
    BAUM v. N. Y. COTTON EXCHANGE.*
    
      N. Y. Supreme Court, Chambers;
    May, 1888.
    
      Injunction restraining interference with seat in Exchange.] An injunction to restrain an Exchange from interfering with a member’s-seat and privileges will not be granted where such member has-been suspended for cause. His remedy is to apply for re-instatement, in conformity with the by-laws of the Exchange, f
    Application for an injunction to restrain defendant from interfering with the plaintiff in the exercise of his rights- and privileges as a member of the New York Cotton-Exchange.
    It appears that in November last, owing to a sharp rise in the market, plaintiff was unable to respond to calls for margins, made upon him, and he therefore caused notice of his failure to be posted. On the liquidation of his affairs-by the Exchange it was found that he owed to other members, on his “short” contracts, $17,765, while there was due-to him from' other members on his “long” contracts,. $16,970, and as an additional asset he had the value of his-membership seat in the Exchange, worth $1,500,, so that taking his exchange business alone, his assets exceeded his-liabilities by $750, and he could if he had chosen, have paid in full all his outstanding debts arising from strictly exchange business. He did not do this, however, but at the-same time he had this notice of failure posted he made a general assignment for the benefit of creditors, preferring a-brother for $20,000 (more than the whole amount due him from members), and showing other large indebtedness, his whole indebtedness being made to appear as $07,045.95. His assets, outside the amount due him from members of the Exchange and the value of his Exchange membership, were insignificant; amounting to not more than $3,300. His Exchange creditors not being in a position to question his strict legal right to make an assignment, nor to dispute the validity of the preference in favor of his brother, found themselves confronted with the probability of receiving nothing on their claims, and therefore accepted the proposition to sell their claims to the plaintiff’s wife for forty per cent, of their face value, which they accordingly did. Baum thereupon applied to the supervisory committee for re-instatement, and that committee, after examining into the manner of his settlement, reported to the board of managers against the granting of the application.
    
      .* See preceding case.
    t As to the nature of the right of the members of an Exchange, seeBelton r. Hatch (N. Y. Ct. of App. 1888), JY. Y. Daily Reg. July 80,. 1888, probably to appear in 109 JY. Y.
    
    
      Plaintiff, on the ground of having made an honorable settlement with his creditors, which entitled him to re-in-statement, now applies for injunction to restrain the defendant from interfering with him in the exercise of each and all the rights and privileges and immunities of a member of the Exchange.
    
      Meville H. Regensburger, attorney for plaintiff.
    
      Francis. M. Scott, attorney for defendant.
   Barrett, J.

This application is without merit, upon either the law or the facts. The plaintiff, under section seventeen of the defendant’s by-laws, forfeited all the ■rights and privileges of membership when his failure was posted by his own act. Having ceased to be a member, he certainly has no right to a mandatory injunction in substance ■compelling the defendant to treat him as a member in good standing. His remedy was to apply for membership generally under section two of the by-laws, or specially under section eigliteen. He resorted to the latter remedy and was defeated, in limine, by an adverse report of the supervisory committee. He would have us, in substance, reverse this report and command the board of managers to re-instate him. This claim is without force. The committee and the board had a right to judge for themselves, whether the plaintiff had made an honorable settlement with his creditors, and there is nothing whatever in their reasoning or action to justify the idea that they have acted capriciously or in bad faith. On the contrary, the plaintiff’s course was peculiar and suspicious, and I do not at all wonder that the Exchange is unwilling to restore him as matters stand. However that may be, the plaintiff has no right save under the defendant’s constitution and by-laws, and he cannot ask the substitution of the court’s judgment in the premises for that of the supervisory committee and the board of managers. That the action of the committee and board is not a matter of form, but of judgment, is plainly evidenced by the provision requiring a two-thirds vote for re-instatement. If some of those who are -to decide upon re-instatement happen to be plaintiff’s creditors, that does not affect the question now before us. The plaintiff became a member subject to these by-laws. He is bound by them, and he must, in some way, secure a two-thirds vote in his favor by the board of managers before he can again become a member. Either that, or he must apply afresh under section 2. In no aspect of the case has he any right to the injunction claimed, and his application must be denied with costs. 
      
       Section 17. When the failure of any member of the exchange has been posted, either by his own act, or by direction of the supervisory committee, the said member shall forfeit all the rights and privileges of membership, except the right to arbitration on claims arising from business transactions with members entered into • before notice of his failure had been posted, and within ten. days thereafter send to the supervisory committee a statement of his affairs.
      It shall then be the duty of said committee to examine such statement and they may in their discretion procure the assistance of an ■expert accountant, and charge the expense attending his services to the ■estate of said member. If any member who has been so posted shall -omit to send to the supervisory committee within said ten days these statements required by this section, or if said committee on an examination shall be of opinion that the said member has conducted his business in a reckless and unbusiness-like manner, they shall so report to the board of managers, who may, by a two-thirds vote, declare such failed member disqualified for re-instatement.
     
      
       Section 2 of the by-laws relates to the general method of election ■of members.
     
      
       Section 18. Any member of the exchange, who finding himself unable to meet his liabilities and obligations at maturity, shall cause notice thereof to be given to the members of the exchange as provided in this article (section 101, and shall have made honorable settlement with his creditors, or shall have offered to pay them pro rata to the full extent of his ability, including the market value of his seat or right of membership, may within one year from the date of his failure apply for re-instatement through the supervisory committee, who ■shall, within one week from the receipt thereof, report to the board of managers such application, together with the opinion of said committee thereon, and the board of managers may at any meeting subsequent to that at which said report is received, by a vote of two-thirds of the members of the board, re-instate such member in all his rights and privileges of membership, upon his paying the initiation fee, or obtaining a transfer to himself of a certificate of membership, as provided in article 3, title 1, of this chapter. But this section shall not be construed to authorize a re-instatement of any member of whose failure a notice shall have been posted by order of the supervisory committee.
     