APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT.
MR. JUSTICE DAY delivered the opinion of the court.
This is a controversy arising in a bankruptcy proceeding and involves questions of the right to certain property, as between the appellant, the Continental & Commercial Trust & Savings Bank, and the Chicago Title & Trust Company, as trustee in bankruptcy of Earl H. Prince, Bankrupt. Two items are involved, first, the sum of $4,250, the amount of certain margin certificates issued by the predecessor of the appellant Bank to the bankrupt Prince; and second, a balance of $575.79 remaining in Prince's checking account with the bank of the predecessor of the appellant, therein deposited by the bankrupt. The trustee brought the suit to recover the amount of the margin certificates and the bank balance as having been preferentially transferred within the terms of the Bankruptcy Act. The District Court held the trustee entitled to recover, and this decree was affirmed by the Circuit Court of Appeals, 199 Fed. Rep. 704, and the case comes here.
There is no controversy as to the facts. A petition in bankruptcy was filed against Prince, February 15, 1905. He had been for several years a member of the Board of Trade of Chicago, buying and selling on the Board and subject to its rules. The Federal Trust & Savings Bank, the predecessor of the appellant, was engaged in the general
banking business in the City of Chicago, and Prince did his banking business at that bank, and had a general deposit and checking account therein. By the rules of the Board of Trade purchasers and sellers might require of the other party to the trade a deposit of ten per cent. of the contract price of the property bought or sold, and further security from time to time as the margin might require. Certain banks, of which the Federal Trust & Savings Bank was one, were authorized to issue margin certificates, which were in the following form:
"Federal Trust and Savings Bank
"Deposited by E. H. Prince,
As security on a contract or contracts between the depositor and , which amount is payable on the return of this certificate, or the duplicate of the same (one of which being paid, the other shall become void), duly endorsed by both of the above named parties, or on the order of the President of the Board of Trade of the City of Chicago, endorsed on either of the original or duplicate hereof, as provided by the rules of the Board of Trade under which the above named deposit has been made.
Not negotiable or transferable
Margin certificates on various days from September 15, 1904, to February 9, 1905, in the form above set forth had been issued to Prince, to procure which he had drawn his check against his checking account with the Bank or deposited with it the requisite sum of money. Each of the said certificates evidenced a liability of the Bank to Prince for the amount ...