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New York Stock Exchange v. Sloan

New York Stock Exchange v. Sloan

United States District Court for the Southern District of New York

August 15, 1980

No. 71 Civ. 2912 (VLB)

Opinion

MEMORANDUM

VINCENT L. BRODERICK, U.S.D.J.

This memorandum contains my disposition of various post-trial motions herein.

Clinton motions.

A. Subrogation.

The evidence at trial established that the Trust Fund was established as a vehicle through which customers of New York Stock Exchange member firms could be reimbursed for losses caused by the financial difficulties of the member firms. Orvis Brothers' customers were reimbursed,  [*2]  and plaintiffs' claims against the Clintons were predicated on subrogation of the Trust Fund to the rights of those customers. The Clintons contend that because payments by the Trust Fund were "voluntarily" made the plaintiffs are not entitled to subrogation and their claims must fail as a matter of law.

The evidence offered at trial supports the proposition that the Trust Fund acted "voluntarily" in reimbursing Orvis customers for their losses, in the sense that the Trust Fund was not considered, nor did it consider itself, to be under legal obligation to reimburse the Orvis customers.

] While it is a principle of law that a mere "volunteer" is not entitled to subrogation, Perlmutter v. Timely Toys, Inc., 8 App.Div.2d 834, 190 N.Y.S.2d 107 (2d Dep't 1959), the inquiry does not end there. The term "volunteer," in the context of subrogation, does not include one who acts to protect his own interests, whether or not he acts under a legal obligation. 73 Am. Jur.2d § 25. Subrogation "is no longer narrow and technical in its scope, but has been broadened and extended to cover particular facts and circumstances, where it is equitable that a person furnishing money to pay a debt [*3]  should be substituted for the creditors or in place of the creditor," 1 Sherman v. Yankee Prods. Corp., 201 App.Div. 647, 194 N.Y.S. 705, 706 (2d Dep't 1922).

Among the protected interests which have been held to give rise to a right of subrogation are: an interest in avoiding litigation and settling a fairly disputed obligation, e.g. American Commercial Lines Inc. v. Valley Line Co., 529 F.2d 921 (8th Cir. 1976); the interest of a mortgagee in the mortgaged property (see 73 Am. Jur.2d Subrogation § 100); the interest of a creditor in maintaining the solvency of a debtor, e.g. First National City Bank v. United States, 548 F.2d 928 (Ct. Cl. 1977); and the interest of the winning party to an arbitration award in obtaining the report of a referee, Sherman v. Yankee Prods. Corp., supra. 

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1980 U.S. Dist. LEXIS 13316 *; Fed. Sec. L. Rep. (CCH) P97,618

NEW YORK STOCK EXCHANGE, INC., et al., Plaintiffs, against FERGUS M. SLOAN, JR., et al., Defendants.

CORE TERMS

investor, customers, subordinated, limited partner, subrogation, lender, reimbursed, limited partnership, pendent jurisdiction, partnership, plaintiffs', predicated, damages, general partner, right of action, federal claim, state claims, circumstances, Stock

Contracts Law, Defenses, Volunteers, Insurance Law, Claim, Contract & Practice Issues, Subrogation, Voluntary Payments, General Overview, Estate, Gift & Trust Law, Trusts, Securities Law, Self-Regulating Entities, National Securities Exchanges, New York Stock Exchange, Regulators, Civil Procedure, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Responses, Waiver & Preservation of Defenses, Pleading & Practice, Motion Practice, Time Limitations, Dismissal, Involuntary Dismissals, Failure to State Claims, Securities Act Actions, Civil Liability, Subject Matter Jurisdiction, Supplemental Jurisdiction, Jurisdiction, Jurisdictional Sources, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Pendent Claims, Trials, Judgment as Matter of Law, Standards of Review, Substantial Evidence, Sufficiency of Evidence, Business & Corporate Law, Agency Relationships, Authority to Act, Torts, Multiple Defendants, Contribution, Business & Corporate Compliance, Contracts Law, Types of Contracts, Covenants, Procedural Matters, Settlements, Releases From Liability, Covenants Not to Sue, Exculpatory Clauses, Multiple Party Settlements, Partial Settlements, Wrongful Death & Survival Actions, Limited Partnerships, Types of Securities, Investment Contracts, Joint Ventures & Partnerships, Business & Corporate Law, Formation, Management Duties & Liabilities, Causes of Action, General Partnerships, Formation, Management Duties & Liabilities, Elements of Proof, Duty to Disclose, Deceptive & Manipulative Devices, Secondary Liability, Controlling Persons