitutes property; such by-law merely affects the use of the property.
    3. Compulsory application, how made.
    
    
      (d) The court may appoint a receiver of a member’s property, and then compel an assignment to such person (being a member or member elect) who shall become a purchaser from the receiver, or to a member or member elect, in trust, to.assign to such person (being a member or member elect) who shall become a purchaser from the receiver.
    3. BY-LAWS.
    1. Restrictions by, on sale or assignment of shares or right of membership, effect of.
    
      (a) Roes not destroy the character or incident as property, which such shares or right of membership otherwise had. .
    Before Speir, J., at special term.
    This was an action in equity by a receiver of a judgment debtor, appointed under supplementary proceedings, against the judgment debtor and his assignee in bankruptcy to compel an assignment of a seat held by the judgment debtor in the Cotton Exchange
    Macaulay & Co., on April 16, 1874, recovered a Judgment against the defendant Baggett, for the sum of $2,408.60, and issued execution thereon, which was returned unsatisfied, and supplementary proceedings were instituted resulting in the discovery of the property sought to be reached by these proceedings. The plaintiff, on July 17, 1874, was duly appointed receiver, and all the personal property capable of manual delivery which the defendant Baggett then had, was transferred in title to the receiver excepting such property as is exempt by law from execution.
    The New York Cotton Exchange was organized by an act of the legislature of the State of New York, passed April 8, 1871, for business purposes in the "city of New York. The membership is elective with certain provisions for a right to sell and assign the seat in the board subject to an election of the purchasing member by the board. The initiation fee for membership of the exchange is fixed at $5,000, and for which a certificate of membership is issued. On the surrender of this certificate to the treasurer a transfer may be made by him to a member or member elect only, notice of the intention to transfer having been duly posted in the exchange room for ten days, and no unsettled claims to members of the exchange having been presented against the party transferring. The treasurer is to be paid $100 for each transfer. The legal representatives of any deceased member may transfer such membership. By the charter the exchange is authorized to take and hold by grant, purchase or devise real and personal estate to an amount not exceeding $300,000, for the purpose of the association. The result is that as the number of members is limited and the dues are large, the right to a seat at the board has a money value. When a member fails to perform his contracts or becomes insolvent he can no longer be a member of the board until he resumes payment, including all penalties and charges, but his seat may be sold for his benefit or that of his creditors among the other members of the board. When a sale of the rights of membership is made, the sale is to be made by the superintendent of the exchange to the highest bidder at the exchange room, after ten days’ notice posted on the bulletin in the room. Any member may purchase the rights of membership of any other member which"shall give him the right to sell the same to any other member or members elect.
    About eight or ten months subsequent to the appointment of the plaintiff as receiver, the defendant Baggett, who before had become a member of the exchange, was declared a bankrupt, and the defendant, George H. Fletcher, was appointed his assignee. Thereupon a motion was made to compel the defendant Baggett to make an assignment of his seat to the assignee of the receiver, as the receiver, according to the rules of the cotton exchange, could not take such assignment personally, he being neither a member nor member elect. The demand for an assignment was based upon an offer which he had received from a Mr. Covas. On this motion the defendant Baggett claimed that the seat was not property, and that the assignee should be made a party. An order was duly made and entered by the court, making the assignee in bankruptcy a party, as necessary on the question of compelling such an assignment to be made. Hence, upon leave being granted, this action was commenced to compel Baggett to assign to a person to be designated by the receiver, from whom he may have received or should receive, an offer, according to the rules of the cotton exchange for his seat therein.
    
      Simon Sterne, of counsel, for receiver.
    
      E. R. Olcott, of counsel, for Baggett.
    
      Francis M. Scott, of counsel, for Cotton Exchange.
   Speir, J.

The appointment of plaintiff as receiver of Baggett, made in the supplemental proceedings under the Code, vested in him the legal title to all the personal property of Baggett. By force of the statute, Code, § 298, the receiver of the judgment debtor is subject to the direction and control of the court in which the judgment was obtained, upon which the proceedings are founded. This action was commenced by leave granted by this court, and the receiver’s appointment confers upon him the right to compel a discovery on defendant’s oath of all his property. I am of the opinion that the seat in the cotton exchange was an incorporeal right which Baggett had at the time he became bankrupt, and was, in the fullest sense property, and that the franchise and privileges secured to the exchange by its. charter and the high price of the initiation fee, show that it was valuable property. Nor can I doubt that, had there been no supplemental proceedings under which a receiver was appointed, it would have passed subject to the rules of the cotton exchange to his assignee in bankruptcy, and if there had been left in the hands of the members of the board any balance after paying the debts due to the members, and all penalties and charges, that balance might have been recovered by the assignee. The question whether the seat in the board was property has been fully settled in a late case, almost if not entirely identical with the case at bar (Hyde Woods, 4 Ott. 524). It is there held that a seat in such a board is not a matter of absolute purchase. That there is no reason why the stock board should not make membership subject to the conditions and rules of the board unless it is a violation of some" statute or some principle of public policy. The reason givends sound : ‘ ‘ -that the rule entered into and became an incident of the property when it was created, and remains a part of it into whose hands soever it may come” (see also Nicholls, &c. v. Eaton, 91 U. S. R. 716). The question being settled that the seat in question is property of value, I think it is the duty of the court to enforce its transfer for the plaintiff’s benefit in this action either to a receiver or to a third person qualified to work out the designs of the law. We have seen that' the personal estate of the debtor becomes vested in the receiver from the time and by virtue of his appointment. The entry of the order appointing the receiver, places the title of all the personal property in him. The provisions of the Code relating to supplemental proceedings were enacted for the purpose of making the property of the debtor available assets in his hands to pay his debts. By a by-law of the exchange this property cannot be assigned to any one but members and to members elect. It cannot therefore be assigned to the receiver as he is neither a member nor a member elect. If this property cannot be reached by the receiver by reason of the restriction placed on its transfer by the by-laws of the cotton exchange, then, to this extent, the object and intention of the Code becomes not only a dead letter but lifeless in spirit. These restrictions, however, do not form an insurmountable obstacle. Bights of property from time immemorial could be reached by a creditor’s bill, and it is now well settled that the same result may be accomplished by proceedings under the Code which furnish a substitute for that proceeding in chancery. Personal property passes to the receiver without assignment; but if an assignment be necessary to effect the purpose of the law, I do not question the power of the court to direct it to be done. It is not an indispensable requisite that such assignment should be made direct to the receiver. It may be made to such purchaser from him who is either a member or member elect of the exchange, or to a member or member elect to hold in trust to assign under the previous direction to said purchaser from him, or shall be either a member or member elect. I therefore direct an assignment to be made to Mr. Covas or some other competent and fit member of the cotton exchange-with apt and proper directions.  