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KATIONAL REPOKTER SYSTEM-UNITED STATES SERIES 



FEDERALREPORTER 

WITH KEY-NUMBER ANNOTATIONS 



VOLUME 262 



PERMANENT EDITION. 



CASES ARGUED AND DETERMINE© 
m TUE 

CIRCUIT COURTS OF APPEALS AND DISTRICT COURTS 

OF THE UNITED STATES AND THE COURT 

OF APPEALS OF THE DISTRICT 

OF COLUIMBIA 



MARCH — APRIL, 1920 



ST. PAUL 
WEST PUBLISHING CO. 

1920 



Copyright, 1920 

BY 

WEST PUBLISHIN6 COMPANÎ 
(262 FED.) 



FEDERAL REPORTER, VOLUME 262 



JUDGES 



OF THE UNITED STATES CIRCUIT COURTS OF APPEALS AND DISTRICT COURTS 
AND COURT OF APPEALS OF THE DISTRICT OF COLUMBIA 



FIRST CIRCUIT 

Hon. OLIVER WBNDELL HOLMES, Circuit Justice Washington, D. C. 

Hon. GEORGE H. BINGHAM, Circuit Judge : Mancliester, N. H. 

Hoa. CHARLES F. JOHNSON, Circuit Judge >„ Portland, Mo 

Hon. GEORGE W. ANDERSON, Circuit Judge Boston, Mass 

Hon. CLARENCB HALE, District Judge, Maine Portland, Me. 

Hon. JAMES M. MORTON, Jr., District Judge, Massa,ohusetts Boston, Masa 

Hon. EDGAR ALDRICH, District Judge, New Hampshire Littletou, N. H. 

Hon. ARTHUR L. BROWN, District Judge. Rhode Islaud Providence, R. I. 

SECOND CIRCUIT 

Hon. LOUIS D. ERANDEIS, Circuit Justice WaRbington, D. C 

Hon. HENRY G. WARD, Circuit Judge New Yorl{, N. Y. 

Hon. HENRY WADB ROGEUS, Circuit Judge New Haven, Conn. 

Hon. CHARLES M. HOUGH, Circuit Judge New York, N. Y. 

Hou. MARTIN T. MANTON, Circuit Judge New Yorls, N. Y. 

Hon. EDWIN S. THOMAS, District Judge, Concecticut New Haven, Conn. 

Hon. THOMAS I. CHATFIBLU, District Judge. E. l). N'ew Yorlj Brooklyn, N. Y. 

Hon. EDWIN L. GARVIN, District Judge, B. D. New York Brooklyn, N. Y. 

Hon. GEORGE W. RAY, District Judge, N. D. New York Norwicli, N. Y. 

Hon. LEARNED HAND, District Judge, S. D. New York New York, N. Y. 

Hon. JULIUS M. MAYER, District Judge. S. D. New York New York, N. Y. 

Hon. AUGUSTUS N, HAND, District .lurti;e, R. D. Nr-w York New York, N, Y. 

Hon. JOHN CLARK KNOX, District Judge, S. D. New York New York, N. Y. 

Hon. JOHN R. HAZEL, District Judge, W. D. New York Bultalo, N. Y. 

Hon. HARLAND B. HOWB, District Judge, Vermout Burlington, Vt 

THIRD CIRCUIT 

Hon. MAHLON PITNEY, Circuit Justice Washington, D. 0. 

Hon. JOSEPH BUFFINGTON, Circuit Judge Pittsburgli, Pa. 

Hon. VICTOR B. WOOLLEY, Circuit Judge Wilmington, Del. 

Hon. THOMAS G. HAIGHT, Circuit Judge Jersey City, N. J. 

Hon. HUGH M. MORRIS, District Judge, Delaware Wilmington, Del. 

Hon. JOHN RELLSTAB, District Judge, New Jersey Trenton, N. J. 

Hon. CHARLES F. LYNCH, District Judge, New Jersey Newark, N. J. 

Hon. J. WARREN DAVIS, District Judge, New Jersey Trenton, N. J. 

Hon. J. WHITAKBR THOMPSON, District Judge, B. D. Pennsylvanla...Plilladelphla, Pa. 

Hon. OLIVER B. DICKINSON, District Judge, B. D. Peunsylvanla Pbiladelpliia, Pa. 

Hon. CHARLES B. WITMER, District Judge, M. D. Peuusylvauia Sunbury, Pa. 

Hon. CHARLES P. ORR, District Judge, W. D. Pennsylvanla Plttsburgh, Pa. 

Hon. W. H. SB WARD THOMSON, District Judge, W. D. Pennsylvanla Pittsburgh, Pa. 

(T) 



Vi 262 FEDERAL KEPOETEB 



FOURTH CIRCUIT 

Hon. EDWARD D. WHITB, Circuit Justice Washington, D. O. 

Hon. JETER C. PRITCHARD, Circuit Judge Ashevllle, N. G. 

Hon. MARTIN A. KNAPP, Circuit Judge Wasliington, D. C. 

Hon. CHARLES A. WOODS, Circuit Judge Marion, S. C. 

Hon. JOHN C. ROSE, District Judge, Maryland Baltimore, Md. 

Hon. HENRY G. CONNOR, District Judge, B. D. Nortii Carollna Wiison, N. C. 

Hon. JAMES E. BOYD, District Judge, W. D. North Carolina GreeaKboro, N. C. 

Hon. EDWI.NT Y. WEBB, District Judge, W. D. Nortli Carolina Charlotte, N. C. 

Hon. HENRY A. MIDDLETON SiVtITH, District Judge, E. D. S. C Charleston, S. C. 

Hon. HENRY H. WATKINS, District Judge, W. D. S. c Anderson, S. G. 

Hon. EDMUiMD WADDILL, Jr., District Judge, E. D. Virginia Rlchraond, Va. 

Hon. HENRY CLAY McDOWBLL, District Judge, W. D. Virginia Lynchburg, Va. 

Hon. ALSTON G. DAYTON. District Judge, N. D. West Virginia Philippi, W. Va. 

Hon. BENJAMIN F. KBLLEB, District Judge, S. D. West Virginia.... Ciiarleston, W. Va. 

FIFTH CIRCUIT 

Hon. JAMES CLARK McREYNOLDS, Circuit Justice Washington, D. C. 

Hon. RICHARD W. WALKER, Circuit Judge Huntsville, Ala. 

Hon. NATHAN p. BRYAN. Circuit Judge' Jacljsonvilie, Fia. 

Hon. HENRY D. CLAYTON, District Judge, N. and M. D. Alabama Moatgomery, Ala. 

Hon. WILLIAM I. GRUBB, District Jude,e, N. D. Alabama Birmingham, Ala. 

Hon. ROBERT T. ERVIN, District Jurlge, S. D. Aloh:ntia Mobile, Ala. 

Hon. WILLIAM B, SIIEPPARD, District Judge, N. D. Florlda Pensacola, Fia. 

Hon. RHYDON M. CALL, District Judge, S, D. FlorMa Jacksonvllle, Fia. 

Hon. WILLIAM T. NEWMAN, District JudKc, N. D. (i'-'oigia^ Atlanta, Ga. 

Hon. SAMUEL H. SIDLEY, District- Judge. N. D. Ocir-ia Atlanta, Ga. 

Hon. BEVERLY D. EVANS. Dir.tri:>t .l;idgc, S. D. Gr i (; :; Savannah, Ga. 

Hon. EUFUS E. FOSTEIt Dlstrici Judge, R. D. Li.i'r :.:ta New Orléans, La. 

Hon. GEORGE W. JAC1\, i.lslut Judac, W. D. Lmi.;.; ii . Slireveport, La. 

Hon. EDWIN R, HOLili'.S, uhiih t Jud.cie, N. and S. D. ill- K^sijjpi Jackson, Miss. 

Mou. w. LEE ESTiîS. Dislriel .laJge, B. D. Texas- Texarkaiia, Te.x. 

Hon. EDWARD R. MEEIC, Hlstrict Judge. N. D. Toxiis Dallas, Tex. 

lion. JAMEd CLIETON WlLaON, District Judge, N. D. Texas Pt. Worth, Tex. 

lion, DUV.'ilj Vv'EST, DiKtrirt .ludgo, W. D. Texas San Antonio, Tex. 

lion. JOSEPH C. Hb'TCiliSSON, Jr., District Judge, S. D. Texas Houston, Tex. 

Hon. WILLIAM R. SMITH, District Judge, W. D. Texas El Paso, Tex. 

SIXTH CIRCUIT 

Hon. WILLIAM R. DAY, Circuit Justice Washington, D. C. 

Hon. LOYAL E. KNAPl'EN, Circuit Judge Grand Rapids, Mlch. 

Hon. ARTHUR C. DBNISON, Circuit Judge Grand Rapida, Mlch. 

Hon. MAURICE H. DONAIIUE. Circuit J^iuge Columbus. Ohio. 

Hon. ANDREW M. J. COCHRAN, District Judge, B. D. Kentucky Maysville, Ky. 

Hon. WAI.TBR EVANS, District Judge, W. D. Kentucky Louisvllle, Ky. 

Hon. ARTHUR J. TUTTI,E, District Judge, E. D, Michigan Détroit, Mlch. 

Hon, CLARENCE W. SESSIONS, District Judge, W. D. Michigan Grand Rapids, Mlch. 

Hon. JOHN M. KILLITS, District Judge, N. D. Ohio Tuledo, Ohlo. 

lion. D. C. WESTBNHAVBR, Dtstriet Judge, N. D. Ohio Cleveiand, Ohio. 

Hon, JOHN E, SATER, District Judge, S. D. Ohlo Columbus, Ohlo. 

Hon. JOHN W. PECK, District Judge, S. D. Ohio Cincinnati, Ohio. 

Hon. EDWARD T. SANFORD, District Judge, B. and M. D. Tennessee.. Knoxvllle, Tenn. 
Hon. JOHN B. MoCALL, District Judge, W. D. Tennessee Memphis, Tenu. 

SEVENTH CIRCUIT 

Hon. JOHN H. CLARKB, Circuit Justice Washington, D. a^ 

Hon. FRANCIS E. BAKER, Circuit Judge Goshen, Ind. 

Hon. JULIAN W. MACK, Circuit Judge Chicago, III. 

Hon. SAMUEL ALSCHULBR, Circuit Judgo Chicago, IlL 

« Appointée! April 23, 1920. » Died March 14, 1920. » Appointed February 18, 1920, 



JUDGES OF THE COXIRTS VU 

(262 F.) 

Hon. BVAN A. EVANS, Circuit Judge Baraboo, Wis. 

Hon. GEORGE T. PAGE, Circuit Judge Peoria, 111. 

Hou. KENESAW M. LAiVDlS. District Judge, N. D. Illinois Chicago, lU. 

Hon. GEORGE A. CAIIPENTER, District JudL;e, N. D. Hiioois Chicago, 111. 

Hou. LiOUIS FITZHE.NRY, District Judge, S. D. Illinois Peoria, 111. 

Hon. GEORGE W. ENGEISH, DiUrict Judge, E. D. Illinois Danville, 111. 

Hon. ALBERT B. ANDERSON, District judge, indiana Iridiariapolls, Ind. 

Hon. FERDINAND A. GEIGER, Dislrict Judge, E. D. Wisconsin Miiwaukee, Wis. 

lion. ARTHUR L. SAN130RN, District Judge, W. D. Wisconsin Madison, Wis. 

EIGHTH CIRCUIT 

Hon. WILLIS VAN DEVANTER, Circuit Justice Washington, D. C. 

Hon. WALTBR H. SANIiORN, Circuit Judge St. Paul. Mlnn. 

Hon. WILLIAM C. liOOK, Circuit Judge Leavenworth, Kan. 

Hon. WALTER I. SMITH, Circuit Judge Council Bluffs, lowa. 

Hon. JOHN E. CARLAND, Circuit Judge Washington, D. C. 

Hon. KIHUROUGH STONE, Circuit Judge Kansas City, Mo. 

Hon. JACOB TRIEBER, District Judge, E. D. Arkansas Little Rock, Ark. 

Hon. FRANK A. YOUMANS, District Judge, W. D. Arlîa;is;;s Ft. Smith, Ark. 

Hon. ROBERT B. LEWIS, Dislrict Judge, Colorado Deuver, Colo. 

Hon. HENRY T. REED. District Judge, N. D. lowa Cresco. lowa. 

Hon. MARTIN J. WADB, District Judge, S. D. lowa Davenport, lowa. 

Hon. JOHN C. POLLOCK, District Judge, Kausas Kansas City, Kan. 

Hon. PAGE MORRIS, District Judge, Minnesota Duluth, Mlnn. 

Hon. WILUliR F. BOOTH, District Judge, Miunesota Miuneapolis, Mlnn. 

Hon. CH.IKLES B. FARIS, JJistriot Judge, E. D. Missouri St. Louis, Mo. 

Hon. ARBA S. VAN VALKENBURGH, District Judge, W. D. Missouri. ..Kansas City, Mo. 

Hon. THOMAS C. MUNGER, District Judge, Nebraska Lincoln, Neb. 

Hon. JOSEPH W. WOOUltOUGH, District Judge, Nebraska Omaha, Neb. 

Hon. COLIN NEBLETT, District Judge, New Mexico Santa Fé, N. M. 

Hon. CHARLES P. AMIDO.N, District Judge, North Dakota Fargo, N. D. 

Hon. HUIJERT L. WILLIAMS, District Judge, H. D. Oklahoma Muskogee, 0kl. 

Hon. JOHN H. COTTERAL, District Judge, W. D. Oklahoma Guthrie, 0kl. 

Hon. JAMES D. ELUOTT, District Judge, South Dakota Sioux Falls, S. D. 

Hon. ÏILLMAN D. JOHNSON, District Judge, Utah Sait Lake City, Utab. 

Hon. JOHN A. RINER, District Judge, Wyoming Clieyenne, Wyo. 

NINTH CIRCUIT 

Hon. JOSEPH McKENNA, Circuit Justice Washington, D. C. 

Hon. WILLIAM B. GILBERT, Circuit Judge Portland, Or. 

Hon. ERSKINE M. ROaS, Circuit Judge Los Angeles, Cal. 

Hon. WILLIAM W. MORROW, Circuit Judge San Francisco, Cal. 

Hon. WILLIAM H. HUNÏ, Circuit Judge San Francisco, Cal. 

Hon. WILLIAM H. SAWTELLE, District Judge, Arizona Tucson, Ariz. 

Hon. BENJAMI.M F. BLEDSOB, District Judge, S. D. California Los Angeles, Cal. 

Hon. OSCAR A. TRIPPET, District Judge, S. D. California Los Angeles, Cal. 

Hon. WILLIAM C. VAN FLEBT, District Judge, N. D. Califernia San Francisco, Cal. 

Hon. MAURICE T. DOOLING, District Judge, N. D. Caliloruia San Francisco, Cal. 

Hon. FRANK S. DIETRICH, District Judge, Idaho Boise, Idaho. 

Hon. GEORGE M. BOURQUIN, District Judge, Montana Butte, Mont. 

Hon. EDWARD S. FARRINGTON, District Judge, Nevada Carsou City, Nev. 

Hon. CHARLES B, WOLVERTON, District Judge, Oregon Portland, Or. 

Hon. ROBERT S. BBAN, District Judge, Oregon Portland, Or. 

Hon. FRANK H. RUDKIN, District Judge, E. D. Washington Spokaue, Wash. 

Hon. EDWARD B. CUSHMAN, District Judge, W. D. Washington Tacoma, Wash. 

Hon. JERBMIAH NETBRBR, District Judge, W. D. Wa.shington Seattle, Wash. 

COURT OF APPEAI.S OF DISTRICT OF COL,UMBIA 

Hon. CONSTANTINE J. SMYTH, Chief Justice Washington, D. C. 

Hon. CHARLES H. ROBB, Assoclate Justice Washington, d! C. 

Hon. JOSIAH A. VAN ORSDBL, Assoclate Justice Washington, D. C. 

* 



CASES REPORTED 



Page 
Acme Motion Pîcture Projector Co., De Vry 

Corporation v. (C. C. A.) 970 

Adams Exp. Co. v. Lansburgh & Bro. 

(App. D. C.) 232 

A. Kimball Co. v. Noesting Pin Ticket Co. 

(C. C. A.) 148 

A. L. Jordan Lumber Co., Northern Idaho 

& Montana Power Co. v. (C. C. A.) 765 

AUey V. Bessemer Gas Eîngine Co. (C. 

O. A.) , . . . . 94 

Ail Package Grocery Stores Co., Sweet v. 

(C. C. AO 727 

American fionding Co., Miller v. (0. C. A.) 103 
American Car & Foundry Co., Edward 

Hines Lumber Co. v. (C. C. A.) 757 

American Mercantile Corporation v. Spiel- 

berg (C. C. A.) 492 

American Métal Ce, Compania Minera y 

Compradora de Metales Mexicano, S. A., 

V. (D. C.) 183 

American Mills Co., American Surety Co. 

of New York v 691 

American Ry. Exp. Co. v. State of Mary- 

land (C. C. A.) . .* 1016 

American Suretv Co. of New York v. 

American Mills Co. (D. C.) 691 

Ammerman v. United States (0. C. A.).. 124 
Ammon & Person v. Narragansett Dairy 

Co. (C. C. A.) 8S0 

Anderson. Keyes v. (C. 0. A.) 748 

Andersen, New York Life Ins. Co. v. (D. C.) 215 

Anzolotti V. McAdoo (D. C.) 568 

Apple, United States v. (D. C.) 200 

Aragon, The (D. C.) 212 

A. Schrader's Son v. Dill Mfg. Co. (C. C. 

A.) 604 

Atha T. Walter (C. C. A.) 75 

Atlantic, The (C. C. A.) 405 

Atlantic Steel Co. v. R. O. Campbell Coal 

Co. (D. C.) 555 

Ausable, The (D. C.) 783 

Backstay Machine & Leather Co. v. Hamil- 

ton, two cases (C. C. A.) 411 

Bain v. United States (C. C. A.) 664 

Baker-Whiteley Coal Co. v. Wilson (C. 

C. A.) 1016 

Baker-Whiteley Coal Co., Wilson v. (C. 

C. A.) 1022 

Bald Eagle Mining Co., In re (O. C. A.). . 62 
Baltimore Dry Docks & Ship Kldg. Co. v. 

New York & P. R. S. S. Co. (C. C. A.) 485 
Baltimore & O. R. Co., StafCord v. (D, C.) 807 
Baltimore & O. R. Co., State of Maryland 

V. (C. C. A) 11 

Baltzley v. Spengler Loomis Mfg. Co, (C. 

C. A.) 423 



Page 
Bank of North America, Wysong & Miles 

Co. (C. C. A.) 130 

Bank of Waynesboro, First Nat. Bank of 

Evanston, Wyo., v. (C. C. A.) 754 

Bank of Waynesboro, Murphy v. (C. C. A.) 756 
Bank of Waynesboro, Sullivan v. (C. C. A.) 756 

Barber & Co., Dorrance v. (C. C. A.) 489 

Barnes, F. Lewald & Co. v. (0. 0. A.)... . 137 

Barues, Moore v. (C. C. A) 318 

Barr, Kiug v. (C. C. A.) 56 

Barra v. Mills (C. C. A.) 1016 

Beich Co. v. Kellogg Toasted Corn Flakes 

Co. (App. D. C.) 040 

Beitman v. Strater (D. C.) 443 

Bell & Howell Co. v. Bliss (C. C. A.) . . . 131 
Benedicto v. Compania de los Ferrocar- 

riies de Puerto Rico (C. C. A.) 932 

Benowitz, United States v. (D. C.) 223 

Ronson, Bul^er v. (C. C. A.) 929 

Bentall v. United States (C. C. A.) 744 

Berksliire Hills Paper Co. v. Byron West- 

on Co. (C. C. A.) 685 

Bernheim Distilling Co., Gregory v. (C. 

C. A.) 1018 

Berriiigcr, Cosden v. (O. C. A.) 1017 

Bessemer Gas Engine Co., Alley v. (C. 

U. A.) 94 

Bothke, Scaunell v. (App. D. C.) 1023 

Bethlehcm Steel Co., Churchward Interna- 
tional Steel Co. V. (D. C.) 438 

Bevcridge v. Crawford Cotton Mills (C. 

C. A.) 381 

Bishop, Sanderson v. (C. C.) 228 

Blakeslee & Co., Impérial Machine & Foun- 
dry Corporation v. (C. C. A.) 419 

Blanchard. In re (C. C. A.) 75 

Bland v. Reeves (C. C. A.) 1016 

Bliss, Bell & Howell Co. v. (C. C. A.) 131 

Block, United States v. (D. C.) 205 

Blnmlien v. United States (C. C. A.) 1016 

Bodden, Ingalls v. (C. C. A.) 245 

Borden Stove Co., Jost v. (D. C.) 16;i 

Border Line Transp. Co. v. Canadian l'ac. 

E. Co. (D. C.) 989 

Borraan v. United States (O. O. A.) 20 

Brant Independent Mining Co. v. Palmer 

(C. C. A.) 370 

Bi-ann v. Wiegand (App. D. C.) 047 

Brisham v. John F. Schmadeke, Inc. (1). 

C.) 571 

lîrill V. Jewett (C. C. A.) 985 

lîrimi, In re (D. C.) 527 

Brinson, In re (I). C.) 707 

r.ritannia, The (C. C. A.) 1016 

Britanuia, The (C. C. A.) 1022 

Britton v. Union Inv, Co. (C. C. A.) 111 



262 F. 



(ix) 



262 FEDERAL REPORTEK 



Page 
Brooke Glass Co. v. Hartford-Fairmont Co. 

(C. C. A.) 427 

Brown-Forman Co., Gregory v. (O. O. A.)- .1018 

Buford, Gooch v. (O. O. A.) 894 

Buja, Hogan v. (D. C.) 224 

Bulger V. Benson (C. O. A.) 029 

Burgess v. Standard Oil Co. (C. C. A.) . . ÏG7 
Burgess Battery Co. v. Novo Mfg. Co. 

(C. C. A.) 072 

JJushoiig V. II. R. Thompson Estate Uo. (C. 

C. A.) 297 

Business Mcn's Accident Ass'n of America 

V. Schiefelbusch (0. C. A.) 354 

Byron Weston (îo., Berkshire Hills Paper 

Co. V. (C. O. A.) 086 

Calumet Coal & Supply Co., City of Ham- 

mond, Ind., v. (C. C. A.) 938 

Campbell Coal Co., Atlantic Steel Co. v. 

(D. C.) 555 

Camp Bird v. Howbert (C. 0. A.) 114 

Canadian Pac. R. Co., Border Line Transp. 

Co. T. (D. C.) SS9 

Caps, Kennicott v. (App. D. C.) €41 

Carnegie Steel Co., Martin v. (C. C. A.).. 5 
Carolina Public Service Co., Kennedy v. 

CD. C.) 8o;î 

Casey, Vnited States Steel Co. v. (C. C. A.) 8S!1 

Cataluna. The (D. C.) 212 

C. Gallagher, The (C, C. A.) 97 

Chan M'y Sheung, Ex parte (I). C) 221 

Chapin, The fC. C. A.) 119 

Chelsea Lighternge Co., McCole v. (C. C. A.)1018 
Chicago Jîonding & Insurance Co., Copper. 

I>]-occ.ss Co. V. (G. C. A.) m 

Chicago, R, I. & P. R. Co. v. O'Dell (C. 

C. A.) 1010 

Chicago & N. W. R. Co. v. E. C. Tecktoni- 

us Mfg. Co. (D, C.) 715 

Churchward Internationa! Steel Co. v. 

Bethlehem Steel Co. (U. C.) 4SH 

City of Hammond, Ind., v. Calumet Coal & 

Supplv Co. (C. C. A.) 938 

City of Mouroe, Détroit, M. & T. S. L. Ry. 

V. (D. C.) 177 

City of Oakland, Standard American 

Dredging Co. v. (G. C. A..) 315 

City of Raton, Colfp.x Cnnnty, N. M., Ra- 
ton WateîTvorks Co. v. (C. C. A.) 1021 

Cleveland. C, C. & St. L. R. Ce, United 

States V., two cases (D. C.) 775 

Cleveland Cliffs Iron Co. v. Kinney (D. 

C.) 980 

Clinchfield Fuel Co. v. Henderson Iron 

Workn Co. (C. C. A.) 392 

Commercial Xat. Bîiuk Passaic Nat. Bank 

V. (App. D. C.) 234 

Commercial Sec. Co. v. Ilolcombe (C. C. 

A.) 657 

Comnania do los Ferrocarriles de Puerto 

Rico, Bencdicto v. (C. C. A.) 032 

Conipar.ia Minera y Conipradora de Me- 

tales Mexieano, S. A., v. American 

Métal Co. (D. C.) 183 

Concrète Appliances Co. v. Meinken (C. 

C. A.) 958 

Conkling v. New York Lifo Insurance & 

Trust Co. (App. D. C.) 620 

Conncr, Scbeuerie v. (App. D. O.) 050 

Consolidated Fuel Co., St. Louis South- 

we.stcra R. Co. of Texas v. {C. C. A.). ..1021 



Page 
Coots, Omaha Nat. Bank v. (C. 0. A.)... 1020 
Copper l'roccss Co. v. Chicago Bonding 

& Insurance Co. (C. O. A.) 00 

Cosden v. Berringer (C. C. A.) 1017 

Cowgill, Johnson v. (C. C. A.) 300 

Cox, Ware v. (C. C. A.) 1022 

Coyle & Co. v. North America S. S. (Corpo- 
ration (C. C. A.) 250 

Crawford Cottou Mills, Beveridïe v. (C. 

C. A.) 381 

Crockett v. United States (C. C. A.) 1017 

CromweJI. Simons v. (C. C. A.) 680 

Cudahy Packing Co. v. Frey & Son (C. 

C. A.) 1017 

Cuyamel Fruit Co. v. Johnson Iron Works 
(G. G. A.) 387 

Daltou, Pétition and Appeal of (C. C. A.) 257 

Daizell, The F. B. (D. C.) 218 

Danville Ben. & Bldg. Ass'n v. Huff (G. 

C. A.) 403 

Davis, The M. Mitchell (C. G. A.) 1016 

Davis. The M. Mitchell (C. G. A.) 1022 

Day, MeCaffrey v. (G. C. A.) 80 

De Groisset v. Vitagraph Go. of America 

(G. C. A.) 100 

Delawaro, D. & W. R. Co., Howell v. (C. 

C. A.) 119 

Deiiison, Dupre v. (D. C.) 975 

Dcniiis-Simmons Lumber Co., Guenther v. 

(C. C. A.) 1018 

Détroit, M. & T. S. L. Ry. v. Monroe 

(D. G.) 177 

De Vrv Corporation v. Acrae Motion Fie- 

tiire Projector Co. (C. C. A.) 970 

Dexter. Zidell v. (C. G. A.) 145 

Diaz. Patterson v. (G. C. A.) 899 

IHIl Mfg. Co., A. Schradcr's Son v. (C. 

G. A.) 504 

Dillon. Kx parte (D. C.) 503 

Dixou Co., Lockport GIpss Co. v. (D. C.).. »76 

ïîoetor, Appoiil of (C. G. A.) 500 

1 )on<,hoc, 'l'josevig V. (G. C. A.) 911 

Dnnovan v. Universal Motor Truck Go. 

(C. C. A.) 322 

Doremns v. United States (C. G. A.) 849 

Dorrfnice v. Barber & Go. (G. C. A.) 4.8» 

I>«rset, Rtichel v. (App. D. C) 652 

Downs V. ÎTiilted St.-îtes (G. C. A.) 1017 

Dressler Producing Corporation, In re (G. 

C. A.) 257 

Drohen, Rowe v. (G. C. A.) 15 

Dur-ktowi Sulphur. Copper & Iron Co. v. 

Galloway (G. C. A.) 609 

Dunellon, The (G. C. A.) 119 

Dupre V. Denison (D. G.) 975 

Duqnesne, The (C. C. A.) 1 

•Duquesno, The (C. C. A.) 5 

Durham, Prcston v. (D. C.) 843 

Dye V. United States (C. G. A.) 6 

Dyer v. International Banking Corporation 

(G. C. A.) 292 

East Carolina Lumber Co., Eastern Transp. 

Co. V. (D. C.) 195 

East St. Louis Connecting R. Co. v. Rob- 

erts (C. C. A.) 1017 

Eastern Transp. Go. v. East Carolina 

Lumber Co. (D. G.) 195 

Eastland, The (D. C.) 535 



CASES RE 
C262 
Page 

E. O. Tccktonîus Mfg. Co., Chicago & N. 

W. E. Co. V. (D. G.) ns 

Edward Ilines Liimbor Co. v, American 

Car & Fotindry Co. (C. C. A.) 757 

Edwards Lumber & Mfg. Co. v. Miller (C. 

C. x\.) 4(10 

K. R. Forbes Piano Co., In re (C. C. A.). . . 037 

E. H. Freeman Electric Co. v. AVeber Elec- 
tric Co. (C. C. A.) 7GS) 

Ely lîoal Estate & Investmont Co. v. 

Watts (C. C. A.) 721 

Empii-e Fiiel Co., Lyons v. (C. C. A.) 4i;j 

Kmijire Tire & Hubber Co., Moore v. (C. 

C. A.) S18 

ElnKle V. Manchester, two cases (App. D. 

C.) 645 

Encle V. Manchester & Spooner (App. D. 

C.) 645 

Equitable Trust Co. o£ ÎS^ew York, Lane v. 

(C. C. A.) 9tS 

Bsrom, The (C. C. A.) ilO:^ 

Etta McElroy. The (C. G. A.) i<4:] 

Evans v. Ourc (D. C.) 550 

Everett, l'hiiiips Co. v. (C. C. A.) 341 

Famons Players' Easkv Corporation, Man- 
nors V. (r>. C.) 811 

Farmcrs' Elevator Co. of Miranda, S. D., 
Thayer v. (C. C. A.) 1021 

Farmors' Life Ins. Co., Slicarer v. (C. 0. 
A.) 801 

Farmers' Elfe Ins. Co., Wible v. (C. C. A.) 861 

F. B. Dalzcll, The (D. C.) 218 

First Nat. P.ank of Evanf;ton, Wyo., v. 

Bank of Waynesboro (C. C. A.) 75 5 

F. Levvald ,Sr Co. t. Earncs (C. C. A.)... 137 

Florence, The (D. C.) 21 S 

Fontana v, XJnited States fC. C. A.) 2S-; 

Forbes Piano Co., In re (C. C. A.) a'7 

Forde, The (C. C. A.) V.n 

Forney, Hendrix v. (C. C. A.) 1018 

Foster v. United Stat<>s (C. C. A.) I*i17 

Fousck, Henkin v. (C. C. A.) '.':'>7 

Frankmere. The (1). C.) 8iy 

Freeman Electric Co. v. Weber l'ili'ctric 

Co. (C. C. A.) 7G9 

Frey & Son, Cudahy Packing Co. v. (C. O. 

A.) 1017 

Fuld Store Co., United States v. (D. C.).. 836 



Gallagher, The C. (C. C. A.) 97 

Gallowav, Dncktown Sulphur, Copper & 

Iron Co. V. (C. 0. A.) 669 

Geisenberfrer & Friodler v. Robert York 

& Co. fC. C. A.) 739 

(jicneral Electric Co., Harvey Ilubbell, Inc., 

V. (D. C.) 155 

General Pireproofing Co. v. Tcrami (C. 

C. A.) 106 

George D. Mayo Mach. Co. v. Ilemphill 

Mfg. Co. (C. C. A.) 4'.','> 

Getty V. Eayne (C. C. A.) 141 

Ginaca v. Peterson. two cases (C. C. A.) . . 804 

Giyins, Ex parte (D. C.) 702 

Gill V. United States (G. C. A.) 502 

Gooch V. Buford (C. C. A.) 8i)4 

Gore, Evans v. (D. C.) 550 

Gottlieb, In re (C. C. A.) 730 

Grandi v. United States (C. C. A.) 123 

Gregory y. Bernheiin DistiUing Co. (C. 

C. A.1 KI18 



îpouted XI 

p.) 

Page 

Gregory v. Brown-Forman Co. (C. C. 

A.) 1018 

Grier v. United States (C. C. A.) 407 

Griisedioik Bros. l'rewery Co. v. Moore 
(O. G.) 582 

G. S. i'.lak.'slee & Co., Impérial Machine & 
Fnnndry Corporation v. (C. C. A.) 419 

Gncï tlier v. Dennis-Simmons Lniuber Co. 
(G. G. A.) 1018 

Gu;;goIz v. United States (C. C. A.) 764 

IIa;:rn]ann Pickling Co., Priée Bonker Mfg. 

Go. v. (C. G. A.) 1020 

IlnuiiUon, lîaclistav Jlachine & Leathcr Co. 

V., tv,() cases (G. C. A.) 411 

Ilammerschlag Mfg. Co. v. Importera' & 

Traders' Nat. Bank (C. G. A.) 266 

Hanrnhan y. Pacifie Transport Co. (C. 

G. A.) 951 

Hartlord-Fairmont Co-, Homer Brooke 

Gilass Co. y. (C. C. A.) 427 

Iliuvev Hubbell, Inc., y. General Electric 

Go. (!>. C.) 155 

Hattie Thomas, The (C. C. A.) 943 

Il.anbtman & Uoeb Co. v. Hooven-Owens- 

Kentsehler Go. (G. C. A.) 408 

H. D. Smith & Co. y. Peck, Stow & Wil- 

cox Co. (C. 0. A.) 415 

ITeath y. Port of Para (D. C.) 815 

ÎJoIemis, The (C. G. A.) 1016 

Helenus. The (G. 0. A.) 1022 

Ilemphill Mfg. Co., George D. Mayo Mach. 

Go. v. (C. C. A.) 435 

ITemphill Mfg. Co., Scott & Williams v. (C. 

C. A.) 068 

Henderson Iron Works Co., Clinchfield Fuel 

Go. v. (C. C. A.) 302 

lîeiidrix y. Forney (C. C. A.) 1018 

TT<-nkin v. Foursek tC. C. A.) 957 

Uniniiig. Turner v,' (App. D. C.) 637 

îlenric hs, Mickle y. (D. G.) 687 

TTerl^ert A: Co., In re (C. G. A.) 682 

Hetherington v. Palmer (C. C. A.) 367 

Hilgcr, Marks y. (C. C. A.) 302 

Hines v. Itittenberg (C. O. A.) 87 

llines Luml)er Co. v. American Car & . 

Foundry Co. (G. G. A.) 757 

Ilitt Lnmber & Box Co., In re (C. C. A.) . .1020 
II. L. Dixon Co., Eockport Glass Co. v. (D. 

C.) 976 

n. L. Herbert & Co., In re (C. C. A.)... 682 

IIog:',n V. J iu.ia (D. C.) 224 

Holeon.be, Commercial Sec. Co. v. (C. C. A.) 657 
Homer Brooke Glass Go. y. liartford-Fair- 

uiont Go. (C. C. A.) 427 

Hooveu-Owcns-Rentschlcr Ce, Haubtman & 

t..;"b Co. v. (C. 0. A.) 408 

Ilopkins v. Kiegger (App. D. C.) C42 

Horn, Monk v. (C. C. A.) 121 

Horowitz V. United States (G. C. A.) 48 

Howard v. Mechanies' Bank {X). C.) 699 

Howard, Ecnke y. (C. G. A.) 946 

Howbert, Camp Bii d v. (C. C. A.) Il4 

Howell, The (G. G. A.) 1018 

Howell v. Delaware, L. & W. R. Co. (O. 

C. A.) 119 

Ilubbell, Inc., v. General Electric Co. 

(U. C.) 155 

Hudson, In re (D. C.) 778 

Uudson Nav. Co., Appeal of (C. 0. A.).. 1021 



xu 



262 FEDERAL REPORTER 



Page 

Huff, Dauville Ben. & Bldg. Ass'n v. (C. 0. 
A.) 403 

Huffman v. Paige-Detroit Motor Car Co. 
(C. C. A.) 116 

Hughes, In re (C. C. A.) 500 

Hunau v. Northern Région Supply Corpo- 
ration (D. C.) 181 

Huttonwood, The CD. 0.) 452 

Imbrie, Martin v. (O. C. A.) 44 

Impérial Machine & Foundry Corporation 

V. G. S. Blakeslee & Co. (C. C. A.) 41i> 

Imponers' & Traders' Nat. Banlc, Hammer- 

schlag Mfg. Co. V. (0. C. A.) 266 

Incoiporated ïown ot Laurens, lowa, v. 

Northern lowa Gas & Electric Co. (D. 

C.) 712 

Incorporated Town of Luverne, lowa, 

Northern lowa Gas & Electric Co. v. (D. 

C.) 711 

Individual Driiiking Cup Co. v. Public 

Service Cup Co. (C. O. A.) 410 

Ingalls V. Bodden (C. C. A.) 245 

Ingle V. Landis Tool Co. (D. C.) 150 

International Banking Corporation, Dyor v. 

(C. C. A.) r 202 

International Harvester Co. of America 

V. Langermnnn (C. C. A.) 498 

International Sugar Feed No. 2 Co., M. 0. 

Peters MiUing Co. v. (C. 0. A.) 336 

Interocean Oil Co., Transcontinental Petro- 
leum Co. V. (C. C. A.) 278 

Isabela, The (C. C, A.) 48o 

Jay V. Weinberg (C. O. A.) 973 

Jewett, Brill v. (C. C. A.) 035 

John F. Schmadekc, Inc., Brigham v. (D. 

C.) 571 

Johnson v. Cowgill (C. C. A.) 306 

Johnson Iron Works, Cuyamcl Fruit Co. v. 

(C. O. A.) 387 

Jong Hong v. United States (C. C. A.).. 1019 
Jordan Lumber Co., Northern Idaho & 

Montana Power Co. v. (C. 0. A.) 765 

Jost V. Borden Stove Co. (D. C.) 103 

J. W. Kingrose Co. v. W. & J. Sloane 

(D. C.) 545 

Kambeitz v. United States (C. C. A.) 378 

Kansas City Southern R. Co. v. Martin (C. 

C. A.) 241 

Kawneer Mfg. Co., Toledo Plate & Window 

Glass Co. V. (C. C. A.) 510 

Kellogg Toasted Corn Flakes Co., Paul F. 

Beich Co. v. (App. D. C.) 640 

Kolly V. Eohinson (D. C.) 695 

Kennedy v. Carolina Public Service Co. 

(D. C.) 803 

Kennicott v. Caps (App. D. C.) 641 

Keycs v. Anderson (C. C. A.) 748 

Kimball Co. v. Noesting Pin Ticket Co. 

(C. C. A.) 148 

King, In re (C. C. A.) 318 

King V. Barr (C. C. A.) 56 

Klipstein, Simson v. (D. C.) 823 

Kovacs, New York Cent. R. Co. v. (C. C. 

A.) 1020 

Kramer, United States v. (C, C. A.) 395 

Kress & Co. v. Lindsey (C. C. A. ) 331 

Krocger Bros. Co., In re (D. C.) 463 



Page 

l.iindis Tool Co., Ingle v. (D. C.) 150 

Lane v. Equitable Trust Co. of New York 

(C. C. A.) 918 

Langermann, International Harvester Co. 

of America v. (C. C. A.) 498 

Langiey v. United States (C. C. A.) 1010 

Lanshurgh & Bro., Adams Exp. Co. v. 

(App. D. C.) 232 

Laync, Getty v. (C. C. A.) 141 

Bedorer v. Northern Trust Co. (C. C. A.) 52 

Lederer, Pearcc v. (D. C.) 993 

Lederer, Stockton y. (D. C.) 173 

Bee V. Vreeland (App. D. C.) 654 

Lcflore County, Miss., National Surety Co. 

V. (C. O. A.) 325 

Lewahl & Oo. v. Barnes (O. C. A.) 137 

Lim Chan v. White (C. C. A.) 702 

Lindsey, S. H. Kress & Co. v. (O. C. A.). . . 331 
Little Kanawha Bog & Tie Co., Reliable 

Towing Co. V. (C. C. A.) 108 

Lockport Glass Co. v. Irl. L. Dixon Co. 

(1). C.) 970 

Loen, In re(I>. C.) 166 

Long V. Miller (C. C. A.) 362 

J.ong Branch Distilling Co., United States 

V. (C. C. A.) 768 

Looney. In re (D. C.) 209 

Louisville & JclTorsonvillc Bridge Co. v. 

United States (C. C. A.) 1019 

Luekenbach Ce, Sannders v. (C. C. A.) 849 

Luckenbach Co., Sannders v. (D. O.) 845 

Lum You, Ex parte (D. C.) 451 

Lyons v. Empire Coal Co. (C. C. A.) 405 

MoAdoo, Anzololti v. (B. 0.) 568 

MeCaffrey v. Day (C. C. A.) 80 

McCole V. Chelsea Lighterage Co. (C. 

C. A.) 1018 

McElroy, The Etta fC. C. A.) 943 

Maclin-Ziranier-McGill Tobacco Co., In re 

(App. D. C.) 635 

Manchester, Engle v., two cases (App. D. 

C.) 645 

Manchester & Spooner, Engle v. (App. 1). 

O.) 645 

Mann-Anchor Co., In re (O. C. A.) 111 

Manners v. Famous Players-Lasky Cor- 
poration (D. C.) 811 

Manufacturers' & Merchants' Lishterage 

Co., Shamrock Lighterage Co. v. (D. C.) . . 844 

Marine Nat. Bank v. Swigart (C. C. A.). . 8."i4 

Marks v. Hilger (C. C. A.) 302 

Martin v. Carnegie Steel Co. (C. C. A.).. 5 

Martin v. Imhrie (C. C. A.1 44 

Martin, Kansas City Southern R. Co. v. 

(C. C. A.) 241 

Maryanne, The (O. C. A.) 129 

Marvland Dredging- & Contracting Co. v. 

State of Maryland (C. C. A.) 11 

Mason, In re (h. C.) 527 

Mavnard v. United Thaeker Coal Co. (C. 

C. A.) 478 

Mayo Mach. Co. v. Plemphill Mfg. Co. (C. 

C. A.) 435 

M. C. Peters Milling Co. v. International 

Sugar Feed No. 2 Co. (C. C. A.) 336 

Mearns v. Sidlivan, two cases (App. D. 

C.) 633 

INIcarns, Tuckcrman v. (App. D. C.) 607 

Mechanics' Bank, Howard v. (D. C.) 699 



CASES EBPORTBD 



C262 F.i 



Page 

Meinken, Concrète Appliances Co. v. (C. C. 

A.) 958 

Merlini v. Partch (C. O. A.) 1020 

Mickle V. Henriehs (D. C.) 687 

Miller v. American Bonding Co. (C. 

C. A.) 103 

Miller, Edwards Lumber & Mfg. Co. v. (C. 

C. A.) 405 

Miller, Long v. (C. C. A.) 362 

Mills, Barra v. (C. C. A.) 1010 

M. J. Rudolph, The (D. C.) 780 

M. Mitchell Davis, The (C. C. A.) 1016 

M. Mitciiell Davis, The (C. C. A.) 1022 

Monk V. Horn (C. C. A.) 121 

Montoya v. United States (C. O. A.) 759 

Moore v. Bames (0. G. A.) 318 

Moore v. Empire Tire & Rubber Co. (C. C. 

A.) SIS 

Moore, Griesedieck Bros. Brewery Co. v. 

(T) O ) 582 

Moore, SinVlèton V.' (C.' C.' À.) !!!!!*.!!*.!'. 357 

Morris, United States v. (D. C.) 514 

Morris & Co. v. Thurmond (C. C. A.) 384 

Multnomah Hôtel Co., In re (C. C. A.) 297 

Murphy v. Bank of Waynesboro (C. C. A.) 756 

Nakano v. United States (C. C. A.) 761 

Narragansett Dairy Co. v. Ammon & Per- 

son (C. C. A.) 880 

National Bank o£ Ashtabula, Taylor & 

Boumique Co. v. (D. C.) 168 

National Discount Co., Pétition of (C. O. 

A.) 1020 

National Savings & Trust Co. v. Ryan 

(App. D. C.) 613 

National Surety Co., Appeal of (O. O. A.) 682 
National Surety Co. v. Leflore County, 

Miss. (C. C. A.) 325 

National Surety Co., United States v. (0. 

C. A.) 62 

Newton, Rhea v. (C. C. A.) 345 

New York Cent. R. Co. v. Kovacs (C. 0. 

A.) 1020 

New York life Ins. Co. v. Anderson 

(D. O.) 215 

New York Lifo Insurance & Trust Oo., 

Conkling v. (App. D. 0.) 620 

New York & P. R. S. S. Co., Baltimore Dry 

Docks & Ship Bldg. Co. v. (C. C. A.) 485 

9,889 Bags of Malt, In re (C. C. A.) 946 

Nirdlinger v. Stevens (D. C.) 591 

Nitinat. The (D. C.) 989 

Nitrate Producers' S. S. Oo., Sullivan v. (O. 

O. A.) 371 

Noesting Pin Ticket Co., A. Kimball Co. v. 

(C. O. A.) 148 

North America S. S. Corporation, W. G. 

Coyle & Co. V. (C. O. A.) 250 

Northern Idaho & Montana Power Co. v. A. 

L. Jordan Lumber Co. (C. C. A.) 765 

Northern lowa Gas & Electric Co., Incor- 

porated Town of Laurens, lowa, v. (D. 

O.) 712 

Northern lowa Gas & Electric Co. v. Lu- 

verne, lowa (D. C.) 711 

Northern Région Supply Corporation, Hu- 

nau V. (D. C.) 181 

Northern Trust Co., Lederer v. (C. C. A.) . . 52 

Northiand, The (C. C. A.) 245 

Novo Mfg. Co., Burgess Battery Co. v. (C. 

C. A.) 972 



XUt 



Page 



O'DoU, Chicago, E. I. & P. R. Co. v. (O. C. 

A.) : .....1016 

Old Reliable, The (C. C. A.) 108 

Oliner, In re (C. C. A.) 734 

Omaha Nat. Bank v. Coots (C. C. A.). . . .1020 
One Pord Automobile and Fourteen Pack- 
ages of Distilled Spirits, United States v. 
(O. C. A.) 374 

Pacific Transport Ce, Hanrahan v. (C. C. 

A.) 951 

Paige-Detroit Motor Car Co. v. Huffman 

(C. C. A.) 116 

Palmer, Brant Independent Mining Co. v. 

(O. O. A.) 370 

Palmer, Hethorington v. (C. O. A.) 367 

Partch, Merlini v. (C. C. A.) 1020 

Passaic Nat. Bank v. Commercial Nat. 

Bank (App. D. C.) 234 

Patterson v. Diaz (C. C. A.) 899 

Paul F. Beich Co. v. Kellogg Toasted Corn 

Flakes Co. (App. D. C.) 640 

P. B. Mann-Anchor Co., In re (C. C. A.) 111 

Pearce v. Lederer (D. C.) 993 

Pcck, Stow & Wilcox Co., H. D. Smith & 

Co. V. (C. C. A.) 415 

Peck, United States v. (C. O. A.) 1022 

Pedarre, United States v. (D. O.) 839 

Peters Milling Co. v. International Sugar 

Feed No. 2 Co. (C. O. A.) S36 

Peterson, Ginaca v., two cases (C. C. A.) . . 904 
l'hihulelphia, B. & W. R. Co., United States 

T. (D. O.) 188 

Phiîlips Co. V. Everett (C. C. A.) S41 

Pinasco V. United States (C. C. A.) 400 

Porterfiold, In re (C. C. A.) 403 

Port of Para, Hoath v. (D. O.) 815 

Pottier & Stymus Co.,In re (C. C. A.).. 955 

Powers V. United States (C. C. A.) 1020 

Preston v. Durham (D. C.) 843 

Price Booker Mfg. Oo. v. Haarmann Pick- 

ling Co. (C. C. A.) 1020 

Prince Line, Travelers' Ins. Co. v. (D. O.) 841 
Public Service Cup Co., Individual Drink- 

ing Cup Co. V. (C. O. A.) 410 

Purpura V. United States (O. C. A.) 473 

Raine-Andrews Lumber Co., United States 

V. (D. O.) 787 

Ramona Farmers Warehouse Co., Thaver v. 

(O. O. A.) '.....1022 

Rathlin Ilead, The (C. 0. A.) 751 

Raton Waterworks Co. v. Raton, Colfax 

County, N. M. (C. 0. A.) 1021 

Reeder v. United States (C. O. A.) 36 

Reeves, Bland v. (C. O. A.) 1016 

Reichel v. Dorset (App. D. C.) 652 

Reliable Towing Co. v. Little Kanawha 

Log & Tie Oo. (C. C. A.) 108 

Renke v. Howard (O. C. A.) 948 

Rhea v. Newton (C. C. A.) 345 

IMdgely, United States v. (C. C. A.) 675 

Riegger, Hopkius v. (App. D. C.) 642 

Kîiisrose Co. v. W. & J. Sloane (D. C.) . . 545 

Rittonberg, Hines v. (O. C. A.) 87 

Roberts, East St. Louis Connecting R. Oo. 

V. (C. 0. A.) 1017 

Robertson v. United States (C. O. A.) . . 948 
Robert York & Co., Geisenberger & BVied- 

1er V. (0. C. A.) 739 



XIV 



2G2 FEDERAL REPORTEU 



Page 

Kobiiîs V. United States (C. C. A.) 120 

Robiuson, Kelly v. (D. C.) 695 

E. O. Campbell Coal Ce, Atlantic Steel Co. 

V. (D. C.) 555 

Rosenfeld, In re (C. C. A.) S7() 

Eowe V. Droben (O. O. A.) 15 

Koxford Knitting Co., Appeal of (C. C. A.) 730 
Koyal Duteb West India Mail Co., United 

States V. (0. C. A.) 61 

E. E. Thompson Estate Co., Bushoug v. 

(C. C. A.) 297 

Endolph. The M. J. (D. C.) 7<S0 

Eyan, National Savings & Trust Co. v. 

(App. D. C.) 613 

St Joseph-Chicago S. S. Co., In re (D. C.) 535 
St. Louis Soutbwestern E. Co. of Texas v. 

Consolidated Fuel Co. (C. C. A.) 1021 

St. Paul, The (C. C. A.) 1021 

Sanderson v. Bishop (C. C.) 228 

Saudren v. Ulster S. S. Co. (C. C. A.) 751 

Saunders v. Luckenbach Co. (C. C. A.).. 84!) 

Saunders v. Luckenbach Co. (D. C.) 845 

Scannell v. Betbke (App. D. C.) 1023 

Schiefelbusch, Business Mcn's Accident 

Ass'n of America v. (0. C. A.) 354 

Selimadeke, Inc., Brigham v. (D. CJ 571 

Schneider, Application of (App. T>. C).... 718 
Schrader's Son v. Dill Mfg. Co. (C. C. A.) 504 

Scheuerle v. Conner (App. D. O.) 650 

Scotia, The (C. C. A.) 119 

Scott & Williams v. Hemphill Mfg. Co. 

(C. C. A.) 908 

Seebach v. United States (C. C. A.) 885 

Shamrock Towing Co. v. Manufacturers' 

& Merchants' Lighterage Co. (I>. C.) 844 

Shearer v. Farmers' Life Ins. Co. (0. C. 

A.) 801 

S. H. Kress & Co. v. Lindsey (C. C. A.) . . . :;:'.]- 

Simons v. Cromwell (C. C. A.) 0!S0 

Simson v. IClipstein fD. C.) S2."i 

Singleton v. Moore (C. C. A.) ;!57 

Sischo, United States v. (D. C.) 1001 

Sloane, J. W. Eàngrose Oo. v. (D. C.) 545 

Smith, In re (App. D, C.) «4:'. 

Smith, In re (App. D. C). 717 

Smith V. Stepbens (C. C. A.) 3021 

Smith, United States v. (D. C.) 101 

Smith & Co. V. Peck, Stow & Wilcos Co. 

(C. C.A.) 415 

Spartan. The (O. C. A.) 97 

Spengler Loomis Mfg. Co., Baltzley v. (C. 

C. A.) 423 

Spielberg, American Mercantile Corporation 

V. (0. C. A.) 492 

Springfield Eealty Oc, In re (C. C. A.) . . . 341 
Stafford y. Baltimore & O. E. Co. (D. C.) 807 
Standard American Dredging Co. v. Oak- 

land (C. C. A.) 315 

Standard Oil Co., Burgess v. (0. C. A.). . . 767 

Standard Shipyard Co., In re (D. C.) 522 

State of Maryland, American Ry. Exp. Co. 

V. (O. O. A.) 1016 

State of Maryland v. Baltimore & O. E. 

Co. (C. C. A.) 11 

State of Maryland, Maryland Dredging & 

Contraoting Co. y. (C. C. A.) 11 

Stephens, Smith v. (C. O. A.) 1021 

Stepbens v. United States (C. C. A.) 957 

Stcphens-Adamson Mfg. Co., Application 

of (App. D. C.) (i35 



Page 

Stevens, Nirdlinger v. (D. C.) 591 

Stimson, The (C. C. A.) 2i~> 

Stockton V. Lederer (D. C.) 173 

Strater, Beitnian v. (D. C.) 443 

Sullivan, In l'o (D. C.) 574 

Sullivan V. liunk of Waynesboro (C. C. A.) 75'! 

Sullivan, Mcarus v., two cases (App. D. 0.) 033 
Sullivan V. Nitrate Producers' S. S. Co. (C. 

C. A.) yn 

Sweet V. AU Package Grocery Stores Co. 

(0. C. A.) 727 

Swigart, Marine Nat. Bank v. (C. C. A.). . 854 

Tamaha, The (D. C.) 218 

Tavlor &. Bournique Co. v. National Bank 

of Ashtalnila (D. C.) 168 

Tecktonius Mfg. Co., Chicago & N. W. B. 

Co. V. (D. C.) 715 

Terami, General Fircprofing Co. v. (0. 

C. A.) 106 

Thayer v. Farmers' Elevator Co. of Miran- 

da, S. D. (C. C. A.) 1021 

Thayer v. Ramona B^armers Warehouse 

Co. (C. C. A.) 1022 

Thomas, The Hattie (C. C. A.) 943 

Thompson v. United States (C. C. A.) 1022 

Thompson Estate Co., Bushong v. (C. C. A.) 297 

Thurmond, Jlorris & Co. v. (C. 0. A.) .384 

Tjoscvig V. Donohoe (C. C. A.) 911 

Toledo Plate & Window Glass Co. v. Kaw- 

neer Mfg. Co. (C. C. A.) 510 

Transcontiner.tal Petroleum Co. T. Inter- 

ocean Oil Co. (C. C. A.) 278 

Travelers' Ins. Co. v. Prince Line (D. C.) 841 
Travis, Yale & Towne Mfg. Co. v. (D. C). . 576 

Tuekerman v. Mearns (App. D. C.) 607 

Turner v. Henning (App. D. C.) 037 

Dhl. United States v. (D. C.) 226 

rhi: United States v. (D. C.) 532 

ULster S. S. Co., Sandrcn v. (C. C. A.) 751 

Union Bank of Canada, United States v. 

(C. C.A.) 91 

Union Inv. Co., Britton v. (C. C. A.) 111 

Union Tool Co. v. United States (C. O. 

A.) 431 

Union Trust Co. of Rochester, N. Y., v. 

Woodward & Lothrop (App. D. C.) 627 

United States, Ammerman v. (C. C. A.) . . 124 

United States v. Apple (D. O.) 200 

United States, Bain v. (C. C. A.) 664 

United States v. Benowitz (D. C.) 223 

United States, Bentall v. (0. C. A.) 744 

United States v. Block (D. C.) 205 

United States, Blumlien v. (C. C. A.) 1016 

United States, Borman v. (C. O. A 26 

United States v. Cleveland, C, C. & St. L. 

B. Co., two cases (D. O.) 775 

United States, Crockett v. (O. O. A.) 1017 

United States, Doremus v. (C. C. A.) 849 

United States, Downs v. (O. C. A.) 1017 

United States, Dye v. (C. C. A.) 6 

United States, Pontana v. (0. C. A.) 283 

United States, Foster v. (C. C. A.l 1017 

United States v. Fuld Store Co. (D. C.).. 836 

United Statea, Gill v. (C. C. A.) 502 

United States, Grandi v. (O. O. A.) 128 

United States, Grier v. (C. C. A.) 407 

United States, Guggolz v. (C. C. A.) 704 

United States, Horowitz v. (C. C. A.).... 48 
United States, .long Hong v. (C. C. A.) 1019 



CASics t;: 



Pag<; 



Tiiitod States, Kambeifz v. fC, C. A.) 378 

Uiihfiiî States v. Kramer (C. C. A.) [i'JÔ 

United States, Lanslcy v. (C. C. A.) lOlt) 

United States v. Long Brancli Distiilinjr 

Co. (C. C. A.) 7G8 

Uuitod States, Ltiiiisville &: Jelîcrsonville 

Bridge Co. V. (C. C. A.) 1019 

United StateK, Montoya v. (C. C. A.) 75!) 

L'nlted States v. Morris (D. O.) til.4 

United States, Naliano v. (C. C. A.) 7G1 

United States v. National Surety Co. (C. 

C. A.) 62 

United States v. One Ford Automobile and 

Foui'teen Packages of Distilled Spirits 

(C. C. A.) ;î74 

United States v. Pecis (C. C. A.) 1022 

United States v. Ped:;r)'e (D. C.) S.'ii) 

Ujiited States v. Pluladelpliia, B. & W. R. 

Co. (D. C.) ISS 

United States, Pinaseo v. (C. C. A.) 400 

United States, Powers v. (C. C. A.) 1020 

United States, Purpura v. (C. C. A.) 473 

United States v. Raine-Andrews Lumber 

Co. (I>. C.) 787 

United States, Reeder v. (C. C. A.) 86 

U'nited States v. Ridgely fC. C. A.) OTô 

United States, Robcrtson v. (C. C. A.) 948 

United States, Robins v. (C. C. A.) 126 

United States v. Royal Dutch West In- 

dia Mail Co. (C. 0. A.) 91 

United States, Seebaeh v. (C. C. A.) 885 

United States v. Sischo (1>. C.) 1001 

United States v. Smith (D. C.) 191 

United Staes, Stephens v. (C. C. A.) 957 

United States, Thompson v. (C. C. A.)... 1022 

United States v. Uhl (D. C.) 226 

United States v. Uhl (D. C.) 532 

United States v. Union Bank of Canada 

(C. C. A.) 91 

United States. Union ïool Co. v. (C. C. A.) 431 
United States v. United States lirokerugc 

& Trading Co. (D. C.) 4'i'.) 

United States v. Vogel (C. C. A.) 2';2 

United States, Webl) v. (C. C. A.) 1022 

United States, Weichen v. (0. C. A.) 941 

United States v. Wells (D. C.) S;!.", 

United States, Wessels v. (C. C. A.) 3S9 

United States, Western Indemnity Co. v. 

(C. G. A.) 1022 

United States v. Woolley (D. C.) 518 

United States, Ya-koot-sa v. (C. C. A.) 398 

United States Brokerage & Trading Co., 

United States v. (D. C.) 459 

United Steel Co. v. Casey (C. 0. A.) 889 



;POiiTED XV 

P.) 

Page 
United Thacker Coal Co., Mavnard v. (C. 

C. A.) 478 

Universal Motor Truek Ce, Donovan y. 

(C. C. A.) 322 

Village of Kinney, Clevcland Cliffs Iron 
Co. V. (D. C.) 080 

Vitagraph Co. of America. De Croisset v. 
(C. C. A.) 100 

Vogel, United States v. (C. C. A.) 202 

Vrceland, Lee v. (App. D. C.) 654 

Wakena, The (D. C.) 989 

V»' alter v. Atha (C. C. A.) 75 

Wai'e V. Cox (C. C. A.) 1022 

Watts, Ely Real Eslate & Investmeat Co. 

V. (C. C. A.) 721 

Webb V. United States (C. C. A.) 1022 

Webcr I31cetric Co. v. R. H. Freennin Elec- 
tric Co. (C. C. A.) • 769 

Weichen v. United States (C. C. A.) 941 

^Veinl,lerg, Jay v. (C. C. A.) 973 

Wcidon, In re (U. C.) 828 

Wells, United States v. (D. C.) 833 

AVergeland, The (i>. C.) 785 

Vï'essels V. Uinted States (C. C. A.) 389 

Western Indemnitv Co. v. United States 

(C. C. A.) .■ 1022 

V'/. G. Coyle & Co. v. North America S. 

S. Corporation (G. C. A.) 250 

White, Lim Chan v. (C. C. A.) 762 

VVhittlesey, Pétition of (C. C. A.) 955 

Wibie V. Farmers' Life Ins. Co. (C. C. 

A.) 861 

Wiej^and, Braun v. (App. D. C.) 647 

Wilson V. liaker-AVinteley Coal Co. (C. 

C. A.) 1022 

AVilson, Baker-Wliiteley Coal Co. v. (C. 

C. A.) 1016 

Woodward & Lothrop v. Union Trust Go. 

of Rochester. N. Y. (App. D. G.) 627 

Woolley, United States v. (D. C.) 518 

Wvsong & Miles Co. v. Bank of North 

America (C. G. A.) 130 

W. & J. Sloane, J. W. Ringrose Co. v. 

(D. C.) 645 

Ya-koot-sa v. United States (C. C. A.) 398 

Yalc &■ Towric Mfg. Co. v. Travis (D. C.) 570 

Yarmonth, The (C. C. A.) 250 

York & Co., Geisenberger & Friedier v. 

(C. C. A.) 739 

Young Toy, Ex parte (D. C.) 227 

Zidell V. Dextcr (C. O. A.) 145 



CASES 

ARGUED AND DETERMINED 

IN THE 

UNITED STATES CIRCUIT COURTS OF APPEALS. THE 

DISTRICT COURTS. AND 1 HE COURT OF 

APPEALS OF THE DISTRICT 

OF COLUMBIA 



THE DUQUESNB. 

(Circuit Court of Appeals, Thlrd Circuit January 8, 1920.) 

No. 2500. 

1. OOULISION <@=>98 — NOT NECESSABY TO SOUND WHISTLE BïJFOBE BOUNDINO 

BEND, WHERE STEAMER IS IN VIEW. 

Kule 6 of the supervising Inspectors, promulgated under Eev. St § 4412, 
requiring steamers rounding a short bend or point, whlch would prevent 
an approacliing steamer being seen at 600 yards, to sound a wtiistle, 
was not violated by failing to whlstle, where the bend was sufficiently 
long and flat to permit tbe approacbing steamer to Iseep the other in 
slght continuously for at least a mile. 

2. Collision <S=98 — Gtjaed and foeecastle lights not a substitute foe 

coloeed staok lights. 

In determlnlng the responsibillty for a collision between steamers, 
guard and forecastle white lights, customarily used, but not required by 
law, cannot be considered as a substitute for, or an excuse for not uslng, 
the eolored stack lights required by rule 6 of Rev. St. § 4233 (Comp. St. 
§ 7948.) 

3. Collision <S=>104 — Mannee of eebutting peesumption that failuee to 

show coloeed stack lights caused accident. 

A Steamer, whlch did not show eolored stack lights at the time of a 
collision, as required by rule 6 of Rev. St. § 4233 (Comp. St. § 7948) , can 
escape the presumption of fault only by showing that the failure to obey 
the rule posltlvely could not hâve contributed to the collision. 

4. Collision <S=j105 — Failuee to show coloebid stack lights as conteibut- 

ing cause. 

Evidence that lights on a steamer*» tow were doubtless concealed by a 
river fog, that its guard lights were not so hlgh as Its stack lights, etc., 
held to establish that the failure to show the eolored stack lights as re- 
quired by rule 6 of Rev. St. § 4233 (Comp. St. § 7948), probably contributed 
to the collision. 

5. Collision <®=> 105 — Evidence estabucshing failuee to show coloeed 

stack lights. 

In a collision case Involvlng two steamers with tows, conflicting évi- 
dence, including an admission by a member of the libeled steamer's crew 
that one of her stack lights was not bumlng soon after the collision, and 

^ssFor other cases see same topic & KEY-NUMBBR in aU Key-Numbered Dlgests & Indexes 
262 F.— 1 



2 262 FEDERAL REPORTER 

testlmony that both stack lights were on the same electric circuit, etc., 
held to estabUsh that the libeled steamer's colored stack lights were not 
bumlng at the tlme of the collision, as required by rule 6 of Rev. St. S 
4233 (Comp. St § 7948). 

Appeal f rom the District Court of the United States for the West- 
ern District of Pennsylvania ; Charles P. Orr, Judge. 

Libel by the Diamond Coal & Coke Company against the Steamboat 
Duquesne; the Carnegie Steel Company, claimant. From a decree 
dismissing the libel, the libellant appeals. Reversed, with directions. 

Lowrie C. Barton, of Pittsburgh, Pa., for appellant. 
Reed, Smith, Shaw & Beal aind John G. Frazer, ail of Pittsburgh, 
Pa., for appellee. 

Before BUFFINGTON and WOOLLEY, Circuit Judges, and 
MORRIS, District Judge. 

WOOLLEY, Circuit Judge. On the night of October 23, 1917, 
the Steamboat "Duquesne" was bound down the Monongahela River 
with a spike tow of seven heavily laden steel barges. Thèse barges 
were placed ahead of the steamboat and were arranged in three tiers 
of two barges each, with the remaining barge in front. The Steam- 
boat "Monitor" with a tow of seven empty flats ahead was bound up 
stream. The night was dark. Some rain had fallen and a rain fog 
hung on the water. The river was about a thousand f eet wide. The 
channel was about midway the river and parallel with the two shores. 
Both steamboats with their tows held courses in or near the channel. 

The "Duquesne" in descending the river had passed a bend and 
had straightened out her course. When the tows of the two steam- 
boats were from 200 to 500 yards apart, the "Monitor" sighted the 
starboard light on the forward barge of the "Duquesne's" tow. Be- 
ing the ascending steamer with the right imder the rule (Pilot Rules, 
August, 1911) of selecting the passing manœuvre, the "Monitor" 
promptly gave one blast of her whistle, indicating her purpose to 
pass port to port, to which the "Duquesne" responded by an assenting 
signal. 

Both steamers moved their tows to starboard, but before the ma- 
nœuvre had been completed both captains discovered that coUision 
was imminent. Thereupon, both reversed their engines with the re- 
suit that the tow of the "Monitor" cleared the tow of the "Duquesne," 
but the forward barge of the "Duquesne's" tow rammed the "Moni- 
tor," causing her to sink and to sustain the damages for which this 
libel was filed. 

The District Court, finding no négligence on the part of the 
"Duquesne," dismissed the libel. The libellant took this appeal. 

The record discloses no pertinent question of law. The issue is 
solely one of fact and raises the one question: Which steamer by 
its négligence caused the collision ? 

The évidence is quite sufficient to prove that the "Monitor". had ail 
lights set and brightly buming. This évidence is reenforced by the 
admission of the captain of the "Duquesne" that he saw the "Moni- 
tor" a mile or more away and kept her in sight. It is also proved that 



THE DUQUESNE <> 

(262 F.) 

the "Monitor" was not slow in sighting the "Duquesne's" tow, and 
that immediately upon observing its lights, she gave a passing signal ; 
and that, considered with référence to the proximity of the two tows, 
their relative positions, and the brief time at her disposai, the "Moni- 
tor" did not unwisely sélect the signal or negligently carry out the 
manœuvre. 

Thus acquitting the "Monitor" of négligence, we tum to the tes- 
timony on which négligence is chargea to the "Duquesne." This 
charge is made upon several grounds: 

(1) In violating Rule VI of the supervising inspectors, promulgated 
under authority of Section 4412 of the Revised Statutes, which re- 
quires a steamer navigating a river at a short bend or point, where 
from any cause a steamer approaching in the opposite direction can- 
not be seen at a distance of 600 yards, to give a signal of one long 
sound of the whistle as a notice to any steamer that may be ap- 
proaching on the other side, and within half a mile of such bend or 
point. 

(2) In violating the Pilot Rules of August, 1911, with respect to 
tow lights, which requires, when a barge is towed by a steamer ahead, 
that it shall hâve a green light on the starboard bow and a red light 
on the port bow. 

(3) In violating the rule respecting steamer lights, presently to be 
mentioned. 

[1] We dispose of the first charge of négligence adversely to the 
libellant, on the ground that the bend or point in the river which the 
"Duquesne" was passing was not such as the rule contemplâtes. The 
bend was not short at ail. It was sufficiently long and flat to enable 
the "Duquesne" to pick up the "Monitor" and keep her continuously 
in sight for a mile or more. Similarly, we dispose of the second 
charge of négligence on a finding that both lights on the tow of the 
"Duquesne" were properly set and burning. 

The question of négligence résolves itself into this: Were the 
lights on the "Duquesne" itself burning? Of thèse lights there 
were two kinds: The guard and forecastle white lights customarily 
used but not required by law, and the colored stack lights required 
by Rule 6 of Section 4233 Revised Statutes (Comp. St. § 7948). This 
rule provides that : 

"River steamers navigating waters flowing into the Gulf of Mexico, and 
their tributaries, shall carry the following lights, namely: One red light 
on the outboard side of the port smokepipe, and one green light on the out- 
hoard side of the starboard smokepipe. Such lights shall show both forward 
and abeam on their respective sides." 

[2, 3] Ail the lights with which we are now concemed were in- 
candescent electric lights of ordinary candie power. There is much 
conflict in the testimony as to whether the guard lights and fore- 
castle lights of the "Duquesne" were burning just prior to the col- 
lision, from which we find that the forecastle lights were not burn- 
ing, though at least five of the ten guard lights (two on one side and 
three on the other) were burning. But as thèse lights are not re- 
quired by the rules and laws of navigation (though helpful, perhaps. 



4 262 FEDERAL REPORTER 

in disclosing a craft on which they are burning), they cannot be re- 
garded as substitutes for lawful lights; neither can the fact that 
some of them were burning exonerate the steamboat from négligence 
in failing to hâve burning the lights required by law. Therefore, we 
regard the issue whether the guard and forecastle lights on the 
"Duquesne" were burning as of no conséquence if it be found that 
her stack lights were not burning. If her stack lights were out, then 
the "Duquesne" committed a positive breach of a statutory rule of 
navigation, promulgated to prevent just such collisions as this one. 
To escape the presumption of fault arising upon such a breach, she 
was required, under familiar principles, to show, not that her failure 
to obey the rule probably did not contribute to the disaster, but posi- 
tively that it could not hâve done so. The Pennsylvania, 86 U. S. 
(19 Wall.) 125, 136, 22 L. Ed. 148. 

[4] The lights of the "Duquesne's" tow were low upon the water 
and were, doubtless, long concealed by the river fog from the view 
of the captain of the "Monitor." The guard lights of the "Duquesne" 
were higher but not so high as the stack lights. Had the stack lighls 
been burning, they probably could hâve been seen above the fog by 
the "Monitor" in time to hâve prevented the collision. This infer- 
ence may fairly be drawn from the fact that the captain of the 
"Duquesne" saw the lights of the "Monitor" above the fog for at 
least a mile. Therefore, as we regard this case, it turns at the last 
on the issue of the "Duquesne's" stack lights. 

[5] On "this issue it appears that no one on the "Monitor" saw 
the stack lights of the "Duquesne" before the collision. Six witness- 
es, officers and deck hands of the "Monitor," testified positively that 
immediately after the collision and for a short time foUowing the 
port stack light of the "Duquesne" was not burning. It is a per- 
missible inference, based on testimony that the two' lights were on 
the same circuit, that if the port stack light was out, the starboard 
stack light also was out. Against this testimony one witness, the 
captain of the "Duquesne," testified that he observed her stack lights 
burning a mile and a half above the point of collision, and three wit- 
nesses aboard the "Duquesne" testified that they saw the stack lights 
burning shortly after the collision. None testified that the lights were 
burning at the time of collision. If this were ail the testimony, it 
would be another instance of the habit of opposing witnesses to 
swear by their ship and we would hâve difRculty in deciding where 
lay the truth. But in this case there was a circumstance which lends 
force to the testimony of some of the witnesses and justifies the re- 
jection of the testimony of others. 

Immediately after the "Monitor" had sunk and her officers and 
crew had crawled into the pilot house, which remained above the 
water, the "Duquesne" moved down to within speaking distance. In 
response to a request by the men for coal and clothes, the captain 
of the "Duquesne" sent Anderson, the watch of the "Duquesne," over 
to the "Monitor" in a yawl. While there, the captain of the "Moni- 
tor" called Anderson's attention to the fact that there were no stack 
lights on the "Duquesne." There foUowed conversation between the 



THE DUQUESNE 5 

(262 p.) 

two about the absence of thèse lights. This conversation was within 
the hearing of five witnesses whose attention was attracted by it and 
whose gaze was thereby directed toward the "Duquesne's" stacks. 
It was this conversation which aroused the attention of thèse witness- 
es and caused them carefuUy to look for lights and which fixed in 
their minds the recollection that, on looking, they saw none. 

Contrary to usual expérience in such cases, Anderson, when called 
to testify for the "Duquesne," admitted that the captain of the "Mon- 
itor" had called his attention to the absence of stack lights on the 
"Duquesne," and testified positively that the red stack light was not 
burning. Being on the port side, he could not testify about the green 
stack light because the stacks obstructed his view. After Anderson 
returned to the "Duquesne," her port stack light came on. 

On this testimony, very briefly recited, we think the issue of nég- 
ligence in failing to keep the stack lights burning as required by law, 
must be resolved against the respondent. As the respondent has not 
sustained the burden of showing that this breach of statutory duty 
could not hâve been the cause of the collision, the presumption, aris- 
ing from the breach, that the collision was due to this fault, remains. 
The Pennsylvania, 86 U. S. (19 Wall.) 125, 136, 22 L. Ed. 148; The 
Teaser, 246 Fed. 219, 222, 158 C. C. A. 379 (C. C. A. 3d). 

The decree below is, theref ore, reversed with the direction that the 
action proceed in harmony with this opinion. 



THE DUQUESNE. 

MARTIN V. CARNEGIE STEEL 00. 

(Circuit Court of Appeala, Thlrd Circuit. January 8, 1920.) 

No, 2501. 

Appeal from the District Court of the United States for the Western Dis- 
trict of Pennsylvania ; Charles P. Orr, Judge. 

Liibel by Emma L. Martin against the Carnegie Steel Company, owner of 
the Steamboat Duquesne. From a decree dismissing the libel, libellant appeals. 
Reyersed, with directions. 

liowrie C. Barton, of Pittsburgh, Fa., for appellant. 

Reed, Smith, Shaw & Beal, and John G. Frazer, ail of Pittsburgh, Pa., for 
appellee. 

Before BUFPINGTON and WOOLLEY, Circuit Judges, and MORRIS, Dis- 
trict Judge. 

WOOLLEY, Circuit Judge. Charles Martin, the englneer of the "Monitor," 
on watch at the time, lest his Ufe in the collision between the "Monitor" and 
"Duquesne." His widow, Emma L. Martin, filed this libel in personam 
against Carnegie Steel Company, owner of the Steamboat "Duquesne," to 
recover damages for his death, charging négligence of that company's serv- 
ants In causlng the collision. The District Court, flnding that the collision 
was not due to thelr négligence, dismlssed the libel. Thereupon, the libellant 
took this appeaL 

The asslgnments of error are directed to the decree of dismissal and to the 
flnding on which it was based. As we hâve reversed the decree on a similar 



6 2G2 FEDERAL REPORTEE 

flnding In the companlon case of Diamond Coal & Coke Co. v. Steamboat 
"Duquesne," Oamegle Steel Co., 262 Fed. 1, — O. C. A. — , arlsing eut of 
tlie same collision, we must reverse thls decree for tlie same reasons. 

At the argument on appeal, the appellee raised a question as to the measure 
of damages under Pennsylvanla statutes. As the District Court did not 
reach the matter of damages, and, accordingly, made no ruling on the question, 
we wish to make it clear that the only issue on which we now pass in dis- 
posing of thls appeal la the one of negùgence trled by the EUstrlct Court and 
determined by its decree. 

The decree below Is reversed vrlth the direction to proceed in accordance 
with this opinion. 



DYE V. UNITED STATES. 
(Circuit Court of Appeals, Fourth Circuit October 14, 1919.) 

No. 1711. 

1. CaeEIEBS <S=338 — INDIOTMENT FOE DISCEIMINATION NKED NOT DESCEIBB DK- 

VICB USED. 

In an indictment for violation of the provision of Hepbum Act (Comp. 
St. § 8597), maklng It unlawful to grant any rebato or concession whereby, 
"by any devlce whatever," any advantage is given or discrimination is 
practiced In favor of a shipper, It is not necessary to describe the devlce 
used. 

2. Cabeiebs <g=5>38 — Evidence sufficient to sustain conviction fou dis- 

crimination, IN violation of Intekstate Commerce Act. 

Evidence held to sustain a conviction of défendant, who as agent for 
a railroad company was in charge of distribution of cars between coal 
mines, for discriminatlng in favor of one mine, although it also showed 
that the discrimination was prlmarily for his own Personal profit, and was 
without the request or knowledge of the mine owner. 

3. Criminal iaw <S=»1173(4) — Qualification of eequested instruction 

habmless. 

Qualification of an Instruction, requested by défendant, held not preju- 
dlcial error, in view of the évidence. 

In Error to the District Court of the United States for the Southern 
District of West Virginia, at Charleston; Benjamin F. Keller, Judge. 

Criminal prosecution by the United States against I. K. Dye. Judg- 
ment of conviction, and défendant brings error. Affirmed. 

H. G. Kump, of Elkins, W. Va. (Conley & Johnson and Lilly & L,illy, 
ail of Charleston, W. Va., on the brief), for plaintiflF in error 

J. Stanley Payne, Sp. Asst. U. S. Atty., of Washiiigton, D. C. (Lon 
H. Kelly, U. S. Atty., of Gassaway, W. Va., on the brief), for the Unit- 
ed States. 

Before KNAPP and WOODS, Circuit Judges, and WADDILL, 
District Judge. 

WOODS, Circuit Judge. The défendant was convicted on the first 
and fifth counts of an indictment charging violation of the following 
provision of the Elkins Act, as amended by the Hepburn Act (Comp. 
St. § 8597): 

" * • • And it shall be unlawful for any person, persons, or corporation 
to ofifer, grant, or give, or to sollcit, accept, or receive any rebate, concession, or 
discrimination in respect to the transportatlon of any property in Interstate or 

£=>For otber cases see same toplc & KBY-NUMBEjR in ail Key-Numbered Dlgests & Indexe* 



DTE V. UNITED STATES < 

C262 F.) 

foreign commerce by any common carrier subject to said act to regulate com- 
merce and the acts amendatory thereof whereby any such property shall by any 
device whatever be transported at a less rate than that named in the tariffs 
publlshed and flled by such carrier, as is required by said act to regulate 
commerce and the acts amendatory thereof, or whereby any other advantage 
Is given or discrimination Is practiced. Every person or corporation, whether 
carrier or shlpper, who shall knowingly offer, grant, or give, or solicit, ao- 
cept, or receive any such rebates, concession, or discrimination shall be deem- 
ed guilty of a misdemeanor." 32 Stat. 847 ; 34 Stat 584. 

On the Une of the Coal & Coke Railway Company there are a num- 
ber of West Virginia coal mines dépendent on that company for the 
transportation of their product to customers in West Virginia and oth- 
er States. In 1917 there was a car shortage. The Interstate Com- 
merce Commission made a rule for the équitable pro rata distribution 
of available cars among the mines according to their output. 

The railway company made a rating of the mines, showing how many 
cars each was entitled to receive according to this rule, without dis- 
crimination against or in favor of any mine or shipper or consignée. 
Governed by this rating, an officiai or employé of the railway made 
a daily distribution of the available cars. Cars sent to the mines to be 
loaded with coal for railroad fuel were not charged against the mines 
on their allotment, but the remaining cars to be used for commercial 
coal — coal sold to the trade — were allotted, and notice was given to 
each mine of the per centum of the cars called for by its rating that 
could be furnished. Thus the number of cars available to each mine 
for commercial coal was ascertained. Since the price of commercial 
coal was higher than fuel coal, it was to the advantage of each mine to 
get as many cars for commercial coal as possible. 

The charge of the first count of the indictment is that the défendant 
was an agent and employé of the Coal & Coke Railway Company and 
had charge of and supervision over the allotment and distribution of 
cars to the several mines served by the railway company according 
to their rating; that on April 18, 1917, when the Dorfee mine was 
entitled to receive only 5 cars, 70 per cent, of its rating, for commercial 
coal, the défendant by means of a device, knowingly allotted, distribut- 
ed, and placed at the Dorfee mine 10 cars which were to be loaded with 
commercial coal, and which were used for the shipment of commercial 
coal; that on the same day the other mines mentioned in the indict- 
ment standing on the same footing were allotted and received only 
70 per cent, of their rating; that this transaction of the défendant was 
an unlawful discrimination. 

The fifth count of the indictment makes a similar charge of discrimi- 
nation in favor of the Tumer mine and against other mines mentioned. 

There was no merit in the motion to quash the indictment. The allé- 
gation is directly made that the mines discriminated against asked for 
ail the cars for commercial coal indicated by their rating and were fur- 
nished only 70 per cent., while the Dorfee mine was furnished much 
more than the number called for by the rating, and it necessarily fol- 
lows that this was on its face a substantial discrimination. 

[ 1 ] It was not necessary to describe the device by which the dis- 
crimination was effected. In denouncing discrimination "by any de- 



8 262 FEDERAL RMIPOETBB 

vice" the statute does not mean that a device is necessary to the offense, 
i>ut that if any device is used the courts are to look through it to the 
real nature of the transaction. Armour Packing Co. v. United States, 
209 U. S. 56, 85, 28 Sup. Ct. 428, 52 h. Ed. 681. For the same reason 
there was no abuse of discrétion in refusing the motion for a bill of 
particulars as to the nature of the device. Besides, the letters of the 
défendant and other évidence show that the défendant could not hâve 
failed to know the transactions to which the indictment related. 

The position that the défendant was tried without having pleaded to 
the indictment is based on a mistake of fact. The record shows that 
the défendant did formally enter his plea of not guilty. He then mov- 
ed to be allowed to withdraw his plea of not guilty and demand a bill 
of particulars. The motion was refused in its entirety, and hence 
the plea stood as originally made. 

The errors assigned in the charge and in the admission and rejection 
of testimony are to be considered in the light of the amendment of 
1919 of section 269 of Judicial Code (Comp. St. Ann. Supp. 1919, § 
1246) : 

"On the hearing of any appeal, certlorarl, writ of error, or motion for a new 
trial. In any case, civil or crlminal, the court shall give judgment after an 
examinatiou of the entire record before the court, without regard to techni- 
cal errors, defects, or exceptions which do not affect the substantlal rights of 
the parties." 

[2] The facts alleged in counts 1 and 5 of the indictment were prov- 
ed beyond ail controversy. But by a motion for a directed verdict of 
acquittai the défendant asked the trial court to hold that thèse facts 
did not constitute an unlawful discrimination as charged in favor of 
the Dorfee mine and against Buchanon River Coal & Coke Company 
and other mining companies mentioned, because the govemment proved 
additional facts showing that Dye himself, and not the Dorfee mine, got 
the benefit of the unequal distribution of the cars. Thèse additional 
facts were that the Dorfee mine in good faith received and loaded 
the cars as fuel cars in fulfiUment of a contract to sell Dye himself 
fuel coal, and by his direction consigned them to the Pennsylvania 
Railroad Company; that at Elkins Dye had the cars reconsigned to 
General Chemical Company at Marcus Hook, Pa., to which he had sold 
the coal as commercial coal at a price about $1.10 a ton above the price 
paid for it as fuel coal to the Dorfee mine. The argument is that the 
discrimination was therefore in favor of Dye himself and not the 
Dorfee mine against other mines mentioned. 

The fallacy seems évident. Taking the cars from the supply avail- 
able for distribution among the mines for commercial coal diminished 
the allotment of the Buchanon Company and other mining companies 
to their disadvantage. It is true that Dye received the main benefit of 
this wrong, since he sold the coal as commercial coal when he had by 
deceit bought it at a lower price as fuel coal. But the Dorfee mine also 
received benefit from the wrong, though unwittingly, for it was enabled 
to get cars and keep its mines in opération, and sell and ship the coal 
for which the cars were used, presumably at a profit, although sold at 



DYB V. UNITED STATES 9 

C2t2 F.> 

the price of fuel coal. Dye's appropriation of the chief benefit supplied 
the motive. His pretense that the cars were for fuel coal, and his 
written déniai to a complaining shipper that such transactions had taken 
place, made évident his knowledge that he was violating the law. Sure- 
ly the défendant could not be relieved of the guilt of this discrimination 
in favor of the Dorfee mine, on the ground of variance between the 
charge and the évidence, by proof that he clandestinely appropriated to 
himself the main profit of the discrimination. On the contrary, the in- 
ference that he discriminated for his own benefit necessarily implied 
that there had been discrimination in favor of the Dorfee mine by 
sending it an excess of cars as a condition précèdent to his reaping the 
principal fruit of the discrimination. 

But in addition to that proof of discrimination against other mines 
or shippers as charged in the indictment would make out the offense, 
even if the préférence to the Dorfee mine was used only as a means of 
carrying out the unlawful scheme against the other mines without ac- 
tuai benefit to the Dorfee mine. The purpose of Congress -was to eut 
up by the roots every form of discrimination, favoritism, and in- 
equality. Louisville & Nashville R. R. Co. v. Mottley, 219 U. S. 467, 
478, 31 Sup. Ct. 265, 55 L. Ed. 297, 34 L. R. A. (N. S.) 671; New 
Haven R. R. Co. v. Interstate Commerce Commission, 200 U. S. 361, 
391, 26 Sup. Ct. 272, 50 h. Ed. 515 ; Armour Packing Co. v. United 
States, 209 U. S. 56, 72, 28 Sup. Ct. 428, 52 L. Ed. 681 ; LouisviUe 
& Nashville R. R. Co. v. Mottley, 219 U. S. 487, 496, 31 Sup. Ct. 265, 
55 L. Ed. 297, 34 L. R. A. (N. S.) 671 ; United States v. Union Stock 
Yard, 226 U. S. 286, 307, 33 Sup. Ct. 83, 57 L. Ed. 226. 

It was further contended in support of the motion to direct a verdict 
of acquittai that the defendant's acts alleged to be criminal were mère 
administrative irregularities subject to investigation by the Interstate 
Commerce Commission. The rule under which the cars were to be 
distributed to the several mines was fair and équitable. The charge 
and the proof were that the défendant intentionally misapplied this 
rule so as to effect the illégal discrimination. This was not an admin- 
istrative act, but a violation of the statute. Pennsylvania Railroad Co. 
V. Puritan Coal Co., 237 U. S. 121, 35 Sup. Ct. 484, 59 L. Ed. 867. 

There is nothing in the point that at the time of the offense Dye was 
not the gênerai manager, the officer who usually had charge of the dis- 
tribution of cars. He was proved to be the agent of the railway Com- 
pany who actually directed the distribution. 

[3] The défendant requested the following instruction: 

"The jury are instructed that the offense of 'discrimination,' as charged in 
this indictment, is the granting of a préférence to a shipper that is not grant- 
ed to ail shippers in substantially the same class, whereby the shipper receivlng 
the same enjoys an unjust advantage over sueh other shippers, and If the Jury 
belleves from the évidence that the fuel coal contracts alleged to hâve been 
secured by the défendant and accepted by certain coal mines on the Coal & 
Coke Eailway, and the securlng of foreign empty cars for such coal, did not 
work an injury or injustice to, or discrimination against, the owner of any 
coal mine served by said railroad, then you should find that the placing of 
sald cars did not constitute a discrimination as charged in the Indictment." 

After reading this request to the jury the District Judge said: 



10 262 FBDEBÂL BBFORTEK 

"I thlnk, gentlemen, that whlle I Indlcated I would glve that Instruction, I 
can only glye It In connection with an explanatlon, because the question Is 
not necessarlly as to whether a mine was favored or dlscrimlnated against. 
The beginnlng of the instruction Illustrâtes what I want to say ; It is 'the 
grantlng of a préférence to a shipper' ; it need not necessarlly be in favor of 
or against a mine, and the contention of the govemment In this case was 
that the défendant himself was a shipper, and that the discrimination favored 
hlm. Of course, that question Is one to be determlned under ail the évidence 
in the case ; but it Is not necessary that a spedflc mine should be discrimiuat- 
ed in favor of or against, if what was done dlscriminated in favor of a 
shipper to the détriment of other shippers or other mines." 

Error is charged in refusing to give this request as presented, and 
in qualifying it by the language quoted. The ground of the assign- 
aient is that the indictment charged discrimination against particular 
coal companies therein mentioned in favor of the Dorfee mine, where- 
as the instruction given allowed the jury to convict if they reached 
the conclusion that the défendant had discriminated against the mines 
mentioned in his own behalf . Technically, the assignment is well tak- 
en; but there was no évidence upon which the distinction contended 
for by appellant could be founded. 

The discrimination proved in favor of Dye himself, and against 
the particular coal companies mentioned, was linked by the proof 
inseparably with discrimination in favor of the Dorfee mine. They 
were parts of one transaction. The same évidence proved both offens- 
es with equal certainty. For this reason the error in charging that de- 
fendant might be convicted if he had discriminated in his own favor 
was unsubstantial. 

The évidence showing discrimination in intrastate shipments and in 
shipments other than those charged in the indictment was admissible, 
because it tended to prove a deUberate intent, and thus disprove def end- 
ant's claim that the discrimination charged was given only temporarily, 
for convenience of administration, with the intent to correct it. 

There was no error in excluding an order of Morrow, superinten- 
dent of transportation, directing that coal shipped as fuel coal and re- 
consigned as commercial coal should be charged against the mine "from 
which the car originated." The proof shows conclusively that the de- 
fendant, not only had no purpose to charge the cars back to the Dorfee 
mine, but that he had placed himself in a position where he could not 
do so. 

The officiai car distribution sheets of the railroad were admissible 
to prove, not that the cars had been actually used as commercial cars 
by defendant's order, but that they were not so charged in the officiai 
distribution. 

It is not necessary to pass on the admissibility of the wheel reports 
made by conductors showing delivery of cars, for the reason that the 
fuUy verified mine reports showed the delivery. 

The other requests to charge ref used by the court were not argued in 
the brief and require no discussion, since they were covered by the gên- 
erai charge, or are clearly unsound, or are not responsive to the issues. 

Even if there had been distinct errors in the admission or rejection 



iURYLAND DEEDGIKG & C. CO. V. STATE OF MAEÏIAKD H 

C262 F.) 

of testimony, or in the charge, tliey would not justify reversai. The 
guilt of the défendant was so conchisively proved that his acquittai 
would hâve been a clear miscarriage of justice. 
Affinned. 



MAKYIiAND DRHDGING & CONTRACTING C». V. STATE OF MARY- 

LAND, to Use of BODDIB, et al. 
STATE OF MARYIiAND, to Use of BODDIB, v. BALTIMOBE & O. B. 

00. et aL 

(Circuit Court of Appeals, Fourth Circuit October 22, 1919.) 

Nos. 1714, 1T15. 

1. ShIPPINO <g=s84(l) — NEGLIGENCE CAUSING DEATH OF STBVEDOEE. 

A dredge, working in a slip, with two Unes on eaeli slde to the plers, 
dropplng and tlghtening altemately, as she worked, which allowed oae 
line to sag while a launcli loaded with stevedores was passing, sweeping 
off a stevedore, who was drowned, Iveld in fault, It appearing that the 
launch signaled and would hâve passed safely, if the line had been held 
taut, as customary, but through négligence was not heard nor seen; and 
the master of the launch also held in fault for proceeding, knowing the 
danger, and wlthout Indication that hls signal was heard and would be 
heeded. 

2. Cakkiebs <g=240 — Maotee and servant <&=j315 — Woekmen being tbans- 

POETED NOT "PASSENQHES"; NEGLIGENCE OF INDEPENDENT CONTBACTOB 
TEANSPOBTINO employés CHAEQEABLB TO THEIE EMPLOTEB. 

Workmen being transported to thelr place of work by the master at 
his expense and in thelr work time, are not "passengers," but employés, 
for whose safety the master must exercise reasonable care ; and he can- 
not relieve hlmself of this responslbllity by employing an Independent 
contractor for their transportation. 

[Ed. Note. — For other définitions, see Words and Phrases, First and 
Second Séries, Passenger.) 

3. Mastee and servant <g=5l94— Stevbdores teanspoetkd to theie woek not 

FEIiOW SEBVANTS OF MASTEE DP VE8SBL. 

Where an employer of stevedores, under agreement to transport them 
to their work, contracted with the owner of a launch to carry them, the 
master of the launch was not their fellow servant, and for his négligence, 
eontributlng to the death of a stevedore, the employer is llable. 

Appeals from the District Court of the United States for the Dis- 
trict of Maryland, at Baltimore; John C. Rose, Judge. 

Suit by the State of Maryland, to the use of Louise Boddie, widow 
of William Boddie, deceased, against the Baltimore & Ohio Rail- 
road Company and others. Decree for libelant against respondent 
Maryland Dredging & Contracting Company, and it appeals. Modi- 
fied. 

For opinion below, see 254 Fed. 720. 

George Forbes, of BaUimore, Md. (Joseph N. Ulman and Knapp, 
Ulman & Tucker, ail of Baltimore, Md., on the brief), for Maryland 
Dredging & Contracting Co. 

Benjamin H. McKindless, of Baltimore, Md. (Charles W. Main, 
of Baltimore, Md., on the brief), for State of Maryland, to the use of 
Louise Boddie and others. 

(S=»For other cases see same topic & KBY-NUUBIia lu ail Key-Numbered Dlgests é Indexée 



12 262 FEDERAL REPOBTEB 

Frank Gosnell, of Baltimore, Md. (Marbury, Gosnell & Williams 
and Jesse Slingluff, âll of Baltimore, Md., on the brief), for Patapsco 
Ship Ceiling & Stevedore Co. 

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges. 

WOODS, Circuit Judge. [1] In the summer of 1917, the dredge 
Chesapeake was working in a slip in Baltimore harbor. The Balti- 
more & Ohio Railroad Company owned the land adjacent to the slip, 
and had employed for the work the Empire Engineering Company, 
and it in tum had employed the Maryland Dredging & Contracting 
Company, owner of the Chesapeake. The dredge was made fast to 
the piers by two lines on each side. When it was not in opération, 
thèse lines were sufficiently taut and elevated above the water for a 
launch to pass under. When the dredge was operating, the lines 
were alternately slack and taut as the bucket of the dredge went up 
and down. Launches frequently passed the dredge, going under 
thèse cables when they were taut. The Patapsco Ship Ceiling & 
Stevedore Company in the course of business carried its workmen 
from place to place in the harbor. For this purpose they sometimes 
used their own launches, and sometimes hired the launches of other 
owners. By contract the employment and pay of the workmen com- 
menced from the time they embarked to be carried to the place of 
work. 

On August 25, 1917, the Stevedore Company contracted with the 
owner of the launch Rosa to carry a number of its workmen from 
the pier adjacent to the slip in which the Chesapeake was dredging 
to the place where they were to work. The Rosa having taken on 
the stevedores undertook to pass under the cables of the Chesapeake. 
While passing one of the cables fell on the launch and knocked off 
the stevedore, William Boddie, who was sitting in the stern. Boddie 
was drowned, and the state of Maryland filed this libel for the bene- 
fit of Louise Bcxidie, widow of William Boddie, against the Balti- 
more & Ohio Railroad Company, the Empire Engineering Company, 
Maryland Dredging & Contracting Company, and the Patapsco Ship 
Ceiling & Stevedore Company, alleging that his death was due to 
the négligence of ail the respondents. The owner of the launch was 
not made a party. The District Court held (1) that the dredge was 
at fault and liable; (2) that since the Dredging Company was abun- 
dantly solvent it was unnecessary to décide whether the Baltimore & 
Ohio Railroad Company and the Engineering Company were ex- 
empt from liability on the ground that the Dredging Company was 
an independent contractor ; (3) that even if the master of the launch 
was at fault, and its owner liable, no decree could be entered against 
him because he was not a party to the action ; (4) that the Stevedore 
Company could not be held liable for any négligence in the naviga- 
tion of the launch because the owner of the launch was an inde- 
pendent contractor. 

We think the first finding is well supported by the évidence. The 
dredge cannot claim, without limitation, the privilèges of a vessel 
resting at anchor. True, the vessel itself was stationary, but it was 



MARTLAND DEEDGINa & 0. CO. V. STATE OP MARTLAND 13 

(262 P.) 

at work with movable lines stretched over the water under which 
its master knew launches passed from time to time; and he knew, 
also, that for their safe passage watchfulness and care were re- 
quired to heed the signal of approach, to keep taut the Une under 
which a launch was about to pass, and to wam any approaching 
launch not to attempt to pass under a Une when he was about to 
slacken it. On conflicting évidence, the District Judge held that the 
Rosa did give a blast of her whistle to indicate her intention to pass 
under the lines then taut; that the master of the dredge or the en- 
gineer set to watch on the stern should hâve heard and heeded the 
signal; that the watch was négligent in not seeing the launch, es- 
pecially after her signal, and either waming her not to try to pass 
or holding the lines taut until she passed. Thèse conclusions having 
strong support in the testimony of witnesses before the court are not 
subject to review hère. 

We think the District Judge was right in the opinion he intimated 
that the navigator of the launch was also négligent. The master of 
the launch knew the great danger of attempting to pass under the 
lines when the dredge was in opération, and he knew, also, that if 
not then in opération it might begin to operate at any moment. Al- 
though his beat was loaded with men, ail of whose lives would be im- 
per iled if the lines fell while he was passing, he subjected them to 
the hazard of the passage, on the chance that the master or watchman 
on the dredge had heard and would heed his signal, although he had 
had no response to it and no évidence of assent to his passage. Thiî. 
was négligence for which we can find no excuse. 

[2] Some authorities hold that employés being transported to their 
place of work in pursuance of a contract with the master, the trans- 
portation being a part of their compensation, are passengers. Klinck 
v. Chicago City Ry. Co., 262 111. 280, 104 N. E. 669, 52 L. R. A. 
(N. S.) 76, Ann. Cas. 1915B, 177, and authorities cited; note 19 L. 
R. A. (N. S.) 718. But by the great weight of reason and authority 
such workmen, in course of transportation, sustain the relation of 
employés for whose safety the master must exercise reasonable care. 
Northern Pacific R. R. Co. v. Peterson, 162 U. S. 346, 355, 16 Sup. 
Ct. 843, 40 L. Ed. 994; Martin v. Atchison, Topeka, etc., R. R. Co., 
166 U. S. 399, 17 Sup. Ct. 603, 41 L. Ed. 1051 ; note 12 L. R. A. 
(N. S.) 856. 

We are unable to agrée that the Stevedore Company can escape the 
conséquences of the négligence of the master of the launch on the 
ground that its owner was employed as an independent contractor. 
Doubtless the owner of the boat was an independent contractor as be- 
tween himself and the Stevedore Company, and in his relation to the 
gênerai public. For any négligence the conséquences of which would 
fall on the Stevedore Company he would be liable over to the Steve- 
dore Company. For any in jury inflicted by his négligence on the out- 
side public, such for example as an injury to another boat by collision, 
the owner of the launch as an independent contractor would be liable to 
the exemption of the Stevedore Company. Sturgis v. Boyer et al., 
24 How. 110, 16 L. Ed. 591; The Eugène F. Moran, 212 U. S. 466, 



14 262 FEDKRAL REPOBTEB 

29 Sup. Ct. 339, 53 L. Ed. 600; Casement v. Brown, 148 U. S. 615, 13 
Sup. Ct. 672, Z7 L. Ed. 582; Wilmington Railway Bridge Co. v. 

Franco-Ottoman Shipping Co., 259 Fed. 166, C. C. A. , Fourth 

Circuit, filed January 7, 1919. 

But the Stevedore Company having contracted to convey its em- 
ployés to their work, its obligation to use reasonable care in the car- 
nage is implied as a part of the contract; and it cannot shift this 
obligation to another by an independent contract to which the em- 
ployés were not parties and to which they did not assent. Water Co. v. 
Ware, 16 WaU. 566, 21 L. Ed. 485; City & S. Ry. Co. v. Moores, 80 
Md. 348, 30 Atl. 643, 45 Am. St. Rep. 345 ; Atlanta & F. R. Co. 
V. Kimberly, 87 Ga. 161, 13 S. E. 277, 27 Am. St. Rep. 231 ; John 
;J. Rade! Co. v. Borches, 147 Ky. 506, 145 S. W. 155, 39 L. R. A. 
(N. S.) 227; note 66 L. R. A. 148, 150; Hussey v. Franey, 205 Mass. 
413, 91 N. E. 391, 137 Am. St. Rep. 460; 14 R. C. L. 99. There is 
no évidence that Boddie or any other employé consented to look to 
the owner of the launch for the saf ety of their transportation. 

[3] The master of the launch whose négligence contributed to the 
death of Boddie was not a fellow servant of the workmen on the 
launch. In New England R. Co. v. Conroy, 175 U. S. 323, 20 Sup. 
Ct. 85, 44 L. Ed. 181, overruling Chicago, etc., R. Co. v. Ross, 112 
U. S. Z77, 5 Sup. Ct. 184, 28 L. Ed. 787, the Suprême Court held the 
conductor of a freight train to be a fellow servant of the train crew. 
There has been much diiïerence of judicial opinion on the question 
whether under the gênerai admiralty law the master of a vessel is a 
fellow servant of the crew, or the représentative of the owner for 
whose négligence resulting in personsil injury to a seaman the owner 
would be liable. The Osceola, 189 U. S. 158, 23 Sup. Ct. 483, 47 L. 
Ed. 760; The Hamilton, 207 U. S. 398, 28 Sup. Ct. 133, 52 L. Ed. 
264; Gabrielson v. Waydell, 135 N. Y. 1, 31 N. E. 969, 17 L. R. A. 
228, 31 Am. St. Rep. 793 ; Thompson v. Hermann, 47 Wis. 602, 3 N. 
W. 579, 32 Am. Rep. 784; Scarff v. Metcalf, 107 N. Y. 211, 13 N. E. 
796, 1 Am. St. Rep. 807; notes 31 Am. St. Rep. 807, and 21 Ann. 
Cas. 110. 

But the question was settled by the following statute: 

"In any suit to recover damages for any injury sustalned on board vessel 
or In Its service seamen haying command shall not be held to be fellow 
servants with those under their authority.". Act March 4, 1915, e. 153, § 20, 38 
Stat 1185 (Comp. St. § 8337a). 

Hence, even if the launch had been the property of the Stevedore 
Company and the master its employé he would hâve been its repré- 
sentative, and for his négligence it would be liable to the workmen it 
had contracted to transport. 

But, even if that were not true, Boddie and the other workmen were 
not fellow servants of the servant of one with whom the Stevedore 
Company had contracted to perform for it its contract obligation for 
their safe transportation. It chose to displace its own servants with the 
servants of another master, and it cannot be heard to say that the 
servant of that other over whom it had no control was a fellow servant 
of its own workmen. 18 R. C. E. 762, and cases cited; Bernheimer 



EOWE 7. DBOHEN 15 

C262 F.) 

V. Baker, 108 Md. 551, 70 Atl. 91, 129 Am. St. Rep. 458; City & S. 
Ry. Co. V. Moores, 80 Md. 348, 30 Atl. 643, 45 Am. St. Rep. 345 ; 
Charron v. Northwestern Fuel Ce, 149 Wis. 240, 134 N. W. 1048, 49 
L. R. A. (N. S.) 162, Ann. Cas. 1913C, 939. 

The resuit is that the owner of the launch is not a necessary party, 
and that the Stevedore Company is liable equally with the Dredging 
Company for the damages found by the District Court. A decree 
will be entered, so modifying the decree of the District Court. 

Modified. 



ROWE V. DROHEN et nx. • 
(Circuit Court of Appeals, Second Circuit. November 26, 1919.) 

No. 5. 

HUSBAND AND WITE i©=149(4) — PeOPEETY BESULTINa FBOU WIFE'b BUSINESS 
NOT SUBJECT TO HUSBAND's CBEiDITORS. 

Where, after a husband was deeply Indébted and tnsolvent, a wtCe on 
her own capital entered business and acquired property, the spouses can- 
not be treated as partners, and the profits of the business subjected to 
clalms of the husband's creditors, though he assisted In the business and 
at times spoke of It as his ; the business being that of the wlfe, who fur- 
nlshed the capital. 

Rogers, Circuit Judge, dissentlng. 

Appeal from the District Court of the United States fof the West- 
ern District of New York. 

Bill of Mûrie L. Rowe, as trustée of James L. Drohen, bankrupt, 
against James L. Drohen and Mabel R. Drohen, his wife. From a de- 
cree dismissing the bill (245 Fed. 684), complainant appeals. Affirmed. 

Herman J. Westwood, of New York City, and Nelson J. Palmer, of 
Dunkirk, N. Y. (Mûrie L. Rowe, of Dunkirk, N. Y., and Louis G. 
Monroe, of Fredonia, N. Y., of counsel), for appellant. 

Nugent & Heffernan and Warner & Woodin, ail of Dunkirk, N. 
Y. (T. P. Heffernan, of Dunkirk, N. Y., of counsel), for appellees. 

Before WARD, ROGERS, and HOUGH, Circuit Judges. 

WARD, Circuit Judge. March 1, 1916, James L. Drohen was ad- 
judicated a bankrupt on his own pétition, and on September 15 his 
trustée, Rowe, filed a bill in equity against him and his wife under 
section 70e of the Bankruptcy Act (Comp. St. § 9654), praying that they 
might be required to convey to him certain pièces of real estate in the 
city of Dunkirk, N. Y., standing in the name of Mrs. Drohen, the 
leases in his and her names of certain moving picture theaters, to- 
gether with their furniture and equipment, also a balance of account 
in the Merchants' National Bank of Dunkirk in the name of Mrs. J. L. 
Drohen, ail of which property the plaintiff charged was acquired out 
of the proceeds of J. L. Drohen's business and fraudulently transfer- 
red to Mrs. Drohen or purchased in her name for the purpose of 
hindering, delaying, and defrauding his creditors. Judge Hazel dis- 

<g=iFor other cases Bee same topic & KBY-NUMBBR In ail Key-Numbered Dlgests & Indexes 
•Certiorarl denled 261 U. S, — , 40 Sup. Ct. 396, 64 L. Ed. — . 



16 262 FEDERAL REPORTER 

missed the bill, and his opinion is reported in 245 Fed. 684. The 
plaintiff's counsel states his theory of the situation as f oUows : 

"The eomplainant now feels that It bas justifled the statement, made earlier 
in the brief, that in the latter part of December, 1906, or early in 1907, whiie 
the Dunkirk Theater was in contemplation, or about the tlme the parties were 
gettlng ready to open It, the two défendants entered Into the fraudulent and 
uneonscionable agreement or understanding that. If the venture should prove 
a success, they would both déclare that the business was hers, and point to 
the bank account as proof, while, if it tumed out a failure, they would both 
assert that the venture was his, and point to the lease and the contracts he 
had made as évidence thereof ; the resuit of which would be that, if it should 
succeed, success should inure to thelr beneflt through her apparent ownership, 
while, if it should fail, credltors on the exeeutory agreements or his owu 
future creditors might seek in vain for thelr money, for, to use Drohen's own 
language. In a similar case later, where the venture dld faîl, 'I hâve a large 
judgment against me.' " 

The bill allèges that on the Ist day of December, 1906, and for some 
time previous thereto, James L,. Drohen was insolvent and at no 
time thereafter had any property whatever, unless that claimed in the 
bill belonged to him. Furthermore the plaintiff concèdes that ail of 
the property so claimed was the direct resuit of the success of a little 
moving picture show called the Bijou Theater opened in Dunkirk in 
February, 1907. 

In March, 1906, Mrs. Drohen, her husband, and her mother lived 
in a small house inherited by Mrs. Drohen and her mother from her 
father. March 31 of that year Mrs. Drohen bought a small additional 
property, 414 Central avenue, paying $500 down, lent her by a warm 
Personal friend, and securing the balance of the purchase money by 
mortgage. What property there was in the family at that time belonged 
to her, and the plaintiff does not contend that James L. Drohen had 
any interest whatever in thèse premises. In 1905 James L,. Drohen 
was being sued for infringement of a patent, and April 23, 1906, an 
interlocutory decree was entered against him on the merits, which 
ripened in January, 1910, into a final decree for some $10,000. 

In 1906 Mrs. Drohen opened a little notion store in the Central av- 
enue house, and, and while engaged in that business her attention was 
attracted to a moving picture show. Concluding that this would be a 
good business venture, she sold out her stock in trade, and December 
12, 1906, opened a bank account in the Merchants' National Bank of 
Dunkirk in the name of Mrs. J. L,. Drohen, with a crédit of $300 given 
to her personally by the bank, and in February, 1907, started the Bijou 
Theater in a vacant store, 303 Lion street. Subsequently, in 1909, she 
opened another little moving picture theater in the neighboring town 
of Silver Creek, where she employed a manager named Geitner, and 
in 1910 she built a larger theater in Dunkirk, known as the Drohen 
Theater. 

During the whole of this period James L. Drohen managed the the- 
aters, made some leases and contracts in his own name, and often 
spoke and acted as if the business were his own. While the conduct 
of the défendants during this period of 10 years was sometimes more 
consistent with ownership in James L. Drohen, and sometimes with 
ownership in his wife, the plaintiff's theory does not commend itself 



EOWE V. DEOHEN IT 

(262 F.) 

to US at ail. To state in détail ail the particulars and weigh the évi- 
dence would make an interminable opinion. Suffice it to say that in the 
small town of Dunkirk it could not but be perfectly apparent to every 
one that ail the property hère involved was the resuit of thèse moving 
picture enterprises. Whether the business failed or succeeded, the un- 
paid creditors of the business would look to thèse properties for pay- 
ment. The creditors existing at the beginning of the business in 
1906 were James L. Drohen's and they were, in view of this mod- 
erate enterprise, of considérable amount. If it was intended to hinder, 
delay, or defraud creditors, thèse are the creditors who would hâve 
been considered. As against them it would hâve been more natural 
to put the bank account in the name of Mabel R. Drohen than in that of 
Mrs. J. L. Drohen, and Drohen could hâve drawn checks on such an 
account under authority from Mrs. Drohen. It would hâve been.still 
more natural to let her sign the checks, as she might well hâve donc, 
only about 3,000 checks having been drawn in about 10 years. More- 
over as to such creditors he would hâve been careful not to speak of 
it as his, or to contract in his own name. Everything was done for 
a long time after the business was obviously a success openly and 
with such inconsistencies as preclude a premeditated purpose to de- 
fraud. Just such inconsistencies are what might be expected in deal- 
ings between husband and wife, and they rebut any inference of the 
calculated conspiracy which the plaintiff suggests. Schreyer v. Scott, 
134 U. S. 405, 10 Sup. Ct. 575, 33 L. Ed. 955. 

The real question is, With whose capital was this successful séries 
of adventures started? because their profits belong to the owner of 
that capital. The évidence is quite clear that this capital was Mrs. 
Drohen's, and though the success was largely due to her husband's 
management and skill, her right to the profits was in no way afïected by 
that fact. Aldridge v. Muirhead, 101 U. S. 397, 25 L. Ed. 1013 ; Mer- 
chant v. Bunnell, *42 N. Y. 539. It would be quite natural that, in 
managing, he would often act and speak as if he owned the business. 
We should not expect to find formai agreements to be made and the 
usual business précautions to be taken between husband and wife. If 
the conduct of the parties is consistent with honesty, we should adopt 
that theory, rather than the very artificial conspiracy which the plain- 
tiff suggests. The conclusion of the trial judge, who saw and heard 
the witnesses, is entitled to great weight in an appellate court, and we 
are entirely satisfîed with it. 

The decree is affirmed. 

HOUGH, Circuit Judge (concurring). That plaintiflf has not proved 
"the fraudulent and unconscionable agreement" adverted to in the 
opinion of WARD, J., I agrée. There was no definite plan or meeting 
of minds, except that which customarily springs from matrimony — i. e., 
an agreement to work together. 

In 1906 the husband was deep in debt and determined not to pay, 

wherefore the common American habit of keeping whatever flowed 

into the family coflfer in the husband's name was deliberately changed 

for the plan of keeping everything in the wife's name. But the hus- 

262 F.— 2 



18 262 FEDERAL BEPOETEE 

band transferred nothing to his wife, because he then had nothing 
worth mentioning to transfer. 

The évidence shows only the practice, so well known in this country, 
of the man "doing business in his wife's name," i. e., making the wife 
owner of the fruits of the debtor husband's labor, in considération o£ 
support and protection. To be sure the measure of support is usually 
(as hère) what the husband takes, and the protection is only required 
(as hère) against old creditors, but the plan is as yet, I think, lawful in 
this country. 

We cannot treat husband and wife (as such) as partners, and per- 
mit the creditors of one to demand an accounting ; and rarely does the 
married pair enter into that formai relation, for to do so (assuming 
its possibility) would usually defeat the avowed object of both, which 
is ta shield the husband behind the wife. This may, I think, be done 
as to earnings after the shield is erected. 

It is plain enough that this Husband often spoke of the business of 
Mrs. Drohen as "his," and boasted of "his" success. But the évidence 
falls far short of proving "reputed ownership," even if that doctrine 
obtained in the United States — which, however, is not the case. 

For thèse reasons, I concur in affirming the decree. 

ROGERS, Circuit Judge (dissenting). I do not concur in the con- 
clusion which my Associates hâve reached. The trustée in bankruptcy 
of James L. Drohen is, in my opinion, entitled to make available to 
the creditors certain assets which stand in the name of the bankrupt's 
wife. 

The claim is that the wife in 1907 began the moving picture business 
in the Bijou Theater in Dunkirk in December, 1906, and that her hus- 
band acted as her agent in its management. The husband at that time 
was insolvent; a judgment having been entered against him on April 
23, 1906, in the sum of $10,723.30, which still remains wholly unpaid. 
In addition to that indebtedness, he was liable on a bond dated July 12, 
1904, and given to the Title Guaranty & Trust Company, upon which 
judgment has since been entered in the sum of $17,321.02, upon which 
judgment he has paid nothing. According to the testimony of the 
husband, the wife had not been engaged in any business of any kind 
prior to entering upon the moving picture business in the Bijou Thea- 
ter. He also testified that his wife had no property of any kind at 
that time, except her interest in the house where they were living. The 
house belonged to his wife and mother-in-Iaw, and was sold subse- 
quently for $2,500 or $3,000. 

A week after the judgment for $10,723.30 was entered the husband, 
on April 30, 1906, closed the account which he had always kept in 
the Merchants* National Bank of Dunkirk ; and on December 12, 1906, 
an account was opened in the same bank in the name of the wife. It 
is somewhat significant that it was not opened in the name of Mabel R. 
Drohen, nor in that of M. R. Drohen, but in that of Mrs. J. L. Drohen. 
Prior to that time she had never had a bank account. It does not 
appear that she ever drew a single check against that account. Sôme 
3,000 checks were before the court below, and every one of them was 



EOWE V. DROHEN 19 

(2S2 P.> 

signed in the husband's handwriting. The profits realized in the mov- 
ing picture business were ail deposited to the crédit of this account. 
The record discloses that the husband drew checks against this account 
to pay for his lodge dues as well as for his clothing, and to pay the 
family doctor's bills, and the bills for groceries, méats, coal, gas, elec- 
tricity, and other family expenses. He purchased with funds drawn 
from his wife's bank account an automobile, and in applying to the 
secretary of state for its registration and for renewals of that registra- 
tion he had in 1914, 1915, and 1916, three times described himself as 
owner and swore to it. In other words, he exercised the same domin- 
ion over the bank account of his wife that he had exercised over his 
own. While the proceeds of the business were deposited to her crédit, 
the liabilities stood against him. The lease of the Bijou Theater ran 
to him as lessee, and the contracts for electric current for the theater 
and other supplies, as well as with the employés, were made in his 
name. As late as 1916 he gave his note for $5,000 to the Goodman 
Piano Company of Cleveland, Ohio, for a fotoplayer No. 40, which 
was to be used in the theater. The reserve seat tickets issued for ad- 
mission to reserved seats in the Drohen Theater had the following 
printed thereon: 

"Theater ticket. Drohen Theater, James Drohen, Owner and Manager." 

Frorii the time the Drohen Theater was opened in 1910 Mrs. Dro- 
hen handled ail thèse tickets. She testified she did not know whether 
she ordered them printed, or whether he did, but said, if he ordered 
them, she knew ail about it. The record shows that there was no agree- 
ment on the part of the wife to pay to the husband any salary for his 
services, and that there was no accounting to her for any moneys he 
saw fit to draw from her bank account. The Bijou business having 
proved a success, a second theater, called the Drohen Theater, was 
opened in Dunkirk, and la ter another in Silver Creek, and still an- 
other in Jamestown. The leases in thèse enterprises ran to the hus- 
band as the party of the second part, and contracts were made as be- 
fore in his name, and the proceeds realized from the theater enter- 
prises were deposited in the wife's account. 

I do not accept the theory that the husband was simply the wife's 
agent. The record discloses a conversation between Mrs. Drohen and 
a third party, in which Mrs. Drohen objected to something Drohen 
was thinking of doing in the business, and Mrs. Drohen remarked that 
she wished Drohen would not do it, but it would not do her any good 
to say anything, as he would do as he wanted to anyway. The rea- 
son why he did as he wanted, rather than as she wished, is disclosed in 
another conversation between Drohen himself and a contractor, who 
was making certain altérations in one of the theaters, in which Drohen 
said that he had to do business in his wife's name, because he did not 
dare to hâve anything in his own name. That the business was his, 
and that he carried it on in his wife's name, explains everything. 

But the understanding that the business was to be carried on in the 
wife's name was not always consistently carried out, although the 
proceeds of the business were always consistently placed to her crédit 



20 262 FEDERAL REPOETER 

in the bank. The Jamestown theater was not a success, and the wife 
testified that that was his venture, and that she had nothing to do with 
it, although she admitted that the checks to cover running expenses 
were paid out of her account. When Drohen found that that particular 
venture was not a success, he wrote the agent representing the lessor, 
"I am sorry to say that I am busted, and cannot pay the rent" of the 
theater any more. The resuit of those business opérations carried on 
by the husband in the wife's name, and into which she had little or 
nothing of money or expérience to put at the beginning, may be seen in 
the f ollowing excerpt f rom her testimony : 

"I own at the présent time the following pièces of real estate: The Drohen 
theater, and the Blood lot. The house and lot on Fourth and Eagle streets 
my mother and I own. Those are the only pièces of real estate I own. In 
addition to that I hâve the fixtures and Personal property at the Bijou The- 
ater, the flxtures and Personal equlpment at the Drohen, one-quarter interest 
in the equlpment, lease, and fixtures of the Silver Creek theater, and tlion 
such liousehold goods as I hâve. I hâve no other property besldes that, which 
I recall. I also hâve a $500 certifieate, or a certlficate calling for $500 capital 
stock In the Mann Company. I bought that. It was In my name. That was 
bought out of the proeeeds of the moving picture show ventures that I epoke 

Ofv" 

What Drohen himself thought about it appears from what he said 
to Judge Fisher when he was taking, in his own name, the lease of the 
Jamestown theater. He stated: 

"That he owned the new Drohen Theater in Dunklrk, free of Ineumbrances, 
in his own name ; that he owned the Bijou Theater in Dunkirk, and the Bijou 
Theater in Silver Creek, ail In his own name, with no Judgments against 
hlm ; and that he was worth over $40,000." 

It is said that statements made by the husband, and not known by 
or assented to by the wife, are not binding upon her. They are to be 
considered, however, in connection with ail the circumstances of the 
case, and if the testimony shows that husband and wife were parties 
to an unconscionable and fraudulent agreement or understanding 
that they should engage in the moving picture business under such con- 
ditions that if the venture should prove a success they should be in a 
position to say that the business was hers, as shown by her bank ac- 
count, and if it turned out a failure to say that the venture was his, 
as shown by the leases and the contracts, then his acts and déclara- 
tions during the pendency of the illégal enterprise, even if made in her 
absence, affect them both. This being in brief outline the facts disclosed 
by the testimony, what is the law that is applicable to them ? 

Do the facts of the case at bar show good faith on the part of Dro- 
hen and his wife, and that he acted really in what was done simply 
as her agent, or was he in fact a principal? In answering that ques- 
tion it is to be kept in mind that direct évidence is not necessary to 
prove fraud, but circumstantial évidence is sufficient. That principle 
of law is well settled. Beardsley v. Duntley, 69 N. Y. 577; Mon- 
tréal River Lumber Co. v. Mihills, 80 Wis. 540, 50 N. W. 507; Wool- 
enslagel v. Runals, 76 Mich. 545, 43 N. W. 454; Trimble v. Reid, 97 
Ky. 713, 31 S. W. 861 ; Bank of North America v. Sturdy, 7 R. I. 
109; Bronson v. Vaughn, 44 W. Va. 406, 29 S. E. 1022; Grier v. 



ROWE V. DROHEN 21 

(262 F.> 

Dehan, 5 Houst. (Del.) 401 ; Granrud v. Rea, 24 Tex. Civ. App. 299, 
S9 S. W. 841. In Beuerlien v. O'Leary, 149 N. Y. 33, 38, 43 N. E. 417, 
418, the New York Court of Appeals déclares that fraud "can seldom 
be proved by direct évidence." In Kaine v. Weigley, 22 Pa. 183, the 
court, speaking through Chief Justice Black, says that — 

"Wlien creditors are about to be cheated, It Is veiy uncommon for the 
perpetrators to proclaim their purposc, and call In witnesses to see it done. 
A resort to presumptive évidence, tlierefore, becouies absolutely necessary to 
protect the rigbts of honest men froni this as from other invasions." 

And in Montgomery Web. Co. v. Dienelt, 133 Pa. 585, 19 Atl. 428, 19 
Am. St. Rep. 663, the court, speaking through Chief justice Mitchell 
and criticising the charge of a trial judge, comments as follows : 

"But the substantial defect of the charge is in Its treatment of the Items 
of évidence, one by one, without at any time directing the view of the jury 
to their united force. There probably never was a case of circumstantlal 
évidence that could not be blown to the winds by taking up each item sep- 
arately, and dismissing it with the conclusion that It does not prove the case, 
The cumulative force of many separate matters, each perhaps slight, as in the 
familiar bundle of twigs, constitutes the strength of circumstantlal proof." 

The property of a debtor belongs to his creditors, and he cannot 
transfer or conceal it with a view of hindering, delaying, or defraud- 
ing them. But a distinction exists between property and services. It 
may be conceded that a man's services, time, talents, and industry are 
his own, to use or not to use as he sees fit. The law may compel him 
to give up his property for the payment of his debts, but it may be 
conceded that it does not compel him to employ his time or talents for 
the benefit of his creditors. 

At common law a married woman could not engage in trade or busi- 
ness in her own name for her personal profit. The reason was that 
she could make no contracts and her earnings belonged to her husband. 
The law bas been changed by statute in this country and in England, 
and for years a married woman in the state of New York, where Dro- 
hen and his wife resided, has been expressly authorized by statute to 
engage in trade or business as if unmarried. Bodine v. Killeen, 53 
N. Y. 93. 

For the same reason a married woman at common law had no power 
to authorize her husband to become her agent. Capacity to act by agent 
dépends on capacity in the principal to do the act himself which he 
authorizes his agent to perform. But when the wife's disability to 
contract was removed, she acquired the right to appoint her husband 
as her agent, to perform for her whatever acts of business she is ca- 
pable of performing for herself. She may therefore constitute her 
husband as her agent within the sphère in which she is compétent to 
appoint an agent. Voorhees v. Bonesteel, 16 Wall. 16, 21 L. Ed. 268. 
And in the case just cited the court said : 

"Under the lavrs of New îork a married woman may manage her separate 
property, through the agency of her husband, without subjecting it to the 
clalms of his creditors, and It is held that she is entitled to the profita of a 
mercantile business conducted by the husband in her name, if the capital Is 
fumlshed by her and he has no interest but that of a mère agent." 



22 262 FEDERAL EEPOETBE 

That was the law of New York then, in 1872, and for years prior 
thereto. And of course it is the law of that state now. Knapp v. 
Smith, 27 N. Y, 277; Buckley v. Wells, 33 N. Y. 518; Draper v. 
Stouvenel, 35 N. Y. 507; Sammis v. McLaughlin, 35 N. Y. 647, 91 
Am. Dec. 83; Owen v. Cawley, 36 N. Y. 604; Abbey v. Deyo, 44 
N. Y. 343; Woodworth v. Sweet, 51 N. Y. 11; Bodine v. Killeen, 
53 N. Y. 93; Stanley v. National Union Bank, 115 N. Y. 122, 22 
N. E. 29. 

When a business is carried on in the wife's name and by her hus- 
band as her agent, it becomes necessary to détermine whether the 
arrangement is one made in good faith, or whether her name ïs used as 
"a cover and a fraud" to protect what belongs to the husband in whole 
or in part. That ownership in the wife cannot be employed as "a cover 
and ^ fraud" to cheat creditors is abundantly established upon the 
authorities. 

In Abbey v. Deyo, supra, the court held it to be well settled that a 
married woman could carry on business on her separate account 
through her husband as her agent, and that the fact that the husband 
gave his services without compensation other than his support, which 
she provided out of the income of the business, would not give his 
creditors any interest in the profits. But that case, and ail the cases 
so far as I am aware, requires good faith. In Abbey v. Deyo the 
court said : 

"The Jndge charged the Jury that they were to find whether the plaintlff 
was in fact carrying on business herself, her husband acting merely as her 
agent, or whether the business was in fact her husband's, and the agency a 
form or devlce for carrying on business with his own means and her son's 
services. If the former, he charged them that the wlfe could hold the prop- 
erty. If the latter, he charged them that the property belonged to the cred- 
itors, and the wlfe must be defeated. This was the précise question for the 
jury to décide, and it was clearly and fairly placed before them. Thelr dé- 
cision Is concluslve hère." 

In Knapp v. Smith, supra, the New York Court of Appeals, speaking 
through Chief Justice Denio, said : 

"Where the husband is Indebted and tnsolvent, as was the case hère, there 
is generally more or less reason to suspect that such arrangements are adopt- 
ed as a cover to dlsguise the substantlal ownership of the husband and to 
defraud the creditors. Whether, in a glven case, the transaction Is sincère 
and bona flde, or a colorable deviee to cheat the créditera of the husband, Is 
a question of fact, to be detennined by the jury or other forum Intrusted with 
décision of such questions." 

In Seitz v. Mitchell, 94 U. S. 580, 24 L. Ed. 179, the Suprême Court 
declared that purchases of property, real or personal, made during 
coverture by the wife of an insolvent debtor are justly regarded with 
suspicion, and that she cannot prevail in contests between his creditors 
and her, involving their right to subject property so acquired to the 
pa)Tnent of his debts without overcoming by affirmative proof the pre- 
sumption against her. "Such," said the court, "has always been the 
rule of the common law ; and the rule continues, though statutes hâve 
modified the doctrine that gave the husband absolutely the personal 



EOWE V. DBOHEN 23 

(262 F.) 

property of the wîf e in possession, and the right to reduce into his pos- 
session and ownership ail her choses in action." 

In Glidden, Murphin & Co. v. Taylor, 16 Ohio St. 509, 91_ Am. 
Dec. 98, it appeared that the husband used the money of his wife in 
establishing and conducting the business professedly as her agent 
and the business made large profits. There was no contract between 
them as to his compensation, and no accounts were kept between the 
parties. He applied a part of the proceeds to the support of the fam- 
ily, used some of them for his own purposes, and invested the rest in 
real and personal property in the name of his wife. The court allowed 
the creditors of the husband to subject the property so purchased to 
payment of his debts. 

In Lachman v. Martin, 139 111. 450, 28 N. E. 795 (1891), a judgment 
for $1,802.43 had been obtained against one Martin and another and 
exécution was returned unsatisfied. The bill sought to subject to the 
payment of the judgment certain lands the title to which was in the 
name of Martin's wife. It was claimed that Mrs. Martin had purchased 
with her own funds one-half of the stock of an Illinois corporation, 
and that the money with which the property was purchased had been 
earned in the business of this corporation, while her interest in it was 
under the management and control of her husband acting therein as 
her agent. The profits which she derived from the corporation 
brought her between $25,000 and $30,000, which she had invested in 
farms and stock, which at the time of the hearing had so increased in 
value as to be worth $50,000. The Illinois statute gave a married 
woman the right to hâve her own separate property, and to make con- 
tracts and do business as a feme sole, and declared that she might 
avail herself of the services and agency of her husband in the conduct 
of her business or management of her property, "without necessarily 
subjecting it, or the profits arising from his management, to the claims 
of his creditors." The court, upon the facts disclosed in the case, held 
that the property in thèse farms was subject to the rights of the hus- 
band's creditors. The court said: 

"But an Insolvent debtor cannot use his wlfe's name as a mère devlce to 
cover np and keep from his creditors the assets and profits of a business which 
Is tn fact his own. The marrlage relation affords many opportunlties for 
oonductlng schemes to defraud creditors, and hence transactions between 
husband and wife, whleh hâve the appearance of belng fraudulent, will be 
closely scrutlnlzed. It Is a question of fact, to be determlned from ail the 
clrcumstances of the case, whether or not the husband Is carrying on his own 
business, or Is merely managing his wlfe's business. It must clearly appear 
that the wife is the bona flde owner of the capital Invested in the business, 
and that the accumulations, which resuit from the conduct of the business, 
are the legltimate outcome of the Investment of her property." 

In Murphy v. Nilles, 166 111. 99, 46 N. E. 772 (1897), the court held 
that where a wife fumishes capital to her husband and allowed him to 
employ it in spéculations on his own account and in conducting the 
business the profits derived therefrom are subject to the claims of his 
creditors. In the course of the opinion the court again declared 
that— 



24 202 FBDBBAL RBPOKTEB 

"An Insolvent debtor cannot use hls wife's name [nor her capital] as a mère 
devlce to cover up and keep from hia credltors the assets and profits of a busi- 
ness which is In f act his own." 

In Talcott v. Arnold, 54 N. J. Eq. 570, 35 Atl. 532 (1896), the court 
held that while a debtor cannot be compelled to work for his cred- 
itors, still, if he puts his latent property-earning ability into action, 
equity will apply any property created to the payment of his debts. 
It declared that a wife may employ her husband as a servant in the 
management of her separate business, but that a court of equity will 
closely scrutinize the case, to détermine whether the employment is 
bona fide and whether the business is clearly the wife's; that if the 
husband, in conducting the wife's business, is a servant of the wife 
under a bona fide employment, then his services in the business will not 
subject any portion of the property to the claims of the husband's 
creditors. In this New Jersey case it appeared that after the failure 
of a firm in which the husband was a partner the wife advanced to 
him $10,000, which she had received from the estate of her uncle. 
The husband was an inventer, and carried on a séries of experiments, 
and caused to be issued in his wife's name a number of patents, from 
which large sums of money were realized, and a portion of the pro- 
ceeds was put in property in the wife's name. AU the contracts in 
the business were made in her name, and the property in which the 
business was conducted and the bank accounts were also in her name. 
No contract of employment was proved, and the entire course of con- 
duct showed that the husband was master of the business, over whom 
the wife exercised no control, and from whom she expected no ac- 
count. The court held that the business was the husband's, and its 
proceeds would be applîed to the payment of his debts. The husband 
and the wife testified that they had entered into an agreement at the 
time the $10,000 was advanced by which he assigned to her the patents 
issued and to be issued, in considération that she should pay him $1,200 
a year, and should pay ail the shop expansés for the development of 
the patents. 

The court declared it found no foundation in the testimony to sup- 
port the theory that the business which was carried on ostensibly in 
the name of the wife was in fact the business of the wife. "Now," 
said the Vice Chancellor in his opinion, "the entire history of the 
business, from the year 1879 down, is convincing that she let him hâve 
her money whenever he wished it, without a question, and that he put 
ail the patents in her name, for the purpose of securing his property 
to his family in case of business trouble, while in fact he retained as 
complète control over it as if he was its absolute owner. Every 
step taken in the business was the ofïspring of his thought and will 
alone. In ail the transactions it is perfectly obvious that everything 
was left to him. His wife naturally had but the faintest knowledge 
of the work in which he was engaged, and exercised no oversight over 
the conduct of the business." The bank accounts were in the name 
of the wife, and he drew checks under a power of attorney from 
her. Contracts made were made in her name. The property in which 
the machines were manufacturée was in her name. "But," said the Vice 



BOWE V. DROHEN 25 

(262 F.) 

Chancellor, "it seems to me transparent that ail this was merely col- 
orable. It was the husband who suggested the agency, who settled 
the terms of the contracts, who received and deposited the money 
arising from them, and who spent it, with no expectation, on his part 
or on her part, that he would ever be called upon to account to her 
for its receipt or expenditure. He kept no books of account, except 
of the most meager and partial kind of the receipts and expenses of 
the business. The wif e never asked for an accounting, and never ex- 
pected any, and he knew that she never expected any." 

This case was reversed in the Court of Errors and Appeals (55 N. 
J. Eq. 519, Z7 Atl. 891), but solely on the ground that that court 
believed, and the Vice Chancellor did not, in the substantial truth 
of the testimony of the husband and the wife conceming the agree- 
ment made between them. The court said their testimony was un- 
contradicted, ànd was corroborated by their conduct ever since the 
alleged making of the bargain. The court declared that — 

"On the grounds above stated, we believe the contraet to hâve been made 
bona flde for valuable considération on both sides, and without any im- 
proper design." 

In Taylor v. Wande, 55 N. J. Eq. 491, 37 Atl. 315, 62 Am. St. Rep. 
818, the New Jersey Court of Errors and Appeals declared that a 
court of equity would carefully scrutinize the employment of an in- 
solvent husband by a wife engaged in carrying on a business on her 
own account. In the circumstances of that particular case the court 
said it could find nothing in the facts which indicated that the husband 
acquired any interest in the profits or earnings of the business. "Had 
the husband's services been rendered to her gratuitously," it was said, 
"such would probably be the conclusion, for the debtor is not obliged 
to work for the benefit of his créditer ; but when, as in this case, the 
services were rendered upon compensation, not shown to be unusual 
compensation for such services, it is beyond doubt that the profits and 
earnings of the business belonged to the wife, notwithstanding they 
were in part due to the husband's skillful services, precisely as they 
would do, had she employed a stranger of like ability to carry on the 
business." 

In Mayers v. Kaiser, 85 Wis. 382, 55 N. W. 688, 21 L. R. A. 623, 39 
Am. St. Rep. 849, it is laid down that the mère fact that the wife em- 
ploys her husband as her agent to carry on her business in her name, 
will not give his creditors a right to hâve their claims paid out of the 
profits of the business, especially where the husband has been paid by 
the wife for his services. And so in Martin v. Remington, 100 Wis. 
540, 76 N. W. 614, 69 Am. St. Rep. 941. In Kendall v. Beaudry, 107 
Wis. 180, 184, 83 N. W. 314, 316, the court points out that there must 
be good faith and then says: 

"In ascertaining the existence of this élément, the question Is whether the 
debtor does in fact give or hire his services to another, the fruits thereof to 
belong to that other, or does he merely exert himself under the color of an- 
other's name, with the understanding or purpose that the fruits of his exer- 
tion shall be his, but screened by that other's name from his creditors. The 
former situation satisfles ail that Is meant by the expression 'good faith' in 



26 262 £<BDS:iU.Ii bbfobter 

thiB connection. • • • He may be led to so act because of the hopelessness 
of attempting to dévote hls efforta to a business of bis own, where they 
would be rendered abortlve by the prompt attack of credltors as soon as tbey 
became at ail productive. Sucb motive or reason is not Inconsistent wlth tbe 
good faith of tbe transaction." 

In Boggess v. Richard's Adm'r, 39 W. Va. 567, 20 S. E. 599, 26 
L. R. A. 537, 45 Am. St. Rep. 938, the court held that a husband may 
engage in business with fais wife's capital in her name and on her créd- 
it for her benefit ; but if, owfng to his skill and labor, large profits ac- 
crue therefrom over and above the necessary expenses and indebted- 
ness of the business, including the support of himself, his wife and 
family, a court of equity will justly apportion such profits between his 
wife and his existing creditors. 

The record in this case has convinced me that husband and wife were 
not acting in good faith, and that the husband had an interest in the 
proceeds of the moving picture business which his creditors are en- 
titled to reach, and I think the judgment should hâve been reversed. 



BORMAN et al. v. UNITED STATES. 
(Circuit Court of Appeals, Second Circuit November 20, 1919.) 

No. 35. 

3, Sales ®=»4(3)— "Bailment" distinguished from "sale." 

Where articles are dellvered by one person to another, vi^ho Is to per- 
form labor en them or to manufacture them Into other articles for the 
former, the transaction is a "ballment"; but if the person who recelves 
the articles may dcliver in return articles whlch are not the product of 
those recelved, the transaction is in fact a "sale." 

[Ed. Note. — For other définitions, see Words and Phrases, First and 
Second Séries, Ballment ; Sale.] 

2. Conspiraot <g=>33 — TiTtE to linings fdenished by United States to 

MANUFACTOEING CONTBACTOB DOE8 NOT PASS. 

Under a contract between the United States and one of the défendants 
for the manufacture of leather Jerkins, which requlred the United States 
to fumish the linings, held, that title did not pass, so that the contractor 
and a confederate, who conspired to obtaln linings from the United States 
In excess of needs and sell the same, etc., were gnilty of vlolating Crimlnal 
Code, §i 36, 37 (Comp. St §§ 10200, 10201). 

8. CEmiNAL LAW <Ê=»1178 — ErROB WAIVED WHEaSE NOT MENHONED IN BBCOBD 
OE BHIBF. 

In a prosecution against a contractor, who manufactured leather Jerkins 
for the United States, and another, for conspiracy to defraud the United 
States, etc., In violation of Crlminal Code, §§ 36, 37 (Comp. St. §§ 10200. 
10201), where it appeared that the contractor disposed of linings fur- 
nished by the United States, title to which did not pass to him, it was 
imnecessary to Inquire whether, at the time he demanded the linings, dis- 
posed of, he knew that they were in excess of his requirements, where 
there was no évidence in the record, and nothlng was sald In the argu- 
ment concemlng it 

Manton, Circuit Judge, dissentmg. 

In Error to the District Court of the United States for the South- 
ern District of New York. 

^ssFor otoer cases see same topic & KEY-NUMBBR In ail Key-Numbered Dlgests & Indexes 



BORMAN V, XTNITED STATES 27 

(262 F.) 

Jacob A. Borman and another were convicted under Criminal Code, 
§§ 36, 37, of conspiring to apply to their own use property of the 
United States, and of conspiring to sell, convey, and dispose of such 
property, and they bring error. Affirmed. 

Wood, MoUoy & France, of New York City (Henry P. MoUoy 
and Melville J. France, both of New York City, on the brief), for 
plaintiffs in error. 

Francis G. Caffey, U. S. Atty., of New York City (Robert A. 
Peattie, Asst. U. S. Atty., of New York City, of counsel), for the 
United States. 

Before WARD, ROGERS, and MANTON, Circuit Judges. 

ROGERS, Circuit Judge. The plaintiffs in error (hereinafter call- 
ed défendants) hâve been convicted upon an indictment which in 
the first count charged them with having unlawfully conspired to ap- 
ply to their own use certain property of the United States, and in 
the second count charged that they unlawfully conspired to sell, con- 
vey, and dispose of the same property. The indictment is based on 
the following provisions of the Criminal Code (Act March 4, 1909, c. 
321, 35 Stat. 1096 [Comp. St. §§ 10200, 10201]): 

"See. 36. Whoever shall steal, embezzle, or knowlngly apply to hls own 
use, or unlawfully sell, convey, or dispose of, any ordnance, anns, ammuni- 
tlon, clotliing, subsistance, stores, money, or otiier property of the United 
States, furnished or to be used for the mllitary or naval service, shall be 
punished as prescribed in the preceding section. 

"Sec. 37. If two or more persons conspire either to commit any offense 
agalnst the United States, or to defraud the United States in any manner or 
for any purpose, and one or more of such parties do any act to efifect the 
object of the conspiracy, each of the parties to such conspiracy shall be fined 
not more than ten thou-sand dollars, or imprisoned not more than two years, 
or both." 

The testimony shows, and défendants admit, that défendant Bor- 
man caused to be shipped to défendant Phillips about February 25, 
1918, some 2,664 yards of linings which Phillips received and which 
had been furnished by the govemment to the défendant Borman to 
be used in making up leather jerkins under contracts which will be 
more fully referred to — which jerkins were intended to be used by 
the military forces of the United States. The 2,664 yards of linings 
were delivered at varions times on the demand of Borman made upon 
the Quartermaster's Department to be used under the contracts, and 
which were in excess of the amount of linings it was necessary for 
the govemment to furnish. It appears that défendant Phillips, act- 
ing under Borman's direction, sold this extra lining material for the 
sum of about $6,000, checks for which were delivered to Borman, 
who in turn indorsed them over to an employé, who, at the direction 
of Borman, deposited the check to his (the employé's) crédit in his 
bank. The money was afterwards applied to the use of the défend- 
ants. And the défense relied upon is that at the time the défendants 
appropriated thèse linings to their own use the title was not in the 
United States, 



28 262 FEDERAL REPORTER 

It appears that two contracts were made between the United States 
and the Borman Sheep Lined Coat Company, one on September 27, 
1917, and the other on October 20, 1917. Contract No. 1112 calls 
for the manufacture of 63,000 leather jerkins, and is on a blank 
printed in part and typewritten in part. It has printed on it that it 
is "to be used for ail purchases of supplies, clothing, wagons, harness, 
bacon, etc., which are purchased in bulk or large quantities to be 
dehvered at dépôts or to purchasing quartermasters." It contains a 
typewritten statement that the supplies are "to be manufactured from 
materials fumished in part by the Quartermaster Corps, and to be 
delivered at the dépôt of the Quartermaster Corps, U. S. Army, 
Philadelphia, Pa." It states that "the government is to furnish lin- 
ing, buttons, and rings only; contractor is to furnish ail other ma- 
terials"; also that "the materials furnished by the government are 
to be received by contractor f. o. b. New York, N. Y. ; * * * con- 
tractor to be liable for any loss of or damage to any of the materials 
furnished by the Quartermaster Corps from any cause whatsoever 
while in his possession. Ail rags and clippings from the linings shall 
remain the property of the United States and be delivered with the 
finished jerkins." 

Contract No. 1464 calls for the manufacture of 50,000 leather 
jerkins, and is on a blank also printed in part and typewritten in part. 
Like the first contract it states that it is to be used for ail purchases 
of supplies, etc. It contains the foUowing provision: 

"The government Is to furnish the llnlng and buttons only. Contracter to 
furnish ail other materials. The llnlng and buttons to be recelred by con- 
tracter f. o. b. New York. Ail rags and clippings from linings furnished by 
the government delivered at the Philadelphia dépôt of the Quartermaster 
Corps, U. S. Army, wlthout expense to the United States for packlng or trans- 
portatlon ; contractor to be liable for any loss of or damage to any materials 
fumished by the Q. M. Corps, U, S. Army, from any cause whatsoever while 
In contractor's possession." 

Both contracts specify the amount to be paid for each jerkin and 
then provide as follows: 

"That for and in considération of the faithful performance of the stipula- 
tions of thls contract, the contractor shall be paid, at the office of the con- 
tracting offlcer, or by ^isburslng offlcer designated by him to make payments, 
the priées stlpulated In thls contract for those supplies delivered and accepted; 
and, except as otherwlse provlded, payments wlU be made as sooh after the 
acceptance of each delivery as Is practlcable and funds on hand for the pur- 
pose will admit." 

Both contracts provide: 

"That the articles hereln contracted for shall be examined and Inspected, 
wlthout unnecessary delay after being delivered, by a person or persons ap- 
polnted by the United States; and upon such Inspection, the articles found 
to be in ail respects as required by thls contract shall be received and be- 
come the property of the United States. Any arid ail articles that may, upon 
such Inspection, be condenmed or rejected, shall be removed from the prem- 
Ises by the contractor withln 10 days after the sald contractor or hls agent 
shall hâve been notlfled of such rejeetlon ; otherwlse, at the rlsk and expense 
of the contractor." 

Counsel for the défendants argue that the contracts show that the 
transactions involved a sale of the materials which the government 



BORJLA.N V. UNITED STATES 29^ 

(262 P.) 

furnîshed, as the word "purchases" and "purchased" necessarily im- 
ply a sale; so that at the time of the delivery of the linings to the 
contractor the title passed out of the United States and to the con- 
tracter, the amount finally to be paid by the government for the fin- 
ished jerkins being reduced by the amount due to the government for 
the hnings furnished. 

[1, 2] It is elementary that where articles are delivered by one 
person to another, who is to perform labor upon them or to man- 
ufacture them into other articles for the former, the transaction is 
a bailment; but if the person who receives the articles may deliver 
in retum articles which are not the product of those received, the 
transaction is in efifect a sale. Now it is not necessary to inquire, for 
reasons which will presently appear, whether under the provisions of 
the contracts herein involved the delivery of thèse linings involved 
a bailment or a sale, whether the contractor was bound to use the 
linings which the government delivered, or whether other linings 
might hâve been used in their stead. Neither is it conclusive that the 
blanks used in filling in the terms of the contracts contained the words 
"to be used for ail purchases of supplies." The government was un- 
doubtedly purchasing supplies, and they were to be manufactured in 
part from materials furnished by it and in part from materials fur- 
nished by the contractor. But for the purpose of the argument we 
shall assume that under the contracts there was a sale of the linings, 
and not a bailment. Then the question arises whether or not under 
the sale the title had passed to the linings herein involved. 

This court had under its considération in Re Liebig, 255 Fed. 458, 
166 C. C. A. 534, the question as to the time when title passes under 
a sale. We said in the case cited that in sales the transfer of title 
dépends upon the intention of the parties however indicated. And in 
Hatch V. Oil Co., 100 U. S. 124, 25 L. Ed. 554, the gênerai rule was 
said to be that the agreement as to the passing of title is just what the 
parties intended to make it, if the intent can be collected from the 
language employed, the subject-matter, and the attendant circum- 
stances. We think the intent of the parties to thèse two contracts 
is clearly indicated in the language they employed. 

The provision already referred to which provided that the contrac- 
tor was to be liable to the United States for any loss of or damage 
to any of the materials furnished by it would seem to indicate that 
the title to the property continued in the government and had not 
passed to the contractor. If the title had passed out of the United 
States, the property was the property of the contractor, and there 
was no necessity for such a provision. 

Moreover, it was provided, as we hâve seen, that "ail rags and 
clippings from the linings 'shall remain' the property of the United 
States"; that is to say, the title in the rags and clippings must un- 
der this language hâve been ail the time in the United States. If the 
title to the linings had passed out of the United States at the time 
of their delivery to the contractor, the title to so much of the linings 
as subsequently became rags and clippings originally passed along 
with the rest, and it could not properly hâve been said that as to 



30 262 FEDERAL EEPOETER 

them the title should continue or "remain" in the United States. 
Some other language would hâve been necessary to indicate that the 
United States was to be reinvested with the title which it lest when 
the linings were delivered. Assuming, then, a sale, it is clear that 
the title could not hâve been intended to pass until the linings were 
eut out, and then only as to so much as were used in the jerkins. 

In view of what has been said, it is not necessary to consider cer- 
tain cases which hâve held that contracts in some particulars not 
unlike those in this case hâve held that the transaction amounted to 
a sale and not a bailment. Power Co. v. Burkhardt, 97 U. S. 110, 
24 L. Ed. 973 ; Hargraves Mills v. Gordon, 137 App. Div. 695, 122 
N. Y. Supp. 245. Neither is it important to consider a class of cases 
of which Dixon v. London Small Arms Co., Ltd., 1 App. Cases, 632, 
is the most notable, in which the courts hâve considered whether such 
contracts resuit in a sale or in an agreement for service. 

An important fact is that thèse linings were not obtained in ac- 
cordance with any contract. The govemment was under no con- 
tractual obligation to fumish them. It was only contractually oblig- 
ed to fumish the amount of linings necessary to enable the con- 
tractor to manufacture the number of jerkins contracted for. An- 
other important fact is that the amount of the linings the government 
was to furnish was not furnished altogether, but as required and call- 
ed for by the contracter. The Quartermaster's Department made an 
allotment to each contracter of the amount of the material he was 
entitled to receive under each contract, and material was issued from 
time to time as called for. When Borman in New York applied to 
the Quartermaster's Department for material the officiais there called 
up the department in Philadelphia and said: "Mr. Borman is hère 
for material; is it ail right to give it to him?" So that Borman, 
using the contract as a reason for his demand, asked for his material 
in excess of what he was entitled to under his contract, and obtained 
the 2,664 yards of the linings which he sold. This yardage cannot be 
said to hâve been obtained in accordance with any contractual ob- 
ligation. 

Moreover, as it was never eut, but remained in the form in which 
it was received, no title passed, and it continued to be the property 
of the government. And the clandestine manner in which it was 
sold and the proceeds put in the name of Borman's employé indicates 
that Borman very well knew that it was not his property, and that 
he knew he was acting dishonestly in what he did. The court in his 
charge said: 

"In other words, as reasonable men, pass upon this situation and ail tbê 
évidence in the case, and détermine whether or not thèse défendants acted 
as honest men or as dishonest men ; and If you conclude that they acted dis- 
honestly, whether thelr intent and purpose was knowlngly to apply to their 
own use property of the United States, and whether their purpose was to un- 
lawfuUy sell, convey, and dispose of property of the United States." 

And it was also charged : 

"That thèse défendants cannot be convleted In this case, unless the Jury 
believe from the évidence to a moral certainty and beyond a reasonable doubt 



BOEMAN V. UNITED STATES 31 

(263 F.) 

that they oonspired to apply the llnlnga to their own use, or consplred to 
unlawfully dispose of them knowing that the Unings belonged to the United 
States." 

Under the charge, as given, Borman could not hâve been convicted 
if the jury beheved that Borman honestly thought that he had ob- 
tained title to the 2,664 yards of linings which he sold. We must 
conclude, therefore, not only that the linings which he sold were as 
a matter of law the property of the United States, but that défend- 
ants did not believe that the title to the linings had passed from the 
govemment to Borman. 

[3] Under the circumstances it is not important to inquire whether 
Borman, at the time he demanded the additional yards of linings, 
knew that they were in excess of the amount which he was entitled 
to receive under the contracts. There is no évidence upon that sub- 
ject in the record, and nothing was said concerning it upon the 
argument in this court; and we fnust assume that Borman did not 
obtain possession by a trick or by fraud. If possession had been ob- 
tained by a trick and animo furandi, title, according to many cases, 
would not hâve passed. See Kerr on Fraud and Mistake, pp. 10, 11 ; 
Cole V. Northwestern Bank, L. R. 10 C. P. 354, Z7Z; Whitehorn 
Brothers v. Davison, [1911] 1 K. B. 463, 470; Oppenheimer v. 
Frazer, [1907] "2 K. B. 50, 70; Kingsford v. Merry, 1 H. & N. 503; 
Regina v. Middleton, L. R. 2 C. C. 38; Bailey v. State, 58 Ala. 414; 
State V. Williamson, Houst. Cr. Cas. (Del.) 155; Cooper v. Com- 
monwealth, 110 Ky. 123, 60 S. W. 938, 52 L. R. A. 136. 96 Am. St. 
Rep. 426; Wolfstein v. People, 6 Hun (N. Y.) 121; Goff v. Golt, 
5 Sneed (Tenn.) 562. 

The défendants are in this court, as they were in the court below, 
admitting that they obtained the linings v/rongfully, that they sold 
them wrongfully, and that they appropriated to their own use wrong- 
fully the moneys realized from their sale. They seek to escape upon 
a technicality the punishment which the Criminal Code of the United 
States imposes. In this they cannot succeed. The défense interpos- 
ed is not tenable. The title to the 2,664 yards continued in the United 
States. 

Judgment affirmed. 

MANTON, Circuit Judge (dissenting). The défendants below 
were charged in the indictment with having conspired to commit an 
offense against the United States, by applying to their own use jerkin 
linings, the property of the United States. The prosecution proceed- 
ed upon an alleged violation of sections 36, 37, of the Criminal Code 
of the United States. 

The défendant Borman was engaged in business under the name 
of Borman Sheep Lined Coat Company and had contracts with the 
government to furnish in ail 113,000 leather jerkins. Under the terms 
of the contracts, the Quartermaster's Department delivered to Bor- 
man quantities of linings to be used in the making of jerkins. On 
the 25th of February, 1918, Borman caused to be shipped to the 
défendant Phillips 2,664 yards of such linings, which were delivered 



32 262 FEDBBAL RBPOBTBB 

to Borman pursuant to the contracts with the government. Phillips, 
acting under the instructions of Borman, sold the linings for $6,000, 
and the check therefor was delivered to Borman, who indorsed it 
over to an employé, and this was deposited to the employé's crédit in 
his bank. 

The main inquiry is whether the linings in question were the prop- 
erty of the United States at the time they were sold under Borman's 
instructions. The District Judge charged the jury, as a matter of 
law, that the title to the linings was in the United States at the time 
of their sale by the défendants, or at the time of the commission of 
the crime as charged. It is the contention of the défendants that 
the contracts were of manufacture and sale, and that the possession 
of the linings by them was not by mère bailment, with a contract of 
service. An examination of the language of the contracts will re- 
veal that the transaction is referred to as a purchase and sale of 
the jerkins; the purchaser being the government. In order to make 
a valid sale of the jerkins to the government, it was necessary for 
the contractor to pass a good title, not only of the materials which 
he purchased and placed in the jerkins, but each and ail of the ma- 
terials which went to make up the manufactured product; otherwise 
the sale wouid amount to a portion of the jerkins — such of the ma- 
terials as were purchased by the contractor and placed in the jerkins. 
The linings were delivered to the contractor in bulk, and the inquiry 
is whether title thereto passed and when it passed. The contracts 
provided in part as follows: 

"Contract for supplies to be delivered in bulk at dépôts and the purchasing 
quartermaster for distribution or use in manufacture, etc. To be used for 
ail purchases of supplies, clothing, wagons, hamess, etc., which are purchased 
in bulk or large quantities to be delivered at dépôts or to purchaslng quarter- 
mastera" 

"Contract for army clothing (to be used exclusively for the manufacture of 
army clothing where raw matériel is fumished by the United States)." 

It would appear that a purchase of jerkins was intended, and not 
a contract for service upon materials furnished by the government. 

Another form of contract used by the government, which is in évi- 
dence, but is not the contract under which the lining was sold, reads 
in part : 

"8. Title to Uaterial Furnished. — ^TJnless otherwise expressly provided here- 
in, ail materials paid for or furnished by the government under thls contract, 
and ail parts and pièces thereof and clipplngs therefrom, In whatsoever form 
or process of manufacture, shall be and remain the property of the govern- 
ment, and, while In the contractor's possession, shall be suitably marked as 
such by the contractor, in the manner dlrected by the contracting offlcer, so 
as to be identified as the property of the government." 

This, it will be'observed, indicates a manufacturing service. The 
Word "purchase" is not used, and the ténor of the provisions is that 
the contractor is to return to the government, in manufactured form, 
the materials which it furnished. 

Purchase implies a substitution of one owner for another. The 
word "purchase," as used in the title of the contracts, must be con- 
sidered in its usual and ordinary meaning, for the contracts are ex- 



BOBMAN V. UNITED STATES ^ 

(262 F.) 

clusively concerned with the buying of supplies by the governn-.ent, 
and the word "supplies" indicates a contract of purch se, and not 
one of service. 

Section 3 of the contracts provides: 

"3. That the articles herein contracted for shall be examined and inspected, 
without unneeessary delay in being delivered, by a person or persons appoiated 
by the United States; and upon such inspection the articles found to be in îdl 
respects as requlred by this contract shall be received and become the prop- 
erty of the United States. Any and ail articles that may, upon such inspec- 
tion, be condemned or rejected, shall be removed from the premlses by the 
contracter within ten days after the said contractor or his agent shall hâve 
been notifled of such objection; otherwlse, at the rlsk and expense of the 
contractor." 

If the goods on inspection are rejected, they do not become or 
remain the property of the United States, but remain the property 
of the contractor, who is obliged to remove the same at his own ex- 
pense. Nothing in the contracts requires the contractor to part the 
rejected jerkins and, while keeping for himself the portion supplied 
by him, retum to the government the linings supplied by it. On th» 
contrary, the contractor in such a case would be required to furnist 
in place of the rejected jerkins, completed ones complying with the 
terms of the contract, and when he has done so, he would be free to 
dispose of the rejected jerkins for his own benefit. It will be noted 
that the other contract referred to (not involved hère) provided that 
ail materials throughout the entire process of manufacture, remain 
the property of the United States ; but it is f urther provided that, in 
case of rejected goods, "the government shall be paid by the con- 
tractor a sum equal to the actual cost or market value at the time of 
such rejection of ail materials furnished hereunder by the govern- 
ment for the making of such articles." 

The spécifications provide the kind of materials used for linings. 
Thèse were what the government was to furnish to the manufactur- 
er, and the government was necessarily to get its own linings back. 
If they hâve always remained its own, it would not insist that the 
linings be of a certain kind. A buyer of leather jerkins would so 
insist. The contracts refer to the price paid, and that indicates the 
sum which the seller will receive in exchange for his completed 
product. The contracts further provide that, in case of the failure 
of the contractor to perform any part of the contracts, the government 
shall hâve the right to supply the deficiency by procurement in the 
open market, or otherwise purchase any of the supplies so required, 
at such places as it may elect. This is to be done at the expense of 
the contractor. It is the usual provision of the contract expressing 
the légal right of any buyer in a contract of bargain and sale to buy 
in the open market an article similar to that to which the seller has 
agreed to deliver to him, and to charge the seller the excess in price 
over the price contracted for, where breach of contract results. 

If it were a mère contract of service, another rule of damages would 

apply involving the cost to get the work done by another. The idea 

of the contract, that only upon acceptance shall the jerkins become 

the property of the government, was intended to mean that then only 

262 F.— 3 



34 262 FEDERAL RBFORTBB 

would the title pass to the government. This imposed upon the man- 
ufacturer the entire responsibility for the goods, the process of man- 
ufacturing, and the resuit of such process. Under the terms, the 
contractor became liable for any loss of or damage to the materials 
furnished by the government, and the government inspecter might in- 
spect the goods and reject any of the articles or materials because of 
inferior workmanship. In the case of such rejection, the materials 
necessarily were thrown back upon the contractor, and it became the 
duty of the contractor to produce, at his cost, other materials to take 
the place of the rejected, and make satisfactory jerkins. It is clear 
to me that there was a sale of the linings in question, and not a bail- 
ment thereof. Power Co. v. Burkhardt, 97 U. S. 110, 24 L. Ed. 973 ; 
Hargraves Mills v. Gordon, 137 App. Div. 695, 122 N. Y. Supp. 245. 
Since it appears that the contracting parties by their written con- 
tracts intended a contract of manufacture and sale of the jerkins, 
title to the parts of the constituent parts of said completed product 
were the subject of a sale. In Buffiun v, Merry, 4 Fed. Cas. No. 
2112, Judge Story said: 

"It was not a contract whereby the spécifie yam was to be manufactured 
into clotli whoUy for the plalntlff's account and at his expense, and nothing 
but his yam was to be used for the purpose. There the property in the yam 
might not be changea; but liere the cloth was to be made of other yarn as 
well as the plalntifC's, the warp of the plaintiff's yarn, the fllling of the de- 
fendant's. The whole cloth, when made, was not to be dellvered to the plain- 
tiff, but se much only as at 15 cents per yard would pay for the plaintiflf's 
yarn at 65 cents per pound. What is this but the sale of the yam at a Bpec- 
Ifled prlce, to be paid for in plaids at a specifled price." 

In Dixon v. London Small Arms Co., Ltd., 1 App. Cases, 632, a 
somewhat similar case, Lord Chancellor Cairns said: 

"New, * * * m order to answer that question you must tum to the 
contract itself. • * • Therefore * * • in substance the resuit of the 
whole is this: What I may eall the raw materlal for the barrel, the steel tube, 
is supplied by the government at a certain prlce ; the butt or stock of the rifle 
is supplied by the government at a certain prlce; ail the other component parts 
of the arm hâve to be provided or made (for the contract Is consistent with 
either view) by the contractors. The whole component parts hâve to be in- 
spected from time to time by the offlcers of the government. They hâve the 
right from time to time to reject any part of the arm while in the course of 
manufacture, which is not consistent with the contract and the spécification ; 
and when the whole is, to use the teehnical term, 'assembled,' when ail the 
pièces of the arm are put together, then if it complied with the spécification, 
and lu that case only, it is to be taken over and accepted by the government, 
and the property in it is to pass to the government, and, on the other hand, 
the prlce is to be paid for the article to the contractors. * • * The ques- 
tion then bas to be asked: During thla process, what Is the position of the 
person who is called the contracter? He is elearly not a servant of the crown. 
That was not contended. There is no contract of service whatever between 
hlm and the crown. He Is not an oflacer of the crown, engaged in the service 
of the crown. Is he, then, an agent of the crown? • * * i cannot flnd 
any ground whatever for contending that the C"ontractor is an agent of the 
crown. He Is a person wlio ia a tradesman, and not the less a tradesman 
because he is engaged in works of a very lai^e and extensive character; he 
Is a tradesman manufacturing certain goods, for the purpose of supplylng 
them accordlng to a certain standard, which Is laid before hlm as a condition 
on which the goods wUl be accepted. During the time of the manufacture 
the property, at ail events, in that which concems the présent case, namely. 



BOEMAN V. UNITED STATES 35 

C262 F.l 

the property In the lock, or the breech action of the rifle, is not the property 
of the crown. The materials are not the materlals of the crown. If the 
respondents make the loek themselves, the materials are provided by the 
respondents, and the respondent's work upon those materials, not as the agents 
of the crown, but as conducting thelr own work and their own manufacture 
for the purpose of supplying the complète arm. » » • i can find hère no 
délégation of authority — no mandate from a principal to an agent; I find 
hère simply the ordinary case of a person who has undertaken to supply 
manufactured goods, who has not got the goods ready manufactured to be 
supplied, and who has to make and produoe the goods in order to exécute the 
order wliieh he has received. I find him engaged in that work on his own 
aecount up to the time when the article Is completed and handed over to, and 
aceepted by, the person who has given the order. I therefore arrive at the 
conclusion that there is not hère on the part of the respondents that which 
amounts in any way to the character or the statua of an agent, a servant, or 
an offieer of the crown." 

Lord O'Hagan said: 

"ïhe contract was not of service, but of sale, for the contractons' ovm bene- 
flt, of certain commodities, fulfiUing certain conditions and to be paid for on 
certain terms; and if those conditions were fulfllled, whether by thelr own 
workmanship or articles provided at their instance, I apprehend the crown 
could uot hâve rejected the commodities; as, on the other hand, its rights of 
rejection on nonfulfillment until the moment of dellvery remalned intact, a 
State of things dlflicult to be reconciled with the theory of agency or service." 

In effect, the delivery of the linings in question was in part pay- 
ment of the cost or price of the finished product. The parties evi- 
dently intended this. The price paid to the contracter was reduced 
to the extent of the value of the Hnings. The question of title must 
necessarily turn upon the intention of the contract and the intent of 
the parties as therein made plain. 

But it is said that because of the provision, "AU rags and clippings 
from the Hning shall remain the property of the United States and be 
delivered with the finished jerkins," a clear indication is given by the 
parties that title to the linings vested in the government at ail times. 
But, to me, the requirement for such a provision indicates that the 
parties intended just the reverse. If the lining material did not vest 
in the contracter on the delivery to him by reason of the nature and 
effect of the contract itself, the clause would be entirely unnecessary 
and without meaning, because, in such case, they would be reserved 
to the government by the very force of its title, without the necessity 
of such a clause or réservation. On the other hand, if the title to 
the lining material did become the property of the contractor on de- 
livery to him, then such a réservation has both meaning and effect, 
and constitutes an exception to the gênerai grant of the linings. 
When the government indicated a wish to accept such linings in the 
contract ofïered in évidence (Défendants' Exhibit D, Contract 108 — 
not involved hère) it said: 

"AU unused material fumlshed by the government shall remain the prop- 
erty of the United States, be properly prepared for shipment and held for such 
disposition as may be necessary by the government. AU rags and clippings 
from material fumlshed by the government shaU remain the property of the 
L'nited States." 

From the foregoing, it is apparent that the government, when in- 
tending to reserve ownership in property which it furnishes to the 



36 262 FBDBKAL KEPOETBB 

contractor, can and does plainly express its intent therefor. The lan- 
gtiage of the contract, since it is drawn by the govemment, must be 
presumed to be that of the govemment. It is the gênerai rule that 
exceptions and restrictions are to be construed strictly against the 
writer of the contract, and not to be extended beyond a fair import 
of the language expressed, except by necessary implication. Duryea 
V. Mayor, 62 N. Y. 592. It was well said in Mallory v. Willis, 4 N. 
Y. 76: 

"Whatever the motive was, the express provision requiring Willis to return 
the oflfals and a spécifie quantity and quallty of flour for a given quantlty of 
good merchantable wheat, taken In connection with the other provisions of 
the contract, implies the exclusion of any claim or right of the plaintifCs to 
any greater quantity of flour, vchatever the quantity produced was, and I 
think it is falrly implied that the surplus, If any, was to belong to Willis." 

In Clarkson v. Stevens, 106 U. S. 505, 1 Sup. Ct. 200, 27 L. Ed. 
139, Stevens had been under a contract to build a ship for the Unit- 
ed States. Materials for the ship were delivered at Stevens' dock 
and under contract, were there received by the United States officiai, 
and stamped "U. S.," and "became the property of the United States." 
It was claimed that the contract provision made the ship built from 
thèse materials also the property of the United States as it was built. 
It was held that title to the unfinished vessel remained in Stevens, 
and that no property therein vested in the United States. The court 
said : 

"For the inference is obvious, from the particularity of such a provision, 
that the larger interest would not be left to mère Intendment." 

I am of the opinion that title to the linings passed when delivered 
to the contractor and that the transaction as to the linings was a sale 
thereof and not a mère bailment. It was therefore error for the 
court to charge, as a matter of law, that the title remained in the 
govemment. Exception was taken to this charge, and, in my opin- 
ion, présents error which requires reversai from this judgment. 



REBDEB et al. v. UNITED STATES.* 
(Circuit Court of Api>eals, EUghth Circuit. November 19, 1919.) 

No. 5355. 

1. InDICTMBNT and INFORMATIOIT ®=>71 — ^SuinCIENCT OF ACCUSATION. 

A crime is made up of acts and Intent, and thèse must be set forth In 
the indictment with reasonable particularity of tlme, place and circum- 
stances. 

2. CONSPIEAOT €=»43(11) — InDIOTMENT FOK SEDinoUS CONSPIBACT. 

An Indictment under Criminal Code, § 6 (Comp. St. § 10170), for con- 
spiracy to prevent, hinder, and delay by force the exécution of the Sé- 
lective Draft Act May 18, 191T. heU sufficient. 
S. CoNSPiBAcr <S=j43(11) — Indictment under Espionaqe Act. 

Counts In an indictment under BIspionage Act June 15, 1917, tlt l, § 4 
(Comp. St. 1918, § 10212d), respectively charging conspiracy to violate 

^ssFor otber cases see same topic & KEY-NUMBER in ail Key-Numbered Dlgusts & Indexes 
•Certiorarl denied 251 U. S. — , 40 Sup. Ct. 346, 64 L. Ed. — . 



REEDEB V. UNITED STATES 37 

(262 F.) 
sections 2 and 3 of the act by atteœptlng to caiise Insubordination, dis- 
loyalty, and refusai of duty In tlie military and naval forces, and to 
obstruct the recrulting and enlistment service, held sufficient. 

4. Indictment and information ©=129(1) — Joindeb of counts. 

Oounts charging separate and distinct offenses grounded upon the same 
transaction may properly be joined in an indlctment, under Kev. St { 
1024 (Comp. St. § 1690). 

5. Céiminal law ®=3508(9), 780(1) — Testimony of accomplices. 

While it is the better practice for courts to caution juries against too 
much reliance upon testimony of aceompliees, there is no absolute rule 
of law preventlng conviction upon the testimony of aceompliees, if juries 
believe them. 

6. CONSPIBAOY <®=527 OVEET ACT8. 

Acts of défendants held to constltute overt acts in furtherance of the 
conspiracy charged. 

7. Abmy and navy ®=40— Obstbuctinq' BECBUiTiNa OB enlistment. 

The offense of obstructing or attempting to obstruct the recrulting or 
enlistment service of the United States, within Espionage Act June 15, 
1917, tit. 1, § 3 (Comp. St. 1918, § 10212c), may be committed by the use 
of vFords, and It is not essential to conviction that défendants' words or 
acts actually prevented recrulting or enlistment. 

8. Cbiminai. law <g=j423(l) — Evidence or acts or conspieatoes. 

Where the évidence showed that an organization formed by défendants 
affiliated with other organizations for a common and unlawful purpose, 
an act of such other organizations in furtherance of the common, pur- 
pose is évidence against ail the conspirators. 

In Error to the District Court of the United States for the Western 
District of Oklahoma ; Colin Neblett, Judge. 

Criminal prosecution by the United States against Walter M. Reed- 
er, J. T. Cumbie, B. F. Bryant, T. A. Harris, Macli F. Clark, and M. 
E. Stuart. Judgment of conviction, and défendants bring error. Af- 
firmed. 

Patrick S. Nagle, of Kingfisher, 0kl., for plaintiffs in error. 
Herman S. Davis, Asst. U. S. Atty., of Frederick, 0kl. (John A. 
Fain, U. S. Atty., of Lawton, 0kl., on the brief), for the United States. 

Before CARLAND and STONE, Circuit Judges, and ELLIOTT, 
District Judge. 

ELLIOTT, District Judge. The indictment against the plaintiffs 
in error, hereinafter ref erred to as défendants, is in three counts. The 
first, under section 6 of the Criminal Code (Act March 4, 1909, c. 321, 
35 Stat. 1089 [Comp. St. § 10170]), charges a conspiracy to hinder and 
delay by force the exécution of a law of the United States approved 
May 18, 1917 (40 Stat. 76, c. 15), entitled "An act to authorize the 
Président [of the United States] to increase temporarily the military 
establishment of the United States, * * * " and by force to pro- 
cure arms and ammunition, and to arm themselves with the same, and 
while armed to combine and ofïer résistance to the authority of the 
United States and to the enforcement and exécution of said act of 
Congress, proclamations, etc. ; the second count charges a conspiracy 
to cause and attempt to cause insubordination, disloyalty, mutiny, and 
refusai of duty in the military and naval forces of the United States, 

4=9For otber cases see same topic & KBY-NUMBER in ail Key-Numbered Digests & Indexes 



38 262 FEDERAL KEPOBTER 

and to induce, entice, persuade, and coerce the persons named in this 
count of the indictment to refuse to submit to and to perform their 
duties as a part o£ the military and naval forces of the United States ; 
and the third count charges défendants with conspiracy to obstruct 
the recruiting and enlistment service of the United States, to the in- 
jury of the service of the United States. 

Défendants were convicted upon ail three counts, and sentenced 
for a term of six years upon the first count and for a period of two 
years each upon the second and third counts, the terms of impris- 
onment to run concurrently. 

[ 1 ] The first contention of the défendants is that the court erred in 
overruling the demurrer to the indictment, insisting that no facts were 
alleged in the indictment under which a court could décide whether 
they were sufficient in law to sustain a conviction. 

In criminal cases prosecuted under the laws of the United States, 
the accused has the constitutional right to be informed of the nature 
and cause of the accusation. The indictment must set f orth the offense 
with clearness and ail necessary certainty to apprise the accused of the 
crime with which he stands charged, and every ingrédient of which 
the offense is composed must be accurately and clearly alleged. The 
object of an indictment is, first, to furnish the accused such a descrip- 
tion of the charge against him as will enable him to make his défense 
and avail himself of his conviction or acquittai for protection against 
a further prosecution for the same cause ; and, second, to inf orm the 
court of the facts alleged, so that it may décide whether they are suffi- 
cient in law to support a conviction if one should be had. For this 
facts are to be stated, not conclusions of law alone. A crime is made 
up of acts and intent; and thèse must be set forth in the indictment 
with reasonable particularity of time, place and circumstances. U. S. 
V. Cruikshank et al., 92 U. S. 542, 23 L. Ed. 588. 

[2] The statute under which the first count of the indictment is 
drawn provides that — 

"If two or m'ore persons • • • conspire to overthrow, put down, or to 
destroy by force the govemment of the United States, * • • or to oppose 
by force the authority thereof, or by force to prevent, hlnder, or delay the 
exécution of any law of the United States, • • • they shall each be" pun- 
Ished. 

It will be observed that under this particular statute an overt act 
is not made an ingrédient of the offense, and the first inquiry is as to 
the sufficiency of the indictment under this statute. Has the pleader 
substantially complied with the rule of law as admirably stated in U. 
S. v. Cruikshank et al., supra ? 

The indictment désignâtes the time and the place of the alleged of- 
fense definitely. It names the défendants, and allèges that they did 
then and there knowingly, willfuUy, unlawfully, and feloniously con- 
spire, etc., with other persons named in the indictment to knowingly, 
willfuUy, unlawfully, and feloniously hinder and delay the exécution 
of a certain law of the United States, designating it as the act of Con- 
gress approved May 18, 1917, giving the title of the act, and referring 
also te the proclamations of the Président of the United States and 



KEEDEB V. UNITED STATES 39 

(262 F.) 

régulations in aid of said act. The indictment further alleged that the 
défendants knowingly, willfully, unlawfuUy, and feloniously opposed 
by force the authority of the United States, its agents and officers, in 
the enforcement of said act, proclamation, and régulations in so far 
as their provisions applied to persons subject to military duty and serv- 
ice thereunder, and particularly in so far as the same applied to 
Wright, Ratcliffe, Blackwood, and others named in the indictment. 
It is further alleged that the défendants did conspire, combine, and 
agrée together with persons named in the indictment by force to pro- 
cure arms and ammunition, and to arm themselves with the same, and 
while armed to ofïer individual and combined résistance to the au- 
thority of the United States and to the enforcement and exécution of 
said act of Congress, proclamation, and régulations, to the end that 
they would thereby hinder, delay, and prevent the said persons from 
being drafted into and inducted into the military forces of the United 
States ; alleging further that such persons and each of them were citi- 
zens of the United States within the state of Oklahoma, having regis- 
tered in said state and not having been exempted from military service 
as provided in said act, and that they were then and there under the 
duty to submit to being drafted into the military service of the United 
States under the provisions of said act, etc. 

It will be noted that this count of the indictment with both clear- 
ness and certainty allèges the conspiracy of the défendants, entered 
into for the purpose of committing the ofifense therein specified, de- 
scribing it in the words of the statute which créâtes it, and to thèse 
allégations is added the names of the persons with whom they con- 
spired, and who, with others, were to be influenced by them, together 
with allégations of intent and purpose, and that they were armed and 
prepared to carry out the purpose of the conspiracy by force. The 
conspiracy in this count is the gist of the crime, and every ingrédient 
of the offense is accurately stated, and apprises the accused of the 
crime with which they stand charged. Clearly the accused were fur- 
nished by the allégations of this count of the indictment with such a 
description of the charge against them as would enable them to make 
their défense and avail themselves of their conviction or acquittai for 
protection against a further prosecution for the same cause. 

[3] Counts 2 and 3 of the indictment are drawn under the provi- 
sions of the act of June 15, 1917 (40 Stat. 217, c. 30), which provide 
that : 

"If two or more persons conspire to vlolate the provisions of sections two 
or three of this titlc, and one or more of such persons does any act to effect 
the object of the conspiracy, each of the parties to such conspiracy shall be 
punished," etc. Title 1, § 4 (Comp. St. 1918, § 10212d.) 

This Statute prohibits two or more persons conspiring to willfully 
cause or attempt to cause or incite or attempt to incite insubordina- 
tion, disloyalty, mutiny, or refusai of duty in the military or naval 
forces of the United States, in the first instance; and, in the second, 
to willfully obstnict or attempt to obstruct the recruiting or enlist- 
ment service of the United States. 



40 262 FEDERAL REPORTER 

The second count of the indictment sets forth the offense charged 
fuUy and clearly in the language o£ the statute, and in addition there- 
to, with the évident purpose of preventing uncertainty or ambiguity, 
further allèges éléments entering into and constituting the offense, as 
the time, place, the persons conspiring, whom they conspired with, 
and that the purpose of this conspiracy with the persons last named 
in the indictment was to knowingly, willfuUy, unlawfully, and felo- 
niously' combine, conspire, conf ederate, and agrée with each other and 
with the persons last named in the indictment to cause and attempt to 
cause insubordination, disloyalty, mutiny, and refusai of duty in the 
military forces of the United States ; and in said count it is specifically 
alleged that the défendants did conspire, combine, confederate, and 
agrée with each other and the persons named in the indictment to in- 
duce, entice, persuade, and coerce Monroe Wright, and others in said 
count named, to fail and refuse to submit to and perform their duties 
as a part of the military and naval forces of the United States, when 
called for duty under the provisions of the act of May 18, 1917, known 
as the Sélective Service Law, and the proclamation and régulations 
duly prçmulgated thereunder. 

This count further allèges that the persons last named, with whom 
défendants conspired, were citizens of the United States, alleging their 
âges, and that they had submitted to and had been registered in accord- 
ance with the terms of said act, and it is then alleged that it was the 
purpose and intent of the défendants that thèse various persons named 
in the indictment, when called for duty and service in the military and 
naval forces of the United States, were to be disloyal to the United 
States, and were to mutiny and rebel against the authority of the Unit- 
ed States, and refuse to perform their duties as a part of the military 
and naval forces of the United States. Thereupon overt acts are al- 
leged, specifying the time and the place of meeting of défendants in 
pursuance of this unlawful conspiracy, and that it was for the purpose 
of effecting the object thereof, and it recites with defîniteness and cer- 
tainty the time, place, and substance of what was done by défend- 
ants pursuant to said alleged conspiracy and for the purpose of effect- 
ing the same. 

The références to the allégations of the second count are true as 
to the third count, except the conspiracy alleged in the third count 
is a violation of that provision of the statute prohibiting obstructing 
the recruiting and enlistment service of the United States. 

It will be seen, therefore, that this indictment is not subject to 
the criticism that it is uncertain, vague, or indefinite. The conspiracy 
charged is set out with particularity, and counsel for défendants has 
failed to point out any insufficiency in the statements of any of thèse 
counts, and has failed to name a single subject or particular in which 
there is any uncertainty or any indefiniteness. The indictment is defi- 
nite and certain as to time and place, with the names of the parties 
charged with having entered into the conspiracy — even the identical 
place where it is alleged the conspiracy was formed, "at Mack Clark's 
farm," is set forth — and the intent and purpose with which the con- 
spiracy was formed ; and the indictment does not stop there, but par- 



EEEDER V. UNITED STATES *1 

ticularizes the îndîviduals whom the défendants are alleged to hâve 
intended to influence, and just what the défendants would influence 
them to do and net to do, with the manner in which this was to be ac- 
complished. 

It will therefore be seen that the question is not presented hère 
as to whether or not each count of this indictment is sufficient to de- 
scribe a statutory offense in the language of the statute, because the 
pleader has fully covered the provisions of the statute in the différent 
counts of the indictment, and in addition thereto has definitely alleged 
facts and circumstances which include ail material éléments entering 
into the ingrédients of the offense charged. Clearly the indictment 
fumished the accused with a description of the charges against them 
which would enable them to make their défense and avail themselves 
of their conviction or acquittai for protection against a further prose- 
cution for the same cause. It fully informed the court of the facts 
relied upon, and the court rightly decided they were sufficient in law 
to support a conviction, if one should be had, and properly overruled 
the demurrer to the first, second, and third counts of the indictment. 
Cochran v. U. S., 157 U. S. 286, 15 Sup. Ct. 628, 39 L. Ed. 704. 

[4] Objection is made that the court denied the motion of the de- 
fendants that they should be proceeded against upon only one count of 
the indictment to be elected and designated by the prosecution. Thèse 
three counts are for the same transaction, and the allégations of the 
separate counts are stated within a distinct and separate provision of 
the statute; each being entirely independent of the others. This is 
permissible by express statute of the United States. R. S. § 1024 
(section 1690, U. S. Comp. Stat.). The purpose of pleading the same 
transaction in several counts as to the manner or means of its commis- 
sion is to avoid at the trial an acquittai by reason of any unforeseen 
lack of harmony between the allégations and the proof. In Dealy v. 
U. S., 152 U. S. 542, 14 Sup. Ct. 681, 38 L. Ed. 545, the Suprême 
Court of the United States said : 

"It Is farailiar law that separate counts are unlted In one Indictment, elther 
because entirely separate and distinct offenses are intended to be cbarged, or 
because the pleader, having In mind but a single offense, varies the state- 
nient in the several counts as to the manner or means of its commission, in 
order to avoid at the trial an acquittai by reason of any unforeseen lack of 
harmony between the allégations and the proofs. ♦ • * Yet, whatever 
the purpose may be, each count is in form a distinct charge of a separate of- 
fense, and hence a verdict of gullty or not gullty as to it is not responsive 
to the charge in any other count." 

See Corbin v. U. S., 205 Fed. 278, 125 C. C. A. 114; Kreuzer v. 
U. S., 254 Fed. 34, 165 C. C. A. 444; Boone v. U. S., 257 Fed. 963, 
— C. C. A. — . 

It may be added that the longest term of imprisonment imposed 
by the trial court upon any of the three counts of the indictment was 
no greater than that which might hâve been imposed upon either count, 
and the terms of imprisonment run concurrently. The sentence im- 
posed, therefore, does not exceed that which might properly hâve been 
imposed upon conviction under any single count. 

There is an exception to the failure of the court to direct a verdict 



42 262 FEDERAL BEPOBTEB 

of not guilty at the close of the plaintifï's évidence. The question 
ofthe sufficiency of the évidence to sustain a verdict of guilty was not 
raised in the trial court by a renewal of the motion at the close of 
ail of the évidence, and it may not now be urged by the défendants, 
unless, in our discrétion, we détermine to consider it. We find in the 
record no sufficient reason for the exercise of such discrétion. 

Défendants' exceptions numbered 2 to 7, inclusive, are largely de- 
voted to the considération of the effect of the testimony, and there- 
fore to the weight to which it is entitled. The jury having seen the 
witnesses and heard the évidence, the weight that should be attached to 
the statements of the witnesses, complained of by counsel for défend- 
ants, was a matter peculiarly within the province of the jury. The 
record contains proof of the existence in the state of Oklahoma, where 
this cause of action arose, of an organization the declared purpose of 
which was to do the very thing prohibited by the statute above cited, 
and that thèse défendants, acting as members of such organization, ac- 
tually conspired, agreed, and confederated together to do the things 
the indictment allèges against them and for the purposes alleged in the 
indictment. Numerous overt acts were shown, including the défend- 
ants arming themselves and others, and agreeing to do by force and 
violence the things prohibited by the statute above quoted. 

Défendants object to the testimony of the witness Parker, alleging 
he was permitted to testify to what one of the défendants told him. 
The record discloses that he was présent with défendants at a meet- 
ing, and that his testimony, complained of hère, was an account of 
a report made by one of the members of the organization as a part 
of the proceedings at this meeting. This testimony was compétent as 
to ail défendants présent. 

[5] Défendants contend they were convicted on the testimony of 
Monroe Wright, a coconspirator, and that his uncorroborated testi- 
mony was insufficient to warrant such conviction. Wright was only 
one of a number of witnesses who testified to the circumstances at- 
tending the formation of the organization to which thèse défendants 
belonged, as well as an account of différent meetings held by members 
of the organization, défendants and others. The facts and circum- 
stances, independent of what was said and done at the meetings, tend to 
support and corroborate the statements of the witness Wright. The 
record contains no request that the court caution the jury against too 
much reliance upon the testimony of this witness as an accomplice, 
and against believing such testimony without corroboration ; and 
while it is the better practice for courts to caution juries against too 
much reliance upon testimony of accomplices, and to require corrobo- 
rating testimony to give credence to such évidence, there is no absolute 
rule of law preventing convictions upon the testimony of accomplices, 
if juries believe them. Caminetti v. U. S., 242 U. S. 470, 495, 37 Sup. 
Ct. 192, 61 L. Ed. 442, L. R. A. 1917F, 502, Ann. Cas. 1917B, 1168; 
Bishop, Crim. Proc. (2d Ed.) §■ 1081, and cases cited in the note. 

[8] Défendants insist that the alleged overt acts are not such as 
contemplated in the provisions of the statute alleged to hâve been vio- 
lated, being merely a séries of acts embraced within the original con- 



EEEDEB V. UNITED STATES *3 

4262 p.) 

fédération. If we understand the argument presented by counsel, it 
is that, because they occurred upon the date upon which the proof s 
showed the meeting was held and the purpose of the organization dis- 
closed, they were not acts intended to carry into effect the original 
agreement. The conspiracy was complète when the agreement was 
entered into. Immediately thereafter défendants participated in 
holding further meetings, sêcuring additional members of the organi- 
zation, securing arms and ammunition, ap~pointing one of défendants 
the représentative of that organization to go to Chicago for conférence 
with the I. W. W., and to act with them against the government of the 
United States in violation of the particular statute in question — ail 
overt acts within the allégations of the indictment. 

Counsel for défendants argues that the défendant Stuart's name 
is mentioned but three times in the record. This goes to the suffi- 
ciency of the évidence, and that question is not hère for our con- 
sidération. In passing, however, it may be noted that we find much 
in this record in criticism of an attempt to minimize the part this 
défendant assumed in this prohibited transaction. It is very évi- 
dent upon the face of the record that he was one of the moving spirits 
in the enterprise ; that he was one of the first to report to the meeting 
at Mack Clark's farm, when he presented a report there of 75 or 100 
that he had secured to join the organization and who were ready for ac- 
tion. The fact that he had taken this action before this meeting at 
Clark's farm and presented the report there as an encouragement for 
organization for this unlawf ul purpose, does not relieve him of responsi- 
bility for the agreement that was then and there entered into ; nor does 
it tend to relieve him from responsibility for the completed offense, 
which is evidenced by overt acts of other coconspirators subséquent 
to the meeting. 

[7] Défendants then contend that language is not proximately ca- 
pable of causing insubordination, disloyalty, mutiny, and refusai of 
duty in the military and naval forces of the United States, or obstruct- 
ing the recruiting service of the United States, unless the circum- 
stances assure that it will reach members of the actual forces, or con- 
flict with agencies of the recruiting service, as the case may be, and, 
further, that there was nothing said or donc by défendants that ever 
reached members of the actual forces of the United States, or con- 
flicted with any of the agencies of the recruiting service, and that it 
does not appear that a single person was ever influenced to the détri- 
ment of the government by anything said or donc by the alleged con- 
spirators. 

The answer to this objection is that the indictment allèges the names 
of certain persons, whose âges are given and their citizenship alleged, 
with the further allégation that they had registered and' were liable 
for service, and that défendants conspired with the persons so named 
with the intent and purpose to do the things prohibited by this statute. 
The Circuit Court of Appeals of the Fifth Circuit, in Deason v. U. 
S., 254 Fed. 259, 165 C. C. A. 547, properly construed the provisions 
of the act of June 15, 1917, making it an offense to willfully obstruct 
the recruiting or enlistment service of the United States, wherein the 



4Â 262 FEDERAL REPOBTEB 

court saîd : The word "obstruct" is not used as the équivalent of "pre- 
vent," but rather of "to make difBcult," and to warrant conviction for 
its violation it need not be shown that défendants' words or acts pre- 
vented recruiting or enlistment. 

The jury, having considered the testimony and the facts and cir- 
cumstances, determined this question against ithe défendants, and 
there is substantial évidence to sustain such finding. 

[8] The court refused to strike out and take from the jury testi- 
mony wrhich défendants say vi^as practically an assumption that the 
organizations known as "W. C. U." and "I. W. W." were and are 
illégal and outlavi' organizations, without proving the same by compé- 
tent évidence. An examination of this record discloses that ail of this 
testimony had relation to the common purpose of violating the provi- 
sions of the statute, the proclamation, and régulations as chargea, and 
that thèse organizations were working with défendants in the carry- 
ing out of the intents and purposes of the alleged conspiracy. A con- 
spiracy has been shown, and thèse other organizations entered into 
that conspiracy. An act of such organizations in furtherance of the 
common purpose is évidence against ail coconspirators ; and this is so, 
though the conspirator committing the act was not a défendant in the 
case being tried. Clune v. U. S., 159 U. S. 390, 16 Sup. Ct. 125, 40 
L. Ed. 269; Isenhouer et al. v. U. S., 256 Fed. 842, C. C. A. . 

That the plans and purposes of thèse défendants were not con- 
summated is due to no fault of theirs. It is clear that the organ- 
ization of which they were members had for its purpose the viola- 
tion of the statutes of the United States in question. It is equally 
clear they were each of them active in the formation of this organi- 
zation, with a full understanding of its unlawful purpose, and co- 
operated toward efTecting its object. 

Finding no prejudicial error, the judgment of conviction is af- 
firmed. 



MABTIN V. IMBRIB et al. 
(Circuit Court of Appeals, Second Circuit. December 10, 1919.) 

No. 39. 

1. Action <S=»22 — Bill tob specifio peefoemance, but seekinq damages, to 

be tbeated as law action. 

A bill for spécifie performance of an alleged contract to purchase cer- 
tain corporate stock and sell one-half to plalntlft, but really seeking dam- 
ages for the refusai to sell half the stock to plalntlfC, should hâve been 
treated as a eommon-law action for breaeh of contract. 

2. Joint adventubes <S=>1 — Fob indefinite peeiod teeminate at wiix op 

bithee pabty. 

An arrangement for an Indeflnlte perlod, under which défendants were 
to purchase corporate stock at a speclfled price for joint account of 
plaintiff and défendants, could be terminated at the wlll of either party. 

3. Joint adventubes ®=»5(2) — Evidence sufficient to show tebmination. 

Evidence held to sustain a finding that défendants had terminated a 
contract for purchase of stock for joint account by notifying plaintlff of 
such termlnation. 

€==>For otber cases see same topic & KEY-NUMBEÎR in ail Key-Numbered Dlgests & Indexes 



MARTIN V. IMBEIE 45 

C2e2 F.y 

4. Appeal and ebbob i®=>197(4) — Objection that évidence was outsidb 

issue too late on appeal. 

In équitable action for spécifie performance of a contract for purchase 
of stock for joint account, where évidence regarding the termination of 
the contract was recelved without objection, the plaintifE cannot contena 
on appeal that the termination of the contract should hâve been pleaded. 

5. Appeal and ebbob <ê=>171(3) — Question not kaised below cannot be 

consideeed. 

Where a case Is tried below on a theory that a partlcular matter is 
withln the issues, it cannot be contended on appeal that such matter was 
without the pleadlngs. 

6. Joint adventubeb <ê=5(2) — Teemination or conteact pbovable under 

GENEBAL DENIAL. 

In suit on contract for purchase of stock for joint account, a gênerai 
déniai authorlzed défendant to show that the contract had been terminat- 
ed at the time of the transactions involved. 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

Bill for an accounting by George A. Martin against William Mor- 
ris Imbrie and others copartners trading and doing business as Wil- 
liam Morris Imbrie & Co. Decree for défendants, and complainant 
appeals. Affirmed. 

Arthur N. Sager, of New York City (William A. Griffith, of Pitts- 
burgh, Pa., of counsel), for appellant. 

Rabenold & Scribner, of New York City (Mark Hyman and Al- 
lan R. Campbell, both of New York City, of counsel), for appellees. 

Before ROGERS, HOUGH. and MANTON, Circuit Judges. 

MANTON, Circuit Judge. A bill of complaint filed by the ap- 
pellant alleged that the appellees on the 14th of November, 1919, 
entered into a contract by the terms of which the appellees were to 
purchase common stock of the Cambria Fuel Company for the joint 
benefit of the .parties to this litigation. This stock was to be pur- 
chased at a price not to exceed $10 per share. The appellant agreed 
not to purchase any of the stock, but to refer ail the persons who of- 
fered any of the stock to him for purchase to the appellees, so that ail 
purchases of this stock for the joint benefit of the parties, under the 
agreement, would be made through the appellees. It further allèges 
that certain purchases were made in the months of November and 
December, 1910, and further that during the years 1912 to 1916, ap- 
pellees purchased common stock of the Cambria Fuel Company to 
the extent of 3,608 shares; that 2,500 shares of this stock were of- 
fered to the appellant, and he declined to purchase the same, and 
ref erred the seller to the appellees as probable purchasers of the stock. 
It is then alleged that, because of this agreement referred to, the 
appellees were the agents and trustées of the appellant, and that the 
appellant was ready and able to pay his share toward the purchase 
of said stock, and demanded that the appellees account for this stock 
as to any dividends paid, and directing that one-half the stock thus 
purchased be delivered over to the appellant upon payment of the 

^ssFor otber cases see same topic & KSY-NUMBBR in ail Key-Numbered Digests & Indexes 



46 262 FSDIiBAL BSPOBTKB 

just and correct amount due and owing by the appellant. From the 
record, it does not appear that this stock was of a peculiar kind, or 
was not purchasable in the market. The appellant has proceeded for 
spécifie performance of a contract which deals merely with personal 
property. The relief he seeks really is money damages for the re- 
fusai to sell one-half of this stock to him, in addition to his share of 
the dividends as may hâve been declared. The contract is purely one 
of an agreement to sell stock or an interest in stock to the appellant, 
which, if broken, entitled the appellant to maintain an action for 
damages for breach of a simple contract. There could be no trust 
created as to this stock, unless the appellant had some property in the 
stock, as it was at the time in the custody of the appellees. The 
case was tried in equity, but should hâve been treated as a common- 
law action for breach of contract. 

[1] Upon the merits of the claim, we are of the opinion that the 
court correctly decided against the claim of the appellant. The 
Cambria Fuel Company was a corporation organized under the laws 
of the State of Wyoming, with a capital stock of $2,000,000. Its 
business was mining coal and maintaining a gênerai store and elec- 
tric power plant near the mines; 1,500,000 of this stock was com- 
mon stock of the par value of $10, and the agreement to purchase 
for the account of the appellant and appellees, made shortly prior 
to December 10, 1910, is not disputed. The agreement itself was 
oral. The fact of its existence has support in letters exchanged, in- 
dicating the purchase of stock for the joint or common account of the 
parties in the months of November and December, 1910. Upon the 
trial, such an agreement was not disputed. The appellees were bank- 
ers having an office in New York City. The appellant testified that 
in November, 1910, he called at the appellees' office and had an in- 
terview, which constitutes the agreement on which he seeks to main- 
tain this action. Then and there it was agreed that common stock 
from time to time be purchased by the appellees as cheaply as it 
could be purchased, with a view of ultimately controlling the inter- 
ests of the Cambria Fuel Company. AU the common stock was to 
be divided as bought from time to time, and the appellant was to pay 
one-half of the purchase price and receive in return one-half of the 
stock. The price limit of the purchase was fîxed at $10. 

The appellees' claims do not materially difïer from this version of 
the agreement. The appellant has not received one-half of the stock, 
nor paid therefor; that is, the purchases made beginning May 23, 
1911, and ending April 25, 1916; and the reason therefor is asserted 
to be that this contract was terminated about January, 1911. The 
reason for the termination, as given, is that the appellant's partner 
was in charge of the funds, books, and offices of the Cambria Fuel 
Company, at Cambria, Wyo., being its secretary and treasurer during 
the year 1910. It was said unauthorized withdrawals were made 
from the funds of the Cambria Fuel Company, and unauthorized in- 
debtedness incurred by one Law, a partner of appellant, and that 
thèse matters were called to the attention of the appellees, and re- 
sulted in an investigation by the directors of the Cambria Fuel Com- 



MABTIK V, niBRIE 47 

(262 p.) 

pany. Report of this investigation was submitted at a directors' meet- 
ing on January 21, 1911, and a record thereof was made in the 
minutes of the company, resulting in a demand at the meeting for the 
résignation of the appellant's partner, Mr. Law. The appellant op- 
posed this, and renominated Mr. Law as secretary and treasurer, and 
in the contest which ensued the appellant and his partner were de- 
feated. 

Then, the appellees testified, they told appellant they would give 
appellant no further interest in any purchase of said stock. They 
terminated the contract, and so stated on two or three occasions with- 
in a few weeks after January, 1911. This testimony was not refuted 
or denied by the appellant, and stands uncontradicted. The oppor- 
tunity to make déniai thereof was accorded the appellant, for he was 
présent in court during the trial and after this testimony of the 
appellees was given. During this period from January 31, 1911, to 
March, 1916, lîie appellant did not institute a suit, nor even demand 
an accounting or damages. He did ask for a reconsideration of the 
appellees' décision to permit of no further interest for appellant in 
the purchases, and this they refused. The appellant states that he 
was refused information as to the purchases in 1912. The coal 
properties were of a spéculative kind, with ail the uncertainties of 
mines and markets, and the value of the stock was very uncertain, 
and subject to many contingencies. The war produced a high value 
for coal because of the shortage, and the priées thus obtained made 
the stock more valuable, and this undoubtedly gives rise to the prés- 
ent demands and this litigation. 

[2] We are of the opinion that, assuming the appellant's version 
of the contract to be the truthful one, it was for an indefinite time 
and an arrangement which might be terminated at the will of either 
party. It could not be binding forever, and it was not an agreement 
that required mutual consent before its termination. Karrick v. Han- 
naman, 168 U. S. 328, 18 Sup. Ct. 135, 42 L. Ed. 484. In Marston 
V. Gould, 69 N. Y. 220, a similar arrangement was made for the pur- 
chase of stock for a joint account. No time was fîxed for the op- 
érations. The court said: 

"The armngement could hâve been terminated at any time by the mutual 
consent of the parties, or at the option of either upon notice to the other. The 
connection was dissolvaWe at the will of either of the parties." 

[3] The appellees exercised their right to dissolve the arrangement 
and terminate it as stated above, and the détermination below of this 
question of fact has ample évidence to support it, and, indeed, stands 
uncontradicted in the record. 

[4-6] The appellant contends that it was necessary for the appel- 
lees to plead a rescission of the contract, for this défense was open to 
them. The answer denied the existence of the contract. The is- 
sue then presented was whether there was a binding and enforceable 
contract at the time of the purchase of the stock in question. The 
évidence as to the termination of the contract was not objected to, 
and the question of pleading was not raised at the trial, either by 
objection or motion. Effect must therefore be given to the rule that 



48 262 FEDERAL RBPOKTBB 

where the parties, with the assent of the court, united in tryîng a case 
on the theory that a particular matter is within the issues, that theory 
cannot be rejected when the case cornes up for review. San Juan 
Light Co. V. Requena, 224 U. S. 89, 12 Sup. Ct. 399, 56 L. Ed. 680. 

We are of the opinion that the theory of the appellant that a rescis- 
sion should hâve been pleaded cannot now be présentée upon this ap- 
peal. Huse v. U. S., 222 U. S. 496, 32 Sup. Ct. 119, 56 L. Ed. 285; 
Grant Bros. v. U. S., 232 U. S. 647, 34 Sup.. Ct. 452, 58 L. Ed. 776. 
But, aside from this rule, we are of the opinion that, on a gênerai 
déniai, it was permissible for the appellees to prove that the contract 
was terminated at the time of the purchase of the stock in question. 

The decree below is affirmed. 



HOROWITZ et al. v. UNITBD STATES. • 
(Circuit Court of Appeals, Second Circuit. Deoember 19, 1919.) 

No. 23. 

1. Cbiminai, law <&=>1149 — Discbetion to grant bili, of pabticttlabs. 

Déniai of a motion for blll of partlculars by défendants in a crlmlnal 
case Is a raatter of discrétion, and not revlewaWe, except in case of plaln 
abuse of discrétion. 

2. Indictment and information <g=>127 — Counts fob ttsino and bellinq 

QOVEBNMENT PEOPEBTY WHICH MAT BB JOINED. 

Counts, each charglng défendants wlth applying to thelr own use and 
selling, at the same place and about the same tlme, cloth, the property of 
the United States, fumlshed under the same contract to be iised in 
maklng clothing for soldiers of the army, in violation of Crlmlnal Code, 
§ 36 (Comp. St. § 10200), heU properly Jolned under Rev. St. § 1024 (Comp. 
St. § 1690). 
8. Abmy and navt i©=a40 — TJni-awfui, selling of cloth fuenished fob aemy 

CLOTHING CBIMINAL OFFENSE. 

The unlawful selUng of cloth, fumlshed by the United States to be made 
into clothing for use of the army, 'keU an offense within Crlmlnal Code, 
§ 36 (Comp. St. § 10200). 

4. AeMT AND NAVT (@=>40 INDICTMENT FOB SELLING PBOPEETY FUENISHED FOB 

ARMT USE SUFFICIENT. 

In an Indictment under Crlmlnal Code, § 36 (Comp. St. § 10200), for 

unlawfully selling property of the United States fumlshed for use of the 

army, it Is not neeessary to state hov? the property came into possession 

of défendants. 

6. Ceiminal law i®=>730(14) — Aegument of counsel not peejudicial eeKok. 

In prosecutlon for selling property of United States fumlshed for the 
army, remarks made to the jury by counsel for the prosecutlon conoemlng 
existence of war and the need of clothing, taken in connection with those 
of the judge, when objection was made, heU, not to constitute prejudicial 
error. 

In Error to the District Court of the United States for the Southern 
District of New York. 

Ciiminal prosecution by the United States against H3mian Horowitz 
and Benjamin Horowitz. Judgment of conviction, and défendants 
bring error. Affirmed. 

®=7For oUier cases see same topic & KflY-NUMBEB In aU Key-Numbered Digests & Indexe» 
•Certlorarl denled 251 U. S. — , 40 Sup. Ct. 396, 64 L. Ed. — . 



HOROWITZ V. UNITED STATES 49 

C262 F.) 

Fitzgerald, Stapleton & Mahon, of New York City (E. N. Zoline and 
L. D. Stapleton, both of New York City, of counsel), for plaintiffs in 
error. 

Francis G. Caffey, U. S. Atty., of New York City (F. M. Roosa, 
of New York City, of counsel), for the United States. 

Before WARD, ROGERS, and MANTON, Circuit Judges. 

WARD, Circuit Judge. This is a writ of error to a judgment of 
conviction of Hyman Horowitz and Benjamin, his son, upon an indict- 
ment under section 36, U. S. Criminal Code (Comp. St. § 10200), which 
reads : 

"Whoever shall steal, embezzle, or knowingly apply to his own use, or un- 
lawfuUy sell, convey, or dispose of, any ordnance, arms, ammunition, clothlng, 
subsistence, stores, money, or other property of the United States fumished 
or to be used for the mllitary or naval service shall be punished as prescribed 
in the preoeding section." 

The indictment contains six counts, in each of which both défend- 
ants are charged with willfully, feloniously, and knowingly, apply- 
ing to their own use, and knowingly, feloniously, and unlawfully 
selling certain pièces of woolen cloth in the first five counts, and 
10 baies of cotton drilling in the sixth count, ail being property 
oi the United States intended to be used for the military service, 
on six separate occasions between November 8 and December 11, 
1917. Counts 2, 3, 4, and 5 were dismissed during the trial against 
Hyman Horowitz, and 3 and 5 as against Benjamin Horowitz; both 
being convicted on the first and sixth counts, and the jury disagreeing 
as to Benjamin Horowitz on counts 2 and 4. 

October 22, 1917, the corporation of Horowitz & Marcowitz, of 
which Hyman Horowitz was vice président and Benjamin Horowitz 
was an employé, entered into a contract with the Quartermaster's Corps 
of the United States Army for the manufacture of 150,000 pairs of 
woolen breeches. The woolen cloth and cotton drilling were to be fur- 
nished by the United States, and were to remain, including rags and 
clippings, the property of the United States. The verdict of the jury 
conclusively settles the fact that the défendants did commit the offenses 
charged. 

[1] The défendants moved for a bill of particulars, which motion 
was denied. This was a matter of discrétion, not to be reviewed, ex- 
cept in case of plain abuse of discrétion, of which we discover no évi- 
dence. The défendants were not surprised or misled, or in any way 
prejudiced, hy want of this information. Indeed, what was asked for 
amounted to a complète discovery of the whole of the government's 
case. 

[2] The joinder of thèse separate offenses and the trial of the de- 
fendants together was entirely proper within section 1024, U. S. Rev. 
Stat. (Comp. St. § 1690), which reads : 

"When there are several charges against any person for the same act or 
transaction, or for tvi'o or more acts or transactions connected together, 
or for two or more acts or transactions of the same class of crimes or of- 
fenses, wMch may be property jolned, instead of having several indlct- 
ments the whole may be jolned in one indictment in separate counts; and if 
262 F.— 4 



50 262 FBDEBA.L RBPORT&B 

two or more Indlctments are found In euch cases, the court may order them 
to be Consolidated." 

The several charges were connectée! together and were of the same 
class of offenses. The same persons were charged in each count with 
acts connected together, viz. applying to their own use, etc., property 
of the same person which was to be used in the same contract at the 
same place and about the same time and they were charged with exact- 
ly the same offense in each count. McElroy v. United States, 164 U. 
S. 76, 17 Sup. Ct. 31, 41 L,. Ed. 355, on which the défendants rely, was 
quite différent. In it four separate indictments were consolidated, 
which charged différent classes of crime, viz. two for assault with 
intent to kill and two for arson. Five of the défendants were indicted 
in three of the indictments, and cnly three of them in the f ourth. The 
instant case is more like Pointer v. United States, 151 U. S. 396, 14 
Sup. Ct. 410, 38 L. Ed. 208. 

[3] It is argued that section 36 applies only to cloth, and not to 
clothing. It is said that cloth has been held by the Suprême Court to 
be a différent thing from clothing. Arnold v. United States, 147 U. 
S. 494, 13 Sup. Ct. 406, 37 L. Ed. 253. The construction of every 
statute dépends upon its own language and intent. Arnold v. United 
States was a revenue case, and a décision that cloth and clothing are 
différent things in respect to custora duties does not prove that cloth 
is not included as a similar thing to "clothing" under a criminal stat- 
ute. We think the gênerai words with which the classes enumerated 
in this section end, "ail other property of the United States furnished 
or to be used for the military or naval service," make it clear that 
cloth is covered as property similar to clothing. Indeed, having in 
mind the mischief to be corrected, it is inconceivable that Congress 
intended to protect clothing, and leave such property as cloth, intended 
for use in making it for the military or naval service, unprotected. 

[4] It is further argued that the motion in arrest of judgment 
should hâve been granted, because the indictment did not state how 
the property came into the possession of the défendants. This might 
be so, if the government were charging the crime of embezzlement, 
although such an objection at the end of the trial, without any pre- 
vious demurrer or motion to quash, might well be held too late. More- 
over, there being no reason to think that the défendants were surprised, 
misled, or prejudiced in any way, the indictment must be held suffi- 
cient under U. S. Rev. Stat. § 1025 (Comp. St. § 1691), which reads: 

"No Indictment found or presented by a grand jury In any District or Cir- 
cuit or other court of the United States shall be deemed Insufficient, nor shall 
the trial, judgment, or other proceeding thereon be affected by reason of any 
defect or Imperfection in matter of form only, wlilch shall not tend to the 
préjudice of the défendant." 

The offense charged was, in the words of the statute, that the "de- 
fendants had knowingly," etc., "applied to their own use" and sold 
the property in question. The statute does not restrict the offense to 
acts of servants, agents, or bailees, who, coming rightfully into pos- 
session of property, subsequently misappropriate it. Any one who does 
the things specified in the act commits the offense and is liable to pun- 
ishment. The first word of the section is "whoever." 



HOKOWITZ V. UNITED STATES 51 

(262 F.> 

There is nothing in the objection ihat the court struck out the firsl 
count, and therefore the défendants should not hâve been convicted 
under it. In a colloquy with counsel, Judge Learned Hand did say, 
no doubt inadvertently, that the first count was stricken out ; but be- 
fore the colloquy ended he stated that the first count remained as 
against both Hyman Horowitz and Benjamin Horowitz. It is also 
complained that he did not state with sufificient cleamess to the jury 
in his charge what counts remained for their considération, and upon 
which of them the défendants could be convicted. The hast évidence 
that the jury comprehended the situation clearly is that their verdict 
was against Hyman Horowitz on two counts, 1 and 6, and against 
Benjamin Horowitz only on two, 1 and 6, disagreeing as to 2 and 4. 

[5] One reading the quotations from the United States attomey's 
summing up to the jury, of which the plaintiflfs in error complain, sep- 
arately, might infer that the jury must or at least may hâve been im- 
properly inflamed; but taken with the whole address, and especially 
with the judge's remarks on the two occasions when the défendants' 
counsel objected at the time, we are quite clear that they could not 
hâve been: 

"It Is a crime which It seems to me demands your utmost considération m 
thls hour. It Is a crime which — ^well, I cannot get a word bad enough to 
descrlbe It, gentlemen, at thls tlme when the boys need clothing, when they 
need thls cloth for clothing, when men are giving their blood, and when ail 
you men are giving your money — 

"Mr. O'Gorman: If your honor please, on behalf of the défendant Hyman 
Horowitz, I object to the remarks of the prosecutor, which are calculated to 
dlvert the attention of the jurors from the Issue before them. It is an attempt 
to inflame and préjudice the jury, and Is objectlonable, If not reprehensible. 

"The Court : I think he only meant to impress them with the serlousness of 
the conditions before them, just as you were talking about the seriousness of 
It to the défendants. 

"Mr. Eoosa: Yes, your honor. 

"Mr. O'Gorman : But he is divertlng the attention of the jury from the thlng 
which Is before them. I take exception to your honor's refusai. 

"The Court : You bave not asked me to do anythlng for you yet 

"Mr. O'Gorman : To instruct the jury to disregard hls référence, that Is, 
the référence of the prosecutor which he has just made, and to admonlsh the 
prosecutor not to repeat them. The défendants are enUtled to a fair, impar- 
tial trial of thls case on the Issues framed by the pleadlngs. 

"The Court: Absolutely. » » • 

"You know that every great war is attended with Its profiteers, and Its 
thieves, and you know how dlfBcult it Is — 

"Mr. O'Gorman: If your honor please, I regret I must again object to thls 
summatlon of counsel; counsel is obvlously and hitentlonally diverting the 
attention of the jury from the issues In thls case. Thls Is clearly an attempt 
to inflame and Influence and préjudice the jury, and to appeal to their 
sympathies. 

"The Court: No, I don't thlnk so; If he confines himself to the questions 
that are at issue hère. 

"Mr. O'Gorman; I ask an exception, if your honor please, on behalf of both 
défendants. 

"The Court : Confine yourself to the issues, but you may state that they are 
important Issues to both sides ; I will allow that, as I allowed the défendants 
to state that It was important to them. I don't tlùnk you ought to refer to the 
Instance of the war." 

The judgment is affirmed. 



52 262 FEDSRAL BBFORTSB 

LEDERBE, Collecter of Internai Eevenue, v. NORTHERN TRUST CO. et al.» 

(Circuit Court of Appeals, Third Circuit. January 7, 1920.) 

No. 2496. 

1. CouBTS <S=366(6) — Décisions of state oouets constbuino inhkmtanck 

TAX LAWS BINDING ON FEDERAL COUBT. 

Décisions of state courts, eonstruing inheritance tax laws of state, are 
binding on ttie fédéral courts. 

2. Intebnal eevenue ®=»25 — Déduction of state collateeal inhebitanck 

tax roe asskssment of fedheal estate tax. 

In View of the history of tlie Législature, collatéral Inheritance taxes 
imposed by the state of Pennsylvania under Collatéral Inheritance Tax 
Act 1887, §§ 1, 5, 9, 15, is a tax on the estate as distlnguished from a 
tax on the inheritance, and the amount of taxes paid thereunder may be 
deducted as a charge against the estate of a décèdent allowed by the laws 
of the jurisdletlon in Computing the net estate under Act Gong. Sept. 8, 
1916, §§ 201-203 (Comp. St. §§ 6336%b-€336J^d) imposlng a fédéral tax 
on the transfer of the net estate of décèdent 

In Error to the District of the United States for the Eastern Dis- 
trict of Pennsylvania ; J. Whitaker Thompson, Judge. 

Action by the Northern Trust Company and Henry R. Zesinger, ex- 
ecutors under the will of Lewis W. Klahr, deceased, against Ephraim 
Lederer, Collecter of Internai Revenue. There was a judgment for 
plaintiffs (257 Fed. 812), and défendant brings error. Affirmed. 

The Collecter of Internai Revenue assessed the decedent'a estate with a 
tax under the provisions of Sections 201, 202 and 203 of the Act of Congress 
of September 8, 1916, entitled "An Act to Increase the revenue and for other 
purposes." 39 Stat. 777, Comp. St. 1918, §§ 6336%b, 6336%c, 6336%d. The 
executors claimed that in ascertalning the value of the decedent's "net estate" 
as a basls of assessment, in the way provided by Section 203 of the act, 
there should hâve been deducted from the gross estate the collatéral inherit- 
ance tax of $39,450.92, due and subsequently paid the Commonwealth of Penn- 
sylvania under the Act of Assembly of May 6, 1887 (P. L. 79). This déduction, 
had it been allowed, would hâve reduced the net estate of the décèdent in the 
amount of the state tax, and, correspondingly, would hâve reduced the assess- 
ment of the Fédéral tax in the sum of $2,331.56. The Collector of Internai 
Revenue refused to allow the déduction. On appeal, the Commlssioner of In- 
ternai Revenue approved the 001160101*8 assessment The executors paid the 
tax under protest and brought this suit to recover It. By stipulation, the 
Issue was tried before the District Judge, who, on an opinion reported at 257 
Ped. 812, entered judgment for the executors of the estate for the latter sum 
and luterest. This writ, prosecuted by the CoUector, brings the judgment hère 
for review. 

The applicable provisions of the dted statutes are as foUows: 

The Act of Congress of September 8, 1916, provides, Inter alla: 
Witle II. Estate Tax. 

"Section 201. That a tax (hereinafter • • « referred to as the tax), 
equal to the followlng percentages of the value of the net estate to be detes- 
mined as provided in section two hundred three, is hereby imposed upon the 
transfer of the net estate of every décèdent dying after the passage of this 
act" 

"Section 203. ^'e( Value of Estate, Bow Determined. — For the purpose of 
the tax the value of the net estate shall be determined — 

"(a) In the case of a résident, by deductlng from the value of the gross 
estate — 

®=3For otJier cases see same topic & KEY-NUMBBB in ail Key-Numbered Digests à Indexes 
•Certiorarl denied 252 U. S. — , 40 Sup. Ct. 483, «4 lu Ed. — . 



LEDERER V. NORTHERN TRUST CO. 53 

(262 F.) 

"(1) Such amounts for fimeral expenses, administration expenses. clalms 
against the estate, * • • and such other charges against the estate, as 
are allowed by the laws of ttie jurisdictlon, « * * under which the estate 
is being administered." 

The Collatéral Inheritanee Tax of the General Assembly of Pennsylvania 
of May 6, 1887, provides, Inter alla: 

"Section 1. • * * That ail estâtes, • • • passing from any person, 
who may die seized or possessed of such estâtes," to collaterals "shall be 
* * * subject to a tax of flve dollars on every hundred dollars of the dear 
value of such estate or estâtes, ♦ * * to be paid to the use of the common- 
wealth. * * * AU owners of such estâtes, and ail executors and admin- 
istrators and thelr sureties, shall only be dlscharged from llabUlty for the 
amount of such taxes * * • by having paid the same over for the use 
aforesaid." 

Section 5 provides that before the exeeutor or administrator shall pay any 
legacy or share in the distribution of an estate subject to the collatéral in- 
heritanee tax, he shall deduct therefrom the tax at the rate prescrlbed in Sec- 
tion 1 and pay it to the Commonwealth. 

Section 9 provides that the Reglster shall issue duplicate receipts for the 
tax when paid by an exeeutor or administrator, which, when countersigned 
by the Auditor General, shall be "a proper voucher in the settlement of the 
estate." 

Section 15 authorizes the Orphans' Court, on discovery by the Eegister that 
the tax has not been paid, to cite the exeeutor or administrator to appear 
and show cause why the tax should not be paid. 

Francis Fisher Kane, U. S. Atty., and Robert J. Sterrett, Asst. U. S. 
Atty., both of Philadelphia, Pa. (R. D. Thurber, of New York City, of 
counsel), for plaintiff in error. 

William Henry Snyder and William M. Stewart, Jr., both of Phil- 
adelphia, Fa., for défendants in error. 

Before BUFFINGTON and WOOLLEY, Circuit Judges, and 
MORRIS, District Judge. 

WOOLLEY, Circuit Judge (after stating the case as above). The 
question is: Whether the collatéral inheritanee tax imposed by the 
Pennsylvania Act of 1887 falls within the déductions allowed by sec- 
tion 203 of the Fédéral estate tax Act of 1916 in arriving at the value 
of the "net estate" on which alone the Fédéral act imposes the tax. In 
other words : Is the amount which the decedent's estate paid the Com- 
monwealth of Pennsylvania as a collatéral inheritanee tax either (a) 
"an administration expense," or (b) "a claim against the estate," or (c) 
one of "such other charges against the estate, as are allowed by the 
laws of the jurisdiction * * * under which the estate is being 
administered?" 

This controversy concerns broadly the privilèges which governments 
make tlie subject of "death duties" — the privilège of giving and the 
privilège of receiving property on death, and the conditions imposed 
and price exacted by the State for the exercise of those privilèges. 
Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283, 287, 18 
Sup. Ct. 594, 42 L. Ed. 1037; Maxwell v. Bugbee, 250 U. S. 525, 40 
Sup. Ct. 2, 64 L. Ed. — . 

The question hère tums on the nature of the two taxes, Fédéral and 
State. It concerns generally the Fédéral tax, which both parties con- 
cède to be an estate tax, that is, a tax that relates not to an interest 



54 262 FEDERAL REPORTER 

to which some person has succeeded by inheritance, bequest, or de- 
vise, but to an interest which has ceased by reason of death; and 
it is imposed not upon the interest of the récent owner or upon his 
privilège to dispose of it, but upon the transfer of the interest in its 
dévolution. The nature of the Fédéral tax being conceded, the matter 
for décision concems particularly the nature of the collatéral inher- 
itance tax of Pennsylvania, éind raises the question, whether that tax is 
an estate tax, which, like the Fédéral tax, concems an interest which 
has ceased upon death, the burden of which is imposed upon the es- 
tate of a décèdent, as claimed by the executors, or is a legacy or suc- 
cession tax, which concems the privilège of receiving such an inter- 
est, the burden of which is imposed upon the legatee or other benefi- 
ciary, as claimed by the Collector. 

The bearing of this question on the case in hand is, that if the col- 
latéral inheritance tax of Pennsylvania is an estate tax and is therefore 
a "charge" against the estate "allowed" in its settlement by the laws 
of Pennsylvania, then the refusai of the Collector to deduct aie amount 
of the tax from the gross in ascertaining the net estate of the décè- 
dent as a basis of assessment was unwarranted. If, on the other hand, 
it is a tax charged not against the estate, but against the legatee as a 
condition imposed upon the transfer of the legacy, then the net estate of 
the décèdent, determined without deducting the collatéral inheritance 
tax paid the Commonwealth of Pennsylvania, was properly computed 
under the Fédéral act and the tax assessed against the same was law- 
ful. 

The nature of collatéral inheritance taxes has been the subject of 
many décisions, both Fédéral and State. The gênerai principle of 
such of them as are termed legacy and succession taxes, when not 
otherwise affected by statutory provisions, is that the tax is upon the 
legacy before it reaches the hands of the legatee, whose property it 
becomes only af ter it has yielded its contribution to the State and after 
it has suffered a diminution to the amount of the tax in return for the 
Legislature's assent to the bequest. Knowlton v. Moore, 178 U. S. 41. 
20 Sup. Ct. 747, 44 L. Ed. 969, following United States v. Perkins, 163 
U. S. 625, 16 Sup. Ct. 1073, 41 L. Ed. 287; Magoun v. Illinois Trust 
& Savings Bank, 170 U. S. 283, 18 Sup. Ct. 594, 42 L. Ed. 1037 ; 
Mager v. Grima, 8 How. 490, 493, 12 L. Ed. 1168. 

But in looking for the nature of the collatéral inheritance tax under 
considération, it is not necessary to seek light from statutes and dé- 
cisions of other states, for the act shows its nature by its own clear 
expressions aided by interprétations repeatedly made by the Suprême 
Court of Pennsylvania. 

The act provides that "ail estâtes * * * shall be subject" to 
the tax; that executors and administrators shall pay the tax; that 
until they pay it they shall not be discharged ; that the Auditor Gen- 
eral's receipt for its payment shall be a proper voucher in the settle- 
ment of the estate; and that in stating an account in the Orphans' 
Court the tax shall be allowed and deducted before a balance for dis- 
tribution is struck. 



LEDEEEB V. NORTHERN TRUST CO. 55 

(2«2 F.) 

The tax, which opérâtes practically as a déduction from the share 
of the beneficiary, is, nevertheless, charged against and paid by the es- 
tate. In using the words "ail estâtes" shall be subject to the tax, the 
Suprême Court of Pennsylvania has held that the Législature contem- 
plated the property of the décèdent, not the interest therein of the 
legatee or distributee, Del Buto's Estate, 45 Leg. Int. 474; How- 
ell's Estate, 147 Pa. 164, 23 Atl. 403; that the tax is imposed only 
once, and that is before the legacy has reached the legatee and before 
it has become his property ; that it must be retained and paid by the 
exécuter or administrator who has the decedent's property in charge; 
that which the legatee really receives is not taxed at ail; his property 
is that which is left after the tax has been taken off, Finnen's Estate, 
196 Pa. 72, 46 Atl. 269. In Jackson v. Myers, 257 Pa. 104, 101 Atl. 341, 
L. R. A. 1917F, 821, where the question was squarely raised, the Su- 
prême Court decided that the collatéral inheritance tax of Pennsylvania 
is not levied upon an inheritance or legacy but upon the estate of the 
décèdent, holding that what passes to the legatee is simply the por- 
tion of the estate remaining after the State has been satisfied by re- 
ceiving the tax. 

[1] Thèse décisions by the Suprême Court of Pennsylvania, con- 
struing a statute of its own state, are binding on this court in a case 
of this kind. From thèse décisions it appears to be settled in Penn- 
sylvania that the collatéral inheritance tax of that state is an estate tax, 
not a legacy tax, and that as such it is levied upon and made a charge 
against the estate of the décèdent. 

Consistently with this view, the Suprême Court of Pennsylvania 
recently held, in a situation just the reverse of this, that in determin- 
ing the amount of a decedent's estate for the purpose of assessing 
the Pennsylvania collatéral inheritance tax, the Fédéral estate tax un- 
der considération should first be deducted as a charge against the 
estate. Knight's Estate, 261 Pa. 537, 104 Atl. 765. 

[2] We are of opinion that the collatéral inheritance tax of Penn- 
sylvania clearly falls within the provision of the Fédéral act as a 
"charge" against the estate of a décèdent "allowed by the laws of 
the jurisdiction * * * under which the estate is being settled," ana 
is, therefore, properly déductible from the gross estate in determining 
the net estate against which the Fédéral tax is assessed. There is, 
therefore, no occasion to go further and décide the other questions 
raised at the argument, whether the State collatéral inheritance tax is 
also an "administration expense," or a "claim against the estate," 
similarly déductible under Section 203 of the Fédéral act in ascertain- 
ing the decedent's net estate as a basis of taxation. A considération 
of thèse aspects of the tax would require -us to reconcile at least two 
opposing décisions rendered under state statutes with différent pro- 
visions, Corbin v. Townshend, 92 Conn. 501, 103 Atl. 647; In re Sher- 
man's Estate, 179 App. Div. 497, 166 N. Y. Supp. 19; and to déter- 
mine whether the terms "administration expenses" and "claims against 
the estate," as found in the statute, are restricted to or expanded be- 
yond their ordinary meaning. 



56 262 FEDERAL BHPOETBE 

As thîs case arose before the Act of February 24, 1919 (40 Stat. 
1057, c. 18) by which the ternis of the Act of September 8, 1916, were 
materially changed, this décision bas no bearing on the later statute. 

The judgment below is affirmed. 



KING et al. v. BARR et al.» 
(Circuit Court of Appeals, Nlnth Circuit. January 5, 1920.) 
No. 3313. 

1. Eqxtity <g=»114 — Intebveneb cannot challenge jtjeisdiction or court. 

An Intervener cannot challenge the court's jurisdictlon, beeause, If the 
court Is without jurisdictlon, the proceedings are void and wlthout effeet 
upon the intervener, and also beeause equity rule 37 (198 Fed. xxviii, 115 
C. C. A. xxviii) provides that interventions shall be in subordination to 
and In récognition of the proprlety of the main proceeding. 

2. Judgment ®=»299(1) — Nkcessity of cobbecting dubinq ouehent tebm of 

COUET. 

Errors In final Judgments can only be corrected by appeal, unless steps 
be taken In the trial court for that purpose during the term In which 
the judgment was entered. 

3. EQurrT <®=114 — Inteevention aftbe entet of final decbee babbeo by 

LACHES. 

Where the final decree in a suit Involving the recelvershlp of a cor- 
poration to satlsfy mortgage demands had been entered some six months 
before a bondholder flled an application to Intervene which ehallenged 
the validity of the entire proceeding, tield, that trial court did not abuse 
its discrétion in denying such pétition, with leave to contest the disposai 
of funds remainlng in the receiver's hands, in vlew of the fact that the 
petltioner had known of the pending proceeding long before entry of the 
final decree. 

Appeal frora the District Court of the United States for the Central 
Division of the District of Idaho ; Frank S. Dietrich, Judge. 

Application hy E. A. King to file a pétition of intervention, in be- 
half of himself and those who wish also to intervene, against Robert 
H. Barr and others. From an order denying the application, the appli- 
cants appeal. Affirmed. 

W. C. Bristol, of Portland, Or., for appellants. 

Eugène A. Cox, of I^ewiston, Idaho, and Richard W. Montague, H. 
H. Parker, Joseph Simon, Wirt Minor, and John H. Hall, ail of Port- 
land, Or., for appellees. 

Before GILBERT, ROSS, and HUNT, Circuit Judges. 

ROSS, Circuit Judge. The présent appeal is from an order denying 
(without préjudice to certain specified rights) the appellant King's ap- 
plication to file a profïered pétition in intervention in a suit commenced 
in the court below November 19, 1915, growing out of the undertak- 
ing by the Lewiston Land & Water Company, Limited (hereinafter 
called the Land Company), a corporation organized under the laws 
of the State of Idaho, to plant fruit trees upon certain lands adjacent 
to the city of Lewiston, in that state, the necessary water for the ir- 

ÊS5»For other cases see same toplo & KBY-NUMBER In aU Ke7-Numbered Disests & Indexe* 
•Rehearing denled February 9, 1920. Certlorari denled 252 U. S. — , iO Sup. Ct. 4SI, M Ia 



KDIQ V. BAEB SI 

(262 P.) 

rigatîon of which was to be furnished through an extensîve water Sys- 
tem by a subsidiary water company called Lewiston Sweetwater Irri- 
gation Company, and to sell in small tracts to the public on the install- 
ment plan the lands so improved and watered. The money with which 
to do those things was, at least in large part, procured by borrowing 
it upon bonds, secured Ijy trust deeds or mortgages, and in part by cer- 
tain so-called gold notes, likewise secured. At the time of the com- 
mencement of the suit, which was brought by a holder of stock in the 
Land Company named Barr, a résident and citizen of the state of 
Washington, on his own behalf and in behalf of ail other such stock- 
holders similarly situated, the Land Company had outstanding por- 
tions of four différent issues of such bonds, the first three of which 
issues were secured by trust deeds or mortgages upon certain specified 
and distinct portions of the lands, and the fourth covering ail of the 
lands owned by the company, including those embraced by the first 
three mortgages. In each of the instruments the Idïdio Trust Company 
(hereinafter called the Trust Company, and which was also an Idaho 
corporation) was made trustée. 

In Barr's bill of complaint it was alleged, among other things, that 
of the lands owned by it the Land Company had then sold 3,320.52 
acres in small tracts to purchasers residing in varions parts of the 
United States, for a price aggregating $1,312,236.25, and that there was 
then owing to it from purchasers and unpaid on contracts of sale ap- 
proximately $487,115, of which $150,000 was then due and collectible 
under the terms of the contracts, and that the Land Company still owned 
4,054 acres of such lands, of the value of $1,500,000; that the Land 
Company was then in debt in the aggregate amount of $1,250,000, of 
which $907,000 was in the f orm of bonds secured by mortgages or trust 
deeds made to the défendant Trust Company as trustée, covering the 
property of the Land Company ; that of the first issue of the bonds re- 
ferred to ail but $20,000 had been paid, and of the second issue ail but 
$41,000 had been paid, and that of the third issue there remained out- 
standing $172,000 in amount; that ail of the outstanding bonds of the 
first two issues had then, "in great measure," been taken up and re- 
placed by the fourth issue of bonds, known as refunding bonds of date 
October 1, 1911, of which refunding bonds there was then outstanding 
and in the hands of many holders scattered throughout the United States 
the amount of $605,000 in the aggregate. It was alleged that the semi- 
annual interest upon the refunding bonds due April 1, 1915, and Octo- 
ber, 1, 1915, respectively, was then due and unpaid, and of the principal 
thereof $25,000 became due and payable October 1, 1915, which like- 
wise remained unpaid, and that the semiannual interest upon the second 
issue became due and payable Octoher 1, 1915, and was then due and 
unpaid. It was alleged that the Land Company was also indebted on 
various notes, accounts, and other obligations in the aggregate amount 
of $264,000, a large part of which was then secured by various notes, 
stocks, and other properties of the Land Company, in addition to ail of 
which taxes upon the real property of the Land Company in the amount 
of $29,000, including penalties and interest, were then delinquent, cer- 
tificates of such delinquency having been then issued ; that the time for 



58 262 FEDERAL REPORTER 

rédemption of a considérable part of the property would very shortly 
expire, to wit, December 15, 1915, and unless provision was made for 
the payment thereof the title of the property would pass to the pur- 
chasers, and be lost to the Land Company and its creditors ; that f ur- 
ther taxes, with penalties and high rates of interest, would soon accrue 
and become delinquent, and that the L,and Company owed other debts, 
approximating $7,000, which constituted liens upon its lands superior 
to the lien of the mortgages and trust deeds ; that the L,and Company 
was in imminent danger of insolvency, and that the appointment of a 
receiver or receivers of its property was essential to the protection of 
both the Company and its creditors. 

The défendant Trust Company answered the bill of complaint, ad- 
mitting most of its averments, ana joining in the request for the appoint- 
ment of a receiver or receivers, and also filed a cross-bàll, in which it 
alleged, among other things, that on or about October 1, 1911, the Land 
Company issued the refunding bonds in the sum of $1,050,000, chiefly 
for the purpose of taking up and retiring its previously existing indebt- 
edness, and issued to the cross-complainant, as trustée, the mortgage 
securing them that has been mentioned, a part of the lands covered by it 
being subject to the prior mortgages issued by the Land Company 
to the extent specified in the bill of complaint, and setting forth 
other reasons why it was necessary for the protection of the prop- 
erty that a receiver or receivers be appointed to take possession and 
administer the property under the orders of the court, and for 
such other relief as should be appropriate, including the foreclosure 
of the mortgages. Two receivers were appointed by the court — 
one being the président of the Trust Company, who resided at 
Lewiston, and the other being a résident of Portland, Or., where 
the Land Company maintained its financial headquarters, by whom 
funds were obtained for the préservation of the title to the property 
and the protection of the orchards through the issuance of receivers' 
certificates. 

Af ter referring to the many difficulties experienced by both the court 
and the receivers in preserving and protecting the property during the 
years it was under such administration, the court below said in its 
opinion : 

"The snit was brought In the Central division of the district, and was 
there pendlng when, on February 9, 1918, In order to fadlitate furtlier pro- 
ceedings, the parties, through their attomeys of record, stlpulated in writing 
that it be tried and a decree entered at Boise, In the Southern division, with 
the same effect as If tried In open court at Moscow, in the Central division, 
and pursuant to thls stipulation a hearlng was had upon the pleadings al- 
ready referred to and a supplemental answer and cross-bill filed by the 
Trust Company, and decree was entered at Boise on February 15, 1918. 
Thereafter, upon March 28, 1918, by stipulation of ail the parties, and for the 
purpose of making certain corrections In the original decree, an amended 
final decree was slgned and filed as of February 15, 1918. It appearlng from 
the supplemental cross-bill that the flrst and second mortgages had In the 
meantime been fully pald, and that therefore the fourth mortgage constituted 
a flrst lien upon ail the lands, except those covered by the thlrd mortgage, the 
decree In effect detennlned the total amoimt of outstandlng recelvership in- 
debtedness, Indudlng the receivers' certificates, allocated to the lands cov- 
ered by the thlrd mortgage a sum which was deemed to be a just proportion 



KING V. BARS 59 

(262 F.) 

thereof, and to ail other lands covered by Uie fourth mortgage the balance 
of such expenses, and authorized the sale of the lands in two corresponding 
groups, the one subject to the lien of the thlrd mortgage, wlth directions to 
apply the proceeds arislng from the sales, first, to the payment of the amount 
of the receivership expenses so apportioned, and, second, to the discharge of 
the refunding bonds. The recelvers were appointed spécial masters to con- 
duet the sale, and after some delay a sale waa reported of the lands covered 
by the third mortgage, by which only enough money was realized to discharge 
the receivership indebtedness apportioned thereto, and the same was con- 
flrmed upon the acceptance by the bidder of the condition that within a cer- 
tain designated period the holders of thèse bonds mlght, by paying their 
ratable nart of the amount bid, corne In and sha^e proportionately in the 
property purchased. The bid reported for the property under the fourth 
mortgage was rejected, and a resale ordered, and upon the second sale an 
ofCer was received, whlch was conlirmed, after being so modifled by require- 
ments of the court as to provide an amount of cash sufficient to pay the 
balance of the receivership indebtedness, and for the coming in of ail bond- 
holders within a designated time and upon specitîed terms and sharing in 
the purchase. The last order was made in July, 1918, and thereupon certifl- 
cates of sale were issued and possession of the property was delivered to the 
purchasers, and pursuant to the orders of the court the proceeds of the sales 
were applied to the discharge of the receivership Indebtedness. 

"On November 2, 1918, three years after the recelvers were appointed, and 
six months after decree, and long after the expiration of the term at whlch 
the decree was entered, and at a time when the court was no longer in pos- 
session of either the property or the funds arislng from the sales thereof, 
the petltioner, who Is the holder of some of the refunding bonds taken by 
hlm in exchange for holding of prier Issues, Informally by mail tendered 
his proposed blll of intervention, with request for leave to file. During the 
three years which had elapsed since the commencement of the action many 
proceedings had been taken by the recelvers, and there had been many trans- 
actions with thlrd persons, ail upon the apparent assumptlon of the propriety 
of the suit and of the orders and decrees appolnting the recelvers, and con- 
ferring authority upon them, and conflrmlng their accounts. Moneys were 
received and paid, contracts were entered into, and tltles were passed. With 
one exception, which has no relation to the questions hère involved, during 
ail of this time no bondholder appeared to protest or suggest. So far as 
appears, the court and its offlcers and the trustée were permltted to carry 
the responsibllity of working out the perplexlng problems as best they could. 
The petltioner, with his counsel, reslded at Portland, where, as already stat- 
ed, one of the recelvers lived, and where much of the business of the Com- 
pany was transacted. It aflSrmatlvely appears that he knew of the receiver- 
ship at a comparatively early date, and in the absence of an averment to the 
contrary it must be presumed that he had such knowledge practically from 
the beglnning." 

Within about a month after the issuance of the refunding bonds and 
the exécution of the mortgage securing them, the petitioner exchanged 
the bonds of the first three issues held by him for such refunding bonds. 
The mortgage securing the latter expressly showed, upon its face, that 
it was designed to provide the funds necessary to pay the then existing 
indebtedness of the company, and also further funds with which to 
continue the opérations of the company. 

[1] The contention made in the assignment of errors, and also in 
the brief of the appellant, that the court below was without any juris- 
diction of the case, is obviously without any merit, first, because, if 
so, ail of its proceedings were absolutely void, and consequently without 
effect upon the appellant; and, secondly, because it is only in a valid 
pending proceeding in which any party is under any circumstances 



60 262 FEDBRAL REPORTER 

permitted to intervene — equity rule 37 (198 Fed. xxvîîî, 115 C. C. A. 
xxviii) declaring, among other things : 

"Any one clalmlng an Interest In the Utlgatlon may at any time be per- 
mitted to assert his rlght by Intervention, but the intervention shall be in 
subordination to, and in récognition of, tlie propriety of the main proceeding." 

Assuming, as we must for the purpose of disposing of the further 
contentions of the appellant, jurisdiction of the cause by the court to 
which the application for leave to intervene was made, we find from 
the record that ail of the property in question had been disposed of 
under and by virtue of the decree of the court made and entered more 
than six months before the appellant applied to intervene, save only 
such proceeds thereof as remained in the hands of the receivers and 
spécial masters, as to which the court entered the order which is the 
subject of this appeal and which is in the f ollowing words : 

"It is ordered that the application of B. A. King (and two others) to inter- 
vene be and the same is hereby denled, without préjudice to the right of 
said applicant, upon making a showing that he Is the holder of bonds and 
that his Interests as such holder are or will be affeeted by the accounts of 
the receivers or spécial masters yet to be acted upon, and that he Is no longer 
deslrous of relying upon the trustée to protect such interests, to apply for 
leave to intervene for the purposes of such accounts, and not for the purpose 
of questioning the validity of the decree or of any order heretofore made." 

[2] The final decree was entered at Boise, Idaho, Fehruary 15, 1918, 
and it appears from the affidavit of the petitioner's counsel that the 
pétition for and the accompanying bill in intervention were not deliv- 
ered to the clerk of the court for the judge until November 2d of the 
same year, more than six months after the entry of the final decree 
establishing the rights of the respective parties to the suit, and long 
after the expiration of the term of the court during which the decree 
was entered. Nothing is better settled than that errors, if any, in a 
final judgment, can only be corrected by appeal, unless steps be taken 
in the trial court for that purpose during the term at which such judg- 
ment is rendered. Bronson v. Schulten, 104 U. S. 410, 415, 416, 26 L,. 
Ed. 797, and cases there cited. 

The proffered bill of intervention is so voluminous (covering 127 
pages of the printed record) that it is practically impossible within the 
proper limits of an opinion to make even a gênerai statement of its va- 
rions allégations, the purpose of which is, in part at least, to open up 
and again try the issues determined by the final decree already entered 
in the case, necessitating, also, if permitted, the bringing into the suit 
of new parties. 

[3] That the petitioners had ample opportunity to intervene in the 
suit prior to the entry of the final decree and set up any and every right 
possessed by them as bondholders (which ownership is the basis of 
every right asserted in the proposed bill of intervention) we think 
sufficiently appears from the admitted knowledge by their counsel of 
the proceedings in the case at least as early as June, 1916, nearly two 
years before the entry of the final decree. 

The record shows that the disposai of a portion of the property as 
directed by that decree involved the sale of that portion by the trustée, 
for which a bid was made by a committee of a majority of the holders 



KING V. BAEB 61 

C262 F.J 

of the refunding bonds, and that to hear the parties in interest in re- 
gard to that matter the judge of the court below, in part, at least, for 
the convenience of the parties and their counsel, took the trouble to go 
to the city of Portland in July, 1918, where two meetings were held be- 
fore the judge, at the first of which the counsel for the petitioners was 
personally présent, and the second of which he failed to attend — pur- 
posely, we can but conclude, from one of the letters to him, printed in 
his own reply brief on this appeal. That meeting resulted in this order, 
confîrming the sale of the property last referred to, which was filed 
by the clerli of the court August 10, 1918 : 

"Order Conflrming Sale of Number 4 Properties. 

"Now, at this time, comlng on to \>e heard the application of the spécial 
masters for an order upon their report and supplemental report in respect 
of the bids made at the foreclosure sale of the properties of the Lewiston 
Land & Water Company, Limited, covered by the mortgage known as the 
Eefundlng Bond Mortgage or Mortgage No. 4 ; 

"The parties of record appearing by their respective counsel, the masters 
being présent in person, Morris Bros, and John Latta, bondholders, appearing 
by Wirt Miner, Mrs. E. J. Jefifery, a bondholder, appearing by J. L. Conley, 
the Security Savlngs & Trust Company appearing by R. L. Sheppard, and the 
holders of receivers' certiflcates appearing by Hon. Joseph Simon and Blain 
B. Coles ; the matter having been set for hearing heretofore and on the 16th 
day of July, 1918, and having for the convenience of the parties, in order 
that ail might be represented, been continued to this date, the court having 
heard and considered the reports of the masters and matters presented by 
counsel and by the varions parties represented, and being advlsed in the 
premises: 

"It is now hère ordered that the bid presented by the masters, entitled 
'BId of Refunding Bondholders,' submitted by the bondholders' committee, 
and approved by W. C. Bristol and Wirt Minor, be accepted In aecordance 
■with its terms, except, however, that the bidders shall comply with the fol- 
lowing conditions: 

"(1) That said bidders pay Into court within nlne days from this date, to 
wit, on or before August 3, 1918, the araount necessary to liquidate the out- 
standing and unpaid receivers* certiflcates and adjudicated claims, with ac- 
crued and accruing receivers' costs and expansés, and the costs and expensea 
of this proceeding, amounting to $120,000. 

"(2) That there be placed in the hands of the masters on or before said time, 
for dellvery to the bidders, a deed of the Lewiston I^and & Water Company, 
Limited, conveylng its right, title, and Interest in and to the property sold 
under foreclosure. 

"(3) That the said bidders on or before said date flle with the masters an 
asslgnment to John H. Hall, on behalf of the bondholders under the mort- 
gage known as No. 3 mortgage, given by the Lewiston Land & Water Company, 
Limited, of the bidders' interest In a one-third part of the spray rigs and 
orchard and farm machinery purchased with gênerai funds during the 
course of the receivership, such one-third to be designated and selected by 
the masters; and authority to the masters to sell, assign, and transfer to the 
said John H. Hall, representing said bondholders, said one-third of the above- 
mentioned personal property, the remalning two-thirds thereof to be trans- 
ferred by the masters' certiflcate of sale to the bidders. 

"(4) It is further ordered that upon compliance with the terms and condi- 
tions above set forth by the bidders the sale upon such bid be and thereupon 
is eonfirmed, and that upon such compliance the masters be and are hereby 
authorized and empowered to exécute and deliver to the Security Savings & 
Trust Company, named in said bid as the holder of title thereunder, a certifl- 
cate of sale of the properties so sold. 

"Dated this 25th day of July, 1918. 

"Frank S. Dletrich, Judge." 



62 262 FEDERAL REPORTER 

Counsel for the petitioners contends that the récital in the f oregoing 
order of his approval of the bid was without justification and improper. 
Let that be admitted, and the f act remains that he had the opportunity 
of objecting to it and failed to do so, and, according to his own affida- 
vit, made no attempt to intervene until about 3% months after the 
filing of the order August 10, 1918. The court below was of the opin- 
ion that, when the application to intervene was made, the term at which 
that order was entered had expired, saying : 

"The court officers In the Idabo district ail réside and malntain their 
offices at Boise, and courts in the Northern, Central and Eastem divisions 
are as a ruie held open only long enough for the dispatch of business ready 
for disposition withln a few days after court convenes. The terms In the 
Central division are flxed by law for the second Monday in May and the 
flrst Monday In November of each year. Section 78, Judlcial Code (Comp. 
St. î 1063). In 1918 the term was adjourned without day on May 24th. As we 
hâve seen by stipulation the cause was transferred for trial and decree and 
for other purposes, and it Is thought that ail the parties assumed and acted 
upon the assumption that ail proceedings requlsite to the foreclosure and 
settlement of the recelver's account were to be taken at Boise, where the 
ternis are held open quite contlnuously. In that view the last orders referred 
to are to be deemed to hâve been taken during the Febmary term in the 
Southern division, and that tenu expired wlth the openlng of the September 
term." 

We are inclined to agrée with the court below in that respect, but, 
regardless of that view, are of the opinion that the court committed 
no abuse of the discrétion with which it was invested, under the circum- 
stances of the case that hâve been mentioned, in denying the petition- 
ers' application to file the proffered bill, and in limiting their right to 
the particulars specified in the order from which the appeal was taken. 

The order is affirmed. 



UN1TE3D STATES v. NATIONAL SURBTT CO. * 

In re BALD EAGLE MINING CO. 

(Circuit Court of Appeals, Eighth Circuit December 10, 1919.) 

No. 201. 

Bankeuptct i©=349 — Claims of United States and sttbkogated subbtt kn- 
titled to e4uai, pbiobity. 

Under Bev. St § 3466 (Comp. St. § 6372), which glves the United States 
priority over other créditons of the estate of an Insolvent or bankrupt 
debtor, and section 3468 (section 6374), providing that, "whenever the prin- 
cipal In any bond given to the United States is insolvent, • » * and 
• • * any surety on the bond ♦ • • paya to the United States the 
money due upon such bond, such surety » • ♦ shall hâve the lik© 
priority," where the United States bas a daim, agalnst the estate of a 
bankrupt, and the surety on the bankrupt's bond securlng such clalm bas 
paid the same to the estent of the obligation of Its bond, the United 
States as to the remalnder of Its claim and the surety as to the amoiint 
paid are entitled to equal priority. 

Hook, Circuit Judge, dissenting. 

Pétition to Revise Order of the District Court of the United States 
for the Eastem District of Missouri ; David P. Dyer, Judge. 

é=>For otber cases see same toplc & KEY-NUMBER in aU Key-Numbered Dlgests & Indexe» 
•Grantlng certtorarl 251 U. S. — , 40 Sup. Ct. 396, 64 L. Ed. — . 



UKITED STATES V. NATIONAL SUBETY CO. 63 

C2$2 FJ 

In the matter of the Bald Eagle Mining Company, bankrupt. On 
pétition by the United States as a créditer to revise an order allowing 
equal priority to the claim of the National Surety Company. Affirmed. 

W. L. Hensley, U. S. Atty., and Benjamin L. White, Asst. U. S. 
Atty., both of St. Louis, Mo. 

Frank E. Williams, of St. Louis, Mo. (S. W. Fordyce, Jr., John 
H. Holliday, Thomas W. White, and Lucius W. Robb, ail of St. 
Louis, Mo., on the brief), for respondent. 

Before HOOK and CARLAND, Circuit Judges, and YOUMANS, 
District Judge. 

CARLAND, Circuit Judge. The petitioner by this proceeding seeks 
to hâve revised in matter of law an order of the District Court made 
December 31, 1918, confirming certain orders of the référée with réf- 
érence to the claims of respondent against the estate of the Bald 
Eagle Mining Company, a bankrupt. The undisputed facts are as f ol- 
lows: 

On November 3, 1917, the respondent filed two claims against the 
estate of the bankrupt, for $3,000 and $150, respectively, which were 
allowed on the same day. On the 12th day of December, 1917, the 
United States filed a claim against the estate of the bankrupt for 
$9,912.84, which was allowed on the same day, and it was further 
ordered and directed that said claim be accorded priority over ail other 
claims, except those for wages and taxes. On March 12, 1918, the 
respondent filed a motion with the référée for leave to amend its two 
claims above mentioned, by claiming priority for the same equal to 
that of the United States. The motion was granted on March 25, 
1918. The United States filed a pétition for review. The proceedings 
were duly certified, and after a hearing the District Court aflîirmed the 
order of the référée. It is this last-named order which the United 
States seeks to hâve revised. 

The claim of the United States against the bankrupt was for dam- 
ages suffered by them by reason of the failure of the bankrupt to per- 
form its contract with the government for supplying coal at Jefferson 
Barracks, Mo., after deducting from said damages payments made by 
the respondent. The claim of the respondent for $3,000 was for money 
paid the United States by reason of its being surety on the bond of the 
bankrupt given to secure the faithful performance of the coal con- 
tract above mentioned. The claim of respondent for $150 was for 
money paid the United States by respondent by reason of its being 
surety upon the bond of the bankrupt to secure the faithful perform- 
ance of a contract to furnish bituminous lump coal to the United 
States arsenal at St. Louis, Mo. In each instance the amount paid was 
the full amount of the bond. The question for décision is as foUows : 
Has the United States and the respondent an equal priority to the 
extent of the amount of their respective claims, or has the United 
States exclusive priority as against ail other claims until the full amount 
of its claim is paid ? The applicable statutes are as f ollows : 



64 262 FEDERAL REPORTES 

Section 3466, R. S. (Comp. St. § 6372): 

"Whenever any person Indebted to the United States la Insolvent, or whcn- 
ever the estate of any deceased debtor, In the bands of the executors or ad- 
minlstrators, Is Inaufflclent to pay ail the debts due from the deceased, the 
debts due to the United States shall be first satisfled ; and the priority hereoy 
established shall extend as well to cases in which a debtor, not having auffi- 
cient property to pay ail hls debts, makes a voluntary assignment Oiereof, or 
In which the estate and effects of an abscondlng, concealed, or absent debtor 
are attached by process of law, as to cases In which an act of bankruptcy is 
committed." 

Section 3468, R. S. (Comp. St. § 6374) : 

"Whenever the principal in any bond given to the United States Is Insolvent, 
or whenever, such principal being deceased, his estate and effects which couae 
to the hands of hls executor, administrator, or assl^ee, are Insuiiicient for the 
payment of hls debts, and, in elther of such cases, any surety on the bond, or 
the executor, administrator, or assignée of such surety pays to the United 
States the money due upon such bond, such surety, his executor, administrator, 
or assignée, shall hâve the like priority for the recovery and recelpt of the 
moneys out of the estate and effects of such insolvent or deceased princi- 
pal as is secured to the United States ; and may brlng and maintain a suit 
upon the bond, In law or equity, in his own name, for the recovery of ail 
moneys paid thereon." 

There is no question as to the meaning of section 3466. In the cases 
specified in said section, the United States has beyond question un- 
doubted priority. When we corne to section 3468, it is claimed by 
counsel for the United States that it must be so construed as to be of 
no force or effect, except in cases where the United States has 
no claim whatever to be satisfied, and it appearing in the présent case 
that the United States has a claim against the estate of the bankrupt, 
said section is inoperative. The ground of this contention is that the 
priority granted by section 3466 still attaches to the claim of the United 
States, even as against the claims of respondent, and that no priority 
exists in favor of respondent until the claim of the United States is 
fuUy paid. If this contention is Sound, we must read into section 3468, 
a proviso at the end of the last clause but one of the section, reading as 
f ollows : 

"Provided that said United States has no claim against the Insolvent estate." 

We do not think we hâve any authority to interpolate such a proviso. 
We are of the opinion that, while the gênerai priority of the United 
States is undoubted, it is within the power of Congress to qualify or 
limit this priority, and that by the enactment of section 3468 it has 
been provided that in the cases mentioned in said section the priority ot 
the United States has been transferred to a surety who has paid the 
penalty of a bond in full, notwithstanding the latter still has a daim 
against the insolvent. It is claimed by counsel for the United States 
that the surety in a case like the one at bar has no priority, unless he 
pays ail of the debt or debts due from the bankrupt to the United 
States. The section which we are endeavoring to construe does not 
provide that the surety shall pay ail the debt or debts due from the 
bankrupt estate to the United States, but only the money due upon 
such bond, and it is conceded that the respondent did this. It paid 



tTNITED STATES V. NATIONAL SUEETY 00. 65 

(262 p.) 

ail the debt for which it was obligated as surety. If it should pay any 
more, it would be a mère voluiiteer, and not entitled to the right of 
subrogation as to the excess. It is not material, if the contention of 
counsel for the United States is right, whether the claim of the United 
States arises out of the same transaction as that of respondent or not. 

It is contended and it is no doubt the law that the priority of the 
sovereign exists in full force and vigor, unless qualified by express 
words. But we hâve express words in section 3468. We think that 
sections 3466 and 3468 should be construed together, so as to give both 
force and efïect ; the United States retaining its priority as to the bal- 
ance of its claims against the bankrupt estate, and the respondent 
standing on a level with them as to its claim. No case has been cited, 
nor hâve we found one, deciding the question involved. The cases 
cited simply establish the proposition that, where the title of the United 
States and the citizen concur, the title of the United States, except so 
far as the Législature has thought fit to interfère, shall be preferred, 
and that where the principal in any bond given to the United States is 
insolvent, and any surety on the bond pays to the United States the 
money due upon such bond, such surety shall hâve the like priority 
for the recovery and receipt of the moneys out of the estate and effects 
of such insolvent as is secured to the United States. Thèse rights are 
ail given by the sections quoted and citation of other authority is un- 
necessary. Respondent's rights must be determined by section 3468. 
What its rights would be under the équitable doctrine of subrogation 
is not involved. The unreasonableness of the contention of counsel 
of the United States is made to appear when we consider a case where 
différent bonds hâve been given by an insolvent to the United States 
with différent sureties. One surety pays the full penalty of the bond 
on which he is liable, but he can hâve no priority until he has paid 
ail the other bonds on which he is not liable. 

We do not think the application to amend the claims of respond- 
ent by claiming priority constituted the filing of new claims after 
the year allowed by law. 

Appeal No. 5362 is dismissed, 

Judgment affirmed. 

HOOK, Circuit Judge (dissenting). Section 3466 of the Revised 
statutes, which provides that "whenever any person indebted to the 
United States is insolvent * * * the debts due to the United 
States shall be first satisfied," is a statutory adoption for this country 
of a public policy which has prevailed in England from a very early 
day. The right is one of préférence in the sovereign over the claims 
of ail private persons, and is of universal application. No other stat- 
ute should be construed to impair or lessen it, unless the intentior^ 
to do so is clearly manifested. 

With the above in mind, let us look at section 3468, R. S., which 
provides that — 

"Whenever the principal In any bond given to the United States Is insolvent, 
• • • and • • * any surety on the bond • • • pays to the United 
262 F.— 5 



66 262 FEDERAL BEPORTEB 

States the money due upon such bond, such surety * • ♦ ghall hâve the 
llke priority. ♦ • * " 

This is no more than a statutory déclaration of the équitable doctrine 
of subrogation in favor of sureties. See United States v. Ryder, 110 
U. S. 729, 4 Sup. Ct. 196, 28 L. Ed. 308. There is nothing in the lan- 
guage employed or in the décisions of the courts applying it to indicate 
that it should be given a more enlarged construction. In the case of 
private rights subrogation is not allowed to work loss or injury to a 
lien or preferred creditor whose claim has not been wholly discharged, 
although the surety may hâve paid in full his obligation for part of it. 
See National Bank of Commerce v. Rockefeller, 98 C. C. A. 8, 174 Fed. 
22, by this court. Much less should it be allowed to impair or lessen 
th'e sovereign preferential right of the government. In Reg. v. O'Cal- 
laghan, 1 Ir. Eq. 439, it was held that the surety of a person indebted 
to the government who pays the indebtedness does not succeed to the 
government's right of priority, if there be a further amount owing it, 
though on a différent account. 

My Brothers say that such a construction of section 3468 is contrary 
to its express language and would deprive it of efficacy. It might be 
said that a contrary construction lessens materially the unqualified 
language of section 3466. I think, however, both sections may be con- 
strued to give each full efîfect according to its terms. That should al- 
ways be donc, if possible. The government's priority by section 3466 
is over ail private claims. The right given by section 3468 to the surety 
who pays his obligation in full is a "like priority" ; that is to say, a 
priority over ail private claims. But there is nothing in this to imply, 
and it does not follow, that the surety is thereby raised to an equal 
or pro rata status with the government as regards an unpaid demand 
it holds against the common debtor or his estate, whether on the same 
or another account. Statutes declaratory of old principles of public 
policy or of the common law should receive the old constructions, and 
in that way apparent inconsistencies may be avoided. 
Tn think the order of the trial court should be reversed. 



COPPER PROOESS CO. v. CHICAGO BONDING & INS. CO. 

(Circuit Court of Appeals, Ttdrd Circuit. January 5, 1920.) 

Nos. 2490-2494. 

1. Triai. <®=359(1) — Oeder of pboof in showing feaud not eeeob. 

Where a surety on the bond of a seller asserted that plalntlff buyer was 
party to the seller's fraud in procuring the bond, proof of the seller'a 
fraud foUowed by proof of the buyer's connivances camiot be objected to 
on the ground of the order of proof. 

2. Featjd <&=a52 — Latitude in peoving fbaitd is allowed. 

When fraud is alleged great latitude of proof is allowed, and accordingly 
it is proper to show party's participation in fraud by showing what was 
said and done, leadlng up to the transaction. 
8. Fbaxjd <S=16 — SUPPBESSION or tettth mat be. 

Fraud may be committed by the suppression of truth as well as the 
suggestion of falsehood, but the law disttagulshes between passive con- 

iÊ=»For otber cases see same topic & KBY-NUMBEK In ail Key-Numbered DIgesta & Indexe» 



COPPEK PEOCESS CO. V. CmOAGO BONDINQ & INS. CO. 67 

C262 F.) 

cealment and active concealment, in that in active concealment tiiere Is 
implied a purpose of design. 

4. FEAUD ©=»17 — SUPPEKSSION OF TEtTTH TO BE FRAUD MUST CONSIST OF MOEE 
THAN SILENCE. 

As a gênerai rule, to constitute fraud by concealment or suppression of 
truth, ttiere must be something more than silence ; that is, there must be 
some occasion wliich imposes on one person the légal duty to si)eak in 
order that he may be placed on an equal footing, in v?hlch case fallure to 
State a material fact is équivalent to a concealment, and amounts to 
fraud equally with an affirmative falsehood. 
6. Peincipal and sUBETr <®;=557 — Evasion amounting to fbaud in procueing 

BOND. 

Where a bonding company, before becoming surety on a bond contingent 
for an Iron company's faithful performance of a contract of sale, asked 
the offlcer of plaintifC if it had made any advances on the contract, etc., 
and plaintifi's ofiicer gave an evasive answer, whleh, while true as far aa 
It went, did not disclose that plaintiff had made advances to the iron 
Company under a spécial contract, such évasion amounted to fraud. 

6. PEINCIPAL and SXJEETY (g=3l60 EVIDENCD of AGEEEMENT with PI/AINTIFF 

lOB ADVANCES TO SELLEE ADMISSIBLE WHEBB SELLES'S BUEETIES ASSEBTED 
CONCEALMETNT WAS FEATJD. 

After plaintiff contracted. with an iron company for the purchase of 
large quantlties of iron at a prlce little, if any, above cost, the parties 
entered into an agreement whereby plaintifC advanced to the iron company 
a large sum of money under a vague contract, but whlch, among other 
things, required the iron company to give bonds for faithful performance, 
held, that, where plalntiff's offlcer, on being interrogated by the surety'a 
représentative, denied having made any advances under the contract to 
the iron company, the agreement was in any event admissible in évidence 
to show plaintifPs fraud. 

7. Evidence i@=104: — Evidence of subséquent eelations between paeties 

accused of feaud. 

Where the surety on the bond of a seller asserted that the seller was 
guilty of fraud in procuring the same, and that the buyer connlved, évi- 
dence of subséquent aets of the buyer and of the seller is admissible to 
show the relatlonship between the parties at the time the fraud was 
committed. 

8. APPEAL AND EEEOB ®=>1047(1) — RULING ON EVIDENCE NOT TO BE DISTUEBKD 

UNLESS HABMFUL. 

While erroneous nilings In Jury trials are presumptively injurious, the 
tendency is to enlarge the sphère of the trial judge in the admission and 
exclusion of testiraony, and not to disturb the judgment, where it affirma- 
tively appears that his rulings, if erroneous, were harmless. 

In Error to the District Court of the United States for the Eastern 
District of Pennsylvania ; J. Whitaker Thompson, Judge. 

Five actions by the Copper Process Company against the Chicago 
Bonding & Insurance Company, which were consolidated and tried as 
one. There was a judgment for défendant, and plaintif! brings er- 
ror. Aifirmed. 

Francis Shunk Brown and William Findlay Brown, both of Phila- 
delphia, Pa., for plaintiff in error. 

Layton M. Schoch and Harry S. Ambler, Jr., both of Philadelphia, 
Pa., for défendant in error. 

Before BUFFINGTON and WOOLLEY, Circuit Judges, and 
MORRIS, District Judge. 

^=3For othei ca»es see eame topio & KEY-NUMBER in ail Key-Numbered Dlgests & Indexe^ 



68 262 FEDERAL REPOETEB 

WOOLLEY, Circuit Judge. Thèse writs-of-error bring hère for 
review five judgments of the District Court entered on verdict in a 
proceeding wherein five actions were Consolidated and tried as one. 
The Copper Process Company was plaintiff; the Chicago Bonding 
and Insurance Company was défendant. The actions were on bonds 
of the défendant company, each for $52,400, given the plaintifï Com- 
pany to assure performance by the Bird Coal and Iron Company of 
its undertakings in the same number of contracta between it and the 
Copper Company for the sale and delivery of pig iron. The Iron 
Company defaulted on ail five contracts. The Copper Company sued 
the Bonding Company on ail its corresponding bonds ; verdicts were 
rendered and judgments entered for the Bonding Company; where- 
upon the Copper Company sued out thèse writs-of-error. 

The record is a large one; the spécifications of error are fifty- 
nine in number. Of thèse, twelve are directed to the judge's charge; 
the remaining forty-seven concem rulings on the admission and ex- 
clusion of testimony. Whether any particular ruling or instruction 
involved error, and if so, whether such error was prejudicial or 
harmless, it is impossible to détermine by considering each ruling or 
instruction separately and alone. It is only possible after reading the 
whole record in order to ascertain the real issues and to find the 
theory on which the trial judge tried them. Expérience shows that 
when a trial judge is wrong in his conception of the issues, or of the 
principles of law applicable to them, his errors are likely to be many 
and also to be prejudicial; but if, on the other hand, the trial judge 
has properly grasped the issues and has tried them under applicable 
law, his errors are likely to be few and harmless. 

On this theory of review, we shall foUow the case in outline as 
pleaded and tried. 

The Copper Company's statements of claim filed in the five actions 
are identîcal, except as the contracts for whose performance the sev- 
eral bonds were given called for pig iron deliveries in différent months 
of the year 1917, beginning with the month of June and ending with 
the month of October. In each statement of claim it appears that 
the Copper Company declared on the indemnity bond of the Iron Com- 
pany, as principal, and the Bonding Company, as surety, for $52,400, 
alleging, first, the exécution of the bond, and, second, its breach by 
the Iron Company, making the bond by référence a part of the 
pleading. The bond assures the performance of the contract in cus- 
tomary terms, and, by référence, embodies the contract. The con- 
tract provides for the purchase by the Copper Company and sale by 
the Iron Company of 4,000 tons of Talladega pig iron of a given 
analysis during a given month at the price of $13.10 per ton deliv- 
ered f. o. b. Talladega, Alabama, payments to be made on a given 
date. 

The contracts bear date March 13, 1917; the bonds April 3, 1917. 

Tuming to the record, it appears that at the trial the Copper Com- 
pany, to support the averments of its pleadings, formally and briefly 
proved the exécution of the bonds, the breach of the contracts by the 



COPPER PEOCESS CO. V. CHICAGO BONDINQ & INS. CO. 69 

(262 FJ 

Iron Company, and the résultant damages, and rested on the liabillty 
of the Bonding Company for indemnity. 

The Copper Company has assigned but one error in the trial of 
its case in chief. This relates to a ruling of the trial judge in al- 
lowing the Bonding Company to lay grounds for contradiction. We 
dispose of this assignment hère as involving no error. 

So far, there was nothing in the case out of the ordinary. The 
trouble began with the Bonding Company's defence, and its defence 
began with its pleadings. 

The defence of the Bonding Company, as pleaded, was, in the 
main, twofold: 

First. That the contracts appended to the bonds when sued on 
were not the contracts appended to and covered by the bonds when 
issued; and that, in conséquence, the contracts of indemnity sued on 
are not the contracts of indemnity which it executed and delivered. 

Second. That it was induced to enter into the bonds by fraud of 
the Iron Company with the knowledge and cormivance of the Copper 
Company. 

Thèse defences, as pleaded, were, in a word, non est factum and 
fraud. 

To sustain the first defence, the Bonding Company introduced évi- 
dence tending to show that the bonds of indemnity into which it 
entered with the Copper Company did not cover contracts between 
the Copper Company and the Iron Company for the purchase and 
sale, monthly, of 4,000 tons of pig iron at $13.10 a ton as declared by 
the Copper Company in its pleadings, but covered, on the contrary, 
other contracts purported to hâve been entered into by the Copper 
Company and Iron Company, for the purchase and sale, monthly, of 
2,000 tons of pig iron at $26.20 a ton; that copies of the supposed 
contracts between the two companies containing the items last given 
were certified to the Bonding Company by the Iron Company and 
were appended to the bonds when they were executed and delivered 
to the Copper Company; that between the tirae of their delivery and 
the bringing of thèse suits, the copies of the contracts so appended 
were removed from the bonds and copies of the real contracts sub- 
stituted for them, during ail of which time the bonds and accompany- 
ing copies of contracts were in the possession and control of the 
Copper Company. By this évidence, the Bonding Company offered 
to support its charge that there was a substitution of contracts and 
that the substitution was the act of the Copper Company. This évi- 
dence was, of course, controverted. On this issue of substitution 
there was ample évidence, properly admitted under the pleadings, 
for a finding by the jury in favor of the Bonding Company. As the 
jury's verdict for the Bonding Company was based either on this 
issue of substituted contracts or on the next issue of fraud, the Cop- 
per Company is concluded by the verdict on this issue. 

[1] That the Bonding Company was induced to enter into its in- 
demnifying undertakings by fraud and gross misrepresentations of 
the Iron Company is not seriously disputed by the Copper Company. 
Its position is that it was not a party to the fraud and was ignorant 



70 262 FEDERAL HEPORTEB 

of the misrepresentations. In its case in chief, the Bonding Com- 
pany, in order to sustain its defence of fraud by the Iron Company 
and connivance by the Copper Company, first introduced testimony 
of the Iron Company's fraud and misrepresentations, to which many 
of the Copper Company's exceptions were noted and errors assigned, 
and then introduced testimony to show the relation of the Copper 
Company to the Iron Company by the acts of their officers and to 
show also the part which the Copper Company, through its officers, 
took in conniving at the fraud of the Iron Company. Obviously, no 
exception can be taken to this order of establishing connivance by 
one party in the fraud of another. 

The substance of this testimony was that the Copper Company 
was not at any time concerned in any business other than its trans- 
actions with the Iron Company; and that the Iron Company had as 
its one asset an interest in an option or arrangement with Laden- 
burg, Thalman & Company of New York, for the opération of a 
blast fumace at Talladega, Alabama, which had long been out of use. 
When the Iron Company was practically without funds or tangible 
assets, it entered into the five contracts with the Copper Company 
on March 13, 1917, whereby it undertook to sell and deliver to the 
Copper Company, monthly, for a period of five months, 4,000 tons 
of pig iron at $13.10 a ton; a price in the Birmingham district, little, 
if any, above cost of production. With thèse contracts made, the 
two companies entered into another contract referred to at the trial 
as the "Underlying Agreement" or the "Y" agreement, reciting the 
five contracts just mentioned and providing, in considération thereof, 
for an advance or payment by the Copper Company to the Iron 
Company of the sum of $50,000, and a further sum of $25,000, both 
sums to be placed to the crédit of the Iron Company in the Com- 
mercial Trust Company at Philadelphia ; the latter sum, however, to 
be drawn on by the Iron Company by voucher checks showing that 
the money was to be paid for certain purposes specified in the agree- 
ment, the one pertinent to this case being "Premium on surety bond, 
believed to be $2,700." This agreement further provided that if the 
Iron Company should be prevented by fire, strikes, riot, mob, or earth- 
quake from making deliveries on the 20, (JX) tons of pig iron covered 
by the five contracts referred to, then the Iron Compcmy would sell 
and deliver to the Copper Company its full production of pig iron 
of whatever grade and quality, at a price of $7.50 per ton below the 
market price. The curious feature of this agreement is, that no- 
where in it is there provision for repayment or return to the Copper 
Company of the moneys it agreed to advance to the Iron Company. 
This agreement was signed some time in March, 1917, and, in part 
performance, the Copper Company placed $75,000 in bank to the 
crédit of the Iron Company. 

With thèse contracts made and outstanding, the Iron Company, in 
carrying out its undertaking to give the Copper Company bonds as- 
suring the performance of its sales contracts, applied to the Bonding 
Company for five bonds of $52,400 each. To induce the Bonding 
Company to enter into thèse bonds, an officer of the Iron Company 



COPPEE PEOCESS CO. V. CHICAGO BONDING & INS. CO. 1 1 

C262 F,) 

supplied the Bonding Company with certified copies of what pur- 
ported to be its pig iron contracts with the Copper Company, which 
showed that the sale and delivery covered, not 4,000 tons a month 
at the suspiciously low price of $13.10 a ton, as actually called for by 
the contracts, but 2,000 tons a month at what was then about the 
market price of $26.20 a ton. On this représentation, Evans, an 
agent of the Bonding Company, went to Philadelphia and met one 
Wilson, an insurance broker, through whom the Iron Company was 
negotiating for bonds. Evans was shown what purported to be an 
engineer's report of the property, and an inventory and a financial 
statement of the Iron Company. He was informed that the Iron 
Company had $75,000 to its crédit in the Commercial Trust Com- 
pany (verified by letter from the depository) which was represented 
as money arising from the sale of stock; owned 2,511.5 acres of 
ore land; and possessed total assets of $1,360,650. In addition to 
statements previously made by the Iron Company in its application 
for bonds and by Wilson, the insurance broker, that no advance of 
any character had been made the Iron Company by the Copper Com- 
pany under the contracts, an officer of the Bonding Company ask- 
ed the Secretary of the Copper Company, prior to the delivery of 
the bonds, whether his Company had made any advance payments 
against iron deliveries under thèse contracts, to which the Secretary 
replied, "Absolutely not." 

To aid the Iron Company in carrying out its undertaking in tlie 
"Y" agreement to obtain indemnity bonds for the protection of the 
Copper Company on the sales contracts, for which the Copper Com- 
pany had -provided $2,700, the Président and Secretary of the Cop- 
per Company went to the bank with Wilson, who had received from 
the Iron Company a check drawn to his order for $6,000. There the 
Président of the Copper Company endorsed Wilson's $6,000 check 
and got from the bank a draft for a like sum. With the bonds pre- 
pared for signature and with this $6,000 draft, the Secretary of the 
Copper Company accompanied Wilson to Détroit. On arriving in 
that city, the Secretary had the draft cashed at a local bank and 
turned the whole $6,000 over to Wilson. What Wilson did with 
it does not appear. This large sum of money was drawn and dis- 
bursed supposedly for the payment of premiums on the bonds, when, 
in fact, the aggregate amount of ail premiums was but $655. Only 
this sum reached the Bonding Company. After the money had been 
paid Wilson, Evans, an agent of the Bonding Company, at its Dé- 
troit Office, delivered the bonds to the Secretary of the Copper Com- 
pany, in the possession of which concem they remained until suit. 
The bonds were executed on or about April 3. 

When the transactions were reported to its home office on or 
about May 1, 1917, the Bonding Company immediately made dis- 
claimer and also made formai tender of the premiums paid. 

The Iron Company breached its first contract in June; in fact, it 
delivered no iron imder any of the five contracts. Testimony was 
oflfered and admitted of acts and conduct of officers of the Copper 
Company, f oUowing the transactions concluded by the Bonding Com- 



72 262 FEDERAL REPORTEE 

pan)^s disclaimer and the Iron Company's breaches, tending to show 
the close relationship of the two companies and their control by the 
same officers. The évidence was, substantially, that the Président of 
the Copper Company assumed control of the funds of the Iron 
Company on its failure to perform its sales contracts; stopped pay- 
ment on checks at his will ; controUed its directorate by his nominees ; 
and in July and August caused it to vote for his protection a bond 
issue of $500,000 and notes to the amount of $750,000. 

It was in the admission of évidence tending to establish thèse facts 
that most of the court's rulings now assigned as error were made. 
While there is a great number of assignriients of error, the errors as- 
signed may fairly be grouped, as w^as done in the plaintifif's brief, 
according to the subject matter to which they relate, as follows: 

(1) Exception to the so-called "Underlying Agreement," admission 
of évidence relating thereto and charge to the jury as to the eflfect 
thereof. 

(2) Exceptions to admission of évidence of misrepresentations made 
to the Bonding Company by officers and agents of the Iron Com- 
pany without the Copper Company's knowledge and charge to the 
jury as to the effect thereof. 

(3) Exceptions to admission of évidence of subséquent transactions 
between the Copper Company and the Iron Company and charge to 
the jury as to the effect thereof. 

The record shows that the judge had a thorough grasp of the case; 
that he carefully kept in mind throughout the trial the précise issues 
made by the pleadings; and that, in his rulings, he was libéral in 
admitting testimony to sustain them. Thèse issues and the manner in 
which they should be tried are nowhere better stated than by coun- 
sel for the Copper Company himself when addressing the judge on 
an objection to an ofifer of testimony. He said: 

"The questions that arise In thls case are thèse: First, as I understand it, 
were the bonds executed? Second, was there any fraud in the proeurement 
of the bonds? Third, bas there been any variation of the terms of the con- 
tract since the bonds were executed to release the surety? Thèse are the 
three questions involved in this case and any évidence that direotly or indirect- 
Vy hears on that is entirely appropriate." 

[2] This statement is in accord with the practice everywhere, that 
when fraud is alleged, great latitude of proof is allowed, and every 
fact or circumstance from which a légal inference of fraud may be 
drawn is admissible. Any such fact, no matter how insignificant, 
may be shown, provided it bears at ail on the point in issue. Ac- 
cordingly, it is proper to prove a party's participation in the fraud by 
showing what was said and done leading up to the transaction, De 
Ruiter v. De Ruiter, 28 Ind. App. 9, 62 N. E. 100, 91 Am. St. Rep. 
107; what was said and done at the time the fraud was committed, 
Crump V. United States Min. Co., 7 Grat. (Va.) 352, 56 Am. Dec. 
116; and, within certain limits, what was said and done after the 
commission of the fraud. Salmon v. Richardson, 30 Conn. 360, 79 
Am. Dec. 255 ; 12 R. C. h. 429, 430, and cases. 

[3-6] It is of the manner in which the trial judge applied thèse 



COPPEB PBOCESS CO. V. CHICAGO BONDINQ & INS. CO. 73 

C262 F.J 

familiar principles of law in his rulings that the Copper Company 
complains. Its most serions complaint relates to the admission in 
évidence of the "Y" agreement, which, it asserts, was error, first, 
because the agreement had no relation to the fraud and misrepre- 
sentations of the Iron Company; and, second, because no duty rest- 
ed on the Copper Company voluntarily to disclose its existence or its 
provisions ïto the Bonding Company. This contention — which covers 
the first group of assignments of error — raises the question, whether 
the Copper Company was guilty of fraud by suppressing facts which 
the Bonding Company was entitled to know. 

Fraud may be committed by the suppression of truth as well as by 
the suggestion of falsehood. 12 R. C. L. 305, and cases. But the 
law distinguishes between passive concealment and active conceal- 
ment, the distinction being that in active concealment there is implied 
a purpose or design. As a gênerai rule, to constitute fraud by con- 
cealment or suppression of the truth there must be something more 
than mère silence, or a mère failure to disclose known facts. There 
must be some occasion or some circumstance which imposes on one 
person the légal duty to speak, in order that another dealing with 
him may be placed on an equal footing. Then a failure to state a 
material fact is équivalent to concealment of the fact and amounts 
to fraud equally with an affirmative falsehood. Pickering v. Day, 3 
Houst. (Del.) 474, 95 Am. Dec. 291 ; 12 R. C. L. 305, 306, 307, 308, 
and cases. 

We are not prepared to say — assuming the relations of the two 
companies otherwise free from fraud — that if the Copper Company 
had allowed the Iron Company to negotiate alone for the bonds, it 
would bave been its duty to seek out the Bonding Company and in- 
form it of the "Y" agreement. But that was not what happened. 
The Copper Company was rendering personal as well as financial 
aid to the Iron Company in securing the bonds which it exacted for 
its own benefit. Its officer came into direct communication with an 
officer of the Bonding Company and discussed the bonds. In that 
discussion, the Bonding Company was endeavoring to ascertain what 
risks it would incur on entering into thê proposed indemnifying ob- 
ligations. The Bonding Company, speaking through an officer, asked 
the Copper Company, addressing its Secretary, whether any advances 
had been made against the contracts it was about to assure. To that 
question, the Copper Company, through its Secretary, responded: 
"Absolutely not." If the Secretary made that reply (which he de- 
nied) he made it with full knowledge of the "Y" agreement. 

What bearing had the "Y" agreement on the Bonding Company's 
indemnity risks? That agreement provided for an advance by the 
Copper Company to the Iron Company of $75,000. Just the char- 
acter of the agreement it is difficult to define — ^whether an advance 
against contract deliveries of pig iron, an out-and-out loan of money, 
or a partnership contribution — at any event, the Copper Company paid 
the Iron Company $75,000 and recited as a "considération" for this 
payment the five sales contracts in question. 

Thèse facts appearing in the "Y" agreement itself, connected with 



74 262 FEDERAL REPORTER 

the unusual feature that nowhere in it was there provision for the 
repa3Tnent or return of the money so advanced, show several things. 
Linking the sales contracts to the "Y" agreement by express récital 
and making the sales contracts a considération for the "Y" agreement 
show an intimate relation between them. But for the existence of 
the five sales contracts there would hâve been no reason for making 
the "Y" agreement. Whatever its character, whether j*i advance 
against iron deliveries, or a loan, the Copper Company was in posi- 
tion, when monthly deliveries began, to deduct at will from its month- 
ly payments the sum or parts of the sum the Iron Company owed it. 
If, in the last analysis, the advance was in the nature of a partner- 
ship contribution, it was even more material to the risk. With a con- 
tract outstanding, having ail thèse provisions and possible construc- 
tions, the Copper Company, when asked by the Bonding Company 
concerning advances, was under légal obligation to tell about it. That 
question was the circumstance that raised in the Copper Company a 
légal duty to speak; and, on its failure, transformed what otherwise 
might hâve been passive silence into active concealment. The Bond- 
ing Company was seeking facts aflfecting the degree of its responsibil- 
ity. The "Y" agreement was such a fact. It was, therefore, the légal 
duty of the Copper Company, when responding to the inquiry, to 
disclose it and to disclose it fully. The question having been asked 
for the purpose of ascertaining the risks involved in the situation, 
any equivocal, evasive, or misleading answer, calculated to convey a 
false impression, even though hterally true as far as it went, was 
fraud. Pidcock v. Bishop, 3 Barn. & Cress. 605; 12 R. C. h. 309, 
310, 311, and cases. It will not do for the Copper Company to say 
that it answered correctly when its Secretary said, on his own con- 
struction of the instrument, that no advances had been made against 
iron deliveries. Even if this be its correct construction, the answer 
given was but a half truth, for the "Y" agreement was a fact which 
showed the financial and contractual relations of the two companies. 
As such, it was material to the risks which the Bonding Company 
would incur in assuring to one the undertaking of the other. Fail- 
ure to disclose this fact, under the circumstance of being asked for 
it, was an active concealment of the fact. As the fraudulent char- 
acter of the concealment was provable only by the admission in évi- 
dence of the thing concealed, we are of opinion that admission of the 
agreement was not error, and that the agreement, together with the 
circumstance of its concealment, constituted évidence sufficient to 
sustain a finding of fraud by the jury. 

In the second group of exceptions we find no error in the admis- 
sion of évidence of misrepresentations made by the Iron Company 
without the plaintiff's knowledge. This because it was necessary, 
first, to show the Iron Company's fraud and misrepresentations be- 
fore it was possible to show the Copper Company's connivance there- 
in. Evidence of connivance was présent, and was sufficient, we think, 
to submit to the jury. 

[7] In the third group of exceptions covering the admission of 
évidence of subséquent acts of the Copper Company and the Iron 



WALTER V. ATHA 75 

C262 F.) 

Company, we find no error. The admission of évidence of this kind 
must ordinarily be guarded, but it was admissible in this case for 
the purpose of showing by its outgrowth what was the relation of 
the two companies at the time the f raud was committed. Salmon v. 
Richardson, 30 Conn. 360, 379, 79 Am. Dec. 255. 

[8] In our review of this entire record, we hâve considered singly 
and in groups the rulings of the court assigned as error and find 
only a few open to question, any one of vvhich, if technically error, 
is harmless error. We recognize that in the theory of the îaw, er- 
roneous rulings in jury trials are presumptively injurious, yet the 
tendency is to enlarge the sphère of the trial judge in the admission 
and exclusion of testimony and not to disturb the judgment when it 
affirmatively appears that his rulings, if erroneous, were harmless. 
Fillippon v. Albion Vein Slate Co., 250 U. S. 76, 39 Sup. Ct. 435. 
63 L. Ed. 853 ; Norfolk & Western Ry. Co. v. Gillespie, 224 Fed. 
316, 320, 139 C. C. A. 552. 

The judgment below is affirmed. 



WAliTER et aL v. ATHA. ATHA v. WALTER et al. In re BLANCHARD. 

(Circuit Court of Appeals, Thlrd Circuit. December 31, 1919.) 

Nos. 2484, 2510. 

1. BANKEtrPTCT ^=228 FlNDINQa OF BEFEBEE ON TTNCONTBADICTED EVIDENCE 

NOT ENTITLED TO WBIOHT GIVEN FINDINQS ON CONFLICTING EVIDENCE. 

WMle a finding of fact by a référée on confllcting évidence will not be 
disturbed, unless tbere Is cogent évidence of mistake, yet. If the referee's 
flndlng be a déduction from established facts or uncontradicted évidence, 
the judge is at liberty to draw hia own inferences and deduce his own 
conclusions. 

2. Bankeuptcy <g=5j467 — Findings of tbiai, couet on uncontradicted évi- 

dence NOT CONCLUSIVE ON APPEAL. 

Where the findings of fact of the bankruptcy court, whlch were in cou- 
flict with those of the référée, were based on déductions from uncontra- 
dicted évidence, the appellate court need not foUovr thein, but may deduce 
Its own conclusions, just as the trial court can disregard findings of 
référée. 

3. Bankeuptcy <S=>340 — Evidence held to show that olaimant lent stock 

to heb son, the bankeupt, and not to a coepoeation. 

Evidence on behalf of claimant, the niother of a bankrupt, held to show 
that she lent stock to her son, the bankrupt, and not to a corporation in 
which he was interested and which pledged the same. 

4. Bankeuptcy <s=>340 — Claims by belative closely sceutinized. 

Claims of relatives of a bankrupt should be closely and carefully 
scrutinized, remembering, however, that the honest or dishonest character 
of sueh clalm is not to be determlned by mère relationship. 
B. Bankeuptcy ®=3314(1) — Duty of bankeupt' to eeimbubse one uending 

HIM stock to PLEDGE. 

Where a mother leut her son corporate stock for the purpose of enabling 
the son to pledge the same and obtain funds for a corporation in which 
he was interested, the son was under an implied duty to reimburse his 
mother for expenses incurred in recovering the shares, because of his 
failure to return them, and such expenses may be proven as a claim on 
the son's bankruptcy. 

©ssFor otiier cases see same toplc & KEY-NUMBER In aU Key-Numbered Dlgests & Indexes 



76 262 FEDERAL EEPOETEK 

Appeal from the District Court of the United States for the Dis- 
trict of New Jersey ; Thomas G. Haight, Judge. 

In the matter of Théodore C. E. Blanchard, bankrupt. From an or- 
der of the District Court (253 Fed. 758), allowing as reduced the claim 
of EmeUne C. Blanchai-d, Effe B. Walter and another, as executors 
of the estate of claimant, since deceased, appeal, and Benjamin Atha, as 
trustée, cross-appeals. Reversed, with directions to the District Court 
to allow claim in full. 

Vredenburgh, Wall & Carey, of Jersey City, N. J. (Albert C. Wall, 
of Jersey City, N. J., and William F. Allen, of New York City, of 
counsel), for Effe B. Walter and others. 

Robert H. Southard, of New York City, for Benj. Atha, trustée, etc. 

Before BUFFINGTON and WOOLLEY, Cii^cuit Judges, and 
MORRIS, District Judge. 

WOOLLEY, Circuit Judge. In the proof of claim and amended 
proof of claim filed by Emeline C. Blanchard in the bankrupt estate of 
her son, Théodore C. E. Blanchard, there is an item of $271,155. On 
pétition by the Trustée for its rejection or réduction, the Référée al- 
lowed the item in full. On review, the District Court reduced it 
to one-fourth and later allowed it for one-half of its amount. From 
the order of the District Court, the claimant took this appeal, charg- 
ing error to the court in not allowing the item in full. On cross- 
appeal, the Trustée assigns as error, first, the action of the court in 
not wholly expunging the item from the claim; and failing in this, 
second, its action in allowing the item for one-half of its amount in- 
stead of for one-fourth. 

As the case is stated in the opinion of the trial judge, 253 Fed. 758, 
we shall do no more than give in outline the facts on which we think 
the case turns. 

The transactions out of which this controversy arose extended 
over a period of twenty years or more. They began shortly after the 
death of the claimant's husband, who, having been one of the founders 
of The Prudential Insurance Company of America, left to his widow 
and several children a large number of shares of the highly valuable 
stock of that corporation. Three of his children, William W. Blanch- 
ard, Fred. C. Blanchard, and Théo. C. E. Blanchard, used their shares 
freely in borrowing money with which to embark upon varions enter- 
prises, which failed with singular regularity. The one with which 
we are hère concerned was Blue Ridge Enameled Brick Company. As 
the financial needs of this and other projects exhausted their resources, 
the sons appealed to their mother from time to time and obtained 
her shares on which to raise the funds they required. Thèse trans- 
actions, initially small in amount, were many in number. The first 
one bearing on this controversy involved 1176*''/ioo shares, represent- 
ing in the aggregate shares which the mother had at previous times 
and in smaller amounts turned over to her sons. Thèse were pledged 
on a note of the Brick Company for $205,000, dated August 1, 1904, 
endorsed by the three sons and the mother, and negotiated with the 



WALTEE V. ATHA 77 

C262 F.) 

Fidelity Trust Company of Newark, N. J. In April, 1908, the Trust 
Company called this loan and also four loans of the three sons, amount- 
ing to $507,000, on which were pledged 2445°'/ioo shares of Pruden- 
tial stock, variously owned. 

Milton E. Blanchard, another son, took up the loan of the Brick 
Company and in return obtained from that Company a new note for 
$216,411.67, dated April 6, 1908, secured by the endorsement of the 
same three sons and by the pledge of 1225^^/ioo shares of the mother's 
Prudential stock. The mother was not an endorser on this note. 

Milton held the note until 1914, when ail three sons who had en- 
gagea in the brick business, as well as the Brick Company itself, were 
in bankruptcy. In this state of affairs, Milton demanded payment 
and threatened to sell his mother's shares pledged with the note. 
Whereupon the mother hought the note from him, and on its endorse- 
ment to her, regained possession of her stock. The sum which she 
thus paid is the item in dispute in her claim against the bankrupt es- 
tate of Théo. C. E. Blanchard. 

The mother's original proof of claim for this sum was based on 
her right of action as endorsee of the note against Théo. C. E. Blanch- 
ard, one of the endorsers. Her amended proof of claim was made on 
the ground that she had loaned her shares from time to time, in dif- 
férent amounts, — until they aggregated the number recovered from 
Milton — unto her three sons, William W., Fred. C, and Théo. C. E. 
Blanchard, for use by them personally in borrowing money for their 
various projects, — among them the Brick Company, — upon promises 
by them, jointly and severally made, to return the same ; and that, upor. 
the failure of Théo. C. E. and the others to keep their promises, she 
was compelled to lay out and expend the amount claimed in order to 
recover her shares. 

The argument on the law of this case has taken a wide range, in- 
volving questions of rights and liabilities of endorsers, co-sureties, 
and contribution, arising out of the finding of the learned trial judge 
that the mother's loans of her shares were to the Brick Company and 
not to her sons personally. Before we are called upon to consider thèse 
questions of law, we must first ascertain the précise character of 
the transactions between the mother and her sons, and détermine, as 
a matter of fact, whether she loaned her shares to her sons to enable 
them to finance the Brick Company, or whether she loaned her shares 
to the Brick Company, and thereby financed it herself. 

[1, 2] The testimony on which this case was submitted first to the 
Référée, then to the District Court, and now to this court, to détermine, 
as a fact, the character of the transactions between mother and sons 
is unusual in that it was nowhere in conflict and the credibility of 
no witness was at any time attacked. The learned trial judge was 
mindful of the rule prevailing in this circuit against disturbing a find- 
ing of fact by a Référée, based on conflicting évidence and involving 
questions of credibility, unless there is cogent évidence of mistake; 
In re Partridge Lumber Co. (D. C.) 215 Fed. 973, 976; but proceeded 
to a finding opposite to that of the Référée under the rule, that if the 
Referee's finding be a déduction from established facts or uncontra- 



78 262 FEDERAL REPOBTEB 

dicted évidence, the judge, reviewing the Référée and having before 
him the same facts, is at liberty to draw his own inferences and de- 
duce his own conclusions. In re New York & Philadelphia Package 
Co. (D. C.) 225 Fed. 219, 221 ; Baumhauer v. Austin, 186 Fed. 260, 
108 C. C. A. 306; Ohio Valley Bank Co. v. Mack, 163 Fed. 155, 158, 
89 C. C. A. 605, 24 L. R. A. (N. S.) 184. We do not believe we are 
expanding the latter rule beyond its proper limits by extending it to 
ourselves on this appeal. 

[3] In proof of her claim, the mother showed that her three sons 
lunched with her and her daughter weekly, and at thèse luncheons 
the sons would represent to her their need for money to carry on 
their business and would ask her to loan thera her Prudential shares. 
The mother was far advanced in years and timid. To thèse requests 
she would usually demur ; though later she would unif ormly yield. In 
representing their needs, the sons frankly told the mother the uses 
for which they wanted her stock, among which was the raising of mon- 
ey for the Brick Company, assuring her that the loans to them would 
be perfectly saf e and promising always to return them as soon as pos- 
sible. The shares when taken were pledged by the sons with the Trust 
Company on their own notes and on notes of their business enterprises, 
among them the Brick Company. 

Thèse transactions began when the mother's inheritance of 2000 
shares of Prudential stock was intact, and after the sons' inherit- 
ances had been exhausted in their various undertakings. They con- 
tinued until the most of the mother's inheritance had been transfer- 
red frora her possession to pledges on the notes of the Brick Com- 
paiw and of her sons, and until their bankruptcy ensued. 

The advanced âge of the mother must, of course, be considered in 
appraising her testimony, yet the very simplicity with which it was 
given lends force to it. Her testimony tended to prove that while she 
knew of the Brick Company as one of her sons' enterprises, she was 
not conscious of having loaned her shares to it. The following excerpt 
f rom her testimony shows its character : 

"Q. Do you know about thla company borrowlng any money? 

"A. No, I do not, not specially. I loaned my stock to my boys. • • * 

"Q. Can you remember whether there was a wrltten agreement with your 
son Théodore as to what he should do with thls stock of yoursî 

"A. Why, I loaned it to the boys whenever they wanted it. They knew they 
eould hâve It when they needed it." 

A daughter, always présent at the luncheons, testified to the con- 
versations between the mother and her sons, to their requests for the 
loan of her Prudential shares, and to the delivery by the mother of her 
certificates to her sons. 

The testimony of Fred. C. and William W. Blanchard went directly 
to the point that the loans were personal to the three sons. True, the 
testimony of the daughter was that of a witness interested in the out- 
come of the controversy; but it is doubtful that the testimony of thèse 
two sons was affected by any financial intefest. Added to this testi- 
mony was that of John R. Hardin, Esq., who, by reason of his rela- 
tion to the Blanchard family as counsel for many years, was intimate- 



WALTEE V. ATHA 79 

C262 V.i 

ly acquainted with their business affairs. He had, however, no knowl- 
edge of this transaction at its inception, and, therefore, could not tes- 
tify that the transfer of shares by the mother to the sons was Person- 
al to them. He testified, however, on bis knowledge of the conduct of 
the family business, that he believed the shares were loaned by the 
mother to the sons. If his testimony was admissible, it would be con- 
clusive of the issue. But the ieamed trial judge considered it incom- 
pétent, and therefore rejected it. Even with Mr. Hardin's testimony 
out of the case, we are satisfied that the claimant has, on other testi- 
mony, established, prima facie, a right to the allowance of the item in 
dispute. 

In opposition to its allowance, the Trustée produced no évidence that 
Mrs. Blanchard ever had transactions of any kind with the Brick 
Company beyond the fact that she was at one time the holder of 100 
of its 6000 shares of capital stock and at another time the holder of 
300 shares. He ofïered no testimony in contradiction of the testimony 
for the claimant that the loans of the mother 's shares were to her 
sons personally, except a paper, dated July 5, 1901, when the sons be- 
gan to borrow and use the mother's shares in raising money for the 
Brick Company. This paper bears the signature of Emeline C. Blanch- 
ard, and is addressed to the Fidelity Trust Company, and purports to 
be a continuing authority given the Brick Company to pledge her 
shares of stock with the Trust Company in borrowing money. This 
paper was signed more than three years before the date of the first 
Brick Company note, and it was given by Mrs. Blanchard on the de- 
mand of the Trust Company, as stated by its Président, in order that 
it might hâve recourse without question to her stock pledged as col- 
latéral, in the event of default on the note by the maker. 

We do not regard this transaction as inconsistent with the claimant's 
proofs that her loans were made to her sons personally. Some of the 
loans made to her sons were admittedly made for use by them in rais- 
ing money for the Brick Company. They could not get money from 
the Trust Company for the Brick Company on her shares unless her 
shares were put in a position that the Trust Company could bave re- 
course to them in the event of the Brick Company's default. The 
Trust Company's demand upon Mrs. Blanchard for written authority 
to pledge the shares was one that is quite customary in banking circles 
when a bank is loaning money to a person offering as collatéral the se- 
curities of another ; and compliance with such a demand is quite cus- 
tomarily made by the owner of securities so loaning them. From this 
paper, made under the circumstances testified to, we cannot draw the 
inference that Mrs. Blanchard loaned her shares to the Brick Com- 
pany. The paper évidences nothing but her purpose to place her shares 
in position to enable her sons to realize on them. 

In our examination of the record, we find that no witness testified 
that Mrs. Blanchard loaned her shares to the Brick Company. Op- 
positely, several witnesses testified affirmatively and positively that 
she loaned her shares to her sons. While the force of the testimony 
of some of thèse witnesses is modified by varying degrees of interest, 
we cannot, in the absence of their impeachment, reject it. Unless we 



80 262 FEDEHAIi EBPOETEB 

wholly disregard their testimony, the claimant must prevaîl, for op- 
posed to their testimony the Trustée produced nothing. Aside from 
the direct testimony of witnesses that the mother loaned her shares to 
her sons, the natural and probable inferences, lawfully to be drawn 
from the transactions, as evidenced by the acts and conduct of the 
participants throughout a long period of time, are, that she loaned 
her shares to her sons, not as agents of the Brick Company as a dis- 
closed principal (Whitney v. Wyman, 101 U. S. 392, 396, 25 L. Ed. 
1050), but to them personally for their use in raising money for the 
Brick Company and their other undertakings. 

[4] In reaching this conclusion, we hâve endeavored carefully to 
keep in mind the rule that a claim of a relative of a bankrupt should be 
closely scrutinized; remembering, however, that the honest or dis- 
honest character of such a claim is not to be determined by mère rela- 
tionship. Davis v. Schwartz, 155 U. S. 631, 638, 15 Sup. Ct. 237, 
39 L. Ed. 829; Estes v. Gunter, 122 U. S. 450, 456, 7 Sup. Ct. 1275, 
30 L. Ed. 1228; Ohio Valley Bank Co. v. Mack, 163 Fed. 155, 156, 
89 C. C. A. 605, 24 L. R. A. (N. S.) 184; Baumhauer v. Austin, 186 
Fed. 260, 265, 108 C. C. A. 306. 

[5] On this finding of fact, the claimant's right (or that of her Per- 
sonal représentatives) to the full allowance of the disputed item in her 
claim is established certainly under one of several familiar principles 
of law, namely, on her son's implied contract to reimburse her for ex- 
penditures she was required to make in recovering her shares because 
of his failure to keep his promise to return them. 

We direct that the District Court modify its order by allowing in 
full the item of the claim in dispute, and that the costs of this case, 
both in the District Court and in this court, be paid by the Trustée 
out of the estate of the bankrupt as a cost of administration. 



McCAFFREY et al. v. DAT et al. 

(Circuit Court of Appeals, Ninth Circuit. January 5, 1920.) 

No. 3295. 

1. Mines and minebals <g=s>S3 — Deed and conteact to fuenish monet fok 

DEVELOPMENT HELD SEPAEATE TRANSACTIONS. 

In an action for failure to comply with a mining contract, évidence 
regarding tlie deeding of mining property In certain proportions to plaln- 
tiffs, wlio had an option on the property, and défendants, who furnished 
the necessary money, and the exécution on the following day of a con- 
tract under whlch défendants agreed to furnish money for developlng 
the property, helA to sustain findlngs that the contract was not a part of 
the considération for the deeds. 

2. Mines and minerals <®=583 — Evidence establishino compuance with 

conteact to fuenish monet fob development. 

In an action against a défendant for refusing to furnish money for the 
development of mining property under a contract committing the opéra- 
tion and development of the mine to defendant's best judgment, uncon- 
tradieted évidence that the location of a claim was probably Invalid until 
certain location work had been done, that property was inaccessible, 

@=3For other cases see eame topic & KEY-NUMBBR in ail Key-Numbered Dlgests & Indexe* 



M'CAPPRET V. DAT 81 

C262 F.J 

that completton of a nearby power plant would save considérable money, 
etc., held to sustaln flndings that défendant did not act arbitrarily or in 
bad faith in refusing to advance more money. 

Appeal from the District Court of the United States for the District 
of Montana; George M. Bourquin, Judge. 

Suit by Edward McCaffrey, R. C. McCaffrey, and Mary Dena Mc- 
Caffrey against Harry L. Day, Mrs. Harry L,. Day, whose true name 
is Helen D. Day, J. D. Finley, and Mrs. J. D. Finley. Judgment for 
défendants, and plaintiflfs appeal. Affirmed. 

Graves, Kizer & Graves, of Spokane, Wash., for appellants. 

W. W. Zent, of Spokane, Wash., Isham N. Smith, of Seattle, Wash., 
John H. Wourms, of Wallace, Idaho, and C. B. Nolan and William 
Scallon, both of Helena, Mont., for appellees. 

Before GILBERT, ROSS, and HUNT, Circuit Judges. 

ROSS, Circuit Judge. A careful examination of the record in this 
case satisfies us of the correctness of the judgment of the court below 
denying the rescission of the contract between the parties, sought by 
the suit. The bill was based upon the alleged failure and refusai of 
the appellee Day to comply with the terms of the contract, and upon 
the allégation that such refusai by him was arbitrary and in bad faith, 
and "not in the exercise of his judginent, or of any discrétion con- 
ferred upon him by the agreement." 

The contract related to certain mining property situated in Lincoln 
county. Mont., consisting of the Héron Iode mining claim, the Cabi- 
net Iode mining claim, the Galena Iode mining claim, and a mill site 
known as the Cabinet mill site, situated on Callahan creek, in Troy 
mining district. In 1910 the property belonged to a corporation called 
Big Eight Mining Company, and during that year it was leased to the 
appellant R. C. McCaffrey (one of the complainants below) by the 
Company, with an option to purchase the same within a certain stated 
time for $50,000 ; deeds theref or being placed in escrow with North- 
western Loan & Trust Company, to be by it delivered to the purchaser 
upon the payment of the purchase price. The lessee entered into pos- 
session of the property under the lease and commenced working the 
ground, in which undertaking he was joined by his son and co-com- 
plainant below, Edward McCaffrey, during the progress of which 
work they shipped a number of cars of lead and zinc ore ; the appel- 
lant Edward McCaffrey, who was a plumber, having invested in such 
work a considérable amount of money out of his business, stated to be 
from $15,000 to $20,000. His father was a prospector and miner. 
The appellee J. D. Finley (a défendant below) was vice président and 
a director of the Exchange National Bank of Spokane, Washington, of 
which bank Day was also a director, and he was a friend of the Mc- 
Caffreys, and acted for them in their dealings regardîng the prop- 
erty hère in question. As the time approached for the exercise of the 
option to purchase the property, the McCaffreys, through Finley, open- 
ed negotiations with an eastern corporation called Grascelli Chemical 
Company for the advance of the necessary $50,000 with which to 
262 F.— « 



82 262 FEDERAL EEPORTBB 

make the purchase, and for the development of the properfy, which 
negotiations were pending at the time Finley, for the McCaffreys, ap- 
pUed to Day with the same end in view ; Finley preferring the latter 
for the reason, particularly, that he was an experienced and compétent 
mining man, as well as one of abundant means. That he was ex- 
perienced and compétent is sufficiently shown by the fact that he had 
been the manager of the large and important Hercules mine of that 
section of the country. 

The évidence shows that Finley knew nothing about mining, but 
that he was himself able to advance the $50,000 with which to effect 
the purchase of the property, and told Day, as well as the younger 
McCafifrey, that he was willing to do so if necessary, but, being anxious 
to interest Day, for the reason that has been stated, went with him in 
the fall of 1912 to see the property. While no one, we think, can justly 
claim from the évidence in ûie case that the property had been suffi- 
ciently opened up to be called a mine, Day, according to his own testi- 
mony, regarded it as a good prospect — so good, indeed, that he said he 
would, with Finley, advance, in certain proportions, the necessary $50,- 

000 to make the purchase and $50,000 more for the development of the 
property. But when it came, as it did, according to the évidence, to the 
proposition that such purchase money be so advanced upon an assign- 
ment of the lease and bond, Day, after an examination of the papers 
by one of his attomeys, and consultation with him, refused the proposi- 
tion. Thereafter, time being of the essence of the escrow agreement, 
haste became necessary, and Day, having then gone to Spokane, sum- 
moned his attorney, Mr. Wourms, there, who arrived at Spokane on 
the morning of the 15th of January, 1913, when, according to his tes- 
timony, Day handed him the abstract of title to the property and re- 
quested him to examine it as expeditiously as possible and advise him 
respecting it; that about the time of Wourms' completion of the ex- 
amination of the abstract Finley and the younger McCaflfrey came to 
the room of the hôtel where he and Day were, and that he informed 
them that, while there were some minor defects in the abstract, it was 
sufficient, but that he wished to see the deeds that were in escrow, and 
which were to be delivered upon the payment of the money, and that he 
and McCaffrey then went to the Northwestern Loan & Trust Company 
to see the deeds, where the cashier of the bank allowed him to examine 
them, but said that they had been notified by the Big Eight Mining 
Company not to deliver them ; that he and McCaffrey then returned 
to the hôtel, where they found Finley and Day, to whom he reported 
the resuit of the visit to the Trust Company, including his report that 
the deeds were sufficient, and — 

"adyised them that the thlng to do was to prépare deeds, Immediately, make 
•* tender. That seemed to appeal to ail the gentiemen présent, and they began 
to dlscuss for some little time as to the Interest that each one was to hâve. 

1 was interestad," said the witness, "in Mr. Day's Interest Mr. Day in- 
sisted on 55 per cent, and there was some talk backward and forward, and 
the one remark that I recall that Mr. McCaffrey made was that that would 
only give hiinself and his father 25 per cent ; that they had spent two years 
on the property and that wasn't enough. Mr. Day then suggested that 51, 
what he wanted was control, and he wouldn't go in unless he did get control, 
and 51 per cent, was Just as good for control as 55; that he was willing to 



M'CAFFRET V. DAY 83 

£262 F.) 

reduce hls demand to 51 per cent. TJiat was agreed upon, and I Immedlately 
proceeded to prépare a deed from the McCalïreys to Mr. Harry L. Day. 
I completed that deed; as I recall it Mr. McCaffrey and Mr. Finley went 
away." 

The witness further testified that he and Finley then went to the 
bank to get the money, and that on the way Finley told him that he 
might just as well prépare a deed for him also, which the witness did 
before going to the bank. The deeds so prepared by Wcurms were 
from the McCafïreys to Day and Finley for 51 and 14 per cent., re- 
spectively, in the property, to pass to and through the McCafïreys from 
the Big Ëight Company. The witness further testified that immedlate- 
ly after he had prepared the deed for Finley the two proceeded to the 
Êxchange National Bank, where Day directed that he be given $50,000 
in money which was donc, and, it being heavy, he and the younger 
McCafïrey took it in a taxicab to the Northwestern Trust Company 
and made the necessary tender. The witness further testified that the 
next morning, January 16th — 

"Mr. Finley came to our rooms at the hôtel, that we used as a kind of a 
workshop, and informed me that he thought that Mr. Day and himself ought 
to enter Into an agreement for the purpose of putting up the money; that the 
McOafCreys were not able to adrance any money to amount to anythlng in the 
development of the property; and as I recall it I told Mr. Finley that I 
didn't see any need of it; that the mining partnershlp law of the state of 
Montana was sufflcient for ail purposes, and Mr. Finley then went away. 
Mr. Day came to the room a short while afterwards, and informed me that he 
had seen Mr. E'inley, and that they had agreed that they would enter into an 
agreement with the McCaflreys for the purpose of advancing some money, 
and requested me to put their agreement, as he narrated it to me, into form. 
I proceeded to do so, and it was discussed backward and forward, and eeveral 
drafts made of It that moming by Mr. Day and Mr. Finley and myself. 

"Q. That would be on the moming of the 16th? A. On the morning of the 
leth. 

"Q. Of January î A. On the morning of the 16th of January, as I recall it; 
and finally we succeeded in gettlng a draft that was satisfactory to Mr. 
Finley and to Mr. Day. Then Mr. Edward McCaffrey came to the rooms 
with référence to the agreement; he read it over, and he asked me whether 
I would object to going up to Mr. — 

"Q. Henley's? A. Henley's, I think; Henley's office; and we went up to 
Mr. Henley's office, Mr. McCaffrey and myself. 

"Q. Do you remember about the time that you got to Henley's office? Is 
there anything that occurred there — A. I belleve Mr. McCaffrey will recall 
it. We waited quite a while for him to return from lunch ; that Is, he was 
out when we went up there. 

"Q. Well, now, when Henley came in, and as the resuit of the vlsit that 
you made to his office there, was there any addition made to the agreement 
as it then stood? A. As I had wrltten the agreement, there was no proviso 
in it that if any of thèse causes should arise that would absolve thèse people 
from — Mr. Day and Mr. Finley from — working the property, unless the con- 
ditions that made it necessary to desist putting up the money should be 
permanent, that they should in the future time be obllged to go ahead, and 
he suggested to me that there ought to be some phraseology of that class in 
the agreement. And I told Mr. Henley, in the présence of Mr. McCaffrey, 
that personally I didn't see any objection to adding an arrangement of that 
kind. 

"Q. And are you able to refer to the partlcular clause that was added to 
the contract, on account of the suggestion made by Mr. Henley? A. Tes, 
sir; a clause in paragraph 8, after the comma, in the fifth line from the 
bottom of that paragraph, reading like this: 'But nothing hereln shall be 



84 202 FEDERAL REPORTER 

oonstrned to flnally release the sald parties ot the flrst part from ttieir 
obligation to fumish said money as aforesaid, unless the obstacles to the 
opération and development of the same shall be permanent.' 

"Q. And theu was thei-e a redrafting of the contract as it was amended? 
A. I took the matter up with Mr. Day and Mr. Finley, and told them that I 
thought fbat was fair, and there was no objection, and I redrafted such 
portions of the contract as was necessary to insert that clause." 

In substance the clause so suggested is found in the contract which 
it is sought by this suit to rescind. It appears from the testimony of 
both Finley and the McCaffreys that the former was their représenta- 
tive in the transactions in question, and from the testimony of both 
Finley and Edward McCaffrey that the latter was présent several 
times during the discussions regarding the matter on the 16th day of 
January, 1913, when the terms of the agreement were finally settled 
and reduced to writing byWourms; and while Edward McCaffrey 
does not deny requesting Wourms to go, or going with him, to Hen- 
ley's office, he does positively deny that the latter was his attorney. 
We insert a brief excerpt from the testimony of that witness: 

"Do you remember going to Mr. Ilenley's office on the 16tb, or were you to 
Mr. Henley's office during the finie that thèse negotiations were carried on? 
A. I don't remember of it. 

"Q. Do you remember goiug there in company witli Mr. Wourms, and 
waitiug during the noon hour until Mr. Henicy returned? À. I don't re- 
uiember. 

"Q. In référence to this agreement? A. I don't remember it at ail. 

"Q. Well, would you say that you were not? A. I couldn't say whether 
I was or I wasn't ; I don't remember. 

"Q. Well, now, again trying to refresh your recollection in référence to 
that, do you remember going to Jlr. Heuley's office? Mr. Ilenley was acting 
as attorney for you, wasn't he? A. No, no ; never was. 

"Q. Never acted for you in auy way? A. No capaeity at ail; never. 

"Q. You never consultcd him? A. Never consulted him in regard to any 
of my business at ail. 

"Q. Well, in regard to this business? A. No; nor no business. 

"Q. Now, do you remember goiug to his oflice — 

"Mr. Graves: I submit that he bas just said that he didn't. 

"The Court: Well, that doesn't necessarily dispose of this question; it is 
cross-examination. 

"Q. Do you remember about this provision baing inserted in this contract 
at the instance of Mr. Houley, when you and Wourms were présent: 'But 
nothing herein shall be eonstrued to finally release the sald parties of the 
first part from their obligation to furnish said money as aforesaid, unless 
the obstacle to the opération and development of the same shall be perma- 
nent.' A. Well, I told you that I didn't see them papers ; never seen them 
until the day I signed them at the bank ; never seen them, nor no part of 
them; had nothing to do with the making, and know nothing about it." 

The record shows that the two deeds, as well as the contract, were 
signed and acknowledged before a notary public at the same time, to 
wit, January 17, 1913. The contract in its lirst, second, and third para- 
graphs, respectively, set forth the interest of each of the parties in 
the property, that is to say, fifty-one one-hundredths in Day, fourteen 
one-hundredths in Finley, and thirty-five one-hundredths in the Mc- 
Cafïreys jointly; and the fourth, fifth, and sixth paragraphs recited 
in substance that in the judgment of the respective parties the proper 
development and opération of the property required the installation of 



M'CAPFRET V. DAT 85 

C262 F.) 

suitable mining and milling machinery and other equipment, and their 
désire to develop, equip, and operate the property, and the willingness 
of Day and Finley to advance money in proportion to their ownership, 
for that purpose, upon condition that such advances should bear a spec- 
ified rate of interest and be repaid out of the first profits derived from 
the opération of the property, or, in the event no such profits should 
be eamed, that they should hâve the right to remove therefrom ail of 
the machinery, etc., with certain other provisions, in the event of a sale 
of the property, not necessary to be mentioned. The foregoing were 
followed by paragraphs 7 and 8, which are as f ollows : 

"(7) Now, therefore, in considération of the premises, and the mutual bene- 
fits which will accrue to the parties hereto, it is hereby agreed that the parties 
of the flrst part [Day and Finley] wlll advance, in proportion to their owner- 
ship In the property, as it nmy be required in the judgment of said Harry L 
Day, the money necessary to operate and further develop and equip the said 
property up to and not exceeding the sum of flf ty thousand ($50,000) dollars. 
This money to be ftirnished on the express condition that tlie parties of the 
flrst part shall be reimbursed for their advances together with Interest thereon 
from date said sums are fumished, at the rate of six per cent. (6%) per 
annum out of the first profits arislng from the opération of the property. 
In the event that there be no profits, they shall hâve the right to remove 
ttterefrom any and ail machinery and Improvements which may be placed 
thereon and shall crédit the actual cash value of ail said machinery and 
improvements, at the time they are removed, on the aceount for money ad- 
vanced by them, or In the event of the sale of the said property before the 
parties of the flrst part shall hâve been fully repaid for their advances with 
interest thereon as aforesald, the parties of the first part shall first be reim- 
bursed for any and ail advances made by them, with interest thereon as 
a/oresaid, from the money derived from the sale of said property, before any 
of the proceeds thereof shall be divided among the owners of the property. 

"(8) It Is hereby further agreed that, if the duty on ores and metals be 
reduced by Congress, or If, in the course of the opération and development of 
the property, the physical condition should be such, or If from any other 
cause or causes beyond the eontrol of the said parties of the first part, it 
shall in the judgment of the said Harry L. Day not be profitable and advau- 
tageous to continue the installation of machinery and the development and 
opération of the property, then and in that event the said parties of the flrst 
part shall not be obliged to make further advances, nor to continue the opéra- 
tion or development of the said property, even though they hâve not advanced 
the full sum of flfty thousand ($50,000) dollars at that time; but nothing 
herein shall be construed to finally release the said parties of the first part 
from their obligation to furnish said money as aforesald, unless the obstacles 
to the opération and development of the same shall be permanent" 

The contract further gave to Day and Finley an option to purchase 
the interests of the McCafifreys in the property, and in the event of 
its transfer to a corporation an option to purchase their stock in 
such corporation at the same price and on as good terms and conditions 
as they (the McCafïreys) might be offered by thlrd parties — such op- 
tion to be exercised within 30 days after receiving a like notice of the 
ofïer. It further provided that Day, or some person designated by 
him, should at ail times hâve the gênerai management and eontrol 
of the property, and that, in the event a corporation should be organiz- 
ed to take it over, Day, or such person or persons as he might sélect, 
should be elected président or gênerai manager thereof — 

"It belng the Intention of the parties to this agreement that the said Harry . 
L, Day, by reason of his ownership of fifty-one one-hundredths (51/100) of 



86 262 FEDERAL EEPORTËK 

the mlnlng clatms herelnbefore described, and of hls long and successful 
expérience as an owner and operator of mines, sball hâve the control and 
management of the said property and of the corporation to be hereafter 
organized." 

It is insisted on behalf of the appellants that the contract was an 
essential part of the considération for the deeds from the McCaf- 
freys, which considération failed in a material part by reason of 
Day's refusai "arbitrarily and in bad faith, and not in the exercise 
of his judgment or of any discrétion conferred upon him by the agree- 
ment," to advance the money or to do anything required of him there- 
by, in conséquence of which the appellants are entitled to a decree 
rescinding the contract and requiring the reconveyance by Day and 
Finley of their interests in the property, upon the return to them 
of such amounts of money as the court should deem équitable. 

[1,2] The court below found the évidence to be insufficient to show 
that the contract was a part of the considération for the deeds, and in 
that view we agrée. We think that fairly shown by the spécifie facts 
testified to by the witness Wourms, and which found strong support in 
the testimony of Day. We also agrée with the court below that the 
proof fails to show that the latter acted in bad faith or arbitrarily. It 
undoubtedly shows that the McCaffreys, as well as Finley, were anx- 
ious and insistent that he proceed promptly to install machinery and 
work the property, and even suggested the érection of a mill. The 
complète answer to such suggestions is that by the agreement of the 
parties the development and opération of the property was left to the 
honest judgment of Day. He testified, among other things, that he 
found that the location of the Galena claim was invalid, for the reason 
that there had been no discovery of minerai within its boundaries, and 
that therefore he directed the extension of a tunnel on one of the other 
claims into the Galena ground for the purpose of making the neces- 
sary discovery, and that for the protection of the property, in the event 
it should prove to be a valuable one, it was désirable to locate some ad- 
joining ground and to acquire a claim called Thomas claim, ail of 
which took more or less time, and of which ail of the parties to the 
agreement were informed ; that the location of the property was about 
six miles from the railroad, the roads poor, and the hauling of ore 
and supplies therefore necessarily costly, especially when the snows 
were on the ground ; that in the event a mine should be found in the 
property an independent production of power for the oneration of a 
mill would be very costly, but that a nearby mine was being equipped 
with electric power by means of water from which power might be 
furnished through the operator of it, with whom he was on friendly 
terms and who had actually consented to supply it — that plant costing 
about $350,000. None of thèse matters so testified to by Day are 
denied, and we think they furnish very good and sufiîcient reasons for 
the delay that occurred in the expenditure of any large sum of money; 
but the évidence shows without conflict that a very considérable amount 
of development work was done from time to time under Day's di- 
rection, in which the appellants joined up to, indeed, a very short time 
■preceding the commencement of this suit. 



HINES V. KITTENBEEQ 87 

(262 FJ 

We discover nothing in the record tending to show any desîre on 
Day's part to take any unfair advantage of his associâtes, and are of 
the opinion that the judgment of the court below is right ; and it is ac- 
cordingly affirmed. 



HINES, Dlrector General of Rallroads, v. RITTENBERG et al. 

(Circuit Court ot Appeals, Fourth Circuit. October 7, 1919.) 

No. 1735. 

1. Railroads <s=34S4(3) — Okigin op fibe question for jubt. 

Whether a fire starting on the roof of a house near defendant's rall- 
road tracks, whlch spread and destroyed other property, was caused by 
sparks froni the engine of a train passing a few minutes before, held, 
under the évidence, a question for the jury. 

2. Railroads <S=>453 — Statittoby uabilitt fou in.tury by fiée not dépend- 

ent ON NEGLIGENCE. 

In an action against a railroad company for destruction of property 
by fire communlcated by an engine on Its road, under Clv. Code S. C. 
1912, § .3226, providing that railroads shall be responslble In damages to 
any person whose property may be injured by flre communlcated by its 
locomotive englues, as construed by the Suprême Court of the state, ab- 
sence of négligence is not a défense. 

3. Railroads <S=>249 — Statute imposino liability fob ftbeb conbtittjtional. 

Civ. Code S. O. 1912, § 3226, maklng railroad companles llable for in- 
juries caused by flre communlcated by thelr engines, regardless of the 
question of négligence, held constitutlonal. 

In Error to the District Court of the United States for the Eastem 
District of South Carolina, at Charleston; Henry A. Middleton 
Smith, Judge. 

Action by Gus Rittenberg, in his own right and as trustée for cer- 
tain insurance companies, against Walker D. Hines, Director Gen- 
eral of Railroads. Judgment for plaintifï, and défendant brings er- 
ror. Affirmed. 

P. A. Willcox, of Florence, S. C. (Benjamin H. Rutledge, Simeon 
Hyde, and Octavus Cohen, ail of Charleston, S. C, and S. M. Wet- 
more, of Florence, S. C, on the brief), for plaintiff in error. 

Louis M. Shimel and J. N. Nathans, both of Charleston, S. C. 
(Nathans & Sinkler, Sm)rthe & Visanska, and A. T. Smythe, ail of 
Charleston, S. C, on the brief), for défendants in error. 

Before KNAPP and WOODS, Circuit Judges, and WADDILL, 
District Judge. 

KNAPP, Circuit Judge. This action was brought to recover dam- 
ages for the loss by fire at St. Stephens, S. C, of certain buildings 
and stocks of goods belonging to plaintiff. The fire is alleged to 
hâve been caused by sparks from a locomotive operated by défend- 
ant as part of the equipment of the Atlantic Coast Line Railroad 
Company. Thèse facts appear: 

[1] The town of St. Stephens consists mainly of a row of build- 
ings along the railroad right of way, which there runs néarly north 

<S=5For other oasès see sams topic & KBY-NUMBER In ail Key-Numbered Digests & Indexes 



88 2G2 FEDERAL REPORTER 

and south. In the early afternoon of Sunday, March 10, 1918, a 
freight train of 36 loaded cars passed through, running north at the 
rate of 20 to 30 miles an hour. Not long afterwards fire was dis- 
covered on the roof, midway between eaves and ridge, of a house 
occupied by Mrs. Keller, in which a hole had been bumed "the size 
of a barre! head." From there the fire spread to adjoining buildings, 
one after another, until most of the row was destroyed, including 
plaintiff's property. At the time the fire was first seen a high wind 
was blowing from the west; that is, towards the buildings that were 
consumed. South of St. Stephens for a couple of miles or more the 
grade of the railroad ascends to the north, though through the town 
the grade is practically level. The locomotive in question was lighter 
than those of more modem type, but adéquate for the train it was 
hauling. 

There was further testimony by a witness, who said he was stand- 
ing at his gâte close by the right of way, about three-quarters of a 
mile from plaintiflf's store, when this train passed; that it was run- 
ning very fast, and the engine "exhausting very hard"; that cinders 
were thrown out, which set fire to the dry grass on his lot; that 
some 10 minutes later, after he "whipped this fire out," he looked 
up the road and saw people running across the track "over towards 
Mr. Rittenberg's side to the fire — the fire that broke out there." 
Another witness said that he was near St. Stephens, on his way from 
church, as this train passed him; that after lie crossed the railroad 
at the station cinders fell on his hat, "came down swift and fast, a 
lot of them"; that soon after he got to the station he heard the cry 
of "Fire!" and saw that the roof of Mrs. Keller's house was burn- 
ing, "about five or six feet from the chimney." Mrs. Keller testified 
that there had been no fire in her house that day for cooking or 
other purposes, "only the lighting of a lamp early that morning." 
Occupants of adjacent houses on either side, and of the other houses 
nearby, testified that no fires had been lighted in their respective 
dwellings during that day. In a word, the testimony is undisputed 
and convincing that the fire which proved so destructive originated 
in the roof of Mrs. Keller's house and from an external cause ; and 
it seems évident from the proofs recited and other circumstances of 
record that the question whelher this initial fire was started by sparks 
or cinders from defendant's locomotive was a question of fact, which 
was properly submitted to the jury. , Grand Trunk R. Co. v. Rich- 
ardson, 91 U. S. 454, 471, 23 L. Ed. 356; lowa Central Ry. Co. v. 
Hampton E. L. & P. Co., 204 Fed. 961, 123 C. C. A. 283 ; Chicago 
& E. R. Co. V. Ohio City L. Co., 214 Fed. 751, 131 C. C. A. 57; 
Hutto V. Railway Co., 81 S. C. 572, 62 S. E. 835. 

[2] The défendant insists, however, that, even if the jury were 
warranted in finding that the fire was caused by sparks from this lo- 
comotive, nevertheless a verdict should hâve been directed in its 
favor, because the locomotive was proven to hâve been equipped with 
a standard spark arrester in perf ectly good condition. In other words, 
it is contended that any presumption of négligence arising from the 
fact that the fire may hâve been started by defendant's locomotive 



HINES V. BITTENBERG 89 

(262 F.) 

was fuUy rebutted, and the absence of any négligence established, by 
conclusive évidence that the locomotive, including the spark arrester, 
was in good order and carefuUy operated. But this contention ap- 
pears unavailing in view of a statute of South Carolina (Code of 
1912, § 3226), and the construction given the same by the Suprême 
Court of that state. The statute reads as foUows: 

"Every railroad corporation shall be responsible In damages to any person 
or corporation whose buildings or otlier property may be injured by fire coni- 
municated by Its locomotive engines, or origlnatlng within the limits of the 
right of way of sald road in conséquence of the act of any of its authorized 
agents or employés, except in any case where property shall hâve been placed 
on the right of way of such corporation unlawfully or without its consent, and 
shall hâve an insurable interest in the property upon its route for which it 
may be so held responsible and may procure Insurance thereon In Its ovvn 
behalf." 

That this statute makes a railroad company liable, under such 
circumstances as are hère considered, although the company is not 
négligent, has been repeatedly held by the courts of South Carolina. 
Thus, in Thompson v. R. & D. R. Co., 24 S'. C. 366, the Suprême 
Court says: 

"Nothing is said in the act about négligence, and the very fact of such 
omission shows that the object of the act was to eliminate any question of 
négligence, Inasmuch as under the law as it previously stood the company 
would be liable only in case of négligence. We are, therefore, forced to con- 
clude that the purpose of the act was to dispense with any inquiry into that 
subject, for it déclares the company liable for property destroyed by fire, 
originating on its right of way from any act of any of Its agents, without any 
qualification whatsoever, either as to négligence or otherwise." 

Again, in Rogers v. Florence R. Ce, 31 S. C. 378, 383, 9 S. E. 
1059, 1060, the same court says: 

"It will be observed that the question of négligence cannot arise under this 
act, because the company is to be held liable, where the fire orlginates within 
its right of way, In conséquence of the act of any of Its authorized agents or 
employés, without regard to the fact of négligence one way or the othcr." 

And in Hunter v. Columbia, etc., R. R. Co., 41 S. C. 86, at page 
91, 19 S. E. 197, 199, the following is said: 

"This statute, therefore, créâtes a spécial and exceptlonal liabillty upon 
every railroad company for any damages done to the property of another by 
fire communicated by Ifs locomotive engines, irrespective of any négligence on 
Its part." 

That this is the settled construction of the statute is affirmed or 
assumed in the subséquent cases of Hutto v. Railroad Co., 81 S. C. 
567, 62 S. E. 835, Brown v. Railroad Co., 83 S. C. 557, 65 S. E. 1102, 
and Birt v. Railway Co., 87 S. C. 239, 69 S. E. 233. 

[3] The validity of such a statute, so construed and applied, is 
upheld by the Suprême Court of the United States in St. Louis & 
San Francisco Ry. Co. v. Mathews, 165 U. S. 1, 17 Sup. Ct. 243, 41 
L. Ed. 611. From the learned and instructive opinion in that case, 
it suffices to quote the following (165 U. S. on page 26, 17 Sup. Ct. 
252, 41 L. Ed. 611): 



90 262 FBDSRAL EBFORTEB 

"Rallroad corporations, In order the better to carry ont the public object of 
their création, the sure and prompt transportatlon of passengers and goods, 
bave been autborlzed by statute to use locomotive englues propelled by steam 
generated by Ares Ugbted upon those engines. It Is wlthln the authorlty of 
the Législature to make adéquate provision for protecting the property of 
othera agalnst loss or injury by sparks from such engines. The rlght of the 
citizen not to bave hls property bumed wlthout compensation Is no less to be 
regarded than the rlght of the corporation to set It on flre. To require the 
utmost care and diligence of the rallroad corporations in taking précautions 
agalnst the escape of fire from their engines might not afford sufflcient protec- 
tion to the owners of property in the neighborhood of the railroads. When 
both parties are equally faultless, the Législature may properly consider It to 
be just that the duty of Insurlng prlvate property agalnst loss or injury caused 
by the use of dangeroi:is instruments should rest upon the rallroad eompany, 
which employa the instruments and créâtes the péril for its own profit, rather 
than upon the owner of the property, who bas no control over or interest in 
those Instruments. • » • The statute is not a pénal one, Impostag punish- 
ment for a violation of law, but It is purely remédiai, maklng the party, 
dolng a lawful act for Its own profit, llable in damages to the hinocent party In- 
jured thereby, and givlng to that party the whole damages, measured by the 
Injury suffered." 

As the case at bar was brought under the South Carolina statute 
and falls clearly within its terms, we perceive no reason for denying 
its full and controlling application. If the fire which destroyed plain- 
tiflf's property was "communicated" by defendant's locomotive — and 
the testimony permitted the jury to so find — the statute imposes lia- 
bility for the resulting damage, even if défendant was in no wise négli- 
gent. That this is the meaning and intent of the statute in such case 
has been repeatedly held by the highest court of the state, and its 
construction of the enactment must be accepted. The question is not 
open to further discussion. 

The case of Savannah Fire & Marine Ins. Co. v. Pelzer Manufactur- 
ing Co., 60 Fed. 39, decided at circuit in 1894, and apparently much 
relied upon by défendant, seems to be distinguishable. In that case 
suit was brought by an insurance eompany subrogated to the rights 
of the owner, and the railroad eompany defended on the ground that 
it had been released from liability by express contract. The opinion 
indicates that in vievv of those facts the question of négligence arose 
independent of the statute. Assuming, however, that anything said by 
Judge Simonton implies that a suit under the statute may be defeated 
by proof of defendant's freedom from négligence, we must décline to 
follow the décision for reasons above stated. AU the other cases cited 
by défendant hâve been examined and found to be inapplicable, be- 
cause they involve only the common-law rule of liability or turn upon 
statutes which were held not to eliminate the question of négligence. 

We are therefore constrained to hold that défendant is liable, wheth- 
er négligent or not, if the locomotive operated by his agent started 
the fire. It f oUows that the question of defendant's négligence was im- 
material, and should not hâve been submitted to the jury. It also fol- 
lows that défendant cannot justly complain of the refusai to gîve a 
requested instruction, even if entitled thereto on the assumption that 
négligence was involved, because the charge actually given is more 
favorable than défendant had the right to ask. 

Exception is taken to the déniai of defendant's motion for a new 



UNITED STATES V. UNION BANK OF CANADA 91 

(262 F.) 

trial on the ground that the damages awarded by the jury, $40,000, 
are alleged to be excessive. But as plaintifï testified to a loss of more 
than $69,000, to say nothing of the fact that he was examined before 
trial, it seems obvious that there ,was no abuse of discrétion in allow- 
ing the verdict to stand. This being so, the question is not reviewable 
in this court. 

The record discloses no réversible error, and the judgment must 
therefore be affirmed. 



TJNITED STATES v. UNION BANK OF CANADA. 

SAMB V. ROYAL DUTCH WEST INDIA MAIL 00. 

(Circuit Court of Appeals, Second Circuit Deeember 10, 1919.) 

Nos. 60, 28. 

Aliens iS=>50 — Exclusion of conthact "laboeee" limited to manual wobk- 

KES. 

The Word "laborer," as used In the contract labor provisions of Im- 
migration Acts, Act Feb. 20, 1907, i§ 2, 4, and Aet Feb. 5, 1917, § 5 (Comp. 
St. 1918, Oomp. St. Ann. Supp. 1919, § 4289^40), is llmited to manual la- 
borers, and nelther a bookkeeper In a bank nor a clerk In a steamship 
office Is wlthln the prohibition. 

[Ed. Note.— For other définitions, see Words and Phrases, First and 
Second Séries, Laborer.] 

In Error to the District Court of the United States for the South- 
ern District of New York. 

Actions by the United States against the Union Bank of Canada and 
against the Royal Dutch West India Mail Company. Judgments for 
défendants, and the United States brings error. Affirmed. 

Francis G. Cafïey, U. S. Atty., of New York City (V. H. Rothwell, 
Asst. U. S. Atty., of New York City, of counsel), for the United 
States. 

Carter, Ledyard & Milburn, of New York City (Walter F. Taylor, 
of New York City, of counsel), for Union Bank of Canada. 

Burlingham, Veeder, Masten & Fearey, of New York City (Van 
Vechten Veeder and William Paul Allen, both of New York City, of 
counsel), for Royal Dutch West India Mail Co. 

Before WARD, ROGERS, and MANTON, Circuit Judges. 

WARD, Circuit Judge. In the first case there is a writ of error to 
a judgment in favor of the défendant directed by Augustus N. Hand, 
J., in an action brought by the United States against the Union Bank 
of Canada to recover a penalty of $1,000 for violation of section 4 of 
the Immigration Act of February 20, 1907, which reads : 

"Sec. 4. That It shall be a misdemeanor for any person, company, partner- 
ship, or corporation, In any manner whatsoever, to prepay the transportation 
or in any way to assist or encourage the importation or migration of any con- 
tract laborer or contract laborers Into the United States, uniess such con- 
tract laborer or contract laborers are exempted under the terms of the last 
two provisos contained in section 2 of this act." 

^=3For otheT ;ases see eame toplo & KBY-NUMBER tn ail Key-Numbered Dlgesta & Indexes 



92 262 FEDERAL EBPORTBB 

Section 2 provides for the exclusion of contract laborers, the relevant 
portions being: 

"Sec. 2. That the followlng classes of aliéna shall be excluded from admis- 
sion into the United States : • ♦ • Persons herelnaf ter called contract la- 
borers, who hâve been Induced or solicited to migrate to tMs country by ofifers 
or promises of employment or In conséquence of agreements, oral, written or 
prlnted, express or impUed, to perform labor In thls country of any klnd, 
skilled or unskilled: • • • And provided further, that skilled labor may 
be Imported if labor of llke klnd unemployed cannot be f ound in thia country : 
And provided further, that the provisions of this law applicable to contract la- 
bor shall not be held to exelude professional actors, artists, lecturers, singers, 
ministers of any rellgious dénomination, professons for collèges or seminaries, 
persons belonging to any recognized learned profession, or persons employed 
strictly as personal or domestic servants." 

The défendant bank, a corporation of the Dominion of Canada hav- 
îng opened a hranch in New Yorlc City, brought from its branch in 
Toronto one Schilling, agreeing to employ him at a salary as assistant 
accountant in its New York office and paying the cost of his trans- 
portation. The question is whether Schilling was a contract laborer 
within the meaning of the act. 

The first législation on the subject was in chapter 164, Laws 1885, 
section 3 of which made it an offense subject to a penalty of $1,000 
to encourage in any way the importation of any alien "to perform labor 
or service of any kind under contract or agreement" in the United 
States. 

Section 5 provided exceptions as foUows : 

« » • • Nor shall this act be so construed as to prevent any person, or 
persons, partnership, or corporation from engaging, under contract or agree- 
ment, skilled workmen in foreign countrles to perform labor in the United 
States in or upon any new industry not at présent established in the United 
States: Provided, that skilled labor foï that purpose cannot be otherwiso 
obtained ; nor shall the provisions of thls act apply to professional actorKS, ar- 
tists, lecturers, or singers, nor to persons employed strictly as Personal or 
domestic servants." 

While this act was in force Rev. E. Walpole Warren was called by 
the Church of the Holy Trinity to the city of New York as its pastor. 
The government brought suit against the church for the penalty and 
the défendant demurred. We overruled the demurrer — 36 Fed. 303 — 
in view of the language of the act — section 3, "labor or service of any 
kind," and of the spécifie exceptions ; section 5, which did not include 
ministers. But the Suprême Court— 143 U. S. 457, 12 Sup. Ct. 511, 
36 L. Ed. 226 — reversed the judgment, holding that the title of the 
act, "An act to prohibit the importation and migration of foreigners 
and aliens under contract or agreement to perform labor in the United 
States, its territories, and the District of Columbia," and the mischief 
which Congress intended to prevent, as shown by the reports of com- 
mittees of Congress on the subject, demonstrated that only manual 
laborers were intended to be excluded. 

Chapter 551, Laws 1891, § 5, amending section 5 of the act of 1885, 
added to the exemptions thèse words : 

"Nor to ministers of any religions dénomination nor to persons belonging to 
any recognized profession nor professors for collèges or seminaries." 



UNITED STATES V. UNION BANK OF CANADA 93 

£262 F.) 

In the case of United States v. Laws, 163 U. S. 258, 16 Sup. Ct. 
998, 41 L. Ed. 151, the défendant Laws brought a chemist from Ger- 
many to Louisiana under contract to perforna services there, The 
Circuit Court of Appeals of the Sixth Circuit certified the question 
whether this was within the prohibition of the act of 1885. The 
court answered the question in the négative, referring to the amend- 
ment of 1891, which had been subsequently passed, as making the 
intention of Congress as found in the case of Holy Trinity Church 
still plainer. 

Chapter 1134, Laws 1907, entitled "An act to regulate the immigra- 
tion of aliens into the United States," by section 2 prohibits the entry 
of aliens under contract "to perform labor in this country of any kind, 
skilled or unskilled" ; the last two provisos being : 

"And provlded further, that skilled labor may be Imported if labor of like 
kind unemployed cannot be found in this country: And provlded further, that 
the provisions of this law applicable to contract labor shall not be held to 
exclude professional actors, artists, lecturers, slngers, ministers of any dé- 
nomination, professors for collèges or seminaries, persons belonging to any 
reeognlzed leamed profession, or persons employed strictly as personal or do- 
mestlc servants." 

Section 4 made it a misdemeanor to assist the entry of such contract 
laborers in any way "unless such contract laborer or laborers are ex- 
empted tmder the terms of the last two provisos contained in section 
2 of this act." 

Thèse provisions, taken together, make a strong support for the ar- 
gument that ail contracts for labor are within the prohibition of the 
act, unless specifically exempted. This was the view taken by Judge 
Neterer in Ex parte Kunijiro Toguchi (D. C.) 238 Fed. 632. Neverthe- 
less, we think the décision in Scharrenberg v. Dollar S. S. Co., 245 
U. S. 122, 38 Sup. Ct. 28, 62 L. Ed. 189, holds that the act of 1907, like 
the prier acts on the subject, prohibits only the entry of manual la- 
borers under contract to perform labor in the United States. In that 
case the défendant brought 19 Chinamen from Shanghai to San Fran- 
cisco, there to ship as seamen on the American registered steamship 
Mackinaw. The court held, Mr. Justice Clarke writing, that thèse mon 
were not under contract to perform labor in the United States, but 
on the high seas, which would hâve been enough to dispose of the 
case; but he also held as a second ground that a seaman was not a 
laborer. If so, an alien imported to perform labor as a seaman on 
vessels enrolled for the coasting trade or the inland waters of the 
United States would not be a contract laborer, within the prohibition 
of the act. Without inquiring whether an accountant as defined by the 
defendant's rules is a member of a learned profession, we affirm the 
judgment on the ground that Schilling was not a laborer within the 
meaning of the act. 

In the second case there is a writ of error to a judgment directed 
for the défendant by the same judge in an action for a penalty under 
section 5 of chapter 29, Laws 1917 (Comp. St. 1918, Comp. St. Ann. 
Supp. 1919, § 428914c), which differs in no material respect as to 
contract laborers from the act of 1907. The défendant sent a clerk 



94 262 FEDERAL REPORTER 

named Mook from its office in Amsterdam to be employed in its office 
in New York at a salary of $1,250 per annum and paid the expansés 
of his transportation. There was an expectation to send him from 
New York to its office at Paramaribo, Dutch Guiana, af ter he had fa- 
miliarized himself with the New York business. The grounds on 
which the verdict was directed were: First, that this employment at 
New York was a temporary one in a business of an international char- 
acter ; and, second, that Mook was not a contract laborer at ail, With- 
out considering the first reason, we concur in the second. 
Judgment affirmed in each case. 



ALLEY V, BBSSEMER GAS ENGINE CO. 

(Clrcnlt Court of Appeals, Pifth Circuit. November 19, 1919. Rehearing 
Denied Decembcr 15, 1919.) 

No. 3326. 

1. Appeal and eibbob ®=»1035 — ^Absence or juby teiai, not PEEatrDioiAL. 

The judgment of the court on the bar of limitations being sustained 
by the undlsputed évidence, absence of a Jury trial was not prejudicial. 

2. Limitation of actions <g=84(2) — Absence of défendant at accbual of 

CAUSE. 

Eev. St Tex. 1911, art. 5702, tolling the runnlng of the statute, if 
défendant be without the state at any tlme during whlcb the action 
mlght be malntained, has no application, where défendant was without 
the state when the cause of action accrued and did not retum within the 
period of limitations. 

3. Limitation Of actions <S=88 — Eobeign coepobations not without state 

duking limitation pebiod. 

Défendant forelgn corporation was, for purpose of citation on it, not 
only within the state when plaintlfl's cause of action for Personal injury 
accrued, but also never without It during the two years thereafter, so 
that under Eev. St. Tex. 1911, art. 5687, subd. 6, and article 5702, action 
was barred ; it at ail times having local sollcitlng agents, on whose orders, 
when approved at the home office, It shipped, article 1861 allowing it to 
be served by citation on any local agent within the state. 

4. CoBPOBATioNS <S=5>668(5) — Sebvice on "local agent." 

A "local agent," within Eev. St. Tex. 1911, art. 1861, allowing a forelgn 
corporation to be served by citation on its local agent within the state, 
Is one at a glven place or within a district. 

[Ed. Note. — For other définitions, see Words and Phrases, Blrst and 
Second Séries, Local Agent.] 
6. Coepobations ®=»380 — Cobpobation agent of anoteeb cobpoeamon. 

A corporation may act as agent of another corporation, unless pro- 
hiblted by statute. 
6. CoBPORATioNS <g=668(5) — Sebvice on ooepoeation's agents, in absence 

OF OFFICEBS. 

A domestlc corporation Is capable of belng served as local agent of a 
forelgn corporation, though ail its ofBcers live without the state ; it having 
agents living in the state, through whom It acts for the forelgn corpo- 
ration. 

In Error to the District Court of the United States for the North- 
ern District of Texas; Edward R. Meek, Judge. 

e=For otber cases sce same toplc & KEY-NtTMBBR in ail Key-Numbcred Disests & Indexe* 



iXI/ET V. BESSEMEK GAS ENGINE CO- 9& 

C262 F.> 

Action by Robert F. AUey against the Bessemer Gas Engine Com- 
pany. Judgment for défendant, and plaintiff brings error. Affirmed. 

W. H. Kimbrough, of Amarillo, Tex., Y. W. Holmes, of Comanche, 
Tex., and Kimbrough, Underwood & Jackson, of Amarillo, Tex., for 
plaintiff in error. 

Cockrell, Gray, McBride & O'Donnell, of Dallas, Tex., for défend- 
ant in error. 

Before WALKER, Circuit Judge, and FOSTER and GRUBB, Dis- 
trict Judges. 

GRUBB, District Judge. This was a suit for damage for personal 
injuries. In the District Court the statute of limitations of two years 
was held to apply to it, and there was a judgment for the défendant, 
from which this writ of error is taken. 

[1] The plaintifï in error contends that the EHstrict Judge erred 
in determining the issue without submitting it to a jury. The appli- 
cability of the statute was presented by demurrers and exceptions 
to the amended pétition and by plea. Evidence was taken in support 
of the plea. The court sustained the plea, after considering the évi- 
dence. No objection to this method of trial was made in the court 
below, and the parties treated it as being properly tried by the court. 
In the view we take of it, the judgment of the court may be sustained 
by tlae undisputed évidence, and the absence of a jury trial was not, 
therefore, prejudicial to the plaintiff in error. 

[2-4] The injury occurred July 28, 1912, and the suit was filed Oc- 
tober 8, 1914, more than two years thereafter. The claim was therefore 
barred by subdivision 6 of article 5687, Rev. Statutes of Texas, unless 
the bar was prevented by article 5702, Rev. Statutes of Texas, which 
provides that, if the défendant be without the limits of the state at any 
time during which the action might be maintained, the plaintiff bas 
the right to bring the suit after defendant's return to the state, and 
the time of defendant's absence shall not be taken as part of the time 
limited by the statute. 

The article bas been held not to apply to one who was absent from 
the state when the cause of action accrued and at ail times thereafter. 
Tourtelot v. Booker (Tex. Civ. App.) 160 S. W. 293 ; Wilson v. Dag- 
gett, 88 Tex. 375, 31 S. W. 618, 53 Am. St. Rep. 766; Veeder v. Gil- 
mer, 103 Tex. 458, 129 S. W. 595. If the défendant was at ail times a 
nonresident of Texas, the statute would bave run in its favor. The 
défendant was a Pennsylvania corporation. It solicited orders through 
a local salesman in Texas, shipped the machines, in response to the 
orders, after they had been approved at the home office in Pennsyl- 
vania, and coUected for the shipments in Texas, through its local rep- 
résentatives there. The local salesmen had no right to accept orders 
or compromise claims. This was the regular course of defendant's 
business in Texas and was not confined to isolated cases. In the case 
of International Harvester Co. v. Kentucky, 234 U. S. 579-585, 34 Sup. 
Ct. 944, 946 (58 L. Ed. 1479), the Suprême Court said : 

"In order to hold it responslble under the process of the state court, it must 
appear that It was earrying on business wlthln the state at the time of the 



96 262 FEDERAL REPORTER 

attempted service. As we hâve sald, we think It was. Hère was a continuons 
course of business In the soUcitatlon of orders, which were sent to another 
State, and in resjwnse to which the machines of the Harvester Company were 
delivered wlthin the state of Kentucky. This was a course of business, not 
a single transaction. The agents not only solicited such orders in Keutùcky, 
but might there reeeive payment in money, checks, or drafts. They might 
take notes of customers, whleh notes were made payable, and doubtless were 
collected, at any bank in Kentucky. This course of conduet of authorized 
agents within the state in our judgment constituted a doing of business there 
in such wise that the Harvester Company might be fairly said to bave been 
there, doing business, and amenable to the process of the courts of the state." 

We think the part quoted covers this case, and shows that the de- 
fendant was doing business in Texas when the cause of action ac- 
crued. 

If so, then it could be served by citation on "any local agent, within 
this state, of such corporation." Rev. Stat. of Tex. 1911, art. 1861. 
The défendant, at the time the cause of action accrued, had two agents, 
one located at Dallas and one at Laredo, each with a defined territory 
under his control. A local agent, under the Texas statute, is held to 
be "an agent at a given plàCe or within a district." W. E. Co. v. 
Troell, 30 Tex. Civ. App. 200, 70 S. W. 324; W. C. P. & Co. v. 
Anderson, 97 Tex. 432, 79 S. W. 516. The agents at Laredo and Dal- 
las were local agents, within the meaning of the Texas statute, and 
capable of being served as such. 

[5, 6] As the défendant was doing business in Texas, and had local 
agents there upon whom service could hâve been had, when the cause 
of action accrued, and as the suit was filed more than two years after 
the injury, the statute is operative to bar the suit, unless the défendant 
was absent from the state during the period of two years after the 
cause of action accrued. It is so contended by plaintifï in error. The 
évidence showed that the défendant had a local agent in Texas, one 
C. H. Bishop, at Dallas and Laredo, from July 29, 1910, until June 
29, 1913. His présence covered the two-year period, except the part 
of it from June 29, 1913, until July 28, 1914. Was the défendant out 
of the state during any part of that period? On October 23, 1912, it 
organized a domestic corporation under the laws of Texas, which 
acted as its agent in Texas from that date until after the bar of the 
statute was complète. A corporation may act as the agent of another 
corporation, unless prohibited by its charter. 3 Thompson on Cor- 
porations, § 2156. 

The plaintifï in error contends, however, that the domestic corpo- 
ration was not capable of being served, because ail its officers lived 
beyond the state of Texas. The record shows that the Texas cor- 
poration sold 20 gas engines for the parent company prior to the 
time of the institution of the suit. The Texas corporation could hâve 
acted in doing so only through agents, and, if its officers ail lived out 
of Texas, it must hâve had agents, not officers, who lived in Texas, 
and through whom such sales were made for it. A corporation can 
act only through agents. The record also shows that the Texas cor- 
poration kept a stock of parts in Texas, to be there fumished to the 
customers of the parent company. Résident agents were essential 
also to conduet that business. The Texas corporation also had two 



THE C. GAIiLAGHBB 97 

a«i p.) 
designated principal places of business in Texas, for the purpose of 
service. 

We think the record shows that the défendant was never absent 
from Texas, for the purpose of citation upon it, during the two years 
succeeding the accrual of the cause of action on which the suit is 
brought, and that the bar of the statute of limitations of two years 
was complète, when the présent suit was brought, October 8, 1914. 

The judgment of the District Court is affirmed. 



THE 0. GALLAGHBE. 

THE SPARTAN. 

(Circuit Court of Appeals, Second Circuit. November 12, 1919.) 

No. 12. 

1. Collision <S=»95(2) — Ovebtakinq xug with tow solelt in fault. 

An overtaking tug, with tow, which unnecessarily attempted to pass 
between two other tows, held solely in fault for collision between her tow 
and another in Long Island Sound. 

2. Collision <3=s>95(1) — Custom vabtino fboh naebow channel bulb jua- 

TIFIED. 

A gênerai practice of west-bound tows in Long Island Sound, when 
approaching North Brothers Island on a flood tide, to keep to the port slde 
of the channel, to give east-bound tows room to round the island and pass 
the railroad piers on the north safely, held justifled, and not In violation 
of the narrow channel rule. 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

Libel for collision by Rogers & Hubbard, Incorporated, against the 
steam tug Spartan, claimed by the Hartford & New York Transpor- 
tation Company, with pétition to limit liability by the Goodwin-Gal- 
lagher Sand & Gravel Corporation, owner of the tug C. Gallagher, as 
well as a libel against the Spartan. lyibel by E. E. ly. Hammer, Public 
Administrator of Bronx County, as administrator of F. F. Borch, de- 
ceased, against the Spartan. From the decree, the claimant of the 
Gallagher appeals. Reversed. 

Foley & Martin, of New York City (William J. Martin and G. 
V. A. McCloskey, both of New York City, of counsel), for appellant. 

Haight, Sandford & Smith and Ellsworth J. Healy, ail of New York 
City (C. B. Smith and E. E. %. Hammer, both of New York City, 
of counsel), for appellee Hartford & N. Y. Transp. Co. 

Han-ington, Bigham & Englar, of New York City, for appellee 
Rogers & Hubbard, Inc. 

Before WARD, ROGERS, and HOUGH, Circuit Judges. 

WARD, Circuit Judge. August 18, 1915, about 2:30 p. m., the 
tug Spartan, bound west, with four schooner barges abreast in the 
first tier and one tailed on in the second tier, behind the starboard 

@=3For other casea see same tciplc & KBY-NUMLEÏR in ail Key-Numbered Dlgests & Indexes 
262 F,— 7 



98 262 FEDERAL REPORTER 

barge in the first tier, had just rounded North Brothers Island in Long 
Island Sound. She was rapidly overtaking the tug Robert Robinson, 
with a hawser tow of five boats, three in the first and two in the 
second tier. At the same time the tug C. Gallagher, close to Riker's 
Island, was approaching North Brothers Island on her way west with 
the Goodwin-Gallagher sand-laden scows No. 74, No. 36, No. 44, 
and No. 8 on hawsers tandem. The tide was flood and the day clear. 

The Robinson, as she passed.around North Brothers Island, steered 
a course which passed the Gallagher, which was heading for the black 
buoy on the north end of the island, starboard to starboard. The 
Spartan, when close to the Robinson's tow, ported to pass with her 
own tow, which was 128 feet wide and in ail some 600 feet long, be- 
tween the Robinson's and Gallagher's tows. 

Seeing that the clearance was very small, the Gallagher starboarded 
and the Spartan slowed, with the resuit that her tow sheered toward 
the Gallagher's tow, and the Gallagher's tow was swung by a very weak 
tide coming through the narrow channel between North and South 
Brothers Islands, and sheered slightly towards the Spartan's tow. 
Thereupon the Spartan ported, with a view to bring the strain on her 
starboard hawser, to break her tow's sheer, and then starboarded to 
straighten the tow out. This is a familiar maneuver, making a course 
something like a reversed curve, sometimes described as snapping the 
whip. Notwithstanding this, No. 18, starboard scow in the Spartan's 
first tier, struck a glancing blow on the starboard side of No. 74, the 
first barge in the Gallagher's tow, shoving it aside and breaking the 
line between it and the next hoat. No. 36. No. 18 then struck the 
starboard corner of the stern of No. 36, which was towing stem first, 
overturning her with her cargo, then striking the next boat. No. 44, 
and breaking the line between her and the last boat. No. 8, and then 
overturning No. 8, whose master, Frederick F. Borch, was drowned, 

There was plenty of clear water for the Spartan to pass between the 
Robinson's tow and the New York shore, and the effort to pass be- 
tween the Robinson's and the Gallagher's tows was reckless in the 
extrême. 

Rogers & Hubbard, Incorporated, owners of the cargo on No. 18, 
filed a libel against the Spartan. The Goodwin-Gallagher Sand & 
Gravel Corporation, owner of the tug Gallagher, filed a pétition to limit 
its liahility, and also a libel against the Spartan to recover damages to 
the barges and cargo in her tow. E. E. L,. Hammer, public adminis- 
trator of Bronx county, as administrator of F. P. Borch, deceased, 
filed a libel against the Spartan to recover damages for his death. The 
cases were tried together, and the District Judge found both vessels 
at fault and the owner of the tug Gallagher entitled to limit liability. 
The owner of the tug Gallagher appealed f rom each decree. 

The District Judge held the Spartan at fault for attempting to pass 
between the tows of the Robinson and Gallagher, instead of slow- 
ing until the Gallagher had passed, and the Gallagher for navigat- 
ing on the port side of the channel in violation of article 25 of the 
Inland Régulations (Act June 7, 1897, c 4, § 1, 30 Stat. 101 [Comp. 
St. § 7899]). 



THE C. QALIiAGHEB 99 

(262 -p.i 

[1,2] We think the Spartan was solely at fault. Article 25 re- 
quires steamers to keep the starboard side of a narrow channel "when 
it is safe and practicable." The testimony is quite convincing that 
hawser tows west bound, in approaching North Brothers Island on a 
flood tide navigate on the port side of the channel in order to give 
east bound hawser tows room to round North Brothers Island and 
pass the railroad piers on the north side in safety. The flood tide in 
the main channel sets on Oak Bluff and the New York side opposite 
the northern end of North Brothers Island, and is then deflected 
slightly toward Riker's Island; this set being somewhat counteracted 
by the direction of the weaker tide coming through the shallow chan- 
nel between North Brothers Island and South Brothers Island. We 
regard this as a reasonable practice, justifying a departure from the 
gênerai rule described in article 25 and hâve recognized similar prac- 
tices at other points. The Three Brothers, 170 Fed. 48, 95 C. C. A. 
322 ; The Transfer No. 21, 248 Fed. 459, 160 C. C. A. 469. 

The proctors for the Spartan cite two décisions of the late Judge 
Adams in the District Court that at this particular point steamers 
must conform to article 25. The Transfer No. 10 (D. C.) 138 Fed. 
221 ; The Abram F. Skidmore (D. C.) 160 Fed. 265. In those cases 
there was no évidence of the practice proved in this case, and the dé- 
cision of the same judge arising out of a collision at a bend in the 
Harlem River in the later case of the Three Brothers (D. C.) 162 Fed. 
388, was reversed (170 Fed. 48, 95 C. C. A. 322), on the ground that 
local conditions justified a departure from article 25. 

Assuming that the Gallagher was on the wrong side of the chan- 
nel, that fault did not contribute to the collision, because the fact was 
obvions, and made it the plain duty of the Spartan to pass upon the 
port side of the Robinson's tow, instead of forcing a passage between 
the two tows. 

The District Judge awarded the sum of $5,000 to Hammer, admin- 
istrator of Borch, deceased, who was a man of 65 years of âge, in good 
health, of good habits, and earning at the highest $55 a month. His 
wife had been living for six years previous to his death in Norway. 
The couple had no children, and there is no accurate évidence of the 
amount he was in the habit of sending his wife. If we concède it to 
hâve been $25 a month, which would certainly hâve been most libéral, 
the présent value of an annuity of $300 would be $2,400 ; his expec- 
tation of life by the mortality tables being less than eight years. This 
amount, we think, covers in full the pecuniary damages sustained by 
the widow, as provided for in section 1904 of the New York Code of 
Civil Procédure. We cannot award more than the intestate could hâve 
paid out of his wages because of the présent high cost of living. 

The decree is reversed, with directions to the court below to enter 
a decree in favor of the libelants Rogers & Hubbard, Incorporated, 
and the Goodwin-Gallagher Sand & Gravel Corporation, for their 
damages as found against the tug Spartan, with costs, and in favor of 
Ernest E. L. Hammer, public administrator of the county of the Bronx, 
as administrator of the estate of Frederick F. Borch, deceased, in the 



100 262 FBDBBAL REPORTES 

sum of $2,400, with interest from the date of his întestate's death. 
Costs of this court to Rogers & Hubbard, Incorporated, and to the 
Goodwin-Gallagher Sand & Gravel Corporation, against the Spartan. 



DE CROISSBT et al. v. VITAGRAPH CO. OF AMERICA et al. 
(Circuit Court of Appeals, Second Circuit. December 10, 1919.) 

No. 79. 

1. BQUITT ®=3l49 — MiaJOINDEB OF PABTIES EEIÇDEBED BIZI, MULTIFABIOTJS AND 

DEVOID or EQUITT. 

Misjoinder of parties plalntlff havlng no Interest, and to whom no re- 
lief can be granted, renders a MU of complaint multlfarious. 

2. Equity i®=149 — Complaint fob ineeingement of copyrights demubbablb 

ab multifaeious. 

One having a proprletorsliip in a copyright of a drama, and another who 
was the sole exclusive owner of motion picture rights in and to the 
drama, may not In one action sue another, alleged to hâve infringed botli 
copyrights,! in the absence of allégations showlng a communlty of 
Interest. 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

Suit by Francis De Croisset, Maurice Le Blanc, and Société des 
Films Menchen against the Vitagraph Company of America, J. Stu- 
art Blackton, and Albert E. Smith. From a decree dismissing the 
bill, complainants appeal. Affirmed. 

Rogers & Rogers, of New York City (Gustavus A. Rogers and 
Saul E. Rogers, both of New York City, of counsel), for appellants. 
William M. Seabury, of New York City, for appellees. 

Before WARD, ROGERS, and MANTON, Circuit Judges. 

MANTON, Circuit Judge. By this bill of complaint the appel- 
lants seek to enforce their alleged right to infringement of two copy- 
rights. One copyright is upon a drama written by the appellants, 
De Croisset and Le Blanc, prior to 1909, and copyrighted in the 
United States on March 3, 1909. There is a copyright claimed to 
hâve been procured by one Cromelin on June 6, 1916, for the bene- 
fit of the Société des Films Menchen, upon the photoplay of the 
same name, which was produced by the London Film Company. The 
appellees produced and exhibited a photoplay entitled Arsène Lupin, 
which is said to be based upon the same plot, thème, and incidents 
to which the respective appellants claim rights by the copyrights hère 
mentioned. 

The complaint allèges, in paragraph 10, that the Société des Films 
Menchen "is, and at ail the times hereinaf ter mentioned was, the sole 
and exclusive owner of motion picture rights in and to said drama." 
The title of the copyright granted by the United States on March 3, 
1909, is as f ollows : "Arsène Lupin, Pièce en Trois Actes et Quatre 
Tableaux par Francis De Croisset et Maurice Le Blanc" — and the 

ig^ssFor otber cases see same toplc & KEY-NUMOER In ail Key-Numbered Dlgests & Indexes 



DE CROISSET V. VITAGRAPH CO. OF AMERICA 101 

(262 P.) 

copyright granted on June 6, 1916, to Paul H. Cromelin for the 
motion picture photoplay was entitled "Arsène Lupin" by Maurice 
Le Blanc. 

[1, 2] Paragraph 12 of the bill of complaint allèges that this was 
done for the benefit of the appellant Société des Films Menchen, and 
"that the aforesaid photoplay was adapted and produced as aforesaid 
by the London Film Company from the aforesaid work of Maurice 
Le Blanc and Francis De Croisset." The assignment of the copy- 
right by Cromelin to the Société des Films Menchen is alleged to be 
on March 27, 1918, and that this assignment was filed in the United 
States Copyright Office April 11, 1919. The bill of complaint does 
not disclose how Cromelin reserved any individual right or interest 
in the copyright after having registered it for the benefit of the 
Société des Films Menchen. Examining the bill of complaint, it is 
apparent that neither De Croisset nor Le Blanc bave any interest in 
the alleged infringement of the photoplay copyright, and none is 
claimed to exist. We bave, therefore, a bill in which the appellants 
hâve no community of interest. What is alleged is a cause of action 
for infringement of the dramatic copyright in which De Croisset and 
Le Blanc alone are interested, and under a separate cause of action 
a claim for infringement of a motion picture photoplay, the copy- 
right of which, at the date of the commencement of the action, the 
Société des Films Menchen is alleged to be the sole and exclusive 
owner. The sufficiency of this complaint was tested by a motion 
to dismiss the bill, and the District Judge sustained the appellee's 
motion. The motion was made because of this misjoinder of parties. 
It was granted without préjudice to any subséquent suit upon the 
copyright of 1916, and the dismissal was made final as to the rights 
accruing under the copyright of 1909. 

We are unable to reach any other conclusion than that the para- 
graphs from 6 to 10 of the bill of complaint allège a cause of action 
in which the individual appellants, De Croisset and Le Blanc, claim 
an alleged infringement of their copyright of the drama Arsène 
Lupin, and in which the Société des Films Menchen bas no interest. 
Paragraphs 10 to 13 of the bill of complaint allège that the appellant 
Société des Films Menchen is the sole and exclusive owner of the 
copyright of the motion picture photoplay founded upon the same 
drama. And the fourteenth paragraph of the bill of complaint al- 
lèges that the — 

"défendants by the production of the motion picture photo play without the 
consent of the complainants, and In violation of the complaiuant's rights, and 
lu infringement of the copyright of said drama Arsène Lupin, and in in- 
fringement of the motion picture copyright of said drama, and with fuU 
knowledge of tlie rights of the complainants made and caused to be made a 
motion picture photo play which is the production of the complète story, 
scènes, situations, characters, and business of the said drama Arsène Lupin." 

Thèse paragraphs of the bill, assuming that Cromelin had a valid 
copyright, allège a right of action in the Société des Films Menchen 
for the infringement of the copyright for the motion picture photo- 
play. It is very apparent that De Croisset and Le Blanc bave no 
interest in this copyright. The pleader hère joins the owners of 



102 262 FEDERAL REPORTER 

separate copyrights — first, the copyright proprietor of the play, and 
then another party which claims to own the motion picture rights 
without specifying the extent of its interest in those rights. In do- 
ing this, the pleader renders his bill multifarious. TuUy v. Triangle 
Film Corp. (D. C.) 229 Fed. 297. Misjoinder of parties plaintiff, 
having no interest and to whom no relief can be granted, renders the 
bill of complaint multifarious and devoid of equity. Nor does it 
appear from the complaint that appellants hâve any community of 
interest in the causes of action alleged, and unless some such inter- 
est appears they may not be joined in one bill against the appellee. 
A bill States différent causes of action where it seeks to enforce dis- 
tinct and separate rights of différent plaintiffs or distinct and sep- 
arate liabilities of différent défendants. Haie v. AUinson, 188 U. 
S. 56, 23 Sup. Ct. 2^, 47 L. Ed. 380; 1 Corpus Juris, § 25, p. 1064. 

The Société des Films Menchen has no interest in any damages 
suffered by De Croisset and Le Blanc and likewise the latter hâve 
no interest in damages suffered by the Société des Films Menchen. 
There is no allégation in the bill of complaint that Cromelin was 
the author of the photoplay or that he ever acquired any proprietary 
rights therein from appellant. De Croisset or Le Blanc, whicla might 
hâve authorized him to procure a copyright registration upon the 
photoplay based upon the drama written by the author. 

It was held by this court that the registration by Cromelin, as 
pleaded in the complaint there under considération, was void for the 
reason that under the copyright no power exists in an agent to 
copyright anything, as that privilège is reserved to authors or pro- 
prietors. Société des Films Menchen v. Vitagraph Co., 251 Fed. 
258, 163 C. C. A. 414; Act March 4, 1909, c. 320, § 8, 35 Stat. 
1077 (U. S. Comp. Stat. § 9524). 

The bill does not allège that the Société des Films Menchen is a 
licensee, nor is it said to be an assignée, but it is alleged to be the 
sole and exclusive owner of the motion picture rights in the drama. 
Sueh ownership as alleged in the motion picture rights does not in- 
clude ownership of the copyrights in the drama. 

The attempt thus to join two causes of action, in which the appel- 
lants hâve not a common interest against the appellees, made the 
bill demurrable. The appellants, one having a proprietorship in the 
copyright, and the other having a proprietorship in an entirely dif- 
férent copyright, may not in one action sue défendants alleged to 
hâve infringed both copyrights. 

We are of the opinion that the District Judge correctly dismissed 
the bill without préjudice to proceeding upon the copyright granted 
in 1916. 

The decree is afîirmed. 



MILLER V. AMERICAN BONDINQ CO. 103 

(262 F.) 

MILLEE V. AMERICAN BONDING CO. 

(Circuit Court of Appeals, Third Circuit. January 8, 1920.) 

No. 2481. 

TJHrTED States <g=>67(3) — Claimants must join in onb action on contbac- 

T0B*8 BOND. 

Under Act Aug. 13, 1894, c. 280, as amended by Act Feb. 24, 1905, c. 778 
(Comp. St I 6923), providlng that materlalmen and laborers on public 
Works may join In one action on the contractor'B bond, etc., the right of 
action Is a new one, created by statute, and is not based on a common-law 
right of trial by jury, and a clalmant refusing to proceed to trial at the 
same time as the other claimants, without offering any reason to the 
trial court for hls refusai, is barred from subsequently malntalning a 
separate action on the bond. 

In Error to the District Court for the Middle District of Pennsyl- 
vania ; Charles B. Witmer, Judge. 

Action by C. E. Miller against the American Bonding Company. 
From an order striking the case from the trial list (256 Fed. 545), 
plaintiff brings error. Affirmed. 

R. W. Archbald, of Scranton, Pa., and James G. Glessner, of 
York, Pa., for plaintiff in error. 

Charles H. Welles, of Scranton, Pa., and F. B. Bracken, of Phila- 
delphia, Pa., for défendant in error. 

Before BUFFINGTON and WOOLLEY, Circuit Judges, and 
MORRIS, District Judge. 

WOOLLEY, Circuit Judge. An action was brought under the 
Act of August 13, 1894, c. 280, 28 Stat. 278, as amended by the 
Act of February 24, 1905, c. 778, 33 Stat. 811 (Comp. St. § 6923), 
on a bond given the United States by Mark P. Wells, contractor for 
the construction of certain public works, and American Bonding Com- 
pany (defendant-in-error), his surety. The plaintiflf was the United 
States for the use of Caesar Francini. C. E. Miller (plaintiff-in-er- 
ror) was one of several intervening claimants. 

At the trial, the use plaintiff and ail intervening claimants, except 
Miller, appeared and successfully prosecuted their claims to verdict. 
After verdict, and while a motion for a new trial was pending, Mil- 
ler ordered the case on the trial list for the trial of his claim, The 
trial judge struck it off pending review by this court on writ-of-er- 
ror, upon the theory, doubtless, that, if the judgment were reversed, 
he might allow Miller to litigate his claim with the others in the 
retrial of the case. In due course, the motion for a new trial was 
refused, judgment entered, and a writ-of-error issued. On hearing 
by this court, the judgment was affirmed as to ail claims except one, 
and was reversed as to that one on an error of the court in refusing 
binding instructions for the défendant. American Bonding Co. v. 
United States, 233 Fed. 364, 147 C. C. A. 300. As to that one claim, 
the court entered a formai order for a new trial. Slocum v. New 
York Life Insurance Co., 228 U. S. 364, 33 Sup. Ct. 523, 57 L. Ed. 

^zs>Foi other cases see came toplc & KEY-NUMBBK in aU Key-Numbered Dlgesta & Indexer 



104 262 FEDERAL REPORTER 

879, Ann. Cas. 1914D, 1029. Thereafter, the claîm was compromised 
by the parties and the action ended. 

More than two years after review by this court, and long after 
the judgment had been satisfied, Miller again ordered the case on 
the trial list. On the defendant's motion to strike it off, Miller 
took the position that there is nothing in the statute under which 
the case was brought which required him to prosecute his claim with 
the other intervening claimants in one trial, and that, in conséquence, 
he was entitled to hâve his claim adjudicated singly and at a separate 
trial before a jury of his own sélection. The court, thinking other- 
wise, struck the case from the list. This is the matter brought hère 
for review on this writ-of-error. 

The Act of August 13, 1894, provided that persons fumishing ma- 
terials and labor for the construction of public works, shall, after 
complying with certain formalities, be authorized to bring suit in 
the name of the United States for their use against the contractor 
and his sureties. This statute gave each of such persons a sep- 
arate and independent right of action on the bond, permitting as 
many suits against the surety as there were claimants, and as many 
trials as there were suits. This involved manifold inequities. It 
left claims of the United States on a parity with the claims of oth- 
ers; it permitted inequalities of recovery between claimants of the 
same class when the bond proved inadéquate; it afforded no oppor- 
tunity for contest by one claimant against the claim of another in 
preserving the security from diminution; it subjected sureties to 
multiplicity of suits and made possible divergent rulings by différent 
courts on the same issues, resulting in préjudice and confusion. To 
overcome thèse and perhaps other disadvantages arising out of this 
statute, Congress, by the amendatory Act of February 24, 1905, did 
two things, first, it assured to the United States priority in its claims, 
Illinois Surety Co. v. Peeler, 240 U. S. 214, 218, 36 Sup. Ct. 321, 
60 L. Ed. 609; and, second (while preserving the original right of 
action to materialmen and laborers), it provided: 

"That where suit is so Instltuted by a créditer or by creditors, orUy one 
action shaU fie irought, and any creditor may file his claim in such action 
and tie made partv thereto withln one year from the completlon of the work 
under said contract, and not later. If the recovery on the bond should be in- 
adéquate to pay the amounts found due to ail of sald creditors, judgment 
shall be given to each creditor pro rata of the amount of the recovery." 

It is dear from this amendment that Congress did not change 
the liability of sureties or withdraw from claimants their remedy on 
bonds for the construction of public works, previously provided by 
the Act of 1894; but changed simply the manner, and also the time, 
in which their remedy against sureties should be asserted. To over- 
come the inequalities and infirmities of the original statute, Congress 
intended, after the claims of the United States had been satisfied, to 
unité ail claimants in a single proceeding, A. Bryant Co. v. N. Y. 
Steam Fitting Co., 235 U. S. 327, Z2,7, 35 Sup. Ct. 108, 59 L. Ed. 253, 
to the end that, ail matters in controversy between ail claimants and 
the surety, as well as between the claimants themselves, arising out 



MILLER V. AMERICAN BONDINQ CO. 105 

(262 P.) 

of the obligations of the bond, should be litigated in one action, re- 
sulting in one recovery, in which, on the bond provirig inadéquate, 
distribution should be pro rata of the amount recovered. 

This was, without doubt, the gênerai intent of Congress. Wheth- 
er there is any exception to it, we are not called upon to décide, 
because, in this case, none was claimed. If Miller was entitled to 
a separate trial by a jury of his own sélection, or if he had a right to 
décline to submit his claim for trial with his co-intervenors, it could 
only hâve been because of some matter or circumstance addressed to 
the j'udgment or discrétion of the trial judge> taking him out of the 
gênerai provisions of the statute and placing him within some excep- 
tion of the statute. No such matter or circumstance was claimed by 
Miller. He did not even move for a continuance of the case. As 
shown in the opinion of the learned trial judge, what Miller did was 
this; — ^being represented by counsel in court 

"when the case was called for trial, after issue joined and the usual publica- 
tion of the list, [he] refused and neglected to submit his claim for adjudication 
îoithout apparent reason or excuse." 

Miller's action against this surety is not based on any right of 
action involving a common law right of trial by jury. It is based 
solely on the new right of action created by the statute "upon the 
terms named." Texas Cément Co. v. McCord, 233 U. S. 157, 34 
Sup. Ct. 550, 58 L. Ed. 893; Illinois Surety Co. v. Peeler, 240 U. S. 
214, 217, 36 Sup. Ct. 321, 60 L. Ed. 609. Thèse terms provide for 
one action for ail claimants, after the United States has been satis- 
fied, and one recovery for ail, under which distribution is made on 
the claims proved according as the security is adéquate or inadéquate. 
In this scheme of the statute, the necessary implication is, that there 
shall be one trial of the "one action." By refusing to submit his 
claim to trial in the manner and at the time afiforded by the statute, 
without offering to the trial judge any reason or excuse which might 
hâve removed him beyond its gênerai terms — as to the possibility of 
which we express no opinion — Miller waived the right of action 
which the statute gave him. As the right of action which Miller 
thus discarded could in no way hâve been revived and restored to him 
in the subséquent proceedings, it is not necessary to review those 
proceedings in search for irregularities involving error. 

The order of the court below must, therefore, be afRrmed. 



106 282 FEDERAL BSPORTEB 



GEINERAL FIREPROOFING CO. v. TBRAMI. 
(Clrcnlt Court of Appeals, Second Circuit December 19, 1919.) 

No. 73. 

1. SaUS €=sS2(3) — CORBESFONDIiNCI] ADMISSIBLE 017 QUESTION OF FABTIES TO 

OONTBAOT. 

On the question whether a contract of défendant to sell was wlth 
plaintlfF, or with the T. Company, mentloned In defendant's letter to 
plaintifl, and as against contention that a letter from plalntiff to défend- 
ant and said letter from défendant to plaintlff, together with a letter 
of crédit of a bank, constituted a closed contract between plaintlff and 
défendant for sale by défendant to plaintlff, held prlor and subséquent 
letters between défendant and the T. Company were admissible as throw- 
Ing light on the letters between plaintlff and défendant. 

2. Sales <@=>53(1)— Pabtiks to contbact question fob jxjbt. 

Whether a contract for sale was by défendant with plaintif?, or with 
the T. Company, held not a question to be determined by the court, con- 
strulng merely the two letters between plaintlff and défendant, but a 
question of fact for the Jury, on ail the correspondence, including prlor 
and subséquent letters between défendant and the T. Company, and the 
oral testlmony. 

In Error to the District Court of the United States for the South- 
ern District of New York. 

Action by Fumio Terami against the General Fireproofing Com- 
pany. Judgment for plaintifï, and défendant brings error. Reversed. 

William H. Griffin, of New York City (James M. Beck, of New 
York City, of counsel), for plaintifï in error. 

Elkus, Vogel, Gleason & Proskauer, of New York City (Joseph M. 
Proskauer and Wesley S. Sawyer, both of New York City, of counsel), 
for défendant in error. 

Before WARD, ROGERS, and MANTON, Circuit Judges. 

WARD, Circuit Judge. This is a writ of error to a judgment di- 
rected by the court in favor of the plairitiff on the merits, leaving to 
the jury only the question of the amount of the plaintiff's damages. 

[1, 2] There is no dispute that the défendant agreed to sell 3,000 
boxes of tin plate for export to Japan, but the question is whether 
the contract was made with Terami or with the Tsunoda Company, 
Incorporated. The complaint allèges that the contract was with Ter- 
ami, the plaintifï, while the answer allèges that it was with the Tsu- 
noda Company, though the plaintifï had an interest of some kind in it. 
The plaintifï ofïered in évidence two letters as foUows : 

"New York City, Aprll 26, 1917. 

"General Fireproofing Co., 395 Broadway, New York City— Gentlemen : I 
hâve now the pleasure of handing you an order for the following: 

"3,000 boxes of coke tin plate I.C.W. 

"20" X 14"— 112 sheets— 100 Ibs. at $9.713 per box f.o.b. mlIU. 

"Shlpments to be made durlng August and September, 1917. 

"I requested the Bank of Taiwan to issue a conflrmed letter of crédit for 
the above amount. In your favor, to be available against shipplng documents, 
which I believe you hâve duly received. 

"IVusting you will glve this order your careful attention, I remain, 

"Yours truly, P. Terami." 

4=>For other cases see eame toplc & KEY-NUMBBR In ail Key-Numbered Dlgesta & Indexe» 



GENERAL FIREPROOPINQ CO. V. TERAM 107 

(262 F.) 

"Aprll 27, 1917. 
"Mr. Fumlo Teraml, 233 Broadway, New York City. 

"Our B.O.P.O. X-780 (T-3348) 

"Dear Sir: We hâve received your letter of April 26th, wMch we under- 
stand is a confirmation of the letter order from the Tsunoda Company, In- 
corpora ted, dated April 19tli, and which called for the foUowlng: 

"3,000 boxes of I.O.W. tin plate 20x14—112 sheets, 100 Ibs. per box in tln- 
lined cases packed for export at $9,85 per box, f.o.b. New ïorU. The freight 
allowanee from Sparrows Point, Md., to New York, on thls order is 10%c. per 
100 Ibs., and an addltional allowanee of 3.2c. per 100 Ibs., which represents 
half of the différence between the freight rate from the Pittsburgh district and 
Sparrows Point to New York. 

"It is also understood that the conflrmed letter of crédit to which you refer 
In your letter Is the letter of crédit issued by the Bank of Taiwan, Limited, 
under date of April 23d, and applying on this same order from the Tsunoda 
Company. 

"We are glad tndeed to hâve been able to enter the order for this materlal, 
and sincerely trust we may continue our présent pleasant relations, 
"ïoura very truly, The General Fireprooling Company, 

"K. L. Brockway, Export Department." 

The défendant offered in évidence two earlier letters of April 17th 
and 19th; the latter being referred to in the letter of April 27th: 

"Aprll 17, 1917. 
"Attention of Mr. Brockway. 

"The General Flre Prooflng Company, 395 Broadway, New York — Gentlemen: 
We beg to confirm our verbal order to you of this momlng for 3,000 boxes 
of I.C.W. tin plate 20x14 — 112 sheets — 100 Ibs. in tln-lined cases packed for 
export, at $9.85 f.o.b. New York, wlth freight allowed from Pittsburg, Pa., 
to New York, if shipment is made to the West Coast direct from the mill. 
Shipplng instructions will be fumlshed you later. 

"You wlU recelve Instructions from us to-morrow In référence to payment 
for thèse goods, or letter of crédit. Thanking you for the quotation, and 
trustlng this may lead to considérable business between our flrms, we are, 
"Very truly yours, Tsunoda Company, Inc., 

"Tsunoda." 
"Aprll 19, 1917. 

"The General Fire Prooflng Company, 395 Broadway, New York City— 
Gentlemen: Referring to your favor of Aprll 17th and our letter dated April 
17th ordering 3,000 boxes of I.C.W. tin plate 20x14—112 sheets, 100 Ibs. per 
box, in tln-lined cases packed for export, at $9.85 per box, f.o.b. New York: 
AUow us to conflrm this order wlth the agreement made to-day as to a freight 
allowanee of 10^^ cents per hundred pounds from Sparrows Point, Md., and 3.2 
addltional allowanee. 

"Thia arrangement was entered Into with your Mr. Brockway, as we under- 
stood the materlal to be in the Pittsburg fleld or Yotmgstown, and freight 
allowanee from that point to New York would be made to us, and in figuring 
our quotation we figured this way, and the addltional 3.2 cents was allowed 
specially to cover the loss that would hâve been Incurred on the basis of 
freight allowanee from Sparrows Point, Md. 

"Thanking you very sincerely for your courtesy In this matter, and hop- 
Ing that thls may lead to large and continuous business between our firms 
we are, ' 

"Yours very truly, Tsunoda Company, Inc., 

"Tsunoda." 

Thèse two letters and letters subsequently written by the défendant 
to the Tsunoda Company were excluded on the ground that the let- 
ters of April 26th and 27th, together with the letter of crédit of the 
Bank of Taiwan, constituted a closed contract with Terami. 



108 262 FEDERAL REPORTEE 

We think the court should hâve admitted, not only thèse two let- 
ters excluded, but subséquent correspondence between the défendants 
and the Tsunoda Company, which were also excluded. The two letters 
threw light upon the letters of April 26th and 27th. Quite plainly the 
défendants wished to make it clear that they were under but one con- 
tract, and that contract was with the Tsunoda Company, as to which 
they were secured by the Bank of Taiwan's letter of crédit. Upon the 
two letters of April 26th and 27th, together with the letter of crédit, 
we cannot say that the contract was with Terami. It is true that sub- 
sequently the défendants, in letters to him and to the Tsunoda Company, 
spoke of the order for the tin plate as made by Terami through the 
Tsunoda Company, or as being on account of Terami, or of Terami's 
order through the Tsunoda Company, or that the plate was bought 
by the Tsunoda Company and sold to Terami. But their correspond- 
ence was continuously and consistently with the Tsunoda Company. 
The correspondence between the défendants and the Tsunoda Com- 
pany and Terami should hâve been admitted, so as to détermine from 
it, together with the testimony of the witnesses, whether the défend- 
ants' contract was with the Tsunoda Company or with Terami. The 
original order given by the Tsunoda Company disclosed nothing to 
show that it was acting for an undisclosed principal and, if it were, 
the défendants could insist upon the contract with the Tsunoda Com- 
pany, if made with it, whether it was buying for or on account of or 
as broker of Terami. Moore v. Vulcanite Co., 121 App. Div. 667, 106 
N. Y. Supp. 393. It was not a question to be determined by the court, 
construing merely the two letters of April 26th and 27th, but a ques- 
tion of fact, to be determined by the jury upon ail the correspondence 
and the testimony of the witnesses. 

The appellant has filed 235 assignments of error, and a brief of 221 
pages, citing a multitude of décisions. The exhibits, not printed in 
chronological order, are unusually confusing. Under thèse circum- 
stances, we shall say no more than the foregoing for the guidance of 
the court on a new trial. 

Judgment reversed. 



THE OLD KBLIABLE. 

tlHLIABLE TOWING CO. et al. v. LITTLB KANAWHA LOG & TIE3 (X>. 

(Circuit Court of Appeals, Fourth Circuit October 7, 1919.) 

No. 1724. 

1. TOWAGE <®=>11(11) — ^TlTO EESPONSIBLE FOB INSECUBE MOOEINO OF TOW. 

A tug owner, contracting to tow loaded barges up Ohlo river, and com- 
pelled by state of water to temporarily tie them up at an Intermediate 
port, held responslble for tlieir being properly secured, and liable for 
loss due to thelr breaklng away on a rise in the river, owing to Insuffi- 
clency of the Unes. 

2. TOWAGE iS=>ll(ll) — Tua NOT UABLE FOR L0S3 OF BABGB LEFT IN POSSESSION 

OF OWNEB. 

A tug, contracting orally to tow three barges on Ohlo river, with no 
tlme limlt, which took two, leavlng the other for a second trlp, held not 

^sjFor other cases see same topic & KEY-NUMBER in ail Key-N umbered Disests & Indexe* 



THE OLD EELIABLE 109 

(262 F.) 

llable for loss of the third barge, which remained In possession et the 
owner, by breaking from its mocrings during a rise of the river. 

8. TOWAGE ®=3l5(3) — ^TUG HELD LIABLE FOR SALVA&E SERVICE TO, BUT NOT 
FOB VALUE OF, BABQE. 

Where a barge broke adrlft through négligence of a towlng tug, but 
was salvaged by the owner vj'lthout serious damage, the tug was properly 
charged witb expense of salvage, but could not be required to pay for 
the barge, 

4. TOWAGE <g=5l5(3) MEASUEE of DAMAGES FOE LOSS OF TOW STATED. 

In admiralty, the measure of recovery for goods lost is the priée at place 
of purehase, together with frelght, Insurance, and other charges of trans- 
portation. 

5. Towage <s=3l5(3) — Allowance of inteebst in case of injuby to tow 

DISORETIONAEY. 

Refusai of the court to allow Interest on recovery from a towing tug for 
loss of property held withln its discrétion. 

Appeal from the District Court of the United States for the Nor- 
thern District of West Virginia, at Parkersburg; Alston G. Dayton, 
Judge. 

Suit by the Little Kanawha Log & Tie Company against the steam- 
boat Old Reliable (the Rehable Towing Company, claimant) and the 
Fidelity & Deposit Company of Maryland. Decree for hbelant, and 
respondents appeal. Modified. 

See, also, 256 Fed. 112. 

l^wrie C. Barton, of Pittsburgh, Pa. (George W. Johnston, of Par- 
kersburg, W. Va., on the brief), for appellants. 

Reese Blizzard, of Parkersburg, W. Va., for appellee. 

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges. 

WOODS, Circuit Judge. In this libel for breach of a towing con- 
tract the decree of the District Court was in favor of the libelant. In 
October, 1917, Reliable Towing Company made an oral contract with 
the Little Kanawha Log & Tie Company for its tug, Old Reliable, to 
tow three barges loaded with cross-ties iÉrom Parkersburg, W. Va., to 
McKeesport, Pa. As no time limit was specified, the contract implied 
performance within a reasonable time, considering the distance, the 
speed of the vessel, the stage of the water, and other circumstances. 
The Old Reliable, not having power to tow the three barges at once, 
took the barges No. 68 and No. 131 in tow, leaving the third, No. 111, 
for another trip. Owing to the stage of the water the dams above were 
down, so that the barges could not at the time be towed above Sisters- 
ville. They were tied up there to await more favorable conditions. 
Temporary stop and delay at Sistersville were expected by the owner 
of the barges, for it sent a man there to ask that the tug be sent back 
for the third barge. Under the conditions stated there was no breach 
of contract or négligence in stopping the barges at Sistersville. 

The barges were tied abreast at Sistersville with insufficient Unes, and 
consequently a sudden and great rise in the river broke them away. 
One of them, 131, was caught by libelant, and salvaged with little 

£=3For other cases see same toplc & KEY-NUMBER in ail Key-Numbered Dlgests & Indexes 



110 262 FEDERAL EBPOETER 

damage; the other, 68, struck a pier of the Parkersburg bridge and 
was lost, with nearly ail of its cargo. Both parties allège négligence 
in failing to securely tie the barges at Sistersville, and each imputes 
the duty and the négligence to the other. 

[1] The owner of the barges and cargo had under the contract no 
responsibility for them after they were taken in tow by the Old Re- 
liable. The facts that it lent Unes to be used in making fast the barg- 
es, either at Sistersville or McKeesport, and that Frazier, one of its 
"subordinate employés, assisted in tying them at Sistersville, do net 
prove that it assumed responsibility for the security of the barges. 
It did not represent the lines to be sufficient, and its assisting employé 
was not in charge of the work for it, nor authorized to waive any of its 
rights. It is not pretended that there was any considération for the 
alleged assumption of responsibility. The correspondence imme- 
diately after the loss shows conclusively that the Towing Company 
attached no blâme to the libelant. The évidence seems to us con- 
clusive that the obligation was on the master of the Old Reliable to 
make the barges fast, that he did not use due care, and that the loss 
resulted from his négligence in this respect. 

[2] The third barge. No. 111, which never left the possession of 
the libelant, was carried away by the force of the ice movement in the 
river and became a total loss. The breach of the contract to tow was 
not the proximate cause of the loss, and therefore the Old Reliable 
cannot be held for the loss and the salvage. St. L., I. M. & S. Ry. Co. 
v. Commercial Union Ins. Co., 139 U. S. 223, 237, 11 Sup. Ct. 554, 
35 L. Ed. 154. 

[3] There was error in the allowance of the damages. Barge No. 
131 was salvaged at a cost of $50, properly chargeable to respondent, 
but it was not mater ially damaged. There was no conversion of the 
barge by respondent, nor do we find évidence of abandonment by 
libelant to the respondent ; its value, $400, should not hâve been charg- 
ed to respondent. 

[4] The value of the ties at place of destination was charged to re- 
spondent, 93 cents for No. 1, and 83 cents for No. 2. The profit, which 
we understand to mean the différence between the original cost, to- 
gether with freight and Insurance, other costs of transportation, and 
the selling price, was to be 15 cents on each tie. In admiralty the meas- 
ure of recovery for goods lost is the price at the place of purchase, to- 
gether with freight, Insurance, and other charges of transportation with- 
out profit. The profit, 15 cents each, should be deducted, and the ties 
charged at 78 cents for No. 1 and 68 cents for No._2. 

[5] The District Judge, in the exercise of his discrétion, refused to 
allow interest, and we see no sufficient ground to say that his discrétion 
was abused. The Maggie J. Smith, 123 U. S. 349, 356, 8 Sup. Ct. 159, 
31 L. Ed. 175 ; Pennsylvania R. R. Co. v. Naam Looze Vennoot 

Schap, 261 Fed. 269, C. C. A. , Fourth Circuit, filed July 1, 

1919. 

The following corrected statement will show the amount for which 
the decree will be entered: 



BBITTON V, UNION INY. CO. 111 

ce: F.> 

2,335 No. 1 tles @ 78 c. each '. $1,821.30 

290 No. 2 ties @ 68 c. each 197.20 

$2,018.50 

Less 249 tles salvaged, of the value of 78 c. each $194.22 

Cost of salvage, 25 c. each 62.25 

131.97 

$1,886.53 
Value of barge 68 400.00 

$2,286.53 

Salvage of barge No. 131 $ 50.00 

Cost of unloadlng tles from same 312.48 

C!08t reloadlng 191.14 

553.62 

$2,840.15 

2,250 ft. Unes $ 50.00 

Cash advanced for coal 81.00 

131.00 

Total due Ubelant from Old Rellable $2,971.15 

Modilîed. 



BRÏTTON V. UNION INV. CO. * 
In re P. B. MANN-ANCHOR CO, 
(Circuit Court of Appeals, Bighth Circuit November 5, 1919.) 
No. 5289. 

1. BANKKtTPTCY <@=s>161(l), 188(3), 311(5) — Lendkb secubed bt invalid wake- 

HOUSE KECBIPTS KNTITLED TO EQUITABLE LIEN ; PAYMENT OP EQUITABLE LIEN 
NOT PEEFEBENCE, WHEEE BASIS OF LIEN MOEB THAN FOUR M0NTH8 PBIOB TO 
BANKEUPTOY. 

As against the trustée In bankruptcy, who stands in no better position 
than the bankrupt, one who made loans to bankrupt, secured by instru- 
ments representing the grain handled by it, whlch more than four months 
before the adjudication were replaeed by one receipt, covering grain in 
various éleva tors in several states, that dld not comply wlth the state 
laws goveming warehouse receipts, was entitled to an équitable lien; 
8o that, even if the contract was unenforceable, the grain having wlth con- 
sent of the parties been sold and the proceeds turned over to the credi- 
tor before the bankruptcy proceedings were initlated, thus making the 
pledge effective by possession, the situation vrtll not be disturbed, and 
the créditer need not, as a condition to allowance of its claim for bal- 
ance due, retvirn the money thus recelved. 

2. Bankkuptct ®=>161(1) — Patment eelates to time of secubitt agbee- 

MENT as BEGAEDS PEEFBKBNCE. 

Sale of property of bankrupt on which a créditer had an équitable lien, 
and payment of the proceeds to the créditer, though within four months 
of bankruptcy, for préférence purposes relate back to the date of the con- 
tract which they were designed to and did fulflll. 

3. Bankeuptct €=»340 — Bueden of peoof as to pbefebence on trustée. 

Even if, to prevent a préférence, there should be absolute identity be- 
tween grain In bankrupt's elevators pledged and that of the same kind, 

®=»For otber cases Ree same topio & KEY-NUMBBR in aU Key-Numbered Dlgeata & Indexes 
•Certlorarl denled 251 U. S. — , 40 Sud. Ct. 346, 64 L. Ed. — . 



112 262 FEDERAL KBPORTEB 

quantlty, and quallty wMch was sold, wlth payment ot the proceeds to 
the secured créditer, the trustée had the burden oî showing absence ol 
identity. 
i. Bankruptcy <g=164 — Identity of pboceeds or pledged peopebtt and 

MONBT PAID PLEDGBE NOT NECES8AEY TO PEEVENT PEErERENCB. 

No préférence can be predlcated on the fact that the money received 
from sale of grain pledged by bankrupt was not kept physically isolated 
till paid to the secured créditer, but waa deposited in bank with other 
money of bankrupt, and a check for the amount Immedlately given to the 
creditor, 

■ Appeal from the District Court of the United States for the Dis- 
trict of Minnesota; Wilbur F. Booth, Judge. 

In the matter of the P. B. Mann-Anchor Company, bankrupt. Order 
of the référée, holding that certain payments to the Union Investment 
Company, a creditor, constituted a préférence, and that it was not 
entitied to allowance of its claim till the money so paid was returned, 
was reversed by the District Court, and Walter F. Britton, trustée 
in bankruptcy, appeals. Affirmed. 

Todd, Fosnes, Sterling & Nelson, of St. Paul, Minn., for appellant. 
Lancaster & Simpson and R. G. Patton, ail of Minneapolis, Minn., 
for appellee. 

Before SANBORN, CARLAND, and STONE, Circuit Judges. 

STONE, Circuit Judge. Appeal from decree of District Court, on 
pétition for review, reversing order of référée in bankruptcy which 
declared certain payments to appellee to be préférences. 

[1,2] The undisputed facts are that the bankrupt, a grain firm 
owning a line of elevators, had for some time been borrowing from 
appellee. Thèse loans were secured by various instruments supposed 
to represent the grain handled by appellee, such as bills of lading and 
receipts. More than four months before the bankruptcy adjudication 
thèse receipts had been replaced by one receipt covering grain in vari- 
ous elevators in several states. The présent controversy revolves 
around the proceeds of grain covered by this receipt, which grain was 
sold by a creditors' committee and the proceeds tumed over to appel- 
lee before, but within four months of, the bankruptcy proceedings. 
It is admitted that this receipt did not comply with the state laws gov- 
erning warehouse receipts; therefore no reliance is placed upon it 
as a warehouse receipt. Appellee's contention is that its course of 
dealing in connection with its loans, made upon the faith of the receipts 
replaced by this last one, coupled with the later réduction and reali- 
zation upon the pledged property before the bankruptcy proceedings 
began, established its right to an équitable lien on the grain covered 
thereby. This position is sound, as against a trustée in bankruptcy, 
who stands in no better position to avoid an équitable claim of this 
character under thèse circumstances than the bankrupt itself. 

The parties to this transaction, with no thought of forbidden préf- 
érence, intended that the grain covered by the receipts should be a se- 
curity for the debt. They sought to impound it for that purpose 
through the instrument delivered. Upon the faith of this security 

^=9For other cases Bee same topio & KEY-NUMBER iu aU Key-Numbered Digests & laàexem 



BRITTON V. UNION INV. CO. 11 '"^ 

(262 F.) 

loans were procured from appellee. As said by Mr. Justice Holmes, in 
the case of Sexton v. Kessler, 225 U. S. 90, 96, 32 Sup. Ct. 657, 658 
(56 L. Ed. 995): 

"So far as the interprétation of the transaction is concerned it seems to us 
tliat there Is only one fair way to deal with it The parties were business 
men acting without lawyers and in good faith attemptlng to create a présent 
Becurity out of specified bonds and stocks. Their conduct should be construed 
as adopting whatever method consistent with the facts and with the rights 
reserved is most fltted to accomplish tlie resuit. * * * So the question is 
whether anything in the situation of fact or the rights reserved prevents the 
intended création of a right in rem, or at ieast one that is to be preferred to 
the claim of the trustée. The bankruptcy law by itself does not avoid the 
transaction." 

The so-called receipt is no receipt, because it fails to comply with 
the requirements of the state statutes governing grain warehouse re- 
ceipts, and it would form no barrier to a proper receipt covering the 
same grain issued to an innocent person. But it is a part of the évi- 
dence of the actual understanding and arrangement between the par- 
ties. The grain was, with the consent of appellee and the bankrupt, 
sold by the committee, and the resulting f unds tumed over to it by the 
committee, to be applied to its debt under the above contract. In es- 
sence such transactions amount to a réduction to possession of the 
grain, and a realization thereon by it. This entire transaction was fuUy 
consummated before the bankruptcy proceedings were initiated. Al- 
though they took place within four months of bankruptcy, yet, for préf- 
érence purposes, they relate back to the date of the contract which 
they were designed to and did fulfill. Security Warehousing Co. v. 
Hand, 206 U. S. 415, 423, 27 Sup. Ct. 720, 51 L. Ed. 1117, 11 Ann. 
Cas. 789. Even if the contract were unenforceable, which we do not 
décide, as contended for by appellant, because the receipt failed to 
conform to the state laws governing grain warehouse receipts, yet it 
was not inherently vicions, was made and carried out in good faith, 
and had been fully performed before the bankruptcy proceedings began. 
Equity will not disturb such a situation. The saving élément hère, 
which prevents application of the state statutes invoked by appellant, is 
that possession of the pledge became effective through possession of 
the money for which the same was sold by consent of pledgor and 
pledgee, with the knowledge that such disposition was to be made of the 
money. 

[3, 4] Appellant contends that the identity of the grain pledged was 
not preserved nor proven. Because of the character of grain, it is 
rare that receipts, pledges, or contracts with warehousemen regard- 
ing it, attempt to segregate the particular grain. The needs of ail 
parties are usually met by description of the warehouse, or réceptacle 
therein, the kind, quantity, and quality of grain. The contract hère 
was of this character. The évidence establishes that the grain sold by 
the committee met the description of this pledge. There is no testi- 
mony showing that it was not the identical grain, if absolute identity 
be required. Nor is it material that the money received for this grain 
was not kept physically isolated until paid to appellee. It was deposit- 
262 r.— S 



114 262 FEDERAL EBPOETEB 

ed in a bank with other money, and promptly checked out to appellee, 
so there is no question that the identical amount received for this 
grain was in the bank and paid the check. 

The judgment o£ the D'Strict Court is affirmed. 



CAMP BIRD, Limited, T. HOWBBiRT, Collector of Internai Revenue.* 
(Circuit Court of Appeals, Eighth Circuit November 17, 1919.) 

No. 4939. 

1. Intxbitai, sevenue €=93S — Bbcovebt bt oobpobation of iixeoai, excise 

TÀX PAID. 

On recovery of excise tax lUegalIy coUected from a corporation, the 
penalty and interest exacted for dellnquency in maklng payment under 
Act Aug. 5, 1909, § 38(5) held also recoverable. 

2. Intkbnal bevenue (g=338 — Recoveby by oobfobation of excessive ex- 

cise TAX. 

A minlng corporation held entltled to recover excessive excise taxes 
pald under Act Aug. 5, 1909, § 38, because of refusai of the Commlssioner 
to make proper allowance for dépréciation of equipment 

In Error to the District Court of the United States for the District 
of C!^lorado; Jacob Trieber, Judge. 

Action by Camp Bird, Limited, against Frank W. Howbert, Col- 
lector of Internai Revenue, District of Colorado. Judgment for défend- 
ant, and plaintiff brings error. Reversed. 

See, also, 249 Fed. 27, 161 C. C. A. 87. 

William Story, Jr., of Sait Lake City, Utah (William V. Hodges, 
James G. Rogers, and George L. Nye, ail of Denver, Colo., on the 
brief), for plaintiff in error. 

John A. Gordon, Asst. U. S. Atty., of Denver, Colo. (Harry B. 
Tedrow, U. S. Atty., of Boulder, Colo., on the brief), for défendant 
in error. 

Before CARLAND and STONE, Circuit Judges, and ELLIOTT, 
District Judge. 

CARL/AND, Circuit Judge. This is an action at law brought by the 
Camp Bird, Limited, hereafter plaintifï, to recover of Howbert, col- 
lector of internai revenue for the district of Colorado, hereafter de- 
fendant, the amount of certain taxes assessed against the plaintifï under 
the Excise Tax Law of 1909 (Act Aug. 5, 1909, c. 6, 36 Stat. 112), for 
the years 1909, 1910, and 1911, which taxes were paid by plaintifï 
under protest The trial court rendered judgment in favor of the de- 
fendant, and the plaintiff sued out a writ of error. The case was before 
us at a former term, and this court affirmed the judgment below. 249 
Fed. 27, 161 C. C. A. 87.. The case was then removed by the plaintiff 
to the Suprême Court by writ of certiorari. While the case was pend- 
ing in that court, one of the Assistant Attorneys General of the United 
States appeared therein and caused the judgment of affirmance by 

®=3For other cases see same toplc & KEY-NUMBBE in ail Key-Numbered Dlgeats & Indeiea 
•Certiorari denied 251 U. S. — , 40 Sup. Ct. 344, 64 L. Ed. — . 



CAMP BIKD V. HOWBEET 115 

(262 F.) 

this court to be reversed on confession of error. Pursuant to said 
reversai a mandate of the Suprême Court issued to this court for fur- 
ther proceedings in conformity to the judgment of the Suprême Court. 

The only question decided by this court at the former hearing was 
that the action of the plaintiff was barred by section 3225, U. S. Rev. 
Stat. (Comp. St. § 5948) ; this being also the ground upon which the 
trial court denied a recovery. There exists no record as to what the 
error was that the Assistant Attomey General conf essed. We conclude, 
however, that as the bar of the statute was the only question decided 
by this court it is in regard to that question we erred in the opinion 
of the Assistant Attorney General, and we further conclude that, as 
the case was remanded by the Suprême Court to this court for further 
proceedings, instead of the District Court, it is our duty to proceed 
and render such judgment on the merits as this court shall deem prop- 
er, regardless of the bar of the statute. Lutcher & Moore Lumber 
Co. V. Knight, 217 _U. S. 257, 30 Sup. Ct. 505, 54 L. Ed. 757. Before 
proceeding to consider the case on the merits, we deem it proper to 
say that the power to review the décisions of this court is an important 
one, and ought to be left as a gênerai rule to the tribunal established 
by law for that purpose. The case in the court below was tried by the 
court, a jury being waived. After hearing the évidence the court made 
findings of fact and conclusions of law, upon which judgment was en- 
tered in favor of the défendant, for the reason that under the facts 
found plaintilï's action was barred by section 3225, supra. 

[1, 2] Eliminating the question as to the bar of the statute, which 
we must assume upon the record was erroneously decided by this 
court, although no appellate court has passed upon the question, the 
assignments of error by the plaintiff are as follows: (1) The court 
erred in deciding that no penalty could be recovered by the plaintiff, 
as the taxes were not paid within the time required by law. (2) The 
court erred in rendering judgment for the défendant, as the facts 
found entitled the plaintiff to judgment for the amount of the taxes 
illegally collected. In regard to the first assignment of error, we are 
of the opinion that, where an illégal tax is paid, the fact that it was not 
paid within the time allowed by law will not prevent the taxpayer from 
recovering the penalty of 1 per cent, per month paid by him for the 
nonpayment of the illégal tax, for, if the tax was illégal, it was never 
due, and therefore the penalty was as much unauthorized as the tax 
itself. In regard to the second assignment of error, the record shows 
that the dépréciation in the value of the mine was caused by the remov- 
al of ores, and that the amount of dépréciation allowed by the Com- 
missioner of Internai Revenue for each year was on mine equipment. 
The court further found as follows : 

"That, If the plaintiff Is entitled to recover under the law, the amounts are 
as follows: For the year 1909, for dépréciation of equipment, $56,907.20; dé- 
préciation of value of mine, $917,697 ; total dépréciation for the year 1909, 
$974,604.20. The amount allowed by the Commissloner for dépréciation to be 
deducted, $40,615, leaves the net dépréciation not allowed $933,989.20, and 
the tax of 1 per cent collected on that amount was $9,339.89. For the year 
1910, the court flnds the dépréciation to be, on equipment, $56,907.20; of the 
value of the mine, $568,129, as claimed In its retum; total dépréciation, 



116 262 FEDERAL REPOKTER 

5625,036.20. The amount allowed by the Commissloner to be deducted $40,615, 
leaves the amount of déprédation in value for wMch it would net be liable to 
taxation $584,421.20, and the 1 per cent, tax collected on that excessive as- 
sessment was ?5,844.21. For the year 1911, the court flnds the depredationa 
of the value of the mine were: On equipment $56,907.20; value of mine, 
$617,789.00; total, $674,696.20. The amount allowed and deducted by the 
Commissloner for dépréciation, $40,615, leaves the amount of déprédation not 
allowed by the Commissloner to be $634,081.20, the 1 per cent, tax on which 
was paid by the plalntiff amounted to $6,340.81." 

It will be seen from thèse findings of fact that the court found 
that there was a dépréciation in the equipment of the mine for each 
of the years 1909, 1910, and 1911, amounting to $56,907, which was 
$16,292.20 each year more than was allowed by the Commissioner ; his 
allowance being $40,615. This would make an overassessment of $16,- 
292.20 each year, which at 1 per cent, would make an illégal tax of 
$162.92 per year, or $488.76 for the three years. AU the remaining 
excess taxes found to be due by the trial court relate to the déprécia- 
tion in the value of the mine caused by the exhaustion of ore. Since 
the case was tried in the court below the cases of Von Baumbach v. 
Sargent Land Co., 242 U. S. 503, 37 Sup. Ct. 201, 61 L. Ed. 460, U. S. 
V. Biwabik Mining Co., 247 U. S. 116, 38 Sup. Ct. 462, 62 L. Ed. 1017, 
and Goldfield Consolidated Mines Co. v. Scott, 247 U. S. 126, 38 Sup. 
Ct. 465, 62 L. Ed. 1022, hâve been decided, and thèse cases hold that 
in no accurate sensé can such exhaustion of the body of the ore be 
deemed dépréciation. There being no other question for détermina- 
tion, our opinion is that the judgment of the court below must be 
reversed, and the case remanded to that court, with directions to enter 
judgment upon the facts found in favor of the plaintifï for $488.76, 
with interest at 8 per cent, from the time the illégal payments were 
made, and also the penalty of 1 per cent, per month paid on said illégal 
tax ; and it is so ordered. 



HUFFMAN V. PAIGE-DETROIT MOTOR CAR CO. 

PAIGE-DETEOIT MOTOR CAR CO. v. HUFFMAN. 

(Circuit Court of Appeals, Eighth Circuit. December 19, 1919.) 

Nos. 6330, 5332. 

1. PEINCIPAI, and agent <©=33 — CONTRACT BT MOTOE CAB MANTJFACTtTEHat 

GIVING EXCLUSIVE EIGHT TO SEIX IN SPECIFIED TEEBITOET TEEMINABIJ! AT 
WILL. 

A contract whereby manufacturer of motorcars granted plaintifC ex- 
clusive right to sell cars in a si)eclfled territory, but which did not ob- 
llgate plaintifC to buy or défendant to sell any speeified number of cars 
at any given priée, and provided for termination if the manufacturer 
should belleve plaintiff was not diligent in selling cars, eta, may be ter- 
niinated by the manufacturer at will. 

2. Peincipal and agent ®=>33 — Manufaotubeb of uotob cabs who tï^b- 

MINATED PLAINTIFF'S AQENCY CONTRACT NOT LIABLE FOB ENTICINQ AWAY 
PLAINTIFF'S SUBAGENTS. 

Where the contract, giving plaintiff exclusive right to sell motor cara 
in a specifled territory, was terminated by the manufacturer, lield, that 

@=3For other cases see Eame toplc & KEY-NUMBEU in ail Key-Numbered DlgesU & Indexes 



HUFFMAN V. PAIGE-DETEOIT MOTOB CAE CO. 117 

(262 F.) 

plaliitiff, who had appointed subagents, could not recover against the 
manufacturer for enticing away hls subagents, where such recovery was 
based on the supposed wrongful cancellation of the principal contract, 
whlch, however, was terminable at the will of the manufacturer. 

In Error to the District Court of the United States for the Dis- 
trict of Nebraska ; Joseph W. Woodrough, Judge. 

Action by William L. Huffman against the Paige-Detrolt Motor 
Car Company. There was a judgment for défendant, after demurrer 
was sustained to each count of the pétition, and plaintiff brings er- 
ror, and défendant assigns cross-errors, based on the refusai of its 
motion to quash service of summons. Affirmed. 

Sidney W. Smith, of Omaha, Neb. (E. G. McGilton, of Omaha, 
Neb., on the brief), for plaintiff. 

Charles B. Keller, of Omaha, Neb., and Sherwin A. Hill, of Dé- 
troit, Mich. (George Doane Keller and Howard H. Baldrige, both 
of Omaha, Neb., Charles B. Warren, William B. Cady, and San- 
ford W. Ladd, ail of Détroit, Mich., on the brief), for défendant. 

Before HOOK and STONE, Circuit Judges, and AMIDON, Dis- 
trict Judge. 

HOOK, Circuit Judge. This was an action for damages by Huff- 
man against the Paige-Detroit Motor Car Company, a corporation 
of Michigan. The first count of his pétition is for a breach of a 
written contract between them by its wrongful cancellation prior to 
the specified date of expiration. The second count is for enticing 
away plaintiff's subagents in the automobile business. The trial court 
sustained a demurrer to each count for its failure to state a cause 
of action, and to both for misjoinder. A judgment for défendant 
followed. There was a third count in the pétition, but it is not now 
in controversy. 

[1] By the terms of the contract the défendant granted to the 
plaintiff the exclusive right to sell Paige automobiles in Nebraska 
and parts of lowa and South Dakota. Voluminous provisions defined 
the basis for future dealings between the parties and their responsibil- 
ities to each other and to third persons. Except for an attempt to 
make their future relation purely that of vendor and purchaser, and 
their transactions wholly interstate in character, the contract is much 
like one of agency. This aspect of it is emphasized by the control 
which défendant reserved over the activities of the plaintiff through 
provisions for cancellation to which référence will presently be made. 
The défendant did not obligate itself to sell, nor plaintiff to buy, any 
specified quantity of automobiles, nor was a determinable quantity 
fixed in a mutually binding way by the requirements of an established 
business. The défendant was expressly exempted from such an ob- 
ligation and from adhérence to the schedule of priées and discounts 
set forth. It was free to décline shipments under the contract, and 
also free to fix and change priées at will. The contract specified a 
time when it expired by limitation. The fîrst count of the pétition 
charged that prior to that time the défendant "without just cause 



118 262 FEDBRÂL BBPORTEB 

terminated and cancelled said contract." But aside from the provi- 
sions above noted, indicating a lack of mutuality of obligation, the 
contract expressly reserved to défendant the right of cancellation 
when iri its opinion the plaintiflf was not working the territory to the 
best advantage. By another clause it was provided that, if the de- 
fendant "believes that the dealer [the plaintiflf] is not properly and 
diligently pushing the sale of its cars, it hereby reserves the right at 
its élection, and without making itself liable in any manner for any 
claim or action for damages, * * * ^q cancel and terminate this 
agreement. * * * " It is quite manifest that the contract merely 
furnished a basis for future dealings to be observed no longer than 
was mutually satisfactory. There was no hard and fast commitment 
of either party, if he chose to break away. Oakland Motor Car Co. 
V. Indiana Automobile Co., 121 C. C. A. 319, 201 Fed. 499; Velie 
Motor Car Co. v. Kopmeier Motor Car Co., 114 C. C. A. 284, 194 
Fed. 324. 

[2] In the second cause of action, plaintifï avers that when the 
contract with défendant was made he had a valuable selling organiza- 
tion in the territory described, and that he accordingly made con- 
tracts with ail his subagents to handle defendant's product; that de- 
fendant canceled its contract with him without just cause, and will- 
fully and maliciously induced and enticed his subagents to sever and 
discontinue their relations and break their contracts with him. Fair- 
ly construed this complaint seems to rest upon the supposed wrong- 
fui cancellation of the principal contract between plaintiff and de- 
fendant. In that view it is obvious that no cause of action is stated. 
The resuit complained of ensued from an authorized lawful act and 
nothing is gained by the use of the terms willfully and maliciously. 
It may be observed that the record, aside from the face of the péti- 
tion, indicates that the terms of thèse subcontracts were like those 
of the principal contract between plaintifï and défendant; that is 
to say, provisional arrangements at will. Upon a condition like that, 
see Triangle Film Corporation v. Artcraft Pictures Corporation, 250 
Fed. 981, 163 C. C. A. 231. But it is enough to say that no cause 
of action is stated for a wrongful or malicious interférence by de- 
fendant in the contract relations between other persons. The above 
conclusions upon the averments of the pétition make it unnecessary 
to consider whether the two causes of action were improperly joined. 

By a motion to quash the service of summons, défendant raised 
a question of jurisdiction, asserting that it was not doing business 
in Nebraska, where the action was brought, and that the man per- 
sonally served there was not its managing agent. We think that the 
proofs, which need not now be recited, warranted the déniai of the 
motion by the trial court. 

The judgment is affirmed. 



HOWEIili V. DELEWABE, L. & W. E. CX). 119 

C262 F.) 

HOWELL V. DELAWARE, L. & W. B. CO. THE DUNELLBN. THE 
CHAPIN. THE SCOTIA.* 

(Circuit Court ot Appeals, Second Circuit December 10, 1919.) 

No. 48. 

1. Collision iS=>70 — New York City Chaetee rule as to mooked vessels 

can be xnvoked only by vessels leaving or entebing slips. 

New York City Charter, § 879, providing that vessels shall not lie 
moored at pier ends, exeept at their own risk, Is for the beneflt only of 
vessels entering or leaving adjacent slips, and eannot be invoked in a 
contest between several barges moored together at the end of a pier. 

2. Collision ®=>70 — Pieb end chabter reoulation additional to otheb 

EULES of navigation. 

New York City Charter, § 879, regulating the mooring of vessels at pier 
ends, does not render obsolète, but Is additional to, other rules of navi- 
gation and maritime conduct, whether founded upon Inland Rules or 
upon accepted gênerai custom. 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

I/ibel by John S. Howell against the Delaware, Lackawanna & West- 
ern Railroad Company, in wrhich the barge Dunellen, her tackle, etc. 
(the Central Railroad of New Jersey, claimant), the barge Chapin, her 
tackle, etc. (the New York Central Railroad Company, claimant), and 
the steam lighter Scotia, her engines, etc. (McAllister Bros., claimants) 
were made parties under the fifty-ninth rule in admiralty. From an 
adverse decree, the claimant of the barge Chapin appeals. Affirmed. 

Action was originally brought against ^the Delaware, etc., Railroad Com- 
pany alone; the other parties hâve been brought in under the flfty-ninth rule 
(29 Sup. et xlvl). 

In daylight, and weather whlch requires no considération, llbelant's scow 
Lex lay fast to the outer end of Pier 33, East River. Outslde of her lay the 
barge Dunellen, and outside of the latter vessel the barge Chapin. The Lex 
was under charter to the Delaware, etc., Company, and it was that company 
which had placed her at the pier end. 

The steam lighter Scotia came out of the slip between Piers 33 and 32, and 
in so doing collided with the Chapin. The blow caused ail three boats at 
the pier end to break loose, and the Lex recelved the damages for which this 
action was brought against the charterer alone. The charterer admltted 
liabillty because of certain agreements in the charter party. 

Thereupon said charterer (the Delaware, etc., Company) brought In the 
Dunellen and the Chapin, alleging as faults (substantlally) : (1) That thèse 
boats had moored outslde of the Lex at ail; and (2) that in so moorrag they 
had negllgently protruded Into and blocked up the approaeh to and exit from 
the slip out of which the Scotia desired to go. The Chapin then brought In 
the Scotia, alleging faults not necessary to recite. 

The trial judge held that the Injuries to the Lex were the direct resuit of 
the Chapin's improperly obstrueting the egress of the Scotia from her slip, 
held the Chapin primarily at fault, and exonerated the Lex, Dunellen, and 
Scotia. Tlius in effect the Delaware, etc., Company succeeded in shifting its 
contractual liabillty as charterer to the Chapin as a tort-feasor, although 
under the decree the charterer remained secondarily responsible. 

From this decree the claimant of the Chapin appealed, assignlng (in sub- 
stance) for error (1) that the proxlmate cause of disaster was the faulty 
navigation of the Scotia ; and (2) that the Dunellen and Lex should hâve been 
found at fault for lying at the pier end in violation of section 879 of the 
Charter of the City of New York. 

e=5For other cases see same topic & KBY-NUMBER in ail Key-Numbered Digests & Indexes 
•Certlorari denied 251 U. S. — , 40 Sup. Ct. 336, 64 L. Ed. — , 



120 262 FEDERAL EEPOETBB 

Harrington, Bigham & Englar, of New York City (T. Catesby Jones 
and I. A. Washbume, both of New York City, of coûnsel), for appel- 
lant The Chapin. 

Marsh & Wever, of New York City (Charles C. Marsh, of New York 
City, of counsel), for appellee Howell. 

Douglas Swift and E. W. Leavenworth, both of New York City 
(J. E. Morrissey, of Syracuse, N. Y., of counsel), for appellee Dela- 
ware, E. & W. R. Co. 

James T. Kilbreth, of New York City, for appellee The Dunellen. 

Hyland & Jabriskie, of New York City (Nelson Zabriskie, of New 
York City, of counsel), for appellee The Scotia. 

Before ROGERS, HOUGH, and MANTON, Circuit Judges. 

HOUGH, Circuit Judge (after stating the facts as above). Whether 
the Chapin so protruded into the fairway as to proximately cause colli- 
sion with the Scotia while the latter was exercising reasonable care 
is matter of fact decided adversly to the Chapin by the trial judge, 
and after reviewing the record we find his conclusions supported by 
évidence, which it would serve no useful purpose to recite. It is, how- 
ever, hère urged as matter of law that, since the Eex and Dunellen 
were also moored at the pier end in violation of New York Charter 
(Laws 1901, c. 466) § 879 (set forth at length in The Allemania, 231 
Fed. 942, 146 C. C. A. 138), they must be as responsible as the 
Chapin. 

Our views of this local harbor régulation are, we think, plainly stat- 

ed in The New York Central Nô. 18, 257 Fed. 405, C. C. A. , 

and The Daniel McAllister, 258 Fed. 549, C. C. A. . It was 

there held, and correctly said below, that section 879 can only he in- 
voked by vessels of the class therein enumerated, viz. those "entering 
or leaving" a slip adjacent to the pier end at which lie the offending 
craft. If, therefore, in this case the Scotia had been injured, she 
would hâve made out a prima facie case against the Chapin under the 
act, by showing where that barge was moored ; yet it remains possible 
for vessels at the pier end to affirmatively show, either that their vio- 
lation of statute neither caused nor contrihuted to disaster, or that 
the "entering or leaving" vessel herself contrihuted thereto. 

[1] But this case — with the Scotia exonerated — is between vessels 
which were ail moored in the same illégal manner; between them- 
selves none can point to the statute, and insist that the others are re- 
sponsible to her by reason of the statute. 

[2] The charter régulation does not, of course, take away, nor ren- 
der obsolète, any other rule of navigation or maritime conduct, whether 
founded on the Inland Rules or upon accepted gênerai custom as 
(usually) announced in judicial décisions; it is additional thereto. The 
Chapin is held solely liable hère, not because she lay with other ves- 
sels at the end of a pier, but because she incumbered and obstructed 
the channel in a way deemed faulty without any référence to the pier 
end statute. 

Decree affirmed. with costs to each appellee. 



MONK V. HORN 121 

(262 F.> 

MONK V. HOEN. 

(Olrcnlt Court of Appeals, Fifth Circuit. January 13, 1920.) 

No. 3409. 

Bankeuptct «3=404 (2) — Effect of denial in pbiob proceedinq of applica - 

TION FOE DISCHABGE. 

Under Bankruptcy Act, § 14a (Comp. St. § 9598), limiting the time for 
flling application for discharge to 18 montlis from date of adjudication, a 
bankrupt is not entitled, on an application filed in a second proceeding 
more than 18 months after hls first adjudication, to a discharge from 
debts provable in the flrst proceeding. 

Appeal from the District Court of the United States for the South- 
ern District of Alabama; Robert T. Ervin, Judge. 

In the matter of Robert Wiley Horn, bankrupt. On appeal by 
William H. Monk, Jr., from order granting discharge. Reversed. 

Moses Kohn, of Mobile, Ala., for appellant. 

William H. Armbrecht and J. Osmond Middleton, both of Mobile, 
Ala., for appellee. 

Before WALKER, Circuit Judge, and GRUBB and JACK, District 
Judges. 

WALKER, Circuit Judge. The appellee was adjudged bankrupt on 
January 25, 1917, on a voluntary pétition filed by him in a proceeding 
in which no application for a discharge was filed, and which was 
closed prior to January 25, 1919, when he filed in the same court an- 
other voluntary pétition, under which he was again adjudged bank- 
rupt. In 1914 the appellant recovered a judgment against the bank- 
rupt, which was a provable debt against the estate of the bankrupt in 
each of the bankruptcy proceedings. He objected to the granting of 
an application for discharge made by the bankrupt in the second pro- 
ceeding, in so far as that application sought a discharge from the debt 
evidenced by the judgment mentioned, and prayed that that debt be 
excluded from the opération of any discharge that might be granted 
under the application therefor. The court ordered a discharge, from 
the opération of which the debt owing by the bankrupt to the appel- 
lant was not excluded. 

This court has decided that, under the provision of section 14 of 
the Bankruptcy Act (Comp. St. § 9598) prescribing the time within 
which an application for a discharge may be made, a bankrupt, after 
the expiration of 18 months from adjudication, is not entitled, in a 
second proceeding, to a discharge from debts provable in the first. In 
re Bacon, 193 Eed. 34, 113 C. C. A. 358 ; Bacon v. Bufïalo Cold Storage 
Co., 225 U. S. 701, 32 Sup. Ct. 836, 56 L. Ed. 1264. It appears from 
the opinion rendered by the District Judge in the instant case that the 
ruling just referred to was not followed, because it was considered 
to be inconsistent with the ruling of the Suprême Court in the case 
of Bluthenthal v. Jones, 208 U. S. _64, 28 Sup. Ct. 192, 52 L. Ed. 
390. What was decided- in the last-cited case was that a debt was not 
excluded from the opération of a discharge by the fact that in a former 

©sjFor other cases sec same topio & KEY-NUMBEE in ail Key-Numbered Digests & Indexes 



122 262 FEDBHAIi REPORTER 

proceeding, on the same creditor's objection, a discliarge was refused, 
where that creditor, though notified of the second proceeding and 
that his same debt was scheduled therein, did not participate in any 
way in that proceeding. The ground of that décision was that the 
creditor lost the benefit, in the second proceeding, of the refusai of a 
discharge in the first proceeding, by f ailing to plead it or bring it to 
the attention of the court in the later proceeding. 

It was not decided in that case that the creditor did not hâve a 
valid ground of objection to the granting of the discharge applied 
for in the second proceeding. It was decided that the creditor's debt 
was not excluded from the opération of a discharge which was grant- 
ed without objection from him. The question of the sufficiency of 
an objection to an application for a discharge, because it was not made 
within the time prescribed by section 14 of the Bankruptcy Act, was 
not involved in that case. Nothing said in the opinion rendered in that 
case indicates that the court had that question in mind. We do not 
think that the décision in that case is in conflict with the above re- 
ferred to décision of this court. 

We are of the opinion that the ruling in the case of In re Bacon, 
supra, was correct. Subdivision "a" of section 14 of the Bankruptcy 
Act créâtes a limitation in favor of creditors having debts provable 
against an estate in bankruptcy. Subdivision "b" of that section pre- 
scribes the grounds on which an application for discharge may be 
refused. There is nothing to indicate that the latter provision was in- 
tended to control or supersede the former one. The former provision 
fixes a period of time beyond which a creditor afïected by the bank- 
ruptcy is not required to remain prepared to prove the existence of a 
ground of objection to a discharge of the bankrupt. It well may be 
inferred that it was contemplated that an application for a discharge 
from any debt afïected by an adjudication of bankruptcy should be 
made within the stated period, whether made in the first proceeding 
in which such debt was provable, or in a subséquent proceeding. 

The provision has the eiïect of preventing a bankrupt from with- 
holding for an unreasonable length of time from creditors affected by 
the adjudication of bankruptcy the opportunity of proving the exist- 
ence of a ground justifying a refusai of the discharge applied for. 
To give to a subséquent adjudication of bankruptcy the effect of en- 
larging the time within which a discharge from debts afïected by a 
former adjudication could be applied for would ainount to a destruction 
of the limitation created by the statute. The conclusion is that the 
court erred in overruling the appellant's motion to exclude his debt 
from the opération of the discharge applied for and granted. 

Because of that error, the decree is reversed. 



GRANDI V. UNITED STATES 123 

(262 F.) 

GRANDI V. TJNITBD STATES. 

(Carcult Court of Appeala, Slxth Circuit. January 6, 1920.) 

No. 3278. 

1. Ceiminai, LA.W <g=»1186(4)— Technicai, objection to inmctment chabgb 

DOES NOT JUSTIFY BEVERSAL. 

Although a count of an Indictment alleging that défendant, knowlng the 
same to hâve been stolen, recelved goods from an Interstate shipment, 
etc., under Act Feb. 13, 1913 (Comp. St. §§ 8603, 8604), did not speclfically 
allège that the goods were stolen, défendant could not hâve been mis- 
led in hls défense, and the defect is a technical one, whlch should be dis- 
regarded on appeal, under Comp. St. § 1691, and Judicial Code, § 269, as 
amended by Act Feb. 26, 1919. 

2. Ceiminal law <g=753(2) — Motion roB dieected verdict waived bt fail- 

URE to EENEW AT CLOSE OP CASE. 

Where defendant's motion for dlrected verdict, made at close of gov- 
ernment's case, was overruled, It was waived, where not renewed at the 
close of the whole case. 

3. RECEIVING stolen goods iS=3 — ReCEIVEB of stolen goods ASSUMES PEBIL 

or SAME HAVINQ BEEN STOLEN FROM AN INTERSTATE SHIPMENT. 

Where défendant knew the goods had been stolen, he recelved them at 
péril of thelr haviag been stolen whlle In the course of an Interstate ship- 
ment, in whlch case he would be llable under Act Feb. 13, 1913 (Comp. 
St. il 8603, 8604). 

In Error to the District Court of the United States for the West- 
ern District of Tennessee; John E. McCall, Judge. 

A. Grandi was convicted of knowingly receiving goods stolen from 
an interstate shipment in violation of Act Feb. 13, 1913, and he brings 
error. Affirmed. 

Chas. M. Bryan, of Memphis, Tenn., for plaintifï in error. 
Wm. D. Kyser, U. S. Atty., of Memphis, Tenn. 

Before KNAPPEN and DENISON, Circuit Judges, and KIL- 
LITS, District Judge. 

KNAPPEN, Circuit Judge. Plaintiiï in error was convicted under 
the Act of Feb. 13, 1913 {2,7 Stat. c. 50, p. 670 [Comp. St. §§ 8603, 
8604]). The indictment contained three counts. The first charged the 
breaking of the seal of a certain railroad freight car containing an 
interstate shipment; the second, the steaHng of goods from that car; 
and the third, the receipt and possession of goods knowing that they 
had been stolen from the car in question, and knowing that they were 
part of an interstate shipment contained in that car, which was alleged 
to be under transportation in interstate commerce — the places from 
which and to which the shipment was being made and the names of 
the consignor and consignée being stated. The conviction was on the 
third count alone. 

[1] A motion to quash the third count, as not charging that the 
goods were in fact so stolen, was denied. There is an absence of 
such spécifie allégation. But while the count was thus technically 
subject to criticism, yet, in view of the frame of the indictment taken 

<g=3Por other cases see same topic & KEY-NUMBBR in ail Key-Numbered Dlgests & Indexes 



124 262 FEDERAL REPORTER 

as a whole, plaintiff in error could not well hâve been misled to his 
préjudice. The count fairly informed the accused of the charge 
against him, and sufficiently so to enable him to prépare his défense 
and to protect him against further prosecution therefor. Daniels v. 
United States (C. C. A. 6) 196 Fed. 459, 465, 116 C. C. A. 233; 
Bettman v. United States (C. C. A. 6) 224 Fed. 819, 826, 140 C. C. 
A. 265. The charge that défendant knew the goods to hâve been stol- 
en naturally implies that the goods had been in fact stolen. The ver- 
dict should not be reversed on account of a defect so obviously tech- 
nical and unsubstantial. U. S. Comp. Stat. 1916, § 1691 ; Judicial Code, 
§ 269, as amended February 26, 1919 (40 Stat. 1181, c. 48) ; West v. 
United States (C. C. A. 6) 258 Fed. 413, 415, C. C. A. . 

[2, 3] A motion to direct verdict, made at the close of the gov- 
ernment's testimony, was overruled. If vire were to treat the right 
to complain as saved (the motion was not renewed at the close of ail 
the testimony, and so was waived), it would not hâve availed plaintiff 
in error, for the motion was plainly without merit. There was abun- 
dant évidence to sustain a finding that the goods were in fact stolen 
from the interstate shipment, and that défendant had guilty knowl- 
edge thereof. Indeed, if he knew the goods were stolen, he received 
them at the péril of their proving to hâve been stolen while in the 
course of interstate shipment, even if he did not know they were 
stolen from a shipment of that kind. Kasle v. United States (C. C. A. 
6) 233 Fed. 878, 882, 147 C. C. A. 552. 

We see nothing in the objection that défendant and one Woods 
were jointly charged with receiving and having possession of the goods, 
without setting out in what way the joint receipt was accomplished. 
Such joint participation was entirely possible, and it was unnecessary 
to State the détails relating thereto. 

We see no error in the fact that plaintifï in error was tried in the 
absence of his codefendant. 

The judgment is affirmed. 



AMMERMAN v. UNITED STATES.* 
(Circuit Court of Appeals, Elghth Circuit. December 15, 1919.) 

No. 5267. 

1. PEOSTiTunoN ®=»3 — Indictment under White Slave Traffic Act sut- 

nCIENT. 

An indictment under WTiite Slave Trafflo Act, § 2 (Comp. St. § 8813), 
charRlng that the transportation was unlawfuUy and felonlously made "for 
the piirpose of debauchery," held sufflclent, 

2. Prostitution "Ssaé — Competenct or évidence in prosecution undeb 

White Slave Traitio Act. 

In a prosecution for violation of White Slave Traffic Act, § 2 (Comp. St. 
§ 8813), évidence of prlor illiclt relations between défendant and the 
woman transported Is compétent. 

3. Chiminal law ®=5782(9) — Instruction as to suffi ciency of évidence. 

Instruction in a criminal case that the jury were requlred to décide 
the questions submltted "upon the strong probabilitles of the case," fol- 

£=sFor other cases see same toplc & KEY-NUMBER in ail Key-Numbered Dlgests & Indexes 
•Rehearing denied Mareh 30, 1920. 



AMMERMAN V. UNITED STATES 125 

(262 F.) 

lowed by a correct statement of the rule as to exclusion of ail reasonable 
doubt, held not erroneous. 

4. Cbiminal law <g=3768(3) — Coercion of jury. 

Statement by the court to a jury that it was the rule of the fédéral 
courts that they should be kept together until tbey had agreed upon 
their verdict held not errer, as tending to coercion. 

In Error to the District Court of the United States for the District 
of Nebraska; Thomas C. Munger, Judge. 

Criminal prosecution by the United States against Day Ammerman. 
Judgment of conviction, and défendant brings error. Affirmed. 

Caesar A. Roberts, of Denver, Colo. (John E. Kelley, of McCook, 
Neb., O. N. Hilton and Leslie M. Roberts, both of Denver, Colo., on 
the brief), for plaintifï in error. 

T. S. Allen, U. S. Atty., of Lincoln, Neb. (F. A. Peterson, Asst. U. 

5. Atty., of Omaha, Neb., on the brief), for the United States. 

Before CAR^AND and STONE. Circuit Judges, and ELLIOTT, 
District Judge. 

STONE, Circuit Judge. Error from conviction on one count of an 
indictment charging transportation of a woman in Interstate commerce, 
for immoral purposes. The errors hère urged are: (1) Insufficiency 
of the indictment. (2) Insufficiency of the évidence. (3) Admission of 
prior illicit relations hetween the parties. (4) Erroneous charge. (5) 
Coercion of the jury. 

[ 1 ] The attack upon the indictment is based on the claim that it is 
lacking in any sufficient allégation of the necessary criminal intent. The 
statute (White Slave Traffic Act, § 2 [Comp. St. § 8813]) condemns 
such transportation when made "with the intent or purpose on the 
part of such person to induce, entice or compel her to give herself 
* * * up to debauchery." The indictment charges that the trans- 
portation was unlawfully and feloniously made "for the purpose of 
debauchery." This is sufficient. 

The challenge to the sufficiency of the évidence cannot be sustained. 

[2] The évidence of prior illicit relations between accused and the 
woman charged to hâve been transported were compétent, as bearing 
upon the élément of the intent with which she was this time transported. 

[3] The portion of the charge to the jury which is attacked is : 

"You are requlred In a criminal case, such as this, to décide the questions 
submitted to you upon the strong probablllties of the case ; but thèse proba- 
billties must be so strong as not to exclude ail doubts or ail possibility of er- 
ror, but to exclude aU reasonable doubts, and when you bave attained that 
degree of conviction, upon which you as prudent men v?ould unbesitatingly 
act in the most Important affairs of life, you can be sure that you bave reached 
that State of conviction that excludes ail reasonable doubt." 

The objection is to the statement that the jury are to décide "upon 
the strong probabilities of the case." That portion of the charge is 
almost Verbatim identical with one approved in Dunbar v. United States, 
156 U. S. 185, 199, 15 Sup. Ct. 325, 3 9 E. Ed. 390. 

©=3For other cases see same topic & KBY-NUMBBR In ail Key-Numbered Dlgesta & Indexes 



126 262 FEDERAL REPORTER 

[4] The claim of coercion of the jury is based on a statement made 
hy the court to the jury at the conclusion of the charge, as follows: 

"Now, In criminal cases in thls court we follow the common-law practica 
of keeping the jurors ail togetber until the jury hâve agreed; but the mar- 
shal wiU endeavor to provide you a place to sleep to-night, so as not to keep 
you up in the jury room. 

"The Marshal: We find it a hard matter to get accommodations; stlll I 
think we mlght be able to get accommodations. 

"The Court : When you go to the jury room, If you agrée on a verdict thls 
evening — it is now a little after 10 o'elock — ^if you want to take a ballot and 
see if you can agrée within the next half hour, we wUl be ready to receive 
your verdict, and that will release you ail. If you should not agrée, we will 
hâve to keep you on hand, and you wUl continue to deliberate in the moming." 

This does not approach coercion. 
The judgment is affirmed. 



EOBINS V. UNITED STATES. 
(Circuit Court of Appeals, Elghth Circuit November 15, 1919.) 

No. 5230. 

1. PosT OFFICE <g=>35, 48(4) — Indictment roB use or uails in bcheuk to de- 

FBAtrD. 

The éléments of an offense under Pénal Code, S 215 (Comp. St. § 10385), 
are a scheme to defraud and the placlng of a letter in a post office for 
purpose of executing it; so indictment thereunder need not allège that 
the scheme wals to be executed by use of the mails. 

2. Criminal law ig= 1036(8) — Disceetion to consideb insueticienct or évi- 

dence NOT TJBGKD BELOW. 

The sufflciency of the évidence to sustaln the conviction may not be 
urged in the reviewing court, where question was not raised below, unless 
it in its discrétion décides to consider It. 

3. CJbiminal law <S=»901 — Motion foe dieected vebdict waived. 

Defendant's motion for dlrected verdict, made at close of govemment's 
évidence, was waived ; he thereafter introduclng évidence. 

4. Ceiminal law <©=1134(4) — Refusal of new tbial not beviewablb. 

Buling of trial court on motion for new trial Is not revlewable in the 
Circuit Court of Appeals. 

In Error to the District Court of the United States for the Eastem 
District of Arkansas ; Jacob Trieber, Judge. 

Paul E. Robins was convicted of a violation of Pénal Code, § 215, 
and brings error. Affirmed. 

Ralph Davis, of Memphis, Tenn., for plaintifF in error. 

W. H. Rector, Asst. U. S. Atty., of Little Rock, Ark. (W. H. Mar- 
tin, U. S. Atty., of Hot Springs, Ark., on the brief), for the United 
States. 

Before CARLAND and STONE, Circuit Judges, and EL,L,IOTT, 
District Judge. 

CARLAND, Circuit Judge. The plaintifï in error, hereafter called 
défendant, was convicted and sentenced upon the first count of an in- 

^ssFor otber cases see same copie & KliT-KUMBER in aU Key-Numbered Digesta & Indexes 



THE FOBDB 127 

C262 P.) 

dictment which charged a violation of section 215, Pénal Code (Act 
Cong. March 4, 1909, c. 321, 35 Stat. 1130 [Comp. St. § 10385]). A 
demurrer to this count was overruled, and this ruling is assigned as 
error. 

[1] Counsel for défendant has fallen into error in assuming that 
section 215 of the Pénal Code is the same as the old section 5480, Unit- 
ed States Rev. Stat. The cases cited in support of the contention that 
the indictment must charge that the scheme to defraud was to be ex- 
ecuted by opening or intending to open correspondence with some per- 
son or persons through the post office establishment of the United 
States, or by inciting some person to open communication with the 
writer, are no longer the law in this respect. United States v. Young, 
232 U. S. 155, 34 Sup. Ct. 303, 58 L. Ed. 548; United States v. Max- 
ey (D. C.) 200 Ped. 997; United States v. Goldman (D. C.) 207 Fed. 
1002; United States v. Young (D. C.) 215 Fed. 267. In United 
States V. Young, supra, the Suprême Court said, 

" • • • The éléments of an offense under section 215, P. O., are (a) a 
Bcheme devised or intended to be devised to defraud, or for obtalning money or 
property by means of false pretenses, and (b) for the purpose of executiug 
such scheme or attemptlng to do so, the placing of any letter In any post office 
of the United States to be sent • • • by the post office establishment." 

[2-4] We hâve no doubt that the first count charged an offense un- 
der the statute. The sufficiency of the évidence to sustain the verdict 
was not raised in the trial court and may not be urged hère, unless in 
our discrétion we décide so to do. We do not think that this is a case 
where our discrétion ought to be exercised in favor of the défendant. 
The motion for a directed verdict made at the close of the évidence 
for the United States was waived by the défendant in introducing évi- 
dence, and the motion was not renewed at the close of ail the évidence. 
The ruling of the trial court on motion for a new trial is not review- 
able hère. 

Judgment affirmed. 

THE FORDB. 

(Circuit Court of Appeals, Second Circuit. Dtecember 10, 1919.) 

No. 64. 

Collision <ê=>74 — ^Pkestjmption a&ainst dkiftee not bebutted. 

Evidence, If not affirmative proof of négligence of vessel, whlch, in a 
harbor, dragged anchor and drifted agalnst another anehored vessel, 
held not to rebut presumption agalnst It; the only v?atch, at nlght, In 
threatenlng weather, belng a landsman, and no one else belng called tlll 
It v?as too late to put out the second anchor to prevent damage. 

Appeal from the District Court of the United States for the East- 
ern District of New York. 

Suit in admiralty for collision by the Neptune Line, Incorporated, 
against the steamship Forde, her engines, etc.; H. Kuhnle, claimant. 
Decree for libelant, and claimant appeals. Affirmed. 

igssFoi other cases see same toplc & KBY-NUMBER in ail Key-Numbered DIeests & Indexes 



128 262 FEDERAL REPORTER 

Haight, Sandford & Smith, of New York City (Henry M. Hewîtt, of 
New York City, of counsel), for appellant. 

Foley & Martin, of New York City (Geo. V. A. McCloskey, and 
William J. Martin, both of New York City, of counsel), for ap- 
pellee. 

Before ROGERS, HOUGH, and MANTON, Circuit Judges. 

HOUGH, Circuit Judge. On the night of December 13-14, 1917, the 
steamship Forde lay at anchor on Red Hook Flats, New York Harbor. 
Libelant's barge Pittston was similarly anchored at a distance which we 
find to hâve been nearly 900 feet. The wind was from northeast to 
east ail the 13th, and until about 3 a. m. on the 14th, with an hourly 
movement never above 39 miles, until between 2 and 3 of the 14th, 
when it rose to 41 ; maximum velocities exceeding 29 miles occurred 
in every hour but one after 5 p. m. on the 13th. Snow began shortly 
after noon of the 13th, and fell continuously until 2 :20 a. m. of the 
14th, when it turned to sleet, and so continued for about an hour. 
When to this undenied description of most unpleasant weather is 
added the statement of the Forde's master that he looked at his barom- 
eter during the evening of the 13th and it was not "very low," we 
accept the testimony for libelant which describes the night as "threat- 
ening." 

Certain it is that libelant's master stayed up ail night watching 
events, while the Forde's officers (who were the only crew aboard 
her) went early to bed, leaving as sole anchor watch a landsman (har- 
bor watchman) whose duty, as described by himself, was to "keep 
my eye out that nothing is molested or interfered with while the men 
are sleeping." At about 3 a. m. of the 14th the wind shifted to north- 
west and blew with a maximum velocity of 88 miles, so that the total 
movement between 3 and 4 a. m. was Ti miles. In this hurricane the 
Forde dragged her anchor, and drifted into collision with the Pittston, 
inflicting the injury for which this action was brought. 

Cases of this kind start with the presumption against the drifting 
vessel stated in The Louisiana, 3 Wall. 164, 18 L. Ed. 85, and since 
it is not claimed, in this court that the Pittston in any way contributed 
to disaster, the inquiry is narrowed to the question whether the Forde 
has affirmatively shown that she was the helpless victim of vis major. 
That the storm was violent is admitted; that the watchman on the 
steamer did as he was told, and called the officers when he thought cir- 
cumstances required it, is proven ; but it is also proven by the Forde's 
own testimony that in threatening weather her deck was left with no 
one on it to start the second anchor, and the officers did not get on 
deck and do that obviously necessary act until the vessels were, if not 
in actual contact, so close that damage was inévitable. 

We think such testimony, if not affirmative proof of négligence, 
wholly fails to rebut the presumption against drifters ; and when there 
is added thereto the fact that the Pittston, similarly situated, put out 
her second anchor over an hour and a half before collision, we think 
claimants hâve failed to justify their conduct. We hâve not referred to 



THE MARTANNB 129 

(262 P.) 

évidence tending to show that the Forde's second anchor was not in 
condition to be effective, and that the barometer was giving far more 
waming of coming trouble than the steamship master admitted. On 
thèse points the District Judge made no definite finding, and we think 
the resuit below sustainable, without expressing our own opinion 
thereon. 

Decree affirmed, with costs. 



THE MARYANNB.* 

(Clrcalt Court of Appeals, Second Circuit Deoember 10, 1919.) 

No. 15. 

Mabitime liens ®=»70 — Deceee fob cost or befaibs aitibmed. 

Decree awarding libelant a lien for amount of Its claim on a quantum 
m«ruit for work done on a steamship affirmed. 

Appeal from the District Court of the United States for the East- 
ern District of 'New York. 

Suit in admiralty by the Ramberg Iron Works against the steam- 
ship Maryanne ; Maryanne Shipping Company, claimant. Decree for 
libelant, and claimant appeals. Affirmed. 

Bullowa & BuUowa, of New York City (H. L. Cheyney, of New 
York City, of counsel), for appellant. 

Foley & Martin, of New York City (G. V. A. McCIoskey and James 
A. Martin, both of New York City, of counsel), for appellee. 

Before WARD, ROGERS, and MÂNTON, Circuit Judges. 

PER CURIAM. We agrée with the District Court that the work 
was not done on the crédit of the owners of the steamer, and therefore 
the libelant had a Hen under the act of June 23, 1910 (Comp. St. §§ 
7783-7787). 

The libel was on a quantum meruit for $17,175.35, but it was admit- 
ted at the trial that $6,053 of the last work done had been paid, so 
that only the sum of $11,122.35 was in dispute. Of this work the 
amount of $5,368 was done under a contract which provided "ail 
work and material furnished to be satisfactory to your marine superin- 
tendent." The balance of the claim was for extra work to which this 
clause did not apply. The work called for by the contract having been 
completed, the libelant could sue upon a quantum meruit, and, though 
the clause as to satisfaction still govemed, it was not made, as is often 
the case, a condition précèdent of payment. It enabled the claimant to 
show just which part of the work and materials was not satisfactory 
to its marine superintendent, but no such dissatisfaction was proved. 

The évidence convinces us that the agents for the steamer knew ail 
about the extra work, and approved of it. When the bill was present- 
ed, the only objection they made was that their marine superintendent, 
Haslam, must go over it before it was paid. He was called as a wit- 

^ssFor other cases see same topio & KEY-NUMBBR In ail Key-Numbered DlgeBts & Indexe» 
262 F. — 9 «Certlorari denied 251 U. S. — , 40 Sup. Ct. 345, 64 tn Ed. — . 



130 262 FEDERAL REPORTER 

ness before the commissioner, and did not express any dissatisfaction 
with the work and materials, but only with the charges for the extra 
work. 

The libelant's course of business was that every night the foremen 
hand into the office time sheets with the names of the men, and the 
times they worked, and sheets of the material used. The foremen tes- 
tified that they knew the facts and that their reports were correct. 
Thèse were checked up in the office with the material that left the 
shop, and summaries of the amount of time and of the material were 
entered on yellow sheets which were produced. The original time and 
material reports had been destroyed in accordance with the usual 
course of business so that no fraudulent intent is to be inferred. The 
proof is within Mayor v. Second Avenue R. R. Co., 102 N. Y. 572, 
7 N. E. 905, 55 Am. St. Rep. 829. The court below found the charges 
reasonable and we see no reason for differing. 

The decree is affirmed. 



WTSONG & MILES CO. et al. v. BANK OF NORTH, AMBBIOA, 

(Circuit Court of Appeals, Fourth Circuit. November 4, 1919.) 

No. 1738. 

Banks and banking <ê=»270(7) — Usuet not défense ob countebclaim in 

ACTION BT national BANK. 

Where usurlous Interest bas been taken by a national bank, the remedy 
given by Rev. St. g 5198 (Comp. St. g 9759), by an Independent action to 
recover the usurlous payments is exclusive, and the claim cannot be 
set up by way of défense or counterclaim in an action by the bank. 

In Error to the District Court of the United States for the West- 
ern District of North Carolina, at Greensboro ; James E. Boyd, Judge. 

Action by the Bank of North America against the Wysong & Miles 
Company and others. Judgment for plaintifï, and défendants bring 
error. Affirmed. 

Thomas J. Jérôme, of Greensboro, N. C. Qerome & Scales, of Greens- 
boro, N. C, on the brief), for plaintiffs in error. 

A. B. Kimball, of Greensboro, N. C. (King & Kimball, of Greens- 
boro, N. C, on the brief), for défendant in error. 

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges. 

KNAPP, Circuit Judge. In this suit by a national bank on a prom- 
issory note for $9,000, dated January 4, 1918, the answer allèges, "by 
way of cross-action or counterclaim," that on previous notes given for 
loans by plaintifï, running through a séries of years and aggregating 
a large sum, défendant has paid plaintifï usurious and illégal interest 
to the amount of $6,941.48, and demands judgment against plaintifï 
for double that amount. The court below on the pleadings dismissed 
the "cross-action or counterclaim," and ordered judgment for plaintifï 
for the fuU amount of the note, with interest from its date, and de- 

^csFor otber cases see same toplc & KET-N0MBER in ail Key-Numbered DIgests & Indexes 



BELL & HOWELL CO. V. BLISS 131 

(262 F.) 

fendant brings the case hère on writ of error. The only question \o 
consider is whether the facts alleged are available to défendant in this 
action. 

The liabjlity of a national bank for taking usurious interest is fixed 
and defined in the National Banking Act (section 5198, U. S. Revised 
Statutes [Comp. St. § 9759]), as follows: 

"The taking, recelving, reserving, or charging a rate of interest greater 
than is allowed by the preceding section, when knowingly done, shall be 
deemed a forfaiture of the entire interest which the note, bill, or other évidence 
of debt carries wlth it, or wliich bas been agreed to be paid thei-eon. In case 
the greater rate of interest has been paid, the person by whom it has been 
paid, or his légal représentatives, may recover back, in an action in the nature 
of an action of debt, twice the amount of the interrest thus paid from the 
I association taking or receiving the saine: Provided such action Is commenced 
within two years from the time the usurious transaction occurred." 

Other than this there is no liability, for state statutes of usury are 
without application. Farmers' & Mechanics' Nat. Bank v. Dearing, 
91 U. S. 29, 23 L. Ed. 196. And this liability is enforceable only in a 
suit against the bank to which the unlawful interest has been paid. 
Barnet v. National Bank, 98 U. S. 555, 25 L. Ed. 212 ; Hazeltine v. 
Bank, 183 U. S. 132, 22 Sup. Ct. 49, 46 L. Ed. 117; Schuyler Nat. 
Bank V. Gadsden, 191 U. S. 451, 24 Sup. Ct. 129, 48 L. Ed. 258. In the 
last-named case the Suprême Court says : 

"This résulta from the prlor adjudications of this court, holding that, 
vfhere usurious interest has been paid to a national bank, the remedy afforded 
by section 5198 of the Revised Statutes is exclusive, and is conflned to an 
independent action to recover such usurious payments." 

Thèse décisions cover the instant case and conclusively réfute de- 
fendant's contention. Its answer sets up no facts which are available 
as a défense or counterclaim, and the court below was therefore right 
in rendering judgment for plaintiff on the pleadings. 

Aiiirmed. 



BELL & HOWELL CO. v. BLISS et al. 

(Circuit Court of Appeals, Seventh Circuit. October 7, 1919. On PeUtion for 
Rehearing, December 11, 1919.) 

No. 2701. 

1. Patents <S=3211(3) — Invaudity of patent no défense to action on li- 

CE»fSB CONTBACT. 

An exclusive licensee of the right to use a patented machine, the ma- 
chines to be made and suppUed by the Ucensor for stipulated payments 
during the term of the contract, cannot dispute the licensor's title, and it 
is no défense to an action on the contract that the patent Is invalid. 

2. Appeal and ebbob i&=5ll76(2) — Couet can dismiss apfeal fbou inteb- 

LOCUTOBY OBDEB. 

An appellate court has power on a proper showing to direct dismissal 
of a blU, on an appeal from an order grantlng a preliminary injunction. 

3. Action <^=>8 — Attempt to misuse powebs or couet to delat action in 

STATE COUBT. 

A suit for infringement against the ovraer of another patent and it» 
exclusive licensee will not be entertained by a court of equity, where the 

<g=>For other cases see same toplc & KBY-NUMBBR in ail Key-Numbered Dlgests & Indexes 



132 262 FEDERAL RBPOBTÏIB 

patent sued on was bought by the llcensee défendant, and the suit eom- 
menced by hls direction and at hls expense tn the name of a dummy 
complainant, who has no interest therein, for the sole purpose of de- 
feating or delaying actions brought In a state court by the licensor to 
recover sums due under the llcense contract. . 

4. Equiït ®=»e5(l) — Maxim of clean hands. 

The nile of equlty, that a complainant must come wlth clean hands, la 
not a matter of défense primarily ; but the courts apply it because of 
the interest of the public, and not as a favor to a défendant. 

On Pétition for Rehearlng. 

5. Patents <S=>286 — Joint owheib kat not bb sued by otheb paet owner 

fob infbingement. 

A joint owner of a patent, who has the right to use the same, canne t bo 
sued for its Infringement by another part owner. • 

Appeal from the District Court of the United States for the East- 
ern Division of the Northern District of IlUnois. 

Suit in equity by Donald M. Bliss against the Bell & Howell Com- 
pan}'' and George K. Spoor. From an order granting a temporary in- 
junction, défendant Bell & Howell Company appeals. Reversed, and 
bill ordered dismissed. 

Appellant entered into a contract wlth appellee Spoor, whereby the latter 
secured the exclusive rlght to use, for a perlod of flve years, a certain ma- 
chine that embodied a patent held by appellant. It was also agreed that 
appellant would sell as many machines for $400 each as the licensee might 
reciuire. In considération thereof Spoor obligated hlmself to pay $140,000, 
in quarterly installments of $7,000 each. Spoor, who was the sole owner of 
the Essanay Film Manufacturing Company, a fllm-making Company, pald the 
flrst four Installments, but thereafter defaulted. An action was thereupon 
eommenced, and a judgment rendered against Spoor in the Illinois state 
court for $28,000. An appeal was taken therefrom and Is still pending. At 
least two other actions were Instituted as varions installments became due. 

While thèse actions were thus pending, appellee Bliss, the sole complainant, 
brought this suit against appellant and Spoor, alleging infringement of the 
so-called Schneider patent, also covering a fllm-making machine; the usual 
relief being sought. Briefly stated, the theory of the Bliss suit was that the 
Schneider patent was prior to and a full anticipation of the Bell & Howell 
patent; that the latter patent was therefore void, and machines made there- 
under by appellant and used by Spoor infringed the Schneider patent Spoor 
flled a cross-bill, designated a counterelalm, against appellant, settlng forth 
hls contract with appellant, assertlng that, if the patent to appellant was in- 
valld, then this contract was void, and in hls prayer for relief sought an 
injunetional order restraining appellant from prosecuting its actions in the 
Illinois courts, also praying that the contract between hlm and appellant be 
declared null and void, and demanding judgment for the $28,000 and interest 
previously paid. 

Appellant by its answer charged appellees wlth a conspiracy to hinder and 
delay the collection of the $28,000 judgment, as well as the prosecutlon of the 
other actions, and, further charged that the bill of complaint was prepared at 
the instigation of Spoor; that the so-called Schneider patent was purchased 
pursuant to an agreement between Spoor and Bliss to assist Spoor in defeat- 
ing the collection of the amount due appellant under the aforementioned con- 
tract. 

After issue was joined, appellant moved to dismlss the suit because Bliss 
"improperly and collusively Instituted the cause for the purpose of creating 
a case cognizable in said United States District Court," and for the further 
reason "that the plaintifC, Donald M. Bliss, did not come Into court with clean 

^isFor «ther cases see same toplc & KEY-NUMBBR in ail Key-Numbered Dlgests & Indexes 



BELL & HOWELL 00. V. BLISS 133 

(262 P.) 

hands, but had been guilty of Inlquity touching the matters and things charg- 
ed in his bill." 

Counsel for Bliss moved to strike from appellant's answer the paragraphs 
eharging an unlawful conspira cy between Bliss and Spoor to procure the 
tJchneider patent to hinder and delay the collection of the royalties due un- 
der the license contract. Before the hearing was closed, appellant flled addi- 
tional reasons in support of its motion to dismiss; it being urged that Bliss 
was only a nominal party, had no interest in the subject-matter of the suit, 
and that lie and one Thompson, agent of Spoor, were guilty of such "iniquity, 
collusion, champerty, and maintenance" touching the matters eharged in the 
bill as to require the court to deny ail relief. Both motions were referred 
to a master, who heard ail the testimony and made a full report. 

Upon thls report being flled, the court struck out the iwrtlons of ap- 
pellant's answer complained of, denied appellant's motion to dismiss, and later 
entered an order staying further action in the state court pending the appeal 
from the first Judgment. Appellant on this appeal attacks, not only the In^ 
junctional order, but also the refusai of the court to dismiss the bill. 

David K. Tone, of Chicago, 111., for appellant. 
John M. Zane, of Chicago, 111., for appellee Bliss. 
David Jetzinger, of Chicago, 111., for appellee Spoor. 

Before BAKER, ALSCHULER, and EVANS, Circuit Judges. 

EVANS, Circuit Judge (after stating the facts as above). [1] We 
find no theory upon which we can sustain the order granting the in- 
junction. The agreement which called for the payment of $140,000, 
to recover an installment of which appellant brought this action in 
the State court, was a patent license contract. The two determining 
paragraphs are : 

"The party of the flrst part hereby gives and grants to Ihe party of the 
second part the exclusive right to use and to hâve used the said step print- 
ing machine as embodied in the aforesaid letters patent and applicationa, 
viz." etc. 

"The party of the fécond part hereby agrées to pay to the party of the 
flrst part for the exclusive right to use the step printing machines as herein 
granted the aggregate surn of one hundred and forty thousand dollars ($140,- 
000.00) conslsting of a yearly royalty of twonty-eight thousand dollars (Ç28,- 
000.00, payable in equal quarterly Installments of geven thousand dollars 
(?7,000.00)," etc. 

Other provisions calling for the sale and upkeep of the machines 
at a stipulated price (in no way involved in any of the state court ac- 
tions) do not affect the relation of the parties as licensor and licensee. 

Such being the position of the parties, Spoor cannot dispute appel- 
lant's title. He is estopped by his contract. Chicago & Alton Ry. Co. 
V. Pressed Steel Car Co., 243 Fed. 883, 156 C. C. A. 395 ; Siemens 
Halske Elec. Co. v. Duncan Elec. Co., 142 Fed. 157, 73 C. C. A. 375. 
It therefore follows that, even though Bliss were successful in this 
suit in defeating appellant's patent, no benefit would inure thereby to 
Spoor in any of the pending state couit actions. He still would be 
liable on his contract for thèse unpaid installments. A reversai of the 
injunctional order necessarily follows. 

[2] Appellant, however, also asks us to dismiss the suit for the va- 
rious reasons assigned. But our right to so dismiss, even though the 
injunctional order be vacated, is challenged by appellee, who urges that 



134 262 FEDERAL REPORTER 

on appeal from an interlocutory injunctional order this court is with- 
out authority to direct a dismissal. 

While many cases may be found where the appellate courts refused 
to consider the question of dismissal (and for good reasons in those 
cases), the question of the right to dismiss upon a proper showing is 
not debatable. Smith v. Vulcan Iron Works, 165 U. S. 518, 17 Sup. 
Ct. 407, 41 L. Ed. 810; In re Tampa Suburb Railroad Co., 168 U. S. 
583, 18 Sup. Ct. 177, 42 L. Ed. 589. 

Especially are we justified in considering the motion to dismiss, on 
the présent appeal, for the facts upon which dismissal is asked also 
necessarily bear upon the question of the alleged abuse of judicial dis- 
crétion in granting the injunctional order. 

[3] Whether we should order a dismissal of the suit, therefore, dé- 
pends upon the particular facts and circumstances of this case, for a 
study of which we must more closely examine the findings of the master 
and the testimony in support thereof. That thèse findings so made 
are amply supported by tiie testimony we are fully satisfied. From 
the master's report it appears : 

That af ter appellant had obtained its first judgment and pending ap- 
peal by Spoor, and after other actions had been instituted against him, 
Spoor sent his associate, Thompson, to New York to purchase the so- 
called Schneider patent, for which purpose Spoor advanced $6,500; 
that such patent was acquired for the avowed object of instituting a 
suit against appellant, which suit was to be used to def eat or delay ap- 
pellant's actions in the state court or to force a compromise of thera ; 
that Thompson, to more effectively accomplish this object, caused the 
assignment of the Schneider patent to run to one Bliss, plaintiff in this 
suit, who was the innocent tool selected to carry out this purpose ; that 
Bliss has no real interest in the patent, and never has had any ; in f act, 
he never hired an attorney to commence suit, nor paid any of the fées, 
has no voice in the management of the litigation, and is indiffèrent to 
the outcome, frankly stating that Thompson agreed to pay ail the ex- 
penses of the litigation. In short, Bliss stated that he never knew a 
suit had been commenced in his name, and was ignorant of the contents 
of the bill as filed. 

That this conduct is such as to justify a déniai of ail relief and a 
dismissal of the bill can hardly be seriously questioned. The conclu- 
sion that the présent suit is for the sole purpose of hindering and de- 
laying the proceeding in the state court is most amply supported by 
the testimony. Nor can the jurisdiction of the state court, upon the 
facts disclosed and for the relief sought, be questioned. The présent 
suit, then, bJuntly expressed, was but a means whereby Spoor, hard- 
pressed in the state court, using a dummy (Bliss) to conceal his own 
identity, sought to do indirectly and deceptively what he could not do 
directly and openly — interfère with the orderly proceedingn of the state 
court. Such action on his part is little less than contempt of that court. 
Coram v. Davis (C. C.) 174 Fed. 664; Lord v. Veazie, 49 U. S. (8 
How.) 251, 12 L. Ed. 1067. That this court should not lend itself to 
such a purpose, or its aid to such a resuit will, of course, be at once 
conceded. 



BELL & HOWELL CO. V. BLISS 135 

(262 F.) 

[4] The complainant, entering a court of equity, must come with 
clean hands. Nor is this court, as argued by counsel for appellees, lim- 
ited, in applying this maxim, to a case where the iniquitous action is 
one of whicii the moving party may personally complain. The rule 
thus invoked need not be pleaded at ail. In f act, it is net a matter of 
défense primarily. Courts apply it, not to f avor a défendant, but be- 
cause of the interest of the public; courts act sponte sua. 10 R. C. 
L,. 390; Memphis Keeley Institute v. Leslie E. Keeley, 155 Fed. 964, 
84 C. C. A. 112, 16 1.. R. A. (N. S.) 921 ; Weeghman et al. v. Killifer 
et al., 215 Fed. 289, 131 C. C. A. 558, L. R. A. 1915A, 820; Larscheid 
V. Kittell, 142 Wis. 172, 125 N. W. 442, 20 Ann. Cas. 576. 

It may be conceded that the naked légal title to the Schneider patent 
is sufficient to support a suit thereon by Bliss, but this absence of real 
interest becomes most material when it further appears that the suit is 
thus instituted to conceal the identity of the real party and the real ob- 
ject of the litigatiotL 

Another reason in support of the conclusion hère reached appeals to 
us as most persuasive. The real parties plaintiff in this suit are Spoor 
and Thompson. Confessedly, Bliss only holds the title for them. Upon 
the testimony before the court, we may not he able to exactly define 
the précise interest of each; but it affirmatively appears that the two 
together are the real owners of the Schneider patents. Placing them, 
then, in their true position, as we are required to do, viz. as complain- 
ants in this suit, with the appellant as défendant, we hâve the anomalous 
situation of Spoor and Thompson seeking an injunction against appel- 
lant for continued infringements committed by Spoor and Thompson. 
If Spoor and Thompson hâve any remedy at ail, it is not in equity. 
Future infringements at any time may be stopped by the complainants. 
If Spoor and Thompson cease using machines, and order no more from 
appellant, then no further infringement will occur. For past infringe- 
ments complainants hâve their remedy at law. 

Equity intervenes in patent infringement suits to prevent a multiplic- 
ity of actions. Injunctions will be denied, and complainants relegated 
to their actions at law, whenever the proof fails to show threatened 
future infringements by the défendant. In the présent suit, Bell & 
Howell infringe only when requested by Spoor and Thompson, the real 
complainants. Certainly complainants cannot complain of their own 
conduct, or of actions induced by their conduct. 

If this conclusion results in a loss of some or ail of their rights under 
the contract with appellant, then their remedy, if any they hâve, must 
be based upon or arise out of tlie contract. This court will not uphold 
the présent suit, because perchance some one of the parties whose in- 
terest is adverse to.appellant has, or claims to hâve, an unstated cause 
of action against appellant, arising out of a différent and distinct state 
of facts. 

The order granting the injunction is reversed, and the cause remand- 
ed, with direction to dismiss tl e bill ; the dismissal, however, to be with- 
out préjudice to the real parties to institute any suit or action that they 
may be advised exists in their favor. 



138 262 FEDERAL REPOKTBB 

On Pétition for Rehearing. 

In support of a pétition for rehearing, counsel for Spoor criticizes 
that portion of the opinion wherein the court says : 

"Another reason In support of the conclusion hère reached appeals to us 
as most persuasive. The real parties plaintiff in this suit are Si)oor and 
Thompson. Confessedly, Bliss only holds the title for them. Upon the testi- 
mony before the court, we may not be able to exactly deflne the précise inter- 
est of each; bût it afflrmatively appears that the two together are the real 
owners of the Schneider patent. Placing them, then, in their true position, 
as we are required to do, viz. as complalnants In this suit, with appellant as 
défendant, we bave the anomalous situation of Spoor and Tliompson seeking 
an injunctlon against appellant for contlnued infringements commltted by 
Spoor and Thompson. If Spoor and Thompson hâve any remedy at ail, It ia 
not in equity ; for their infringement at any time may be stopped by the com- 
plalnants. If Spoor and Thompson cease using machines, and order no more 
from appellant, then no further Infringement will occur. For past infringe- 
ments complalnants hâve their remedy at law." 

This statement is criticized, because Spoor and Thompson are said 
to be the infringers ; it being claimed that Thompson is no party to the 
infringement. This criticism of the statement of fact seems to be well 
taken. While Spoor testified that Thompson worked for the Essanay 
Company, owned by Spoor, and was to be paid for film development by 
"the machine" at a certain rate per foot, it does not appear that "the ma- 
chine" referred to was the Bell & Howell machine. From the entire 
record we think it is more correct to conclude that the development 
work carried on by Thompson at the Essanay plant was by a machine 
other than the Bell & Howell machine. But infringement by Spoor, in- 
stead of by Spoor and Thompson, does afford justification for a change 
in the conclusion reached. 

[5] Counsel urge that, even though the Schneider patent is owned by 
Spoor and Thompson as tenants in common, Thompson may enjoin fu- 
ture infringement by Spoor, citing Herring v. Gas Consumers' Ass'n (C. 
C.) 9 Fed. 556, which supports his position. In that case the court says : 

"Oan a part owner Infringe the common patent and eseape ail llability? 
* ♦ * Se has, by virtue of the joint oivnership, a right to use the patenta- 
but he has no right, more than a stranger, to infringe the same. If there is 
an Infringemert, the right of recovery is In the party wronged. AU the joint 
owners should ordinarUy be parties plaintiff; but, if the wrongdoer is the one 
who is guilty to the damage of the other joint owner, the latter should not 
be left remediless. As to such Infringement they are strangers." 

The reasons thus given for the décision are not at ail persuasive. If 
a tenant in common, by virtue of the joint ownership, "has a right to use 
the patent," as conceded in this opinion, we are at an utter loss to un- 
derstand why "he has not the right to infringe" the same. The con- 
trary conclusion is supported by numerous authorsties. Among them 
are several décisions by this court. Walker on Patents (3d Ed.) § 294 ; 
Aspinwall Co. v. Gill (C. C.) 2,2 Fed. 697; Pusey & Jones Co. v. Miller 
(C. C.) 61 Fed. 407; Blackledge & Weir v. Craig Mfg. Co., 108 Fed. 71, 
47 C. C. A. 212; Drake v. Hall, 220 Fed. 905, 136 C. C. A. 471 ; Central 
Brass & StampingCo. v. Stuber, 220 Fed. 909, 136 C. C. A. 475. 

While this was but one of the reasons assigned in the opinion in sup- 
port of the reversai of the order entered in the District Court, and the 



K. LEWALD & CO. ▼. BARNBS IST 

(262 F.) 

reversai might well hâve rested upon the other reasons there set forth, 
we embrace the opportunity of correctin^ the opinion so far as we find 
it in error, and at the same time dispose of the contention in support 
of the pétition for rehearing. 
The pétitions for a rehearing are denied. 



F. LEWALD & CO. V. BARNES. 

(Carcult Court of Appeals, Seventh Circuit. October 7, 1919. Rehearing 
Denied December 5, 1919.) 

No. 2714. 
Patents <S=328 — Poe cott buttons not iNFBiNaED. 

The Bamey patent, No. 885,135, for separable cuff link buttons, heti 
not infringed. 

Appeal f rom the District Court of the United States for the Eastern 
Division of the Northern District of Illinois. 

Suit in equity by C. Clarence Barnes, trustée, against F. Lewald & 
Co. Decree for complainant, and défendant appeals. Reversed. 

Edward Rector and Walter H. Chamberlin, both of Chicago, 111., 
for appellant. 

Laurence A. Janney, of Chicago, 111., for appellee. 

Before BAKER, ALSCHULER, and EVANS, Circuit Judges. 

ALSCHULER, Circuit Judge. The appeal is from a decree finding 
infringement of United States patent No. 885,135, 1908, to Barney 
relating to separable cuff link buttons. Infringement is the sole issue. 
Figures 1, 2, and 3 of the patent are: 




138 262 FEDERAL BBPOETEB 

Flg. 1 shows the button in position, the inner flanges having heen 
passed through the button holes of the cuflFs leaving the button faces 
B, B' in position, the Connecting link flexibly holding the two button 
members in relatively similar position to accommodate the inchnation 
of the cuff ends m, m. In Fig. 2 link r, r is mounted revolubly in the 
left button member of the figure, its révolution being effected by the 
small cross-piece 1, the head a' of the free end of the link being in- 
serted through a slot in the other button member, and by means of a 
quarter tum of the link held by engagement with the inner side of the 
slot plate, and withdrawable therefrom only by turning the link to 
bring the head in alignment with the slot. A pressure spring keeps 
the link from automatically turning, and the revolving of the button 
members themselves (whereby the link head might become withdrawn 
and the button members separated) is prevented by the stiffness of the 
cuflf which holds in place between the edges of the button-holes the flat 
Connecting shank between the two flanges of each button member. 

Such buttons are useful in that the separate members may be insert- 
ed through the buttonholes, and the cuff while on the wrist may be 
readily fastened by the opposite hand, and unfastened without need of 
removing one of the button members from the buttonhole, and there is 
no likelihood when the cuff is not buttoned together, of the separate 
parts dropping from the cuff. 

Concededly the device which the patent describes is useful only in 
a stiff cuff, with the stiff buttonhole edges of which, as indicated, the 
device must coact in order to be effective. That this is contemplated 
by the patent is further manifest from that part of the spécification 
which reads: 

"Of course the saine resuit (bringlng the head of the link In alignment with 
the slot so that by revolving the link the head may enter or be withdrawn from 
the slot) may be attained by simply turning one or the other of the button 
members B B' 90°, but this action is obviously Impracticable when they are 
mounted in the buttonholes of the starched cuff." 

Admittedly the device of the patent could not be used for soft cuffs, 
the buttonholes of which would afford no résistance to the turning of 
the button members, and their conséquent f alling apart ; and when in 
about 1910 soft cuffs were coming more in vogue, demand arose for a 
separable link button for that use. The link of the then commercial 
Barney button could not be so employed, nor was the spécial adapta- 
bility of the described Barney device to the relative inclination of the 
two ends of the stiff link cuff a factor in the soft cuff problem, where 
there was no fixed relative inclination of the cuff ends calling for ad- 
justability or flexibility as, between the two button members. There- 
upon appellant brought out, and for some years has been making and 
selling the alleged infringing button desîgned for soft cuffs and consist- 
ing of two parts, each having an outside button head and an inner 
flange, with a bail produced from the inner flange of one of the parts, 
adapted to snap intq and out of a spring socket in the inner flange of 
the other button part, the two parts being joined by the ordinary snap 
joint thus formed, and being attached or separated by manual pres- 
sure. 



p. LEWALD & CO. V. BASNBS ^^^ 

(262 F.) 

Claim 1 of the patent in suit is as follows: 

"As an Improved article of manufacture a separable cuff llnk button, the 
Bame comprising a pair of Independent button members each provlded with a 
flxed shank terminating in a latéral flange or enlargement adapted to pass 
through a buttonhole of the cuft and retain said member therein, a swinglng 
coupling member or Itnk mounted on one of the button members and extending 
lougitudlnally beyond its flange, and having the free end of sald link con- 
structed to engage with the fellow button member for detachably securing 
them together." 

Appellant contends that its button is not within the purview of the 
Barney conception, and that, even if claim 1 were literally readable 
upon it, when construed in the hght of the prior art and the prob- 
lem Barney undertook to solve, the claim cannot be held to cover ap- 
pellant's device. Moreover, appellant insists that in its button there is 
an entire absence of that élément in the claim set forth as "a swinçing 
coupling member or link mounted in one of the button members." It 
is appellee's contention that this élément of the claim is found in ap- 
pellant's device in the adjustability of the parts by reason of the snap 
joint not being absolutely rigid, but subject to more or less of move- 
ment; that the claim itself does not require the link to swing in the 
member upon which it is mounted, but that the swinging may take 
place in the opposite member to which in use it is detachably secured ; 
and that even if, by the terms of the claim, the link swings from the 
member on which it is mounted, the rigidity of its mounting in appel- 
lant' s button, and the swinging action in the opposite button member, 
would be but a reversai of the opération of the parts, whereby no dif- 
férent resuit is secured, and infringement would not be thereby 
avoided. 

Our study of the record convinces us that Barney was dealing only 
with a problem of cufï buttons with détachable part, readily conform- 
able to the surface of the stifHy starched link cuflf. He had to hâve such 
mobility and flexibility of the two parts as would leave them in rela- 
tively similar position, not controlling or influencing the shape or in- 
clination of the cuflf, but conforming to the cufif surface. This is what 
Barney described — ^button members which must hâve relatively similar 
adjustability. Of course the old chain or link fastening between the 
cufï buttons left the buttons to conform themselves to the position of 
the cuflfs, and where the link was rigid to the buttons, the latter were 
inclined at such angle as would conform approximately to the probable 
inclination of the cufï. But Barney was trying to accomplish the same 
resuit with buttons which might be readily joined or separated as indi- 
cated, while the wearer has the cuffs on, and without likelihood when 
separated of the parts dropping from the cuffs. It is manifest that if, 
instead of the link swinging in the member in which it is mounted, it 
had been rigid thereon, Barney's button would hâve been a failure for 
use on stiff cuffs, in that whatever flexibility might hâve been secured 
through the swinging attachment of the free end of the link to tlie 
opposite side, there would be no adjustability of the member to which 
the link was rigidly attached. If the link were attached rigidly at right 
angles to one member, and there was mobility only with the opposite 
member, it is apparent that the rigidly attached button would either 



140 262 FEDERAL REPORTER 

not lie flat against the cuff, or would force that end of the cuff either 
forward or backward from the other end, so that the ends would not 
be even. 

The scope and law of the invention seem to be well indicated where, 
referring to the Connecting Hnk, the spécification describes "a swinging 
spring pressed rotatable central link or tongue mounted in one of said 
front heads and extending longitudinally through its shank and back 
head and being detachably connected in a yielding or flexible manner 
with the back head of the other button member," thus indicating flex- 
ibility and conformability at both ends of the link. 

It seems that about 1910 Barney aiso went to work on the problem 
presented by the soft cuflf, and he then brought out his types E, F, and 
G, which were offered in évidence, and which some years later came 
into commercial use; but it is to be noted that while in those types 
he abandoned the revolubility of the Connecting link as described in 
eacli of them he retained the élément of the Connecting link swinging 
in the member on which it is mounted. It does not appear from the 
évidence that this was necessary for the purpose of producing a but- 
ton effective for soft cuffs, but whether Barney was or was not aware 
of this, he still clung to the link which swung on the member on which 
it was mounted, and as late as 1918 he licensed another model of, 
soft cuff link button which is likewise swingingly mounted on one 
member, the free end, as in appellant's button being joined to the other 
member by a snap Joint. It does not appear that appellee ever con- 
ceived or undertook to make a button wherein the link is rigidly held 
by the member on which it is mounted. 

Buttons composed of separable parts, each having two flanges for 
inserting in différent garments or parts of garments, to be fastened to- 
gether by the uriion of the button parts, are old. Newman (patent 
227,700, 1880) shows a cuff button in two parts, each having two flang- 
es, one part having a rigidly attached compressable protruding bail 
to be pressed into a socket in one of the flanges of the other part. True 
it was not used for so-called link cuffs, but for the ordinary cuffs with 
overlapping buttonholes; and while the évidence does not show that 
link cuffs were then in use, ail that would be required to adapt it for 
the link cuff was to put a face on the under side. Indeed even this 
was not necessary, for the faces need not be the same, being just a mat- 
ter of choice. Appellant's device is far more nearly an adaptation of 
Newman than of Barney. Newman's button as shown in his patent 
would hâve served link cuffs, not so well as Barney's for the stiff cuffs, 
but better for soft cuffs. 

Buchanan (patent 12,020, 1902) and Marks (712,080, 1902) both 
show what in principle is very much akin to appellant's button. They 
are not stated to be cuff buttons, but they show what appear to be two 
ordinary coUar buttons, the head of one constituting a bail or having 
a rigidly attached bail to be inserted in a socket in the lower flange of 
the other, whereby one of the parts being fastened into the lower end 
of a détachable cuff, and the other into the wristband of the shirt, the 
cuff is readily attachable and détachable by snapping or unsnapping; 
the bail of one of the button parts into or out of the socket in thej 



QETTY V. LATNE 141 

(262 FJ 

other. If such device were inserted in the huttonholes of soft cuffs 
we would hâve the same resuit and the same possibiUties as with appel- 
lant's button, the matter of shape or ornamentation of the faces net 
involving invention. 

We are satisfied that claim 1 of the patent in suit contemplâtes as 
one of its essential éléments a link or coupling member which swings 
in the buttori member on which it is mounted, and that appellant's de- 
vice does not embody this élément or its équivalent, and it does not 
therefore infringe. 

The decree of the District Court is reversed, with direction to dis- 
miss appellee's bill. 



GETTY V. LATNE et aL 

(Circuit Court of Appeals, Fifth Circuit January 5, 1920. Reliearlng Denied 

February 18, 1920.) 

No. 3384. 

Patents ®=3328 — Patent for well mechanism valid, but not infeinged. 
The Layne patent, No. 821,653, for well mechanism^ held valid, but not 
entltled to the wide range of équivalents of a pioneer patent; also held 
not mfringed. 

Appeal from the District Court of the United States for the West- 
ern District of lyouisiana ; George W. Jack, Judge. 

Suit in equity by Mahlon E. Layne and others against Fred I. Getty. 
Decree for complainants, and défendant appeals. Reversed. 

R. E. Milling, of New Orléans, La., and Francis M. Phelps, of Wash- 
ington, D. C, for appellant. 

Paul Synnestvedt and Harvey h. Lechner, both of Philadelphia, Pa., 
Jesse R. Stone, of Houston, Tex., J. D. Wilkinson, of Shreveport, La., 
and Walter P. Armstrong, of Memphis, Tenn., for appellees. 

Before WALKER, Circuit Judge, and GRUBB and ERVIN, Dis- 
trict Judges : 

GRUBB, District Judge. This is an appeal from a decree of the 
District Court for the Western District of Louisiana in favor of the 
plaintiffs in the District Court, the appellees in this court, and against 
the appellant in this court, who was the défendant in the District Court. 
The effect of the decree was to sustain the validity of letters patent is- 
sued to the appellee, Mahlon E. Layne, May 29, 1906, for a well mecha- 
nism and numbered 821,653, and also to find that the défendant had 
inf ringed the patent by a patented construction of his own. The same 
patent has been twice heretofore passed on by this court, and its va- 
lidity twice sustained. El Campo Machine Co. v. Layne, 195 Fed. 83, 
115 C. C. A. 115; Van Ne?s v. Layne et al., 213 Fed. 804, 130 C. C. 
A. 462. We think the défendant showed no sufficient reason for a 
departure from our previous décisions sustaining the patent, and that 
the District Court was correct in determining the question of its valid- 
ity in favor of the plaintiffs. 

(gssFoi other cases see s&me topic à KEY-NUMBER In ail Key-Numbered Digests & Indexes 



142 262 FEDERAL REPORTER 

The remaining question is that of infringement. The merit in 
Layne's invention, protected by the patent sued on, was that it provided 
a pump for deep wells, by avoiding the necessity of having a wide pit 
at the top of the well, and so was capable of being used in drilled 
wells, and those drilled narrowly and to a comparatively great depth. 
Doing away with the wide pit at the top made it necessary that the ad- 
justment and lubrication of the well mechanism be donc firom the sur- 
face, instead of from the bottom of the pit. The problem that con- 
f ronted L,ayne was to devise a mechanism that could be placed and kept 
in position, oiled, and opéra ted frein the surface. This required ad- 
justment, lubrication, and protection of the bearings and shaft, after 
the well mechanism had been lowered into the drilled hole, and with- 
out the necessity of the removal of it therefrom. The Crannell patent 
was intended for use in a wide pit, into which descent was possible, 
and so Crannell was confronted with no such problem. The limited 
depth of the pit, in which the Crannell patent was to be used, made it 
also unnecessary to use a jointed shaft and intermediate bearings. 
Layne solved his problem by the use of a jointed shaft with inter- 
mediate bearings, lubricated from the top to the bottom by gravity, 
and protected from the water and sand of the well by being inclosed 
in a casing, which excluded both sand and water from the bearings 
and shaft. He accomplished its adjustment to vertical positions in the 
well hole by suspending the shaft, pump and casing from the top of 
the well, and by a .System of wedges holding the well mechanism in 
position when adjusted. The suspending of the well mechanism from 
the top also enabled Layne to keep the shaft in alignment through the 
added stifïness given by the downward thrust of the weight of the 
pump and shaft. This downward thrust also helped to effect the 
closure at the lower bearing against the entrance of sand and water. 
However, the spécifications of Ivayne's patent show that he relied upon 
stufiîng boxes at the top and bottom of the shaft to effect the closure, 
and to prevent entrance of water and sand, to the détriment of the 
shaft and bearings. 

The twentieth claim of the patent — that sustained in the case of Van 
Ness V. Layne, supra — covered "the combination of a well casing, a 
rotary pump therein, and a line shaft for the pump entirely closed off 
from the water in the tvell." Validity was given this claim by defin- 
ing a closed shaft to be one having the three functions of (1) aiding the 
alignment of the shaft in the well casing ; (2) providing for lubrication 
of the shaft and bearings ; and (3) protecting the shaft and bearings 
from water and sand. The question of adjustment did not enter into 
the discussion in that case. The closed shaft of the claim was restrict- 
ed, as above stated, by referring it to the character of inclosed shaft 
described in the spécifications of the patent. It was only by giving the 
claim this restricted meaning, and limiting it to the description in the 
spécifications, that the claim could be sustained. We must then look 
to the spécifications to détermine the character of an inclosed shaft 
covered by the Layne patent. The shaft there described was a jointed 
shaft with top, intermediate, and lower bearings, means of adjustment 
and fixation, means for lubrication, means for alignment in the well. 



GKTTT V. 1.ATNK 1*3 

C262 F.J 

and means for preventing water and sand f rom reaching the shaft and 
bearings. The Layne patent too nearly resembles the Crannell patent 
to be called a pioneer patent, though it did accompHsh a révolution in 
the well-driUing industry. Its merit was in adapting the Crannell type 
of pump to a narrow and deep well hole, in a way that has been held 
hy us to exhibit novelty. While the substitution of mère mechanical 
équivalents for the means adopted by Layne could not avoid inf ringe- 
ment of his patent, it is also true that the range of équivalents cannot 
be enlarged upon the idea that his patent was a pioneer one in the pump 
art. Its advance over Crannell prevented Crannell f rom being consid- 
ered by us an anticipation, and was enough to show novelty, but it stops 
there. The lyayne patent must rest, not upon the idea of closure, which 
would not be patentable apart from the method by which it was ac- 
complished, but upon the means of its accomplishment, as disclosed by 
the spécifications of his patent. The means which he adopted to ac- 
complish adjustment we are not hère concerned with, because the 
Getty pump has no means of adjustment up and down in the well. It 
is also true that the Getty pump cannot be held to infringe the means 
that Layne used to keep his shaft properly aligned, since that was 
accomplished by suspending the mechanism from the top of the well, 
while Getty's pump mechanism receives its support by resting on the 
bottom of the well. 

That leaves remaining for considération the comparison of the re- 
spective methods used by Layne and by Getty for lubrication and for 
closure. Layne's method of lubrication was to put the oil in at the top 
and to permit it to descend to each of the bearings, and remain stag- 
nant within tlie shaft casing until ejected from the top after it had 
become spent by air pressure through an air vent. When it was eject- 
ed, it was replaced by clean oil from the top again. On the other hand, 
the oil was confined at the bottom of the well by use of a packing or 
stuffing box. Getty adopted a circulatory System of lubrication. By it 
the oil was also introduced from the top, and descended to the lower 
bearings by gravity. However at the bottom there was only a partial 
obstruction to its exit, presented by a long sleeve bearing. Its passage 
out from the shaft casing was automatic and continuons, so that there 
was a constant and free flow of lubricant from the top of the line shaft, 
throughout its length, and out through its bottom. This method was 
claimed to be necessary to Getty's device, because wear on the upper 
bearing required a continuons supply of fresh oil for its proper lubrica- 
tion. Thèse f unctional différences between the stagnant and circulatory 
Systems of lubrication prevent their being considered as merely mechan- 
ical équivalents. 

Layne, according to the spécifications of his patent, efïected his clo- 
sure at the top and bottom of his shaft by the présence of stufifing boxes, 
assisted by the effect of a downward thrust bearing and collar. In prac- 
tice, La3me soon abandoned the use of packing boxes, substituting there- 
for a long sleeve bearing and retaining the collar. The downward 
thrust of the weight of the shaft and pump, together with the down- 
ward pressure of the column of oil in the shaft casing, accomplished 
his closure. While the pressure of the column of oil against the out- 



144 262 FBDEBAL REFOBTEB 

ward column of water is now urged by Layne as important in his means 
of closure, it is true that it is not stressed, as such, in the disclosure 
of his patent. Principal reliance is there placed on the use of stuffing 
boxes. Getty's mechanism is f ree from any such closure devices, either 
against the flow of oil outward or the flow of water inward, except 
the long sleeve bearing, without either a collar or the advantage of 
the downward pressure from the suspended apparatus. Getty relies 
for closure upon the downward pressure of the oil column balancing 
the upward pressure of the water column. His mechanism prevents 
him from availing of packing boxes to effect closure, because they 
would equally prevent the exit of the oil, which is a necessary feature 
of his circulatory System. The same reason would prevent his using 
a thrust hearing with a collar. In addition, the fact that his pump, 
shaft, and casing are supported on the bottom of the well, and are not 
suspended from ahove, deprives him of the downward thrust, due to 
the weight of the apparatus as a means of closure. 

We think Getty has accomplished closure and lubrication by means 
so functionally différent from Layne's disclosure in his patent, that 
they cannot be said to be mère mechanical équivalents, but rather dis- 
tinct methods of attaining the same object; the object itself not be- 
ing patentable. The mère fact that Getty's closure is not complète, or 
not as complète and effective as that of î^ayne, is an unimportant fact. 
The material différence lies in the fact that Layne's patent effects the 
closure by physical obstructions, such as packing boxes and thrusts 
bearings, aided incidentally only by the pressure of the oil column, 
while Getty's partial closure is effected by balancing the pressure of the 
column of water outside the shaft casing against the pressure of the 
oil inside the casing, without the use of physical obstruction. The dif- 
férence is not one without a reason, and adopted merely to avoid in- 
fringement. It is made necessary by the différent method of support 
and lubrication used by Getty from that disclosed in Layne's patent. 
It is true that in the Van Ness Case this court stated that Van Ness 
used the pressure of the oil column, and did not use packing boxes, to 
effect closure. Van Ness, however, did suspend his well mechanism 
from the top of the well, and did use thrust bearings and a collar to 
help close the bottom of the shaft casing. The mechanism in the El 
Campo Case, which was held not to infringe l,ayne's claims numher- 
ed 4, 9, and 20, was one that was also supported at the bottom of the 
well, instead of being suspended from the surface. Referring the 
closed shaft of Layne to the description in the spécifications of his 
patent, as we must do, we think the différences from Getty's mecha- 
nism with respect to means of aJignment, lubrication, and closure are 
so important that Getty's differing means should not be held to be 
mechanical équivalents, and should not be held to infringe the closed 
shaft of Layne's patent. 

The decree of the District Court is therefore reversed, and the 
cause remanded to that court for further proceedings in conformity 
with this opinion ; and it is so ordered. 



ZIDELL V. DEXÏEB 145 

(262 P.) 

ZIDELL V. DBXTER et al. 

(Circuit Court of Appeals, Ninth Circuit. .Tanuary 5, 1920.) 

No. 3389. 

1. Patents <®=j28 — Absembling old éléments into single design constitdtes 

invention. 

The fact that tlie éléments of a design patent were old does net establisli 
want of invention in assembling them. 

2. Patents ©=5328 — Design patent fob childken's eompers valid. 

The Zldell design patent, No. 52,720, for childien's rompers, held valid 
and not infringed. 

3. Patents (S==>252 — Design patent not infbinged by distinquishable vaei- 

ATION or ELEMENTS. 

Wliere a design invention consists only of bringing togetber old élé- 
ments with slight modifications of forni, the invention is confined to 
those modifications, and a person using tlie same éléments with his own 
variations of form does not infiinge, if his design is reasonably distinguish- 
able from the patented design. 

4. Patents ®=5252 — Design patent fob children's eompebs not infbinged. 

Design patent for children's rompers held not Infringed by varions gar- 
ments, each of which had some, but not ail, of the éléments contained in 
the patented design. 

Appeal from the District Court of the United States for the South- 
ern Division of the Southern District of CaUfornia; Oscar A. Trip- 
pet, Judge. 

Patent infringement suit by William I. Zidell against Mrs. Billie 
Dexter, trading as the Billie Bumps Manufacturing Company, and 
Arthur Letts, trading as the Broadway Department Store. From 
that portion of the decree holding that certain garments did not in- 
fringe (259 Fed. 582), plaintiff appeals. Afïîrmed. 

Frederick S. Lyon and Léonard S. Lyon, both of Los Angeles, Cal., 
for appellant. 

William R. Litzenberg, of Los Angeles, for appellee Broadway De- 
partment Store. 

Charles C. Montgomery and Victor R. McLucas, both of Los An- 
geles, Cal., for appellee Dexter. 

Before GILBERT, ROSS, and HUNT, Circuit Judges. 

GILBERT, Circuit Judge. The appellant brought suit for infringe- 
ment of design patent 52,720, issued to the appellant on November 19, 
1918, for "children's rompers." The court below held that the pat- 
ent was valid, and that the défendant Letts had infringed by manufac- 
turing and selling garments of the type described in the proceedings as 
Exhibit No. 6, but had not infringed in the making and selling of cer- 
tain other types of garments, known in the record as Exhibits No. 
4, No. 5, and No. 8. From that portion of the decree the appellant ap- 
peals. 

[1] The patent was obtained without spécifications or description 
other than drawings of the design, and it gives to the public no no- 
tice that any particular élément or group of éléments of the design is 

^:=>For other cases eee same topic & KEY-NUMBBR In ail Key-Numbered Digests & Indexes 
262 F.— 10 



14G 262 FEDERAL REPOKTEU 

prédominant. On the face of the design tlie more promînent distin- 
guishing features would appear to be (1) a square Dutch collar; (2) 
the ornamentation of collar, wrist bands and knee bands; (3) a belt 
with large buttons; and (4) the flaring or peg shape of the trousers. 
The prior art is shown by the Verdi patent, No. 1,255,491, issued Oc- 
tober 15, 1917, for a "child's garment," in which is shown a square 
neck, short sleeves, flaring or peg-shaped skirts, and a belt, ail in gên- 
erai resemblance to the appellant's design. Patent No. 47,447, issued 
to Georgene Averill June 15, 1915, présents a combination of short 
sleeves, belt, and peg-shaped trousers. Patent 51,674, issued to S. E. 
Davis january 8, 1918, for "child's one-piece outer garment," exhibits 
the gênerai features of the appellant's design, with the single exception 
that the trousers are long and hâve not the peg shape. An advertise- 
ment in a Los Angeles daily paper of May 25, 1917, displays a picture 
of a one-piece child's garment called "Peggy Jeans," showing a square 
neck, short sleeves, sleeve cuffs, and belt, and an advertisement in a 
i,os Angeles paper of June 5, 1917, shows a garment called "Klever 
Kiddie," with Dutch neck, short sleeves, with cuffs, and flaring trou- 
sers, with gênerai peg effect. Other advertisements of the year 1917 
display similar one-piece rompers with the Dutch neck, short sleeves, 
sleeve cuffs, belts, and short trousers, the latter fuU, but not peg- 
shaped. 

It will thus be seen that there is nothing new in any of the features 
of the appellant's design. He but brought together éléments that 
were old and well known. Single pièce child's rompers with belts were 
old. Square Dutch collars were old. Ornamental stitching was old. 
Peg-shaped trousers were old. The fact that the éléments were old, 
however, does not prove want of invention in assembling them into a 
single design, and in view of the fact that the patent was granted, and 
that the design was favorably accepted by the public, we are not con- 
vinced that the court below was in error in sustaining the validity of 
the patent. 

[2-4] In a design invention, which consists only of bringing to- 
gether old éléments with slight modifications of form, the invention 
consists only in those modifications, and another who uses the same 
éléments with his own variations of form does not infringe, if his 
design is distinguishable by the ordinary observer from the patented 
design. This is the conclusion deducible from the leading case of 
Smith V. Whitman Saddle Co., 148 U. S. 674, 13 Sup. Ct, 768, 37 L. 
Ed. 606. And in cases where, as hère, the éléments of the design are ail 
old, and the design is illustrated by drawings only, it has been held 
that in the absence of spécifications the patentée who combines the old 
éléments must be held substantially to the design which he exhibits bv 
his drawing. In Ashley v. Samuel C. Tatum, 186 Fed. 339, 108 C. C. 
A. 539, it was held that in the absence of a spécification calculated to 
secure to the patentée the prédominant feature of his device, with or 
without ornamentation, the absence of ornamentation as shown in his 
drawing must be considered an essential élément of the design, and it 
is not infringed by another design which shows such surface orna- 
mentation. In R. E. Dietz Co. v. Burr & Starkweather, 243 Fed. 592, 



ZIDELL V. DEXÏER 147 

(262 F.) 

156 C. C. A. 290, the court said that when a spécification îs nied with 
the drawing — 

"it must be construed together wlth the clalm and drawing, as Is the estab- 
lished rule in respect of other patents. The rules of interprétation are not 
différent from those regulating other patents, and a design claim may (like any 
other) be restricted to the spécifie form sliown. 

And in Asliley v. Weeks-Numan, 220 Fed. 899, 136 C. C. A. 465, the 
court said : 

"The patentée having a patent with written spécifications relating to an 
entirely new form of inkstand, he is entitled, not only to the exact design 
shown in his drawing of the patent, but also to the protection of the court 
against the making and marketing of inlistands which contain the dominant 
features of the design described in the spécification." 

As already shown, we hâve no means of knowing which, in the mind 
of the inventor, was the prédominant feature of his design. It seems 
obvious that one purchaser might be attracted by the shape of the col- 
lar, another by the ornamentation stitched on the coUar, cuffs, and 
knee bands, another by the belt with large buttons, and another by 
the flaring effect of the trousers. The garment known as No. 6 has ail 
of the features of the patented design, excepting that the ornamental 
stitching is slightly différent, and the collar, instead of being made 
square, is V-shaped. This the court held to be an infringement and 
the ruling in that respect is not challenged by appeal. Exhibit 4 differs 
from the patented design in that there is no ornamental stitching on the 
Dutch collar or cuffs, and no belt with buttons, and it is distinctly 
différent in the shape of the trousers, which, instead of flaring mid- 
way, carry side pockets flaring at the top of the trouser legs. Exhibit 
No. 5 has ail the features of the design patent, except that it is not a 
single pièce garment and has no ornamental stitching, and has two front 
pockets stitched upon the trouser legs. Exhibit 8 is similar to Exhibit 
4, except that it has buttons upon the belt. 

We do not think that the court below erred in holding that thèse 
garments do not infringe. In determining the question of infringe- 
ment, both the character of the design and the nature of the fabric 
to which it is applied are to be taken into account. The différences 
in designs, which under the patent law will avoid infringement, are 
différences which will attract the attention of the ordinary observer, 
giving such attention as the purchaser usualiy gives in buying articles 
of the kind in question and for the purposes for which they are intend- 
ed. The évidence shows that at and prior to the conception of this 
design there were in use and on sale very many similar garments, with 
variations in design so slight as to leave to the ordinary observer the 
impression of a very gênerai resemblance, and we must assume that 
to womankind, who are the purchasers in the main of this class of gar- 
ment, thèse various coincident forms of garments were known, and 
whether such purchasers would be deceived into taking the garments 
which are alleged to infringe for a garment of the patented design 
would necessarily dépend largely upon that gênerai knowledge. There 
is no évidence that any purchaser has in fact been so misled. 

The decree is affirmcd. 



148 2C2 l^EDEItAL lïKPOETEK 

A. KIMBALL CO. v. NOESTING PIN TICKET CO. 

(Circuit Court of Appeals, Second Circuit. December 16, 1919.) 

No. 74. 

1. Patents <S=5l6 — Attkibutes of "invention" stated. 

Wh.Ile patentable "Invention" Is net a term of légal art, or capable of 
judicial définition, yet it is a means only, or tlie embodiment of the in- 
ventive idea, and roerits the title, eveu if the want it meets is not appar- 
ent until some préviens invention, Imperfectly satlsfying the more unl- 
versal want, discloses the subordinate and narrower need. 

X Patents <®=>328 — Fok pin ticket device valid. 

The Thompson patent No. 1,252,862, for an improved pin ticket device 
to be attached to textile and other articles offered for sale, held valid 
against the contention that it did not disclose invention. 

3. Patents ©=3l7 — When meciiakical skill beoomes inveniio.n stated. 

As a mechanic is one who applies his trade by rule or rote, and only 
uses what he leamed yesterday to do the work of to-day, it may become 
invention, where a mechanic uses insight or foresight to couipreliend a 
probiem, and uses even the learaing of yesterday to do new things in a 
new way. 

Appeal froni the District Court of the United States for the South- 
ern District of New York. 

Patent infringement suit by the A. Kimball Company against the 
Noesting Pin Ticket Company. Decree for plaintif!, and défendant 
appeals. Afifirmed. 

Action Is upon patent 1,252,862, is.sued to J'^igene W. Thompson January 8, 
1918. The subject of invention is a "pin ticket," whlch means a card or tag 
intended to bear price marks or other descriptive matter, and afîlxed to arti- 
cles offered for sale (usually textile), by means of a pièce of wire, so formed 
as to présent a staple whose prongs pass through both card and cloth ; but the 
base of said vrire staple is so formed and prolongea (at right angles to the 
staple points) as to cmbrace (when bent) the conjoined edges of the pierced 
cloth and card. The staple ends are then also bent over or back against the 
rear face of the card. 

Of the claims in suit, the sixth defines the invention in most gênerai terms, 
and is as foUows : 

"In a pin ticket having a plurality of round-pointed doublfr«hank pins form- 
ed of a single pièce of wire, the wire between said pins engaging with the 
ticket to form a support therefor, the shank of said pins passing through the 
ticket, and the free ends of the wire being bent to engage with both surfaces 
of the ticket to hold the pins in engagement therewith." 

The seventh daim is not sufficiently différent to require quotation. The 
court below found the patent valid and infringed ; défendant appeals. 

Cyrus N. Anderson, of Philadelphia, Pa., and Walter K. Earle, 
of New York City, for appellant. 

Nathan Heard, of Boston, Mass., and Abr. A. Silberberg, of New 
York City, for appellee. 

Before WARD, ROGERS, and HOUGH, Circuit Judges. 

HOUGH, Circuit Judge (after stating the facts as above). Ap- 
pellant States that the only substantial question hère presented is va- 
lidity; i. e. can invention be found in this "pin ticket"? 

<g=For other cases see same topic & KEY-NUMBER in ail Key-Numbered Digests & Indexes 



A. KIMBALL CO. V. KOESTING TIN TICKET CO. Ui^ 

C262 F.) 

We accept the statement, and shall endeavoi^ to answer the query, 
without bolstering décision by dwelling on the presumption attaching 
to grant of letters, or the admitted fact that défendant controls and 
manufactures under another patent, over which priority was awarded 
Thompson after a protracted interférence. Such proceedings assume 
a belief in validity on the part of both contestants. Roth v. Harris, 
168 Fed. 279, 93 C. C. A. 581. 

[1] Invention, as we are instructed by the highest court, is not judi- 
cially to be defmed ; i. e., it cannot be determiued as to Umit of mean- 
ing. But many attributes may be marked. Thus patentable inven- 
tion is a means only; it is the embodiment of the inventive idea (Cor- 
rington v. Westinghouse, &c. Ce, 178 Fed. 715, 103 C. C. A. 479) ; and 
even the smallest invention, if it merits the title, must meet an existing 
want, yet that want, invoking invention, may never be apparent until 
some previous invention, imperfectly satisfying the more universal 
want, discloses the subordinate and narrower need (1 Rob. Pat. 134). 

It is this thought that justifies, and indeed compels, study of the 
prior art, as distinguished from anticipatory patents or uses. To 
know, not only what the "more universal want" was, but how far and 
by what means it had been supplied, is a process not seldom resulting 
in the validation of modest inventions, and the destruction of many 
of great pretense. 

This indicates that "invention" is not a terni of légal art, like "com- 
mon carrier" or "contingent remainder" ; nor can applicability be fixed 
by Consulting dictionaries, while reports furnish, not précédents, but 
only illustrations. What does connect the large word with the perhaps 
small thing is évidence ; and litigations like this become studies of 
facts, as varying in patent matters as in other human contests. 

[2] This record shows that, trivial as the article seems (e. g.) to our- 
selves, pin tickets hâve long been a widely used trade adjunct; also 
that much effort has been expended to produce them cheaply in quan- 
tity, yet affixable to a fabric's edge firmly and with ease, without prick- 
ing the operator or injuring what is marked. 

The "more universal want" has been and still is largely supplied by 
the "Empire ticket," made under an expired patent (St. John, 340,- 
961). The substantial différence between that ticket and Thompson's 
device is that the prongs of the latter's staple are f ormed, not by cut- 
ting a wire transversely ^nd making _ thereby a sharp point, but by 
doubling the wire back on itself and so producing a smooth, blunt 
point. 

The Bayer reissue, 13,769, shows that making smooth pointed pins 
by doubling a small wire on itself was known before Thompson ; no 
more is claimed for it. But the tool which rapidly and cheaply makes 
staple points by cutting wire may leave burrs or roughened edges, 
which, though usually negligible, eut (e. g.) délicate silk. 

Thus the "narrower need" is disclosed, and Thompson is confessedly 
the first to supply it. Others hâve tried to ; probably Bayer did ; but 
his pin could not hold its ticket firmly, and devices clutching or bind- 
ing, but not piercing, the f abric, hâve been put on the market, but with- 
out covering the ground. 



]Ô0 262 FEDEKAL REPORTEE 

Ilere, then, is a want shown to hâve long existed among intelligent 
merchants, whose desires are always studied by equally intelligent man- 
ufacturers, and the question recurs whether to furnish the means of 
supplying that want is invention. 

[3] It is, of course, urged, and naturally, that no more than a me- 
chanic's skill was needed to take the final step. But a mechanic is one 
who applies his trade by rule or rote, and only uses what he learned yes- 
terday to do the work of to-day in the same old manner. He may do 
it excellently, but if he has, not only hindsight, but insight or fore- 
sight, first to comprehend the problem and use even the leaming of 
yesterday to do the new thing in a new vs^ay, that mechanic has usu- 
ally eamed the inventor's title. 

This is what Thompson has done, if the malter be reasoned from 
the premises of évidence. It is, however, an important evidential élé- 
ment that the trade world to which this little device must appeal, 
whether of manufacturers or buyers, evidently regards it as important. 
That word is always relative, and courts and juries should learn its 
meaning from the évidence, and not their own émotions. 

Thus guided by the évidence, we find as matter of fact that the pat- 
ent discloses invention, and in so doing we arrive at a resuit not new in 
this court, and do it in substantially the same way as heretofore. 
George Frost Co. v. Cohn, 119 Fed. 505, 56 C. C. A. 185; David v. 
Harris, 206 Fed. 902, 124 C. C. A. 477; Barry v. Harpoon, etc., Co., 
209 Fed. 207, 126 C. C. A. 301 ; Fonseca v. Suarez, 232 Fed. 155, 
146 C. C. A. 347. 

The decree is affirmed, with costs. 



INGLE V. LANDIS TOOL CO. et al. 

(District Court, M. D. Pennsylvanla. June Term, 1919.) 

No. 267a. 

1. Patents <3=:5202(1) — Riqhts to paetly peei'ected invention passes bt as- 

signment of all patents, etc. 

Assignments, by which a concern transferred a boring maclilne, together 
wlth ail patents, drawings, patterns, etc., relatlng thereto, held to convey 
any rights the assignor had in an unpatented improvement made by 
one of its employés. 

2. Patents <S=393 — Employeb entitled to invention by employé. 

Where a designer, employed to make Improvements in a boring machine, 
left the résulta of his work wlth hls employer, and later returned at the 
request of the employer's assignée to give ail necessary assistance in ex- 
plaining the construction and opération of the machine, etc., held, that 
the employé's rights to the invention passed to hls employer under thetr 
contract of employment. 

8. Patents <g=»203 — Assigneœ's eights not qkeater than those oï patentée. 
A patentee's assignée, who was familiar with ail the transactions 
which constltuted proof that the patentée had sold hls inventive powera 
to his employers, has no better title to the patent than his assignor. 

®=3For other cases see same toplc & KEY-Xt'MBER in ail Key-NuTnb<?re<l Digests fi Indexes 



mGLE V. LANDIS TOOL CD. 151 

(262 7.) 

4. Bankruptcy <3=>138(2) — Riqhts to invention acquiked bt pabty claim- 

INQ tTNDEB TEUSTEB'S SALE. 

Where an employer became bankrupt, and Its assets and applications 
for patents on a boring machine were sold to trustées for credltors, wlio 
assigned them to the I. Company, whlch later sold and asslgned them to 
défendant, and an employé remained in tlie employment of the employer's 
successors and completed an improvement prior to the sale to défendant, 
défendant acquired title to the improvement, whether it was completed 
prior to bankruptcy or not 

5. Patents <S=5l83 — Rights to paetlt perfected invention govebned bt 

GENERAL BULES. 

The sale of a banknipt's interest In a partly perfected invention upon 
which patent had not Issued is governed by the gênerai principles relating 
to bargains and sales, since Eev. St. § 4898 (Comp. St. § 9444), requlriug as- 
slgnments of patents to be in writing, applies only where the patent bas 
Issued. 

6. Patents <S=»202(1) — Assignée holds légal titlb in tbust fob équitable 

OWNEB. 

The assignée of a patentée holds the légal title In trust for the owner 
of the équitable title. 

7. Patents <S=3316 — Court has powee to bequike assionment of patent in 

infringement suit to equitable owneb. 

Where a défendant set up its équitable title to the patent involved In 
an Infringement suit, the court, having jurisdictlon of the parties and 
subject-matter, may do complète equity between them by dismissing the 
bill and requirlng plaintiff to assign to défendant the légal title to the 
patent in suit. 

In Equity. Patent infringement suit by Arthur H. Ingle against 
the Landis Tool Company and the Gurney Electric Elevator Company. 
Bill dismissed, and plaintiff required to assign légal title to patent to 
the fiirst-named défendant. 

Charles H. Howson, of Philadelphia, Pa., Clyde L. Rogers, of Bos- 
ton, Mass., and James G. Sanderson, of Scranton, Pa., for plaintiff. 

E. W. Bradford, of Washington, D. C, and Fred C. Hanyen, of 
Scranton, Pa., for défendant. 

WITMER, District Judge. In this infringement suit, the sole ques- 
tion at issue is one of title or ownership of the improvements in a 
boring machine, forming the basis of this controversy, and covered 
by letters patent, on application of William R. Carey, No. 1,244,449. 

It appears that the Ingle Machine Company was organized in 1904 
Having purchased from Conrad M. Conradson the right to manufac- 
ture a horizontal boring machine which he had invented, together with 
assignments for patents, the company hegan the building and sale of 
thèse machines. The machines were improved through the efforts of 
the company, and in December, 1913, when it went into bankruptcy, it 
liad pending several applications for patents on improvements, includ- 
ing the application for the basic invention of Conradson. For some 
time preceding, William R. Carey was in the employ of the company 
as a designer on the boring machine and other tools, which the company 
was manufacturing. He was working for the company, and paid as 
such for his services. In the course of his employment Carey made 
drawings, consisting of detailed layouts, said to be improvements on 
the machine, intended to overcome certain defects due to weakness in 
gearing, approximately as shown in the patent. His work in this par- 
ticular v,'as about reaching completion, when bankruptcy intervened. 



152 262 FEDERAL REPORTER 

In January, 1914, the assets of the company were solcl by order of tîie 
bankrupt court to William Gleason, Charles P. Schlegel, and L. P. Will- 
sea, trustées for the creditors. The applications for patents relating 
fo the boring machine were likewise assigned to thèse trustées on May 
29, 1914, and in turn by them assigned to the Ingles Corporation. 
Carey remained in the employ of the parties during the transfer and 
completed his undertaking. 

On June 4, 1914, Carey having left his dravvings in the possession 
of his employer and found employment elsewhere, the Ingles Corpo- 
ration sold and assigned to the Landis Tool Company, one of défend- 
ants, ail of its right, title, and interest in the appHcations for lettcrs 
patent pertaining to said boring machine. A final agreement and 
assignment was made August 13, 1914, in which the Ingles Corpora- 
tion, as the owner of the Rochester Boring Machine Company, man- 
ufacturers of the Rochester boring machine, sold for $10,000 to the 
Landis Tool Company ail the patents, drawings, patterns, spécial tools, 
jigs, templets, part Hsts, advertising matter, and correspondence re- 
lating to the manufacture and sale of said boring machine, including 
the right to use the name under which said boring machines hâve been 
manufactured and sold, agreeing to discontinue the manufacture of 
such" machines, as long as the Landis Company chose to carry on the 
business, and further specifying that, not only the items set forth should 
be included in the sale and transfer, but "any others which might be 
classed as belonging to the manufacture of the boring machines and 
accessories thereto." That the Ingles Corporation sold and intended 
to transfer to the Landis Company ail of its property interest in and 
to the boring machine, as it was then constructed and in prospect of 
construction, as well as the business of manufacturing and selling of 
same, is not doubted. Indeed, there is no one hère speaking for the 
corporation claiming to the contrary. 

[1] Though the agreement between the parties is not as full and 
explicit as it might be, yet it is fully established by the testimony that 
the Carey improvements and drawings, being an important feature of 
the machine should pass with the same in the transfer of the property. 
It was not only so agreed, but, indeed, the drawings and ail that was 
tangible was delivered over by the assigner to the assignée, together 
with instructions how to avail itself of the alleged advantages and 
benefits. The conclusion foUows that, if the corporation had title to 
the improvements designed and sketched by Carey, the same were 
transferred and passed over to the Landis Company. 

[2] Whether Carey obtained the right to the monopoly implied in 
the patent dépends upon the character of his employment and the un- 
derstanding between the parties. Dowse v. Fédéral Rubber Co. (D. 
C.) 254 Fed. 308. He was employed as a designer to make the draw- 
ings and design certain improvements in détail relating to the con- 
struction of the machine, whereby it might be made stronger and 
capable of doing heavier work in a more satisfactory manner. This is 
what he accomplished through the aid of others interested in the im- 
provement of the machine. He was paid for what he accomplished, 
and accomplished what he was paid for — to improve the machine of 



INGLE V. LANDIS TOOL 00. 15îi 

(262 F.) 

his employer, in order that ît might hâve greater value as such, and 
be more salable as such machine. Though there v/^s no writing to 
the effect, yet the circumstances attending his employment, the nature 
of the vi^ork he performed, as well as the subséquent conduct of Carey, 
is convincing that it was not intended that he should retain any Per- 
sonal interest whatever in the resuit of his efforts in the improvement 
of the machine. 

After bankruptcy intervened, Carey continued his efforts, remaining 
until shortly before the transfer to the Landis Company. When he 
changed his employment, he lef t the resuit of his undertaking with his 
employers, drawings and ail. After the transfer of the machine, and 
ail pertaining, was fully effected, and delivery of drawings to the 
Landis Company, Carey, upon the invitation of this company, for a con- 
sidération, came from Ohio, where he was then employed, to the cora- 
pany's plant at Waynesboro, Pa., for the purpose of instructing those 
in charge of the construction of the machine how to make use of and 
avail themselves of the advantage of his improvements upon it. He 
remained at the company's plant three or four days, giving every possi- 
ble assistance regarding the matter of his drawings and their applica- 
tion to the matter to be corrected in the machines then in course of 
construction and about to be constructed. He was acquainted with the 
sale and transfer that had taken place, and it could not be otherwise 
than that he was aware of the full purpose of the Landis Company to 
push the manufacture and sale of thèse machines, with the improve- 
ments in which he now claims he then had a personal property inter- 
est. Without a Word of protest, or an inkhng of a thought that he was 
at ail interested, he returned home, and later fully and freely wrote 
the Landis Company concerning further particulars in référence to 
the matter of his visit and the use of his improvements. 

The inference follows that he had no idea then of claiming an in- 
terest in what he had accomplished for his former employers, and that, 
in fact, the product of his labors, as he understood his relations with 
them, belonged to those who paid him for the very thing accomplished. 
In this particular there is no doubt that he sold in advance to his em- 
ployers his inventive powers and ail that was accomplished thereby. 
As was said by Mr. Justice Brewer, in Solomons v. United States, 137 
U. S. 346, 11 Sup. Ct. 89, 34 L. Ed. 667: 

"If one is employed to devise or perfect an instrument, or a means for ac- 
complishing a prescribed resuit, he cannot, after succossfully accomplishing 
tlie work for which he was employed, plead title thereto as against his em- 
ployer. That which lie has been employed and paid to accomplish becomes, 
when accomplished, the property of his employer. Whatever rights as an 
individual he may hâve had in and to his inventive powers, and that whicb 
they are able to accomi^llsh, lie has sold in advance to his employer." 

[3] Surely Carey's assignée has no better title than he. Ingle, the 
plaintiff assignée, vi'as'acquainted with Carey's employment, and ail that 
was intended thereby to be accomplished, and ail that was in fact 
achieved. He was made acquainted with the sale and transfer of the 
machine and its belongings from the Ingles Corporation to the Landis 
Company, as also with the intervening changes in title. He is not a 



154 262 FEDEUAL REPOIlïKll 

stranger to what transpired. He was interested in the initial purchase 
of boring machines, as an officer of the corporation that took his name. 
He pushed its development, manufacture, and sale prior to the bank- 
ruptcy proceeding, and later endeavored to repurchase the same from 
the Landis Company. His failure to succeed resulted in the letters 
patent taken out in the name of Carey and assigned to himself . Thèse 
were intended, and to some extent were used, as a wedge to accom- 
pUsh his purpose. Though he may hâve other than fancied grievances, 
he has no cause to complain of the conduct of the défendants and as 
to them. If he otherwise possessed the semblance of claim to Carey's 
invention, he would be estopped from asserting his claim to a monopoly 
of the improvements claimed by Carey under his letters patent. 

[4, 5] But plaintiff argues that, if the Ingles Company had other- 
wise a right to the assignment of the Carey invention, when bankruptcy 
overtook Carey's effort, it had not as yet assumed such a stage of de- 
velopment as would impress the same with a property right, or as an 
asset transférable by the bankruptcy proceedings, and therefore title 
did not pass out of the Ingles Company. 

Whether as an invention it was completed while Carey was in the 
employ of the Ingles Company, or afterward, while continuing to de- 
vote himself to his undertaking in the employ of tliose who succeeded, 
by purchase, to the business of the company and the improvement of 
the machine in question is not important. Surely, at some time, while 
in the employ of the défendants' predecessor in title, Carey completed 
his efïort, which was at ail times, and in ail of its stages, the property 
of his employers, who joined in the transfer to défendant the Landis 
Company. And whatever may hâve been its stage of development 
when bankruptcy intervened is not material, since the property of the 
bankrupt, the machine and ail its belongings, passed in the same man- 
ner as any other property acquired. Ager v. Murray, 105 U. S. 128, 26 
L. Ed. 942. The sale of the bankrupt's property interest in the im- 
provement, if incomplète or otherwise, and the inchoate right to the 
exclusive use in the invention, if complète, before patent was granted, 
is governed by the gênerai principles of the law relating to bargains 
and sales. Cook v. Sterling Electric Co. (C. C.) 118 Fed. 46; In re 
Myers-Wolf Mfg. Co., 205 Fed. 289, 123 C. C. A. 441. 

There is no provision of law that prevents the assignment of the 
invention not patented. Such is regarded as other property. The 
law only takes it out of the ordinary when a patent theref or is granted. 
Then it isthat the statute (section 4898, R. S. U. S. [Comp. St. § 9444]) 
applies, and requires that the assignment, conveyance, or grant, or what- 
ever interest therein, shall be in writing. 

[6] Though the plaintiff, through the inventor, obtained the patent 
in suit, he holds such légal title in trust for the owner of the équitable 
title. Dalzell v. Mfg. Co., 149 U. S. 315, 13 Sup. Ct. 886, 37 L. Ed. 
749. 

[7] The défendant having set up its équitable rights in the answer 
filed, and prayed for an order requiring the plaintiff to assign the title, 
which he nominally holds, this court, having jurisdiction of the parties 
and the subject-matter, will do fuU and complète equity between them. 



HAEVET EUBEELL, IKC, V. GENERAL ELECTEIC 00. 155 

(26i F.) 

It foUows that the bill will be dismissed, at the cost of the plaintiff, 
and in the decree presented an order on the plaintiff may be incorpo- 
rated, requiring him to assign to the défendant Landis Company the 
légal title to the patent in suit. 



HABVEY HtrBBETX, Inc., v. GENERAL ELECTRIC CO. et al. 

(District Court, S. D. New York, October 20, 1919.) 

No. 265. 

1. TbADE-MARKS and TBADE-NAME8 ©=67— MaKINQ UNPATENTKD PAETS INTEB- 

CHANGEABLH NOT XJNLAWFTJL COMPETITION. 

Complainant, a large manufacturer of eleetrical contact devices, In the 
absence of protection by patent or triide-mark, held not to hâve acquired 
an exclusive right in the arbitrarlly selected size and shape of the parts 
of its devices, whlch precluded other manufacturers from openly adopt- 
ing sueh size and shape for the puriwse of standardizing and making the 
parts interchangeable with those of each other and of complainant. 

2. Tkade-maeks and trade-names <S=>93 (S)— Evidence insufficient to snow 

■DNKAIB COMPETinON. 

Allégations of unfair compétition, by copying the physical character- 
istics of complainant's devices, held not sustained by the proofs. 

In Equity. Suit by Harvey Hubbell, Incorporated, against the Gen- 
eral Electric Company and others. Decree for défendants. 

W. Clyde Jones, of Chicago, 111., and Everett N. Curtis and Clifton 
V. Edwards, both of New York City, for plaintiff. 

Frederick P. Fish, Samuel Owen Edmonds, and Hubert Howson, 
ail of New York City, for défendants. 

MANTON, Circuit Judge. This bill in equity seeks relief for an 
alleged invasion of property rights and unfair compétition in trade, 
said to resuit from the manufacture and sale by some of the défend- 
ants named of separahle attachment plugs and réceptacles. It is 
claimed that some plugs and réceptacles, sold by some of the défend- 
ants named, correspond in make and fit with devices produced by the 
plaintiff. 

Two causes of action are alleged in the pleadings and were urged 
upon the trial: 

First. That the plaintiff, by its energy, industry, and expendlture of 
large sums of money throughout a period of 10 years prior to the 
lîling of the bill, established and built up a System of doing business, 
constituting a service to its customers, which resulted in good will 
and business, and the plaintiff now claims that, thus creating a Sys- 
tem of service, it bas a property right which a court of equity should 
protect from the invasion of other manufacturers. 

Second. That the défendants hâve copied the distinctive appear- 
ances of plaintiff's goods, and hâve placed them upon the market in 
such a way and by such devices as are calculated to deceive inno- 
cent purchasers, and that by reason thereof they are guilty of unfair 
trade. 

«gssFoi other cases see same toplc & KEY-NUMBBR in ail Key-Numbered Dlgests & Indexes 



156 262 FEDERAL REPORTER 

[1] As to the first cause of action, the plaintiff contends that the 
défendants the General Electric Company and the Bryant Electric 
Company, and some selling agents named as défendants, hâve united 
in a plan of action or scheme to appropriate the Hubbell System, so- 
called, in violation of the plaintiff's property rights, and that the de- 
fendants hâve entered the market in compétition with the plaintiff 
with a séries of devices, plugs, and réceptacles, so constntcting them 
as to use the arbitrary dimensions of the interfitting parts, as to in- 
terfit and interchange with the plaintiff's devices, therehy interfering 
with its System and property right, said to be secured to it, with the 
resuit that there has been diverted from the plaintiff recurring sales 
to which it is entitled as a resuit of the good will and business it has 
established. 

The défendants présent the issue by a déniai of the existence of such 
a right as claimed, and further urge that there is no such similarity of 
construction or of the method of carrying on their business as to war- 
rant the claim of unfair trade. The principal controversy is over the 
use by the défendant General Electric Company, and the other manu- 
facturers, of parallel contact-making members of the same dimensions 
and spacing as those characterizing the contact-making members pro- 
duced by the plaintiff. The défendants admit that they hâve used the 
same dimensions and spacing as used by the plaintiff, but contend that 
this was donc in a necessity for and an honest effort to standardize thèse 
devices for the benefit of the trade and public, and with no intent to 
cause any unfair trade to the plaintiff. Concededly, the resuit is that 
the défendants' devices are interchangeable with plaintiff's Une of de- 
vices, such, at least, as employ the parallel form of contact. 

The first cause of action alleged présents the question : Has the 
plaintiff such a property right in a system of service which a court of 
equity should protect ? 

The General Electric Company produces a Une of devices known in 
ihe trade as "G. E. Standard ;" the Bryan Electric Company produces 
a Une known as the "Spartan ;" and, throughout the trial, comparison 
as to the shape, form, and manufacture was made between plaintiff's 
Une and the Unes of thèse two défendants. Plaintiff has sold to the 
public millions of thèse two-part coacting devices, and its Une has 
found its place in hundreds of thousands of apartment houses, office 
buildings, and living quarters throughout the country. This was ac- 
complished by plaintiff receiving a fair profit for its réceptacles, and, 
as it says, a larger profit for caps which coact with thèse réceptacles. 
Thus the plaintiff claims it has sustained great damage to its business. 

The évidence in the case shows that separable plugs hâve been known 
and were in use prior to 1904. The earliest example of this form was 
the Weston plug, made under the Weston patent. No. 480,900, granted 
August 16, 1892. It was on the market for a number of years. The 
terminais on the plug base appear to be (he same as the Hubbell plug 
No. 5915. The cap, to the binding screws of which the conductor is 
screwed, is separable from the body, thus enabling the body to be screw- 
ed into the socket or réceptacle and the circuit completed by inserting 



HAEVEY HUBBELL, IXC, V. GENERAL ELECTRIC CO. 157 

(2G2 p.) 

the cap in the body by a straight thrust, thus avoiding twisting the con- 
ductor. 

Another separable plug, put on the market in 1897 and sold since in 
suhstantial quantities, illustrâtes the terminal charactertistics of the 
Hubbell plug No. 5915, and the sleeve contacts in the Huhbell early 
plugs. This, toc, had a separable cap with coacting contacts. 

The General Electric plugs were of the same construction as the 
Hubbell No. 5915, except that in the latter the pin and sleeve contacts 
were replaced by a flat and knif e blade contacts ; and there is sufP.cient 
évidence to justify the claim of the défendant that the separable caps 
and flat knife blade contacts, arranged in parallel relation and récepta- 
cles and sockets adapted there for, were in common use as early as 1886. 
Of this the Ft. Wayne sockets, réceptacles, and plugs were typical. 
They were manufactured by the Ft. Wayne Jenney Electric Company. 
It thus appears that separable parts were united by thrusting the knife 
blade contacts into the locking contact springs of the réceptacle, as is 
done to-day in the case of both the plaintiff's and défendants' devices, 
The Ft. Wayne devices were superseded by devices having the terminal 
styles of the screw ring sud bottom plate type. Then foUowed the nov- 
elty plug réceptacle, where the contacts were of the pin and sleeve type. 

In 1903 came the interchangeable plug réceptacles. The Bryant Elec- 
tric Company brought out one having a flush surface réceptacle, as il- 
lustrated in their catalogue of 1902, at pages 60, 61. This provided 
for the fitting of the plugs or caps interchangeably into any of the ré- 
ceptacles of the line. 

In 1904 Hubbell brought out his separable or détachable caps, thus 
permitting the cord to be connected to the body without twisting, and 
permitting an interchange with a Hne of réceptacles; but at this time 
there were already out for public use, both the pin and sleeve form and 
the flat knife blade form. The blades were arranged in both tandem 
relation as well as parallel relation. At this time, undoubtedly, the 
favorable form was to provide for the connection to be made by thrust- 
ing rather than turning. About this time there came into vogue the 
more fréquent use of the electric fan, heating and cooking devices, hair 
curlers and irons, as well as other devices where electricity was used. 

In 1906 the Benjamin Electric Company brought out a small non- 
separable swivel plug, which was customarily used. Plaintiff brought 
out five différent types of contacts. Thus the différent types of contacts 
became more diversified, and there was, therefore, no unit of that line 
interchangeable with a similar unit of any of the complète lines. The 
plaintiff bas estabhshed its line of interchangeability, so far as its caps 
and sockets and réceptacles were concerned. The défendant General 
Electric Company had established its own line, providing for a mechan- 
ical interlocking between the maie and female contacts, having the 
contact dépendent upon friction, and with the flat knife blade form, 
such as is illustrated in the Ft. Wayne phig. The Bryant Electric Com- 
pany brought its line of surface plug réceptacles and its Chapman ré- 
ceptacle. 

Hubbell adhered to the pin and sleeve form of contact, and provided 
pins with necks or dépressions to effect the locking engagement with 



158 262 FEDERAL REPORTER 

the female contacts, and concealing its female contacts. Presumably, 
the insulation of the plug body covered the ends of thèse contacts, to 
guard against short circuits. Huhbell produced the knife blade con- 
tacts after 1904, and then employed the blade contacts down to the 
commencement of this suit. It changed its contacts from the tuming 
form to the thrusting form. The plaintiff did this under the protection 
of its own patents, Nos. 774,250 and 774,251, and also claimed protec- 
tion under the Weston patent. No. 4S0,900. It had a license under the 
latter patent. Thereaf ter the plaintiff placed upon the market a smaller 
size and less costly plug designed in several types, and in 1912 it 
brought out its parallel blade cap No. 5915, which is in issue in this 
case. This provides parallel arrangement of blades and slots, such as 
are found in the General Electric plug, "G. E. 062." The cap of Hub- 
beU's No. 5915 is interchangeable with the cap of "G. E. 062" plug, and 
fits into the body of the latter with serviceable contact. 

In 1914 both tandem bladed caps and parallel bladed caps with ré- 
ceptacles with double contacts, so as to coact with caps of either sort, 
were brought out. There was then provided the f our-window construc- 
tion of réceptacle, having two tandem slots and two parallel slots. This 
was protected by the Burton patent, No. 1,169,613. In October, 1914, 
plaintiff brought out the "double T" or "T-T" form of réceptacle. In 
1916 the plaintiff brought out coacting plug caps having blades arrang- 
ed at right angles. Thèse would coact with T-T slots, as would the 
Hubbell tandem blade caps. 

In 1915 it is estimated that 85 or 90 per cent, of the business was be- 
ing done by the plaintiff, the General Electric Company, the Bryant 
Electric Company, and four other concerns, who were licensees of the 
General Electric Company and the Bryant Electric Company. There 
were other companies in the field doing the balance of the business. 
There were from 15 to 20 différent types of blades, and from 15 to 30 
différent types of réceptacles. The Une of each was not interchangeable 
with a competing line. The Plubbell Company was producing and dis- 
posing of the larger proportion caps and réceptacles. 

Then it was that the défendants claim there was public demand for 
standardization. Undoubtedly, it was costly to the public to hâve non- 
interchangeable plugs, caps, and réceptacles. There was a need for 
standardization, as is best illustrated by the activities of the Internation- 
al Electric "Light Association. The manuf acturers, including the plain- 
tiff, entered into a conférence, and discussion was had as to the method 
of standardization. Plaintiff rebelled against standardization, using its 
type of cap and réceptacle with the dimensions as, it says, arbitrarily 
selected by it for the manufacture of its line. With the plaintiff re- 
fusing to standardize, the défendants selected its dimensions and meth- 
od of contact, and standardized upon the plaintiff's type of blade. 

Plaintiff had sold, at this time, approximately 13,000,000 réceptacles 
and plug bases having tandem slots; also approximately 18,000,000 
tandem blade caps adapted to coact with those réceptacles and bases, 
and had sold nearly 1,250,000 réceptacles and plug bases having parallel 
slots, and an equal number of parallel blade caps adapted for co- 
action therewith. In this it was easily the first (in numbers) in putting 



EAKVEY HUBBELL, INC., V. GENERAI, ELECTRIC 00. 159 

C262 F.) 

in public use a single type of plug or réceptacle. Most of the plaintifï's 
tandem and parallel devices were in actual use in 1915. For this rea- 
son, and because the public had so largely invested in caps and plugs 
of this type, défendants say that they f elt the obligation to standardize 
upon the Hubbell caps; and the défendants contend that they hâve 
adopted a noninfringing construction which the public might use in- 
terchangeably with plaintifï's, because they employ the same dimen- 
sions and spacing of the contact. 

There is no question of inf ringement of patent involved in this issue. 
As a resuit, 85 per cent, of the production of the country is now inter- 
changeable. The défendants' caps and plugs are plainly marked, so 
that any reasonably intelligent purchaser can easily discern the type of 
plug he purchases. The marks are plain and unmistakable. 

Under thèse facts, I am of the opinion that plaintiff has no exclusive 
right to manufacture caps and réceptacles of thèse dimensions and spac- 
ing of contacts. Its competitors should hâve the right to make plugs and 
réceptacles with contacts of any size and shape they désire, even if by 
so doing it will permit of an interchangeability with the Hubbell Une. 
If the plaintiff had popularized some unnecessary and purely nonfunc- 
tional features of its productions, thèse could not be appropriated with- 
out its consent. If it had secured a trade-name, such as "Hubbell's," 
it could not be appropriated, or if it was protected by valid patents it 
would be entitled to immunity from infringement. Thèse are not the 
rights which are hère sought to be enforced. The plaintiff asserts a 
common-law property right, and on what it claims to be the best di- 
mensions for the purpose in the spacing of the contacts. 

In Marvel Co. v. Pearl et al, 133 Fed. 160, 66 C. C. A. 226, it was 
said: 

"In the absence of protection by patent, no person can monopollze or ap- 
propriate to the exclusion of others éléments of mechanieal construction which 
are essential to the successful practieal opération of a manufacture, or which 
primarily serve to promote its efficiency for the purpose to which it Is de- 
voted. Unfair compétition is not established by proof of similarity in form, 
dimensions, or gênerai appearance alone. Where such similarity consists in 
constructions common to or characteristic of the articles in question, and 
especially where it appears to resuit from an effort to eomply with the physi- 
cal requirements essential to commercial success, and not to be designed to 
misrepresent the origin of such articles, the doctrine of unfair compétition 
cannot be successfully invoked to abridge the freedom of trade compétition. 
The enforcement of such a clalm would permit unfair appropriation, and deny 
the exercise of the right of fair compétition." 133 Fed. 161, 162, 66 C. C. A. 
227. 

In Meccano v. John Wanamaker, New York, 250 Fed. 450, 452, 162 
C. C. A. 520, 522, Judge Ward, speaking for the Circuit Court of Ap- 
peals, said, where a somewhat similar claim to that now advanced by 
the plaintiff was made: 

"The complainant cannot obtain a monopoly for ail time of perfora ted plates 
of the lengths having equidistant holes and intervening spaces which it flrst 
used. Thèse are functional features of the unlts of construction, which any 
one is at liberty to use. Of course, It cannot claim a monopoly of constructing 
the particular models or toys which it has made, as, for example, wheelbar- 
rows, bridges, crânes, Ferris wheels, trucks, etc. Assuming that the public 
associâtes plates of this description with the complainant as a source, and 



160 262 FEDERAL EEPOUTEB 

that there Is likely to be confusion because of similarity of the outflts, it Is 
a question whether it Is entitled, wittiin tlie décision of the Suprême Court 
in Singer Co. t. June, 163 U. S. 169, 16 Sup. Ct 10O2, 41 L. Ed. 118, to more 
protection than that outflts made by others should be advertised and sold as 
the produet of the makers, under names and in packages which do not simu- 
late the complainant's. This is true of the outflts which the défendant sells. 
The name of the complainant's is 'Meceano,' and of those sold by the défend- 
ant 'American Model Builder.' They are advertised as made by the American 
Mechanical Toy Company, and sold in dlssimilar packages. So, in the nature 
of things, the constructing éléments and the things constructed being the 
same, the plates illustrating them and the instructions contained in the man- 
uals fumished vvith the two outflts must be more or less alike. AU that 
should be required of other makers is to do indépendant work." 

No court has ever gone to the extent of permitting the establishment 
of a monopoly of proportions or measurements, in the absence of some 
patent protection. To do so would be practically to engross the par- 
ticular business. Distinguishing marks may be adopted to dénote the 
origin of production, or some pecuHar method of distinguishing goods, 
and thus secure the benefit of good réputation which it has acquired 
from such use or practice. The public hâve the right to make sep- 
arable plugs, and, from the nature of the requirements, they must hâve 
a resemblance in form, dimensions, and appearance. No one should 
hâve the exclusive privilège of selecting measurements, even though 
arbitrarily selected, and thus establish a particular spacing of the con- 
tacts to the exclusion of others. To do so would be to stifle compétition. 

The plaintifif hère does not rest upon the adoption of spécial char- 
acteristics of any kind, but of features which pertain to the article 
made and sold. Nor is this in conflict with the now well-established 
rule that, if an article has a leading and striking characteristic, which 
characteristic is designedly given by its maker, and advertised and 
exploited, and afterward recognized, particularly by purchasers, be- 
cause of such characteristic, the right to make and use the character- 
istic can be protected by an action, if an imitation is perpetrated. This 
rule finds its support in what is referred to in the cases as nonfunction- 
al unfaif compétition. It présupposes that the appearance of the 
article, like its descriptive title, has a secondary meaning, and has been 
associated in the public mind with the first corner as a manufacturer 
or source, and if a second corner imitâtes the article exactly, so that 
the public will believe bis goods hâve come from the first and will buy, 
in part at least, because of that déception, the court will enjoin the sec- 
ond corner. Crescent Tool Co. v. Kilborn & Bishop Co., 247 Fed. 299, 
159 C. C. A. 393. In this case it was said: 

"ïhe défendant hns as rauch right to cofiy the 'nonfunctional' features of 
the article as any others, so long as they bave not beeoine associated with the 
plaintlff as manufacturer or source. The crltical question of fact at the out- 
set always is whether the publie is moved in any degree to buy the article 
because of its source and what are the features by which it dlstinguishes that 
source." 

The authorities relied upon hy the plaintifï are not in conflict with 
Hiese views. 

In International News Co. v. Associated Press, 248 U. S. 231, 39 
Sup. Ct. 68, 63 L. Ed. 211, 2 A. L. R. 293, the conceded évidence 
which caused the court to grant its protection indicated that the de- 



HAEVET HUBBELL, INC., V. GENERAL ELECTRIC CO. 161 

(262 F.) 

fendant's acts amounted to fraud and bribery. The Suprême Court 
stated that the complainant had a property right in the news which it 
secured in the conduct of its business, and restrained the défendant 
from bribing the employés of the complainant to release the news to 
the défendant. There is no question of fraud, or palming off by the 
défendants in this issue, nor is there any claim of déception advanced 
upon this theory of the case. 

In the case of Searchlight Ga*s Co. v. Prest-O-Lite Co., 215 Fed. 692, 
131 C. C. A. 626, mainly relied upon by the plaintifï, the complainant 
had established a System of service in tîie sale of its Prest-0-L,ite tanks 
with the right of having them refilled; that is, a new tank filled and 
given in exchange for the old, at the price alone of acétylène gas. The 
purchase included the right to return the old tank. There the défend- 
ant, with what the court found to be fraudulent intent, sold similar 
tanks and merely removed the paper sticker from over the Prest-0- 
Lite name, and turned the misused tank back to the plaintifï, thu!\ 
using the plaintiff's tanks and selling the defendant's gas. The plain' 
tiff there repaired, at its expense, the tank which had been used by the 
défendant, and by which method défendant secured profits. It was 
a fraudulent and deceitful practice, and the court enjoined its contin- 
uance. The court, by injunction, simply required the défendants to 
sell their products under their own name, and did not enjoin anything 
other than the fraud which was perpetrated. The défendant there was 
permitted to sell, using its own Prest-O-'Lite tanks and its gas with prop- 
er labels. This was far from granting immunity from compétition. 

In Fonotipia Co. v. Bradley (C. C.) 171 Fed. 951, the plaintifï had 
gone to great expense in preparing musical records of the voices of 
great artists, and from thèse produced the commercial records which 
were sold to the public. The défendant simply copied copies of the orig- 
inal records and put them on the market, advertising that they were ail 
duplicates of the original records made by the artists. This was a 
fraud and déception, and was enjoined. 

In the so-called scalper ticket cases (Nashville Ry. Co. v. McConnel! 
[C. C] 82 Fed. 65; Illinois Central v. Caffrey [C. C] 128 Fed. 770; 
Penn. Co. v. Bay, 150 Fed. 770) nontransf érable railway tickets were 
sold. They were sold, and the transférée went before the validating 
agent, had them validated, and sold the tickets. An injunction was 
granted against the ticket sellers' continuation of this business method 
(scalpers). Thèse cases had ail the éléments of fraud and deceit. The 
conductors accepted the fraudulently resold tickets, and were deceived 
in the belief that the passenger, who had a contract as an original ven- 
dee, was exercising his right under his contract of carriage. Because 
they were return tickets, they were sold at a reduced rate, and the 
railroad company was thus cheated out of the full and regular fare. 

In the trading stamp cases (Sperry & Hutchison Co. v. Mechanics' 
Clothing Co. [C. C] 128 Fed. 800; vSame v. Temple [C. C] 137 Fed. 
992; Same v. Louis Weber, 161 Fed. 219) there was a deliberate in- 
terférence with a spécial contract made between the plaintifï and stores 
which were giving the trading stamps to their customers. The de- 
fendants deliberately sought to induce the merchants to break their 
262 F.— 11 



162 262 FEDERAL REPORTER 

contract, and the court held them to be guilty of f raud, saying that by 
their advertisement they deceived the public. An injunction was grant- 
ed because there was unfair and f raudulent interférence with the con- 
tracts and the property protected by the contracts. 

The record of the case under considération discloses no palming off 
of goods or attempt thereto. Nor does it indicate that by advertising 
or otherwise did the plaintiff retain any property right in the caps or 
réceptacles when sold. There was nothing in the nature of a mère li- 
censee in the sale. It was an absolute exchange of the commodity for 
the money received, and the vendee acquired absolute property rights 
in the articles which he purchased, unrestricted in any way. Nor can I 
find f rom the record that the caps or réceptacles were sold from their 
appearance alone. Indeed, the distinguishing features are said to be 
in the concealed contact slots and nicked edge blades. Thèse are recog- 
nized in the trade as the main characteristics of the varions devices of 
the plaintiff, and by such they are recognized and distinguished from 
competing devices, and theref ore a means of identification of plaintiff's 
production. 

I conclude, therefore, that plaintiff bas no common-law property 
right, as it claims to bave, and it cannot succeed in its position on this 
branch of the case. 

[2] Unfair compétition is alleged as against the défendants in copy- 
ing the physical characteristics of some ten of Hubbell's devices. They 
are as follows: 

(1) The Hubbell hemispherical cap with knurled edge and base with 
nickeled sleeve. 

(2) Hemispherical brass-covered cap. 

(3) Elongated cap. 

(4) Cord connector. 

(5) Motor plug with cylindrical cap. 

(6) Brass-covered chandelier plugs. 

(7) Cylindrical lamp réceptacle. 

(8) Flush réceptacles witli black centers and brass plate. 

(9) The use of the word "Duplex." 

(10) The use of the word "Standard." 

The caps and réceptacles are sold largely to jobhers and men who 
are f amiliar with the trade. Each manufacturer bas plainly visible 
his trade-name, so that it is easy for a purchaser to tell which he is 
buying. Hubbell bas a distinctive characteristic, as pointed out, which 
the trade ail know. I bave examined carefully the physical exhibits 
which are involved in each of the above 10 claims, where it is said 
défendants hâve copied the devices of the plaintiff. Without dealing 
with each specifically hère, I am satisfied that there is no such palming 
off or even copying of the physical exhibits as to présent an actionable 
wrong. There is no such copying of lines. The plaintiff, in ail its 
advertisements, made plain the distinguishing characteristics of its 
plug. I find nothing which would warrant an interférence by a court 
of equity because pi:rchasers bave been deceived or plaintiff's rights in- 
fringed. Shredded Wheat Co. v. Humphrev Cornell Co., 250 Fed. 
960, 163 C. C. A. 210. 

For thèse reasons, a decree will be granted to the défendants. 



JOST V. BOEDEN STOVE CO. 163 

(262 F.) 

JOST V. BORDEN STOVE CO. 

(District Court, B. D. Pennsylvania. January 2, 1920.) 

No. 1909. 

1. Patents <S=»118 — Compuanok with statutoet eequibements necessaby. 

No one has the rlght to a patent, without complying wlth ail tlie condi- 
Oons set forth lu Rev. St. §§ 4S86, 4887 (Comp. St. §§ 9430, 9431). 

2. Patents <S=»2S2 — Action ïob infbingement based on issuance of patent. 

A patent infrlngement suit Is based, net on the fact that plalntifï may 
be entitled to a patent, but on the actual Issuance of a patent to hlm. 

3. Patents ©=5312(3) — Géant of patent and infeingemenï as peima facib 

case. 

In patent Infrlngement case, évidence of the grant of the patent and of 
Infrlngement présents a prima facie case, which défendant must over- 
come to prevent plalntifC securing a decree. 

4. Patents ©=310(7) — Attack on validity of patent mattee of défense in 

infeinoement sttits. 

In patent infrlngement suits, the grounds speclfled In Rer. St. § 4920 
jComp. St. § 9466), on which défendant may attack the validity of the 
patent, are purely matters of défense. 
6. Patents <S=»310(1) — Plaintiff mat establish only pbima facie case ob 

rORESTALL DEFENSE. 

In patent infrlngement suit, the plaintiff may, if he chooses, confine his 
case in ehief to establishing a prima facie case, or he may forestall the 
défense by presenting his whole case in chlef, but he Is not requlred to 
négative possible défenses. 

6. Patents ©=>310(1) — Necessity of pleadinq that inventions had not been 

abandoned in infbingement suit. 

In a patent infrlngement suit, a bill Is not defectlve for failure to al- 
lège that the invention had not been abandoned to the publie, sluce this is 
purely a matter of défense, which the défendant may raise under Rev. St. 
§ 4920 (Comp. St. § 9460). 

7. Patents <®=5310(9) — Determining administbateix's eight to sue fob in- 

fbingement. 

In a patent infrlngement suit, defendant's contention that title to the 
patent was not sufflciently alleged to be in plaintiff, who was the Inven- 
tor's admlnlstratrix, raises only the question of a possible variance, and 
cannot be determined on a motion to dismlss the bill before proofs bave 
been offered. 

In Equity. Suit by Estelle C. Jost, administratrix of John Frederick 
W. Jost, against the Borden Stove Company. On motion to dismiss 
the bill. Denied. 

Mark W. Collet, of Philadelphia, Pa., for plaintiff. 
William Steell Jackson, of Philadelphia, Pa., for défendant. 

DICKINSON, District Judge. Whenever two things, however es 
sentially différent, corne (as is often the case) to be the same in results, 
ail thought of différence is likely to be dropped, and the différences ig- 
nored. 

[1-3] The présent motion is based upon such suppression of the. 
thought of a différence between letters patent which hâve been granted 
and the right to the patent or its validity. The différence is, of course, 
obvions. No one has the right to a patent without bringing himself 

^=sFoi other cases see same toplc & KEY-NUMBBB In ail Key-Numbered Dlgests & Indexes 



164 2C2 FEDERAL REPORTER 

within ail the conditions set forth in R. S. §§ 4886 and 4887 (Comp. St. 
§§ 9430, 9431). Without the patent he has no property right upon 
which any one could trespass. Having that property right, he has a 
cause of action against any one who infringes. In other words, his 
cause of action dépends, not upon whether he is within the provisions 
of the patent laws, and, in conséquence, possessed of the right to a 
patent, but whether a patent has in fact been granted to him. It is 
true the right he claims may be open to question, and the validity of 
his patent to successful attack; yet nevertheless the real condition of 
things is that without the patent he has nothing, but with it he has ail 
the rights which it grants, until the invalidity of the patent appears. 
Hence we bave the accepted doctrine that évidence of the grant of a 
patent and of infringement présents a case which, if made out by the 
évidence, the défendant must overcome, or the plaintifï is entitled to 
his decree. 

[4] The logic of the doctrine that the case of the plaintiff dépends 
upon the patent he holds, and not upon the facts which give him the 
right to the grant of a patent, is that the issue, which this feature of the 
case présents, is that of patent or no patent, or, in other words, the 
production of his patent is conclusive of his patent rights, which are 
not open to collatéral attack. 

This would necessarily be the law of the trial of patent cases, as it 
would be of any other like cases, except for the fact that this law has 
been changed by statute, and R. S. §' 4920 (Comp. St. § 9466), permits 
the défense to attack the validity of the patent on the grounds set 
forth. It is perfectly clear, however, that thèse are purely raatters of 
défense. 

[5] The conclusion from the above cannot be resisted that a plaintiff 
(as to this branch of his case) may confine his pleadings and proofs to 
the grant of a patent to him. It happens that the facts permitted to be 
shown in défense are the same facts, and necessarily must be at least 
some of the same facts, upon which the right of the plaintifï to his 
patent dépends. 

This, and the trial conditions next stated, hâve brought about what- 
ever confusion of thought upon this subject exists. Trials, like ail other 
combats, hâve their principles of strategy and of tactics. It is the 
right of a plaintiff to confine, if he chooses, his case in chief to the 
establishing, as it is called, of a prima facie case. The défendant 
must then answer it, to jvhich answer the plaintiff may reply. Know- 
ing, however, what the défense will be, he may deem it to be good trial 
tactics to présent his whole case in chief, and undertake the proof, not 
only of the issue to him of a patent, but also of the facts upon which 
his right to it ultimately dépends, thus forestalling the défense. View- 
ing the pleadings as the field of strategy, as the trial is of tactics, he 
may plan the battle on either of the lines suggested in the same way, by 
setting forth his whole case or only a prima facie case. It is apparent 
that the ultimate results (if a défense is made) are the same, as the 
plaintiff must appear, not only to hâve, but to hâve a légal right to hâve, 
a patent. It is also apparent that the only practical différence produced 
is in respect to the course of the trial. It does not foUow, however. 



JOST V. BORDEN STOVE CO. 16» 

C262 P.3 

that because the plaintiff may thus anticipate the défense, by averring 
and proving facts which it will set up, that he is bound to do so, and the 
conclusion, before suggested, that he is not required to négative any or 
ail possible défenses, still holds. 

[6, 7] Thus the question before us seems to stand upon principle. 
We hâve stated it in the abstract. In the concrète, it may be thus pre- 
sented : The plaintiff has not in her bill, which is the statement of her 
cause of action, averred, among other things, that this invention had 
not been "abandoned to the public" ; nor has the plaintiff, who sues in 
a représentative character or capacity, averred "in ipsissimis verbis that 
the title to the patent was in the administratrix of the inventor, who 
is the plaintiff in this action." 

We hâve chosen thèse two grounds of the motion to dismiss as typi- 
cal. The first raises the question of law, which we hâve discussed, and 
very squarely raises it, because abandonment is one of the défenses 
which R. S. § 4920, permits. We do not understand just what the other 
ground is (not having access to the verbiage of the bill) ; but, giving to 
this part of the motion ahy of the meanings it may hâve, the resuit rer. 
mains that it goes at most to the assertion that there will be a variance. 
This we cannot détermine now, having only the allegata before us, nor 
until the probata appear. 

It remains only to see whether the conclusion reached (that this mo- 
tion be denied) is in accord with the decided cases by which we are con- 
trolled. It is to be observed that many of the later cases discuss the 
question of pleading presented as affected by the equity rules of 1912 
(198 Fed. xix, 115 C. C. A. xix). Indced, counsel so discuss it. This 
is, of course, one way of meeting it; but it does not cover the whole 
ground. 

One évident purpose of the equity rules was undoubtedly to simpli- 
fy pleadings and curtail verbosity, but the necessity of setting forth a 
cause of action still remains. The fact statements, upon which the 
cause of action dépends, must still be made, although now they are 
limited to the ultimate facts. Whether the bill in a patent case is re- 
stricted to the statement of the grant of a patent, or expanded to in- 
clude a statement of ail the facts which enter into the question of va- 
lidity, does not of itself indicate compliance or noncompliance with the 
requirement to make only ultimate fact statements. The real question, 
in conséquence, goes back of the présent equity rules. Nor do we see 
that the cases which rule that a plaintiff may set forth ail the ultimate 
facts upon which his cause of action in the end dépends, without the 
bill being open to the charge of the averments being surplusage, nec- 
essarily rule either that he is bound to so set them forth, or that he 
might not confine himself to the statement of such ultimate facts as 
establish a prima facie case. 

The conclusions reached we think to be in accord with the decided 
cases, among which are those cited in the respective briefs of counsel. 
Even thèse are too numerous to be even listed. In conséquence, we 
limit ourselves to a few of them. Fichtel v. Barthel (C. C.) 173 Fed. 
489; American v. Orient (C. C.) 145 Fed. 649; Pittsburgh v. Bêler 



166 262 FEDERAL RBPOETEB 

(D. C.) 222 Fed. 950; McCoy v. Nelson, 121 U. S. 484, 7 Sup. Ct. 
1000, 30 L. Ed. 1017; Bayley v. Braunstein (D. C.) 237 Fed. 671; 
Schaum v. Copley (D. C.) 243 Fed. 924. 
The motion to dismiss is denied. 



In re LOEN. 
(District Court, W. D. Washington, N. D. December 27, 1919.) 

No. 5943. 

AlJENS <S=>65 ALIEN WHO SUBBENDERED DECLAItATION OV INTENTION TO EVADE 

MILITABY SERVICE NOT ENTITLED TO CITIZENSHIP. 

Thougti applicant, wlio had (lecUireti iutontion to becorae citizen, sur- 
rendered same and made affldavit of v^illingness to return to Norway, 
his native country, in support of inilitary exemption clairn, vvas inducted 
Into niilitary service, and bel'ore his ciaim was disposed of the armistice 
was signed, and he was discharged, held that, despite Act June 29, 1906, 
g 4, as amended by Act May 9, 1918 (Comp. St. 1918, § 4352), and by Act 
July 19, 1919, providing for admission to citizenship of any person of 
foreign birth who served in the military or naval forces in the United 
States and had been honorably discharged, applicant cannot be ad- 
mitted to citizenship; his conduct shovi'ing désire to avoid burdens of 
citizenship, tostead of loyalty to United States. 

Naturalization Proceediiig. In the matter of the application for citi- 
zenship of Knut Sigfred Loen. Application denied with préjudice. 

John Speed Smith, Chief Naturalization Examiner, of Seatde, 
Wash. 

NETERER, District Judge. This applicant, at the time of regis- 
tration for war service was 23 years old. He had declared his in- 
tention to become a citizen of the United States. For the purpose of 
avoidïng military service, he surrendered his déclaration of intention 
to the Norwegian consul, to be forwarded to the department at Wash- 
ington, D. C, and made an affidavit of his willingness to return to his 
native country, in support of his exemption claim, on the ground of 
being an alien. His exemption was disallowed by the local board, and 
he was inducted into the army at Camp Lewis, and before his claim 
could be acted upon by the departments at Washington, D. C, the ar- 
mistice was signed. During the time applicant was in the service, he 
declined to become a citizen, although requested to do so at Camp 
Lewis. He knew that during the time he was at Camp Lewis spécial 
sessions of United States court were held at Camp Lewis for the con- 
venience of soldiers to become citizens, and many thousands were 
naturalized. 

Applicant filed his application for citizenship under Act July 19, 
1919, c. 24, § 1. Section 4 of Act June 29, 1906, c. 3592, 34 Stat. 596 
(Comp. St. 4352), provides that any alien may be admitted to citizen- 
ship who immediately prior to his application "has resided continuous- 
ly within the United States for fîve years, and within the state where 
the court is held one year, and that during the time he has been "a 

®=5For other cases see saine toplo & KEY-NtfMBER In ail Key-Numbered Digests & Indexes 



IN EE LOEN 167 

(262 F.) 

man of good moral character, attached to the principles of the Constitu- 
tion of the United States, and well disposed to the good order and 
happiness of the same." Section 4, subd. 1, of this act, provides that 
an alien shall déclare on oath before the clerk of any court authorized 
to naturalize aliens, two years at least prior to his admission, that it is 
bona fide his intention to become a citizen of the United States, and a 
willingness to forfeit ail allegience and fidelity to foreign sovereignty. 
This act was amended May 9, 1918 (40 Stat. 542, c. 69 [Comp. St. 
1918, § 4352]}, by adding the seventh subdivision, by which it is pro- 
vided : 

"Any alien servlng In the mllitary or naval service ot the United States 

(lurin^ the time this ijoimtry is engajjed in the présent war may file his pétition 
for naturalizatlon without maklng the prellminary déclaration of intention, 
and without proof of the required five years' résidence wlthin the United 
States." 

On July 19, 1919, this subdivision 7 was amended by providing that — 

"Any person of foreign birth who served in the mllitary or naval forces 
of the United States during the présent war, after final exainination and ae- 
ceptance by the said mllitary or naval authorlties, and shall hâve been honor- 
ably discharged after such * • • service, shall bave the beneflts of the 
beventh subdivision of section 4 of the act of June 29, 1906, * • * as 
amended, • * • and this provision shall continue for the period of one 
year after ail the American troops are returned to the United States." 

The applicant claims that he was honorably discharged, and that 
this application is timely, and that he should be admitted. The appli- 
cation is within a year, and he beats an honorable discharge. 

Is the examination of the court as to the applicant's qualification 
for citizenship limited to the timeliness of the application, and to the 
discharge, or is the duty still impose d upon the court to détermine 
wfhether the applicant comes within the other requvrements of the lavv ? 
The exceptions in favor of an honorably discharged soldier appear to 
be deiinitely and clearly pointed out, and limited to proof of résidence 
and déclaration of intention, as far as the présent inquiry is concerned. 
Ail of the requisites except résidence and déclaration of intention must 
theref ore be met by the applicant, as the only limitation placed upon the 
court, as far as concerns us hère, is with relation to déclaration of in- 
tention and résidence. The applicant never left the training camp. 
So far as appears, no further disposition was made of his claim for 
exemption by the departments at Washington. 

In the instant case, the applicant had declared his intention to become 
a citizen, and under oath declared his willingness to renounce ail al- 
legiance to foreign sovereignty. By that oath he solemnly swore it to 
be his bona fide intention to transfer his citizenship and allegiance. 
This implied willingness and intention to défend the flag, to support 
the Constitution and laws of the United States ; and, when invitation 
was extended, he declined to do so, thereby repudiating his declared 
intention, and asserted under oath préférence for his native country. 
He failed to meet the test. Nothing appears to indicate a change of 
sentiment or feeling of regret. 

Citizenship and allegiance to this country are made of sterner stuflf. 
He i^ not fitted to take the oath of allegiance. Interprétation of the 
oath of allegiance is more than a mère formula of words. It is the 



IGS 2C2 FEDERAL REPORTER 

translation of the alien applicant for citizenship from foreign language, 
foreign history, foreign ideals, and foreign loyalty, into a living char- 
acter of our language, of our history, of our life, of our ideals, and 
loyalty to our flag. It is that intellectual, spiritual, patriotic develop- 
ment of love for the United States, his adopted country, and its Consti- 
tution and laws, which moves him in sincerity to dedicate his life to its 
service, and conscientiously agrée to défend it against ail enemies and 
the implanting in his soûl of a sincère détermination that in the hour of 
danger or attack upon the Constitution or the flag, to dévote to their dé- 
fense and support unlimited loyal service to the extent of his life, if re- 
quired. Any person unwilling to pledge his hands, his heart, his life, to 
the service and préservation of the govemment of the United States, 
first and always, is unworthy to be admitted to citizenship. 

The proof does not show the applicant's loyalty to our flag and 
his willingness to défend it. This applicant, when the flag was as- 
.saulted by a foreign foe, was unceasing in his efforts to évade mili- 
tary service in a conflict forced upon this country, and did nothing 
which would indicate that he was attached to the principles of the 
Constitution of the United States, carrying forward liberty, equality, 
justice, and humanity. It was not until ail danger was past, when 
the armistice was signed, that he made up his mind to again knock at 
the door of his country, and ask to be admitted to citizenship. 

The application is denied with préjudice, and before he can be ad- 
mitted to citizenship he will hâve to serve a probationary period which 
will justify a court to conclude that he is in truth and in fact attached 
to the principles of the Constitution and the laws of this country. 



TAYLOR & BOUENIQTJE CO. v. NATIONAL BANK OF ASHTABULA. 

(District Court, N. D. Ohio, E. D. December 27, 1919.) 

No. 10201. 

1. Courts <®=3372(7) — Collecting bank's liabilitt as collectob govebned 

bt general law, not state decisions. 

On a Question of gênerai law, as the liability of a bank accepting for col- 
lection commercial paper, the fédéral courts are not bound by décisions of 
the State in which the contract was made, or to be performed, but must 
détermine the question of liability by référence to ail the authorlties. 

2. Banks and banking ®=5l71(6) — Liability of bank collectinq commer- 

cial PAPER FOR ACTS OF CORRESPONDENT. 

A bank receiving commercial paper in one state for collection In another 
is llable for any neglect of duty occurring in its collection, whether nrls- 
ing from the default of its own officers or employés, or from that of its 
correspondent, and while this obligation may be modifled by contract. a 
modification will not be inferred from knowledge that the receiving bank 
must, or intends in due course of business to, forward the paper to an- 
other bank for collection. 
i. Banks and banking •©=175(%) — Owner of commercial papeb cankot 

SUE correspondent SELECTED BT BANK TO WHICH PAPEB WAS DELIVEBED 
FOR COLLECTION. 

Where a correspondent selected by a bank with which was deposited 
commercial paper for collection is négligent, and the owncr sulïers a loss, 

*=3For other cases see sama topic & KBY-NUMBBE in ail Key-Numbered Digests & Indexos 



TATLOR & BOURNIQUE CO. V. NATIONAL BANK OF ASHTABULA 109 

{262 F.) 

the owner cannot in hls own name sue the négligent correspondent, but 
his rlght of action is agalnst the bank with which he deposited tbe com- 
mercial paper. 

At Law. Action by the Taylor & Bournique Company against the 
National Bank of Ashtabula. On demurrer. Demurrer to pétition 
sustained. 

H. E. Starkey, of Jefferson, Ohio, and Charles J. Ford, of Geneva, 
Ohio, for plaintiflf. 

Green & Gallup, of Cleveland, Ohio, and Mott G. Spaulding, of 
Ashtabula, Ohio, for défendant. 

WESTENHAVER, District Judge. The défendant demurs to the 
plaintifï's pétition on the ground that a cause of action is not stated. 
The pétition in substance allèges that on the 14th day of March, 1918, 
plaintiff delivered to the Wisconsin National Bank at Milwaukee, Wis., 
for collection, four drafts, payable on demand, aggregating $12,533.45, 
drawn by plaintifif on the Horton Milling Company of Ashtabula, Ohio, 
payable to the order of the Wisconsin National Bank, with bills of 
lading attached, for four cars of No. 3 white corn, sold by the plain- 
tiff to the said Horton Milling Company ; that the Wisconsin National 
Bank duly forwarded thèse drafts to the défendant at Ashtabula, Ohio, 
for collection ; that the défendant carelessly and negligently held them 
until about May 6, 1918, without making any demand for payment or 
acceptance, and without making any report or giving any notice of its 
failure to act; that as a resuit of this conduct the four cars of corn 
were permitted to lie on the side tracks of the railroad carrier until the 
corn had become heated and damaged, and was no longer of the grade 
and quality originally sold and shipped; and that the Horton Milling 
Company refused on May 6, 1918, to accept the corn or to pay the 
drafts. Plaintiff seeks to recover damages based on this négligent 
conduct of the défendant. 

Upon this demurrer plaintiff contends that the law of Wisconsin 
is to govern, and that this law is what is known as the Massachusetts 
rule, applicable to the liability of a bank accepting commercial paper 
for collection. On the other hand, the défendant contends that the 
case is governed by the law of Ohio, which is the same as that known 
as the New York rule. No statute of Wisconsin is cited or claimed to 
be in force creating any spécial rule différent from the gênerai law of 
commercial paper. The law of Wisconsin invoked by plaintiff re- 
sults from the décisions of its Suprême Court. See Stacy v. Dane 
County Bank, 12 Wis. 629; Blakeslee v. Hewett, 76 Wis. 341, 44 N. 
W. 1105. 

The argument before me turns chiefly on whether or not there is 
any conflict in the décisions of the Surpeme Court of Wisconsin and 
of Ohio, and, if so, which line of décisions shall be foUowed — the 
plaintiff contending that, inasmuch as its contract was made in Wis- 
consin with the Wisconsin National Bank of Milwaukee, and was to 
be partly performed there, that the law of that state should control; 
and the défendant contending that, inasmuch as Ohio was the place 



170 262 FEDERAL REPORTER 

where the contract was to be perf ormed, and the place where defend- 
ant's contract, if any, was made, the Ohio law should control. 

[1] In my opinion, the true question of law upon which the case 
turns is not that assumed by counsel. There is, in my opinion, no 
question involved of conflict in law, and therefore no inquiry need be 
made as to where the contract was made, or by the law of what state or 
forum it is to be controUed. The applicable raie is that stated in 
Swift V. Tyson, 16 Pet. 1, 10 L. Ed. 865 ; B. & O. Railroad v. Baugh, 
149 U. S._368, 13 Sup. Ct. 914, 17 L. Ed. 772. The rule thereby es- 
tablished is that, when the question is one of gênerai law, and not of 
purely local law, it is to be determined by référence to ail the authori- 
ties, and upon due considération of the principles of gênerai jurispru- 
dence applicable to the subject, and not by référence merely to those 
of the state in which the cause of action arose. 

Swift V. Tyson, supra, involved the question of whether or not one 
who acquired negotiable paper for a pre-existing debt in due course 
before maturity and without notice of any défense thereto was to be 
regarded as a holder for value. The cause of action arose in New 
York, by the décisions of which one taking a note for a pre-existing 
debt was not regarded as a holder for value. It was held that this 
was a question, not of local law, but of gênerai commercial law, and 
was to be decided upon an examination of ail the authorities and due 
considération of the principles underlying the gênerai commercial law 
of the land. The resuit was that the United States Suprême Court 
held in that case that one taking negotiable paper for a pre-existing 
debt was a holder in due course. Mr. Justice Story, delivering the 
opinion, says that the laws of the state, which were made by the orig- 
inal Judiciary Act the rule of décision in the United States court, 
mean state laws, strictly local ; that is to say, positive statutes of the 
state and the construction thereof adopted by the local trihunals, and dé- 
cisions relating to rights or titles to things having a permanent lo- 
cality, such as the rights and titles to real estate and other matters im- 
movable and intraterritorial in their nature and character. 

In B. & O. Railroad v. Baugh, supra, this and ail the intervening 
cases were fully reviewed, and the law reiterated to the same effect. 
It was therein held that the rule of fellow servancy in négligence cases 
was not a question of local law, but of gênerai jurisprudence, and that 
the Ohio vice principal rule would not be followed and applied in the 
United States courts, even when the in jury was sustained and the 
cause of action arose in Ohio after the pronouncement by its Suprême 
Court of that rule. It results that, if the United States Suprême Court 
has declared a rule applicable to the présent controversy, it must con- 
trol, and hence it is immaterial to inquire whether the so-called New 
York or Massachusetts rule is the true rule, or which has been adopt- 
ed in Ohio. 

[2] Upon this proposition there can be no doubt. See Hoover v. 
Wise, 91 U. S. 308, 23 L. Ed. 392; Exchange National Bank v. Third" 
National Bank, 112 U. S. 276, 5 Sup. Ct. 141, 28 L. Ed. 722. Neither 
of thèse cases has ever been overruled, criticized, or distinguished, 
and while I do not find that the question involved has ev'er again been 



TAYLOR & BOUKNIQUE CO. V, NATIONAL BANK OF ASHTABXJLA 171 

(262 F.) 

under considération by the Suprême Court, I do find that thèse cases 
hâve ever since been uniformly followed by ail inferior fédéral courts. 
The law, as established by thèse cases, is that a bank receiving com- 
mercial paper in one state for collection in another state from a maker 
or drawer residing there is liable for any neglect of duty occurring in 
its collection, whether arising from the default of its own officers or 
employés, or from that of its correspondent or its agents in another 
state. This obligation, it is true, may be modified by contract; but a 
modification of the bank's obligation will not be inferred from knowl- 
edge that the receiving bank must, or intends, in due course of busi- 
ness, to forward the same to anodier bank for collection. The sound 
reasoning and policy upon which this rule rests is sufficiently stated 
in Exchange National Bank v. Third National Bank, supra, and in 
Reeves v. State Bank, 8 Ohio St. 465. 

The contrary doctrine is that a bank receiving commercial paper and 
performing thèse duties is merely obliged to exercise due care in the 
sélection of compétent agents and in the transmission of such paper 
with proper instructions. The resuit of this doctrine is that the re- 
ceiving bank is impliedly authorized to sélect subagents, who thereby 
become agents of the owner of the paper, and is not liable for the neg- 
lect or default of its subagents. On the other hand, under the correct 
doctrine as established by the décisions above cited, the receiving bank 
contracts to make collection, and is, in effect, an independent con- 
tracter, which may avail itself of such agencies as are necessary or 
proper in the performance of its contract, but remains itself liable to 
the owner for due performance by its agents or représentatives thus 
employed, and they do not become subagents of the owner; nor is 
the receiving bank exonerated from liability to the owner, no matter 
what degree of care or diligence it exercises in selecting its agents. 

The case of Bank of Washington v. Triplett, 1 Pet. 25, 7 L. Ed. 37, 
sometimes cited as holding the contrary, is distinguished, on the ground 
that the bank, upon the facts, was held to hâve contracted directly 
with the holder of the bill to collect it, and that the forwarding bank 
was the holder 's agent merely to transmit the bill for collection. This 
is also the doctrine in Ohio. See Reeves v. State Bank, 8 Ohio St. 466. 
This case has been followed once, and the law therein stated has been 
approved twice in later cases. There is nothing to the contrary in 
Hilsinger v. Trickett, 86 Ohio St. 286, 99 N. E. 305, Ann. Cas. 1913D, 
421, as contended on behalf of plaintifif. In this case, Judge Spear, 
delivering the opinion, says that it is unnecessary to consider the prop- 
osition stated in Reeves v. State Bank, supra, because neither the bank 
taking the paper for collection nor the bank to which it was forwarded 
was shown to be guilty of any neglect of duty, and, further, no loss 
to the owner had resulted from the alleged négligence. 

[3] Thus far there is no difficulty. The question, however, remains 
to be considered whether or not the real owner may maintain an ac- 
tion against the bank or agent to which the paper was forwarded by 
the bank first taking it for collection, as well as against the receiving 
bank. It is undisputed that the owner may maintain an action against 
the receiving bank. The apparent difficulty in plaintifï's situation has 



172 2C2 FEDERAL REPORTER 

impelled me to give the most careful considération to Ihis question. 
As a resuit, I am of the opinion that plaintiff may maintain an action 
only against the bank with which it made its contract for collection, 
and not against any other bank to which the receiving bank forwarded 
it, based on the latter's négligence or breach of duty, as a resuit of 
which collection was not made. This conclusion is amply supported by 
the following authorities: Hoover v. Wise, 91 U. S. 308, 23 L. 
Ed. 392; Hyde v. First National Bank, 7 Biss. 156, 12 Fed. Cas. 1110, 
No. 6970; Balcomb v. Old National Bank (C. C. A. 7) 201 Fed. 680, 
120 C. C. A. 27; Montgomery County Bank v. Albany City Bank, 7 
N. Y. 459; Morris v. First National Bank of Allegheny, 201 Pa. 
160, 50_Atl. 1000; note of Editor, 50 Am. St. Rep. 123, 124. This 
proposition is also explicitly held in Reeves v. State Bank, 8 Ohio 
St. 466, 483. The dissenting opinion of Judge Sutliff conceded this 
to be the correct ruie when applied to an action based on failure to 
collect, due to négligence or breach of duty. See, also, I Mechem on 
Agency, § 333; 1 Daniel, Negotiable Instruments, § 344; note, 52 
1,. R. A. (N. S.) 663. The holding, in brief, of thèse authorities, is that 
whenever the doctrine of Exchange National Bank v. Third National 
Bank, supra, otherwise called the New York rule, is adopted, the 
owner's right of action for failure to collect, due to négligence, is lim- 
ited to the bank with which the holder made his contract for collection. 

The légal principles upon which thèse décisions rest are funda- 
mental. The receiving bank, being in effect an independent contracter, 
has control of the means and agencies necessary and proper to per- 
form its contract. The principal assumes no responsibility for the 
acts or conduct of the agents selected by an independent contractor. 
There is no privity of contract between the principal and the agents 
of the independent contractor. If the principal sustained to them 
such privity as would permit him to maintain an action against them, 
then he would become in law responsible for their acts and conduct. 
They might sue him for compensation, and he might be sued by 
Etrangers for their acts. He would be bound by their admissions while 
acting within the apparent scope of their authority. Notice to them 
would be notice to him. Thèse principles are too important to be 
unsettled, out of considération for the inconvenience which plaintiff 
may suffer as a resuit of what must be regarded as erroneous dé- 
cisions of the Suprême Court of Wisconsin. 

This opinion might end hère, but, to avoid possible future misun- 
derstanding, a word should be added with référence to those cases 
which hold that the owner of a negotiable paper may, under some 
circumstances, maintain an action against a bank to which the paper 
has been sent by a receiving bank to recover money collected thereon 
in an action for money had and received. In Reeves v. State Bank, 
supra, this right was denied. Judge Sutliff dissented, solely on the 
ground that no privity of contract was necessary to support an action 
by the real owner for money had and received against one who had 
no superior right to retain it. Other cases hold that, before remit- 
tance to the receiving bank, the latter's agency may be revoked, and 
that an action for money had and received may be maintained against 



STOCKÏON V. LKDEREB 173 

(262 F.) 

the bank to which it is sent, if no advances hâve been made by the 
latter thereon. See cases cited, note of editor, 50 Am. St. Rep. 123, 
124, and note, 52 L. R. A. (N. S.) 663-665. It is unnecessary, as be- 
tween this conflict, to détermine which Une of cases déclare the cor- 
rect rule. It is sufificient to point out that none of them hâve any 
application to an action based on négligence, as a resuit of which col- 
lection was not made. 

The demurrer will be sustained. An exception may be noted. Leave 
to amend, if desired, will be given. 



STOCKTON V. LEDERER, Internai Revenue Collecter (two cases). 

(District Court, B. D. Pennsylvanla. December 2a, 1919.) 

Nos. 5028, 5800. 

Intbenai, eeventje <S=>7 — Accumulation for charitable purposes not sub- 
ject to income tax. 

Income of the e.state of a testator In the hands of trustées held not 
subject to tax, under Act Sept. 8, 1916, c. 463, § 2(b) (Comp. St. § 6336b), 
wliere by the ternis of the will a portion of it, so small as to be exempt 
from tax, is to be used in payraent of an aunulty, and the remainder, 
added to the corpus of the estate at the end of tlie annuity tenu, is to 
be paid over to a charity, which, under section lia (Comp. St. § 6336k), ia 
exempt from the tax. 

At I^aw. Actions by Alexander D. Stockton, sole surviving trustée 
under the will of Alexander J. Derbyshire, deceased, against Ephraim 
Lederer, Collector of Internai Revenue. Judgments for plaintifï. 

Prichard, Saul, Bayard & Evans, of Philadelphia, Pa., for plain- 
tiff. 

Robert J. Sterrett, Asst. U. S. Atty., and Francis Fisher Kane, U. 
S. Atty., both of Philadelphia, Pa., for défendant. 

DICKINSON, District Judge. As precisely the same questions of 
fact and of law arise in each of the above cases, we dispose of them 
in one opinion. The findings of fact and the conclusions of law ac- 
companying this opinion are to be taken as found separately in each 
case, respectively. 

The broad question discussed in this case involves an inquiry into 
the meaning of the acts of Congress taxing incomes. The particular 
income is that accruing to an unsettled decedent's estate. The Une of 
thought pointed out to us by counsel for the United States as we grasp 
the thought and are able to foUow the Une is, roughly stated, this; 

In defining the persons whose incomes are made subject to the tax 
Congress created a person whose entity may be recognized through 
the use of the descriptive phrase of decedent's estâtes. The thought 
may be readily grasped by calling to mind one of the very numerous 
situations created out of the fact that some one has died seized and 
possessed of property, the possession and the légal title to which passes 
to his représentatives and is held bv them for an indetinite time. Dur- 

<gz:3Foi other casea Bee aaitio luDio à: K.iV -\ U.^ii- --.i m iiii Kfcy-Xuniijvi l;J IJif^t-tH it hj.iixts 



174 262 FEDERAL EEPOETER 

ing this time income accrues and is received. The phrase commonly 
in use to describe this situation is intelligible and sufficiently expressive 
in itself. It is "income of the estate," as distinguished f rom the person 
or persons to whom it ultimately goes. If this income is visually 
traced as issuing out of the corpus of the estate and flowing into the 
hands of the légal représentatives of the testator or other décèdent, 
and then being distributed in whole or in part after diminution and 
division, if there be any, to the person or persons to whom it ultimately 
goes, the distinction between the income of the estate and the income 
of the beneficiaries under the will or other ultimate récipients is 
brought to light with satisfactory clearness. 

The estate with which we are concerned is that of a testator wlio 
had charged his estate with certain annuities, or what were practically 
the équivalent of annuities, and had given the residue to a charity. 
More accurately speaking, he had bequeathed and devised his whole 
estate to his executors qua trustées in trust to invest and keep invested 
and to pay the annuities, and after the coming of âge of one of them 
and death of the survivor of the others pay over the corpus of the es- 
tate, together with the accumulated income, to the charity. 

Applying the doctrine which counsel for the United States asks to 
hâve applied, as above outlined, a tax has been assessed upon the in- 
come as it has accrued to the trustées. In order to complète the state- 
ment of facts, although the bearing of thèse features upon the ques- 
tion before us is not seen, it may be added that application was made 
to the court, having jurisdiction of the estate, to distribute to the resid- 
uary cestui que trustent the balance of the estate after making pro- 
vision for the assurance of the payment of the annuities and their re- 
lease. This was upon the practical ground that the ownership of the 
corpus of the estate and the excess income over and above the payment 
of the annuities vested in the charity. Distribution was refused by the 
court. Resort was then had to the practical expédient of the trustée 
investing the funds of the estate in the form of a loan to the institution 
representing the charity, upon which loan the charity paid an inter- 
est sufficient to take care of the administrative charges and the pay- 
ment of the annuities. The annuities hâve aîl fallen in, except one 
small one. 

The argument of counsel for the United States, concisely and per- 
haps inadequately stated, is that, the estate being an entity or per- 
son having an income within the meaning of the tax laws, this income 
is taxable as such notwithstanding the fact that it ultimately goes to 
the charity. The thought upon which the argument is based is sup- 
ported by the statement that, notwithstanding the fact that the estate 
is large and the income therefrom many times the sum required to 
meet the annuities, there is no légal certainty that anything will go 
to the charity. The income as income belonging to the estate is tax- 
able under the provisions of the taxing statute, and is exempt only so 
far as it goes to the charity. Therefore, if it does not go to the 
charity, there is no ground of exemption, and as it cannot now be 
determined with légal certainty that it will go to the charity, it remains 
taxable. 



STOCKTON V. LEDERER 175 

(262 F.) 

There are at least two obstacles in the way of the acceptance of this 
argument as sound. One is that there are two grounds of exemption 
from taxation. A part of the income is exempt because of the exemp- 
tion in favor of charity. The other part is exempt because it is below 
in amount the taxable lirait. The two take in the whole income, and 
it is difficult to escape the conclusion that if the whole income is ex- 
empt, none of it is taxable. The other obstacle is really the same 
viewed from a différent standpoint. It is that this income is not the 
income of the estate, but of the parties to whom it is given. The légal 
représentatives of the testator are nothing more than the réservoir 
and conduit pipe through which the income reaches the beneficiaries 
of the testator's bounty. If that income is eut off, so that it does not 
arise or is lost in the hands of the trustées, the loss is the loss of the 
beneficiaries. This is nothing more than the emphatic statement that 
the income which the United States is proposing to tax is their income. 
Moreover, it may be stated in addition that the fact theory upon which 
counsel for the United States base their argument is whoUy fanciful 
and artificial. Practically speaking, there is a surplus of income 
which goes to charity, so that the whole fabric of the argument is based 
upon a légal figment, and to recur to tlie thought already expressed, 
as no part of the income is taxable if it is the income of the benefi- 
ciaries, we do not see how the fact that the charitable beneficiary may 
not receive its share in any way affects the question. 

We hâve dealt with the case as to its facts on the basis of the cor- 
pus of the residuary estate, together with the accumulations of in- 
come going under the will to the charity. Of course, if there were 
hère an intestacy as to the whole or any part of the estate an entirely 
différent question would arise, because the income which is claimed 
to be taxable would not be within the exception to the act, We hâve 
viewed the question of intestacy as a closed question for the reason that 
this will has been construed by the state courts, and the finding made 
thereon fixes the status of ail possible claimants. As a conséquence 
we must perforée accept this finding, inasmuch as a finding by this 
court that any portion of the estate, either corpus or income, passed to 
distributees under the intestate laws would be the finding of something 
which does not exist and which legally cannot possibly come into exist- 
ence. As a further conséquence we hâve not taken up the subject of 
intestacy, but accept the ruling made that the décèdent did not die in- 
testate as to any part of his estate. 

It may be conceded that the income from this estate is within the 
gênerai taxing clause of the act of Congress because ail persons who 
receive income which ultimately goes to another are required to with- 
hold out of the income a sum équivalent to the normal income tax 
and render a return thereof, etc. It is to be observed, however, that 
the income out of which this tax sum is to be withheld is the income 
of some one who is subject to the tax, and subclause (a) of clause G 
(38 Stat. 172) provides that income moneys which go to charity and 
other named institutions of like gênerai character are not within the 
taxing clause of the act. This statement is made with respect to the 
provisions of the taxing act of 1913 (Act Oct. 3, 1913, c. 16, 38 Stat. 



176 202 FEDERAL KEPORTER 

114) assumîng it to include the încomes from unsettled decedent's 
estâtes which were included by the act of 1916 (Act Sept. 8, 1916, c. 
463, 39Stat. 756). 

The act of 1917 (Act Oct. 3, 1917, c. 63, 40 Stat. 329), so far as we 
hâve been able to discover, does not change the situation. The lan- 
guage employed in the act of 1916, which makes clear the inclusion 
of incomes froni decedent's estâtes as taxable, is open to a construc- 
tion which would include the income which is derived from the as- 
sets of this estate, but section 11 (a) of the same Act (Comp. St. § 
6336k), specifically provides that income which belongs to a char- 
itable institution shall not be subject to the tax. The part of the in- 
come which goes to the sole remaining annuitant is not taxable be- 
cause of the provision which is in every one of the acts declaring in- 
comes up to a certain amount not to be taxable under the act. 

We are therefore of opinion that no part of the income from this 
estate is subject to the teix, and that the plaintiff is entitled to recover 
judgment for the sum set forth in the pleadings. We under stand 
there is no controversy over the amount for which judgment should 
be rendered, and the plaintiff may enter formai judgment for the sum 
demanded in each case. 

We accOmpany this opinion with findings of fact and conclusions 
of law, in accordance with the requests submitted by plaintiff, as fol- 
lows: 

Findings of Fact. 

The facts are found as requested in requests of plaintiff 1, 2, 3, 4, 5, 
6, 7, 8, 9, 10, 11, 12, 13, 14, and 15. 

Conclusions of Law. 

We find and state conclusions of law in accordance with the requests 
of the plaintiff, as follows : 

Requests 16, 17, 18, and 19 are found as requested. 

The conclusion with respect to request 20 is that judgment may be 
entered in each of the cases before us for such sum as counsel may 
agrée to be the correct sum in each case. We retain jurisdiction of the 
causes to find and détermine the amounts for which judgment may be 
entered, in the event that counsel fail to so agrée. 

Defendant's requests for conclusions of law are answered as fol- 
lows: 

Requests 1, 2, 3, and 4 are denied. 

Requests for findings of fact are answered as follows: 

1. Finding 1 is made as requested, in the respect that the income 
referred to is iricome derived from the assets of the estate of the décè- 
dent pending its administration and final distribution. The income and 
corpus of this estate is distributable in accordance with the will of the 
testator, Alexander J. Derbyshire. 

2. So far as finding 2 is of a question of fact, it is found that the law 
of the distribution of this estate was declared by the Suprême Court 
of the State of Pennsylvania in Biddle's Appeal, 99 Pa. 525, to be that 
the corpus of the estate was not distributable in the lifetime of the 
annuitants. 



DETROIT, M. & T. S. L. RY. V. CIÏY OF MONROE 177 

(262 F.i 

3. So far as finding 3 is one of fact, it is that the law of this case 
is that the trust referred to remains an active trust during the li£e of 
the annuitants, in so far as that the corpus of the estate is not distrib- 
utable until after the death of the last annuitant. 



DETROIT, M. & T. S. L. RY. v. CITY OF MONROE et aL 

(District Court, E. D. Michlgan, S. D. Deeember 22, 1919.) 

No. 300. 

1. COTJETS <S=5508(1) FEDERAL COUET HAS NO JUEISDICTION TO ENJOIN BUIT 

IN STATE COUBT, WHEKE NOT IN AID OF ITS OWN JURISDICTION. 

Under Rev. St. § 720, now Judicial Code, § 205 (Comp. St. § 1242), a 
fédéral court cannot eiijoiu proseeution of a suit In a state court, wliere 
not in aid of Its own jurlsdlctlon previously acquired, but to enable It 
to assume jurisdlctlon of the controversy tben pouding in tlie state court, 
because a fédéral question Is incidentally involved therein. 

2. Courts <S=489(9) — State court has in some instances jueisdiction of 

questions under interstate commerce act. 

State courts are not without jurisdiction in every case involving rights 
or questions under the Interstate Commerce Aet. 

In Equity. Suit by the Détroit, Monroe & Toledo Short Line Rail- 
way against the City of Monroe and others. On motion to dismiss bill. 
Granted. 

See, also, 257 Fed. 783. 

Bernard F. Weadock, of Détroit, Mich., for plaintifï. 
J. C. Lehr, of Monroe, Mich., for défendants. 

TUTTLE, District Judge. This is a motion to dismiss the bill of 
complaint herein on the grounds of alleged lack of equity appearing on 
the face of the bill, and of alleged lack of jurisdiction by this court to 
grant the relief prayed in the bill. 

The controversy out of which this suit arose has already been before 
this court recently on a bill filed by the city of Monroe, Mich., hereinaf- 
ter called the City, one of the présent défendants, in one of the state 
courts of Michigan, against the présent plaintiflf, hereinafter called the 
Railway, to restrain the latter from an alleged violation of a certain 
franchise contract between said City and said Railway, in charging 
rates of fare between said City and the city of Détroit, Mich., higher 
than the rates prescribed by the provisions of said franchise contract. 
This previous suit was removed by the Railway, défendant therein, to 
this court on the ground that the incrcase in rates complained of was 
based upon and justified by an order of the Interstate Commerce Com- 
mission, and that theref ore such suit was one arising under the Consti- 
tution and laws of the United States and removable to the fédéral court. 
Afterwards said suit was remanded by this court to the state court 
from which it had been removed, for the reason that it appeared that 
the bill therein was not based upon any rights arising under the féd- 
éral laws, and did not so directly involve a fédéral question as to make 
that suit a removable one. It was the opinion of this court that the 

$=9For otlier cases see same topic & KQY-NUMBBR in ail Key-Numbered Digests & Indexes 
262 F.— 12 



178 262 FEDERAL REPORTER 

substance and essence of that bill was the complaint that the Railway 
was violating the franchise mentioned and that the allégations therein 
fo the effect that the aforesaid order of the Interstate Commerce Com- 
mission was void, as relating to whoUy intrastate rates, were made by 
the City merely to négative an anticipated défense by the Railway, and 
was only incidental to the real purpose of the suit. It was therefore 
held that the suit did not arise under the Constitution or laws of the 
United States, within the meaning of the statute providing for the re- 
moval of such suits. City of Monroe v. Détroit, Monroe & Toledo 
Short I,ine Ry., 257 Fed. 782. 

After that suit had been thus remanded to the state court, the Railway 
filed the présent bill in this court against the city, its mayor, and its 
city attorney, seeking to restrain them from further prosecution of said 
suit. In its bill herein plaintiff Railway allèges that before the removal 
of the previous suit the state court had issued a temporary injunction 
restraining said plaintifï from collecting the rate of fare fixed in the 
order of the Interstate Commerce Commission, referred to, and requir- 
ing plaintifï to collect only such rate of fare as was provided in the 
franchise mentioned; that said plaintiff bas not complied with said 
injunction as it is advised by counsel that such injunction is invalid 
because the court by which it was issued was without jurisdiction in 
the premises; that thereafter plaintiff moved the said state court to 
dissolve such injunction, and dismiss the bill filed in that suit, upon the 
ground, among others, that sole jurisdiction to enjoin, set aside, annul, 
or suspend any order of the Interstate Commerce Commission was con- 
ferred upon the United States District Court for the district in which 
the carrier was a résident, which motion was denied ; that thereupon 
said suit was removed to and remanded by this court as hereinbefore 
stated; that subsequently the City and its officiais named as défend- 
ants herein instituted proceedings in the suit in the state court to cause 
this plaintiff to be punished for contempt of that court in failing to 
observe its said injunction, and that an order to show cause why this 
plaintiff and its officers should not be punished for such alleged con- 
tempt has been issued, and hearing thereon set in said proceedings; 
that the défendants herein intend by force and violence to remove 
from the cars of this plaintiff the crews thereof while said cars are in 
opération, and to cite said crews for contempt of that court in fail- 
ing to collect and charge the rates of fare fixed by the aforesaid fran- 
chise, despite the f act, as alleged by plaintiff, that said crews are now 
collecting the lawful rates of fare fixed in the aforesaid order of the 
Interstate Commerce Commission; that such action will resuit in 
disabling plaintiff from performing its public duty as an interstate 
carrier, and will cause great financial loss to it and untold inconvenience 
to its patrons ; that plaintiff is forbidden by law to charge discrimina- 
tory rates, and that if it should charge and collect the rates of fare fix- 
ed in the franchise, rather than that fixed in said order, it would be 
guilty of a discrimination in favor of said City and its inhabitants as 
against the other patrons of its Une, and be subject to the pénal ties pro- 
vided in the fédéral statutes, and that a compliance with said injunc- 
tion would render plaintiff liable to criminal prosecution for each 



DETROIT, M. & T. S. L. EY. V. CITY OP MONROE 179 

(262 F.) 

day that it neglected to collect the rates of fare established in said 
order, and would resuit in a multiplicity of suits against it and its 
officers and agents ; that said défendants hâve not applied to the proper 
tribunals established to test the validity of said order, or to set it aside, 
but are relying solely upon the aforesaid suit to harass and annoy plain- 
tifï and prevent it from complying with the order of the Interstate 
Commerce Commission; that said state court is without jurisdiction in 
the premises, sole and exclusive jurisdiction therein being conferred by 
the fédéral statutes on the fédéral courts, and that the prosecution of 
said suit will deprive plaintiff of its property without due process of 
law, in contravention of the provision of the Fourteenth Amendment 
to the Constitution of the United States. 

Plaintiff prays for a temporary and also a permanent injunction, re- 
straining the said City and its said officiais from further prosecuting 
the suit in the state court, and from taking any further steps to cite 
plaintiff, its officers, agents, or crews for alleged contempt of court in 
complying with the said order of the Interstate Commerce Commission, 
and from attempting to enforce the terms of the aforesaid franchise 
(called by the plaintiff in its bill an ordinance) relative to the rates of 
fare named therein, and from causing any forfeiture of the rights of 
plaintiff thereunder by reason of the increase in said rates complained 
of. As already stated, défendants hâve moved the court to dismiss 
this bill for want of jurisdiction and for lack of equity. 

[1] Proceeding first to consider the question of jurisdiction, it is ap- 
parent that the whole object of this bill is to secure an injunction re- 
straining the proceedings in the state court referred to. Section 720, 
United States Revised Statutes, being section 265 of the Judicial Code 
(Comp. St. §' 1242), provides as follows: 

"The writ of Injunrtlon sliall not be granted by any court of the United 
States to stay proceedings In any court of a state, except In cases where such 
injunction may be authorlzed by any law relating to proceedings in bank- 
ruptcy." 

This court, therefore, is asked to do exactly what Congress has ex- 
pressly provided that it should not do. While it is true that the pro- 
hibition of this statute does not extend to cases in which it is neces- 
sary that a fédéral court should grant an injunction to protect its own 
jurisdiction, previously acquired for other purposes than that of en- 
joining proceedings in a state court, yet it seems clear that this is not 
such a case. Before the filing of this bill this court had already divest- 
ed itself of ail jurisdiction over the subject-matter of this controversy 
and no proceedings of any kind were then pending hère in relation to 
any of the matters involved in the présent suit. It is not, therefore, 
necessary that any injunction should be issued as prayed in this bill 
for the purpose of restraining interférence with the jurisdiction of 
this court. This is not, of course, a case where an injunction is au- 
thorized by any law relating to proceedings in bankruptcy. Nor is it 
sought to restrain the enforcement of a state law alleged to be in con- 
travention of the United States Constitution. The prohibition, there- 
fore, of the statute is applicable. Haines v. Carpenter, 91 U. S. 254, 
23 L. Ed. 345 ; Dial v. Reynolds, 96 U. S. 340, 24 L. Ed. 644 ; St. 



180 2G2 FEDERAL EEPORTKR 

Louis, Iron Mountain & Southern Ry. Co. v. McKnight, 244 U. S. 368, 
37 Sup. Ct. 611, 61 L. Ed. 1200. 

The mère fact that in the suit in the state court thus sought to be 
restrained a fédéral question is incidentally involved does net authorize 
a fédéral court to enjoin the prosecution of such suit, although such 
fédéral question, if directiy involved, would be within the exclusive 
jurisdiction of the fédéral court. Western Union Telegraph Co. v. 
Louisville & Nashville R. R. Co., 218 Fed. 628, 134 C. C. A. 386 (C. C. 
A. 7) ; Cari Laemmle Music Co. v. Stern, 219 Fed. 534, 135 C. C. A. 
284 (C. C. A. 2). 

Nor does the fear that plaintifï may be subjected to fréquent prose- 
cuti ons in the suit in the state court entitle it to an injunction hère, in 
the absence of a showing that tliis court bas the necessary jurisdiction 
to grant équitable rehef within the gênerai powers of a court of equity 
having proper jurisdiction. Fitts v. McGhee, 172 U. S. 516, 19 Sup. 
Ct. 269, 43 L. Ed. 535 ; Indiana Mfg. Co. v. Koehne, 188 U. S. 681, 
23 Sup. Ct. 452, 47 L. Ed. 651. 

It is urgently insisted by the plaintiff that the suit in the state court 
is one to enjoin, set aside, annul, or suspend an order of the Interstate 
Commerce Commission, and that therefore such suit is within the ex- 
clusive jurisdiction of a fédéral court. Section 208, Judicial Code 
(Comp. St. § 997). This contention bas already heen, in effect, over- 
ruled by this court in its opinion already cited. City of Monroe v. 
Détroit, Monroe & Toledo Short Line Railway, supra. 

[2] Nor are the state courts without jurisdiction in every case in- 
volving rights or questions under the Interstate Commerce Act. Penn- 
sylvania Railroad Co. v. Puritan Coal Mining Co., 237 U. S. 121, 35 
Sup. Ct. 484, 59 L. Ed. 867; Pennsylvania Railroad Co. v. Sonman 
Shaft Coal Co., 242 U. S. 120, 37 Sup. Ct. 46, 61 L. Ed. 188; Pennsyl- 
vania Railroad Co. v. Stineman Coal Mining Co., 242 U. S. 298, 37 
Sup. Ct. 118, 61 L. Ed. 316, 

Plaintiff is not without proper remedy in the premises. It will bave 
an opportunity to présent, in the state court itself, the contention that 
such court lacks jurisdiction to entertain the suit pending there or to 
grant the relief prayed therein, and, if necessary, that contention and 
défense may, in due course, be submitted, on writ of error, to the 
United States Suprême Court. Robb v. Connolly, 111 U. S. 624. 4 
Sup. Ct. 544, 28 ly. Ed. 542; Fitts v. McGhee, supra; Indiana Mfg. 
Co. v. Koehne, supra; Prentis v. Atlantic Coast Line Co., 211 U. S- 
210, 29 Sup. Ct. 67, 53 L. Ed. 150; Dalton Adding Machine Co. v. 
State Corporation Commission, 236 U. S. 699, 35 Sup. Ct. 480, 59 L. 
Ed. 797. 

For the reasons stated, the motion to dismiss the bill must be grant- 
ed, and an order entered in conformity with the terms of this opinion. 



HUNAU V. NORTHERN REGION SUPPLY CORPORATION ^^^ 

(262 F.) 

HUNAU V. NORTHERN REGION SUPPLY CORPORATION, 

(District Court, S. D. New York. January 3, 1920.) 

Il Corporations <©=642(4%) — Fobeign compant subject to pbocess wheeh; 

AGENT HA8 AUTHOKITT TO CONCLUDE BABGAINS GENEIÎALLT. 

A foreign trading corporation, which sends an agent to New York, au- 
thorized to conclude bargalns generally, is subject to local process In 
personam. 

2. Corporations <S=3G42(6) — Foeeign company not subject to process in 
person unless doing some contintjous or permanent business. 

A foreign eoiTporatlon is not subject to local process in personam In 
respect of eacli single transaction vvbicli it inay autborize within the 
domestic jurisdictiou, unless it does sonio '"conttnuous" or "permanent" 
business within tbat jurlsdiction. 

At Law. Action by Adolph Hunau against the Northern Région 
Supply Corporation. On motion by défendant to quash service of 
original writ in personam. Motion denied. 

The défendant is a foreign corporation organized under the laws of the 
"government of the Northern Région" of Russia, whatever that may be. It 
is In fact a co-operative buying and selling company, whose business is to 
buy American and English products, raw and made up, and to export ail 
klnds of Russian produce in retum. On May 20, 1919, the plaintiff, a citizen 
of New York, served one of the defendant's directors, Danichewsky, in New 
York, with a summons issued ont of the state court, and attached a bauk 
deposit of the défendant in a local bank. The moving papers described the 
plaintiff's claim as arising upon a contract to pay tlie plaintiff for services 
rendered in New York to one Konecliko, an agent of the défendant, sent hère 
upon ttie company's business. The défendant, appearing speeially, removed 
the suit and got the attachment vacatxsd. It tben moved, stlU appearing 
speeially, to quash the service on the ground that it was doing no business 
hère. The matter was referred to a master, and is now arguod upon excep- 
tions to his report. 

The master found the défendant to hâve done business under the foUowing 
évidence: 

The corporation, being organized in Septcmbcr, 1918, wrote a letter to a 
New York bank in October of that year, statlng the kinds of goods it would 
like to buy, and requesting assistance and proper introduction for its rep- 
résentatives about to be sent, among whom was one Koneehko. He was 
stated to bave no authority to buy, but to be only a "specialist" in selecting 
goods. The bank was itself to give the orders of purchase, and the défendant 
would wire a transfer of tlie necossary funds. To effect this arrangement the 
défendant transmitted .Î47,000 to the bank. 

Koneehko arrived In New York in December, 1918, and b^an at once ex- 
amining goods, and setting on foot negotiations vi'ith varlous sellers. Thèse 
he continued until April 15, 1919, when Danichewsky, a director, arrived, who 
himself continued the business till May 20th, when the summons was served. 
It was to holp Koneehko in hIs dcalings that he emiiloyed the plaintiff, ac- 
cording to the latter's story. 

The bank apparently at once told the défendant that the suggested arrange- 
ment was not satisfactory to it, for on January 4, 1919, shortly after 
Koneehko had arrived, tlie défendant in reply advised the bank that Koneehko 
was authorlzed to buy goods and that his orders should be honored by them. 
On Januarj' 26, 1919, the défendant asked Koneehko to postpone buying till 
the director, Danichewsky, should arrive, owing to the difficulties of receiv- 
Ing any goods at Murmansk durtng the winter season. This cable was not 
transmitted to the bauk by either the défendant or Koneehko. Before Dani- 
chewsky's arrivai, Koneehko had, however, concluded a contract wlth a local 

^ssFor other cases see same toplc & KBY-NUMBER in aU Key-Numbered Digests & Indexes 



182 2C2 FEDERAL REPORTER 

Company by which the défendant might purehase $200,000 worth of goods, 
and under that contract he had used up ail or nearly ail the deposit, .f 47,000, 
in actual purchases. Another large contract of purehase had been nearly 
concluded, and negotiations were opened with others. In ail thèse the plain- 
tifC helped tim. Thèse contracts appear to hâve been not for spécifie pur- 
chases, but apparently authorized the défendant to purehase goods as Its 
agents mlght afterwards sélect. Danichewsky, on his arrivai, canceled the 
exlsting contract, refused to complète that which was nearly concluded, and 
repudiated the supposed contract wiUi the plaintiff. 

The master thought that the défendant was "doing business" in New York 
generally and contlnuously, and that in any event, in respect of those matters 
out of whlch the cause of action arose, the défendant was subjeet to juris- 
dletion, regardless of any gênerai business. Ile relied upon Premo Specialty 
Co. V. Jersey Cream Oo., 200 Fed. 352, 118 C. C. A. 458, 43 L. B. A. (N. S.) 1015 
(C. a A. 9th Cire), and Reilly v. Phil. & R. Ky. Co. (D. C.) 109 Fed. 349. 

Philip A. Carroll, of New York City, for the motion. 
Alphonse G. Koelble, of New York City, opposed. 

LEARNED HAND, District Judge (after stating the facts as 
above). [ 1 ] It appears to be still the fédéral law (People's Tobacco Co. 
V. American Tobacco Co., 246 U. S. 79, 38 Sup. Ct. 233, 62 L,. Ed. 587, 
Ann. Cas. 1918C, 537), despite International Harvester Co. v. Ken- 
tucky, 234 U. S. 579, 34 Sup. Ct. 944, 58 l,. Ed. 1479, that the mère 
solicitation of business, by agents sent into a state without authority 
to conclude bargains, does not constitute "dqing business" within its 
borders. Such was, of course, the ruling in Green v. C, B. & Q. 
Ry. Co., 205 U. S. 530, 27 Sup. Ct. 595, 51 L. Ed. 916, and Interna- 
tional Harvester v. Kentucky, supra, must be deemed to rest upon the 
fact that the local agents had authority to receive negotiable paper 
in payment of orders which they had not the power to close. On the 
other hand, in New York, the last ruling of the Court of Appeals defi- 
nitely held that a "continuons" and "permanent" business within the 
state, which consisted only of soliciting orders, was "doing business." 
Tauza V. Susquehanna Coal Co., 220 N. Y. 259, 115 N. E. 915. A 
searching analysis of the whole subjeet would hâve been necessary if 
the case at bar raised that question. The theory upon which rests the 
right to sue a foreign corporation is in flux, and much may dépend in 
the end upon what view becomes dominant. 

In this case, however, it appears to me that the master is right un- 
der any rule, because Konechko had power to buy from January 4, 
1919, on a power which he exercised in one instance, and was in course 
of executing in others, when Danichewsky intervened. The defend- 
ant's only business was to buy and sell goods between Russia and Eng- 
land and America, and when it sent a duly authorized agent, with power 
to buy tliem in New York, and he began what was designed to be a 
continuons business — at least so it must be assumed- — I cannot well 
see what other business it could hâve donc. The cable of January 26, 
1919, did indeed direct Konechko to postpone any purchases till Dan- 
ichewsky arrived ; but I do not read it as curtailing his powers mean- 
while, nor did Danichewsky question his intermediate purehase. It 
was based upon the difficulty of receiving goods at Murmansk, due to 
lack of berthing facilities, and was rather a direction of the manner 
m which he should exercise those powers. It is in this aspect signifi- 



OOMPANU MINERA Y COMPBADOKA, ETC. V. AMERICAN M. CO. 183 

(262 F.) 

cant that it was never communicated to the local bank, as the cable of 
January 4, 1919, had been. I conclude that the défendant had begun a 
"continuous" and "permanent" business hère. Danichewsky certainly 
had fuU powers after he arrived in April, nor does it appear that, at 
least until he left in May, the business of the défendant was intended 
to cease. At least, the project appears to hâve remained open on May 
20, 1919. 

[2] T do not mean to suggest, however, that the service will stand up- 
on the second ground suggested hy the learned master. I know of no 
authoritative décision that a corporation submits itself to local jurisdic- 
tion as to any single transaction performed in a foreign state. If so, 
it would be suable upon ail local causes of action, regardless of any 
other business. Such, indeed, appears to hâve been the notion in Premo 
Specialty Co. v. Jersey Cream Co., 200 Fed. 352, 118 C. C. A. 458, 43 
L. R. A. (N. S.) 1015, and was in 33 Harv. L. R. 10, attributed to my 
décision in SmoHk v. Phil. & R. Ry. Co. (D. C.) 222 Fed. 148, though 
I was, at least consciously, quite innocent of any such purpose. I do 
not, however, understand this to be the law at ail. How far a corpora- 
tion is immanent in every authorized act of its agents anywhere, and 
what will be the eventual basis of its subjection to foreign process, 
it is not necessary to consider ; but it is clear that at présent some gên- 
erai activities are necessary. The last expression of the Suprême 
Court (Flexner v. Farson, 248 U. S. 289, 293, 39 Sup. Ct. 97, 63 L. Ed. 
250) gives little encouragement to the "realists" ; but it must be owned 
that no consistent theory can at présent reconcile ail the cases, cer- 
tainly not ail the opinions. At any rate, this case ought not to be the 
excuse for a gênerai essay. 

The motion is denied. 



COMPANIA MINERA T COMPBADORA DE METALES MEXICANO, S. A., 
V. AMERICAN METAL CO., Limited, et al. 

(District Court, W. D. Texas, El Paso Division. January 15, 1920.) 

No. 671. 

1. COUBTS ©=>359 JOINDEB OF CAUSES AND PAKTIES DE)?ENDANT, AS AFFECTINO 

BIGHT TO EEMOVAL, TESTED BT LOCAL STATE LAWS. 

In determining vvhether an action was properly removed from a state 
court, the question whether the causes of action and parties défendant 
are properly joined will be determlned according to the local state law. 

2. Action (S=>50 (5) — Joindeb of causes of action pbopee. 

A pétition seeking damages for an alleged breach of contract from one 
défendant, and also alleglng that such défendant acted as agent of a 
second défendant in making the contract, and seeking recovery agalnst 
such second défendant in case It was the principal, Jmld to properly join 
causes of action and parties défendant under local Texas laws. 

3. REMOVAL of causes ©=5l STATUTOBT nature of BIGHT. 

The right of removal from state to fédéral courts is purely statutory. 

4. Removal of causes <S=348 — Sbparable contkovebst to which an alien 

IS A paett not eemovable. 

A separable controversy to which an allen is a party cannot be removed 
from a state to fédéral court. Irrespective of whether the alien is a 
plaintiff or défendant. 

(gssFoT other cases see aame toplc & KEY-NUMBER in ail Key-Numbered Dlgests & Indexes 



184 2G2 FEDERAL REPORTER 

5. Removai, of causes ®=29 — Suit involving alie^'s is not "suit between 

citizens of different states." 

Where an alien plaintif!: sued an alien défendant and a citizen de- 
fendant, the suit is not one between cltizens of différent states, within 
Jndicial Code, § 24 (Comp. St. § 991), conferring original jurisdiction ou 
fédéral District Courts In such cases. 

[Ed. Note. — For other définitions, see Words and Phrases, Controversy 
between Cltizens of DiflCerent States.] 

6. Courts <g=»321 — Where one oe moke parties are alieks, each plaintifp 

MUST BE capable OF SUINQ EACH DEFENDANT TO GIVE FEDERAL COURT JUR- 
ISDICTION. 

Under Judicial Code, § 24 (Comp. St. § 991), conferring original juris- 
diction on fédéral District Courts In certain suits between cltizens of a 
State and foreign states, each plalntifC must be capable of suing each de- 
fendant in the fédéral courts, and, if the défendant is an alien, and one of 
the plaintiflfs is also an alien, a fédéral court bas no jurisdiction, al- 
though other plalntiffs are citizens of the state. 

7. Eemoval of CAUSES ®=>11 — Suit in which plaintiff and one of défend- 

ants ARE ALIENS NOT REMOVABLE. 

A fedei-al District Court has not original jurisdiction over a suit 
brought by an alien plaintiff agalnst an alien défendant and a citizen 
défendant, and such a suit, therefore, cannot be removed from a state 
court to the fédéral court 

8. Eemoval of causes <©=»82 — Pailuee of alien défendant to join in péti- 

tion FOR eemoval. 

In suit by an alien plaintiff agalnst an alien défendant and a citizen 
défendant, the failure of the alien défendant to join in the citizen de- 
fendant's pétition for removal virould necessltate remanding the case to 
the state court, even if it were otherwise removable, since a citizen de- 
fendant's right to remove a separable controversy does not exist in 
suits involving alien parties. 

Suit by the Compania Minera y Compradora de Metales Mexicano, 
S. A., against the American Métal Company and the Compania de Min- 
érales y Metales, S. A., was removed from a state court by the first- 
named défendant. Motion to remand granted. 

Jones, Jones, Hardie & Grambling, of El Paso, Tex., for plaintiff. 

Turney, Burges, Culwell, Holliday & Pollard, of El Paso, Tex., for 
défendant American Métal Co., Limited. 

Joseph B. Cotton, of New York City, and Turney, Burges, Culwrell, 
Holliday & Pollard, of El Paso, Tex., for défendant Compania de Min- 
érales y Metales, S. A. 

SMITH, District Judge. This case was removed hère from a state 
court, and a motion to remand is now presented. 

The plaintiff Compania Minera y Compradora de Metales Mexi- 
cano, S. A., a corporation organized under the laws of the republic of 
Mexico, brought this suit in the district court of the Forty-First ju- 
dicial district of Texas, at El Paso, and upon the iîrst count of its 
pétition seeks to recover of the défendant Compania de Minérales y 
Metales, S. A., damages for an alleged breach of contract theretofore 
made and entered into by and between them. By the second count ot 
its pétition plaintiff makes the American Métal Company, Limited, 
a corporation incorporated under the laws of the state of New York, 

^x=9Fot other cases see same topic & KEY-NUHBER In ail Kejr-Numbered Digests & Indexes 



COMPANIA MINERA Y COMPRADOEA, ETC. V. AMERICAN M. CO. 185 

(262 F.) 

a party défendant, and allèges that said Compania de Minérales y 
Metales, S. A., in making said contract with plaintiff and in breaching 
same, was acting as the duly authorized agent of said American Métal 
Company, but says it makes such allégation only in event it should be 
determined that Compania de Minérales y Metales, S. A., in making 
said contract, was not acting for itself, but as the agent of American 
Métal Company, Limited, and only in the latter event does the plaintiff 
pray judgment against the last-named company. 

Pétition and bond for removal were seasonably filed by the American 
Métal Company, Limited, one of the défendants, but in thèse the other 
défendant, Compania de Minérales y Metales, S. A., did not join. 
The pétition for removal is based upon the following grounds: (1) 
That this is a suit in which there is a controversy between citizens of 
différent states, and that the défendants are nonresidents of the state 
of Texas. (2) That there is a separable controversy herein, wholly 
between the plaintiff and the petitioner for removal, which can be ful- 
ly determined as between them. (3) That the matter in controversy 
is between dtizens of a state and foreign states, citizens, or subjects. 

[1,2] Looking to the local laws of Texas as the proper test (Cin- 
cinnati, New Orléans & Texas & Pacific Ry. Co. v. Bohon, 200 Ù. S- 
221, 26 Sup. Ct. 166, 50 L. Ed. 448, 4 Ann. Cas. 1152), the causes of 
action set up by plaintiff and the parties défendant are properly jdined 
(New State Land Co. v. Wilson et al. [Tex. Civ. App.] 150 S. W. 253). 
Therefore the case with which we are hère dealing is one in which 
there is only one plaintiff, an alien corporation, and only two défend- 
ants, one of which is an alien corporation, and the other a citizen cor- 
poration. The removal petitioner, the American Métal Compemy, 
Limited, contends that this is a case of which this court bas original 
jurisdiction, and therefore is removable hère under the following pro- 
visions of the statutes: 

"The District Courts shaJl hâve original jurisdiction as follows: « • * 
Of ail suits of a civil nature, at cominon law or in equlty, * » * where 
the matter in controversy exceeds, exclusive of interest and costs, the sum or 
value of three thousand dollars, and * • » (b) is between citizena of 
différent states, or (c) is between citizens of a state and foreign states, citi- 
zens, or subjects." Section 24, Judicial Code (Act March 3, 1911, c. 231, 36 
Stat. 1087 [Comp. St. § 991]) 

— and that provision of section 28 of the Judicial Code (Comp. St. § 
1010) which reads as follows: 

"Any other suit of a civil nature, at law or in equity, of which the District 
Courts of the United States are given original jurisdiction by this title, and 
which are now pending or which may hereafter be brought, in any state court, 
may be removed Into tJie district court of the United States for the proper dis- 
trict hy the défendant or défendants therein, being nonresidents of that state. 
And when in any suit mentloned in this section there shall be a controversy 
which is wholly between citizens of différent states, and which can be fully 
determined as between them, then either one or more of the défendants actual- 
ly interested in such controversy may romove said suit into the District Court 
of the United States for the proper district." 

[3] The right of removal is purely statutory. No case can be re- 
moved from a state to the fédéral court, unless it clearly cornes within 
some provision of the removal statute. Great Northern Ry. Co. v. 



186 262 FKDliBAL REPOUÏER 

Alexander, 246 U. S. 276, 38 Sup. Ct. 237, 62 h. Ed. 713 ; Kentucky 
V. Powers, 201 U. S. 1, 26 Sup. Ct. 387, 50 h. Ed. 633, 5 Ann. Cas. 692 ; 
Phœnix Ins. Co. v. Pechner 95 U. S. 183, 24 h. Ed. 427. Therefore, 
in order to dispose of the motion to remand, it is necessary to deter^ 
mine whether or net this case comes within any of the provisions of 
the statutes above quoted, and, if it does not, the motion shûuld be 
granted. 

[4] The contention that there is in this suit a separable controversy 
between the plaintifï and the défendant petitioning for removal, which 
would authorize the case to be removed to this court, cannot be sus- 
tained, because, if there is a separable controversy, which I do not 
décide, it is not "whoUy between citizens of différent states," as is 
required by the separable controvei^sy provision of the statute. The 
plaintifF, one of the parties to the controversy, being an alien, excludes 
the case from that provision. A separable controversy to which an 
alien is a party cannot be removed, whether the alien is a plaintifï or 
défendant. Deakin v. Lea, Fed. Cas. No. 3695 ; Creagh v. Equitable 
Life Assurance Society (C. C.) 88 Fed. 1 ; Merchants' Cotton Press 
Co. v. Insurance Co. of North America, 151 U. S. 368, 14 Sup. Ct. 
367, 38 L. Ed. 195 ; King v. Cornell, 106 U. S. 395, 1 Sup. Ct. 312, 
27 L. Ed. 60; Woodrum v. Clay (C. C.) 33 Fed. 897; Insurance Co. v. 
Insurance Co. (C. C.) 50 Fed. 243 ; Tracy v. Mord (C. C.) 88 Fed. 
801. 

[5] Now, eliminating the separable controversy question entirely, 
as I must, and considering the case as a whole, it must be also held 
that this is not a suit "between citizens of différent states," and hence 
not within the jurisdiction of this court by virtue of that provision of 
the statute. 

[6, 7] This brings us to a considération of the third and last ques- 
tion presented, and that is whether or not the case is removable, be- 
cause falling within that provision of the statute which gîves the 
United States District Courts jurisdiction of suits when the required 
amount is in controversy and is "between citizens of a state and for- 
eign states, citizens and subjects." 

It has been held that, where a citizen of a state sues a citizen of 
another state and an alien, the case is within fédéral jurisdiction, and 
may be removed from a state court upon the joint pétition of both de- 
fendants. Baker v. Pinkham (D. C.) 211 Fed. 728; Roberts v. Pac. 
& A. Ry. & Nav. Co., 121 Fed. 785, 58 C. C. A. 61 ; Carson v. Hyatt, 
118 U. S. 279, 6 Sup. Ct. 1050, 30 L. Ed. 167. Thèse décisions were 
correctly based upon the obvious reason that the défendants should 
be accorded the right to unité in a pétition to remove a case, where 
they could hâve removed severally, if sued alone. But it has also been 
held that the fédéral courts hâve no jurisdiction of a case in whicli 
both the plaintiff and the défendant are aliens. Montalet v. Murray, 
4 Cranch, 46, 2 L. Ed. 545 ; Mossman v. Higginson, 4 Dali. 12, 1 L. 

Ed. 720; Cunard S. S. Co. v. Smith, 255 Fed. 846, C. C. A. ; 

Pooley V. Luco (C. C.) 72 Fed. 561. Neither of thèse rulings is appli- 
cable to the instant case. If thèse défendants had been sued separately, 
one of the suits would hâve embraced an alien plaintiff and a citizen 



COMPAJNLâ. MINERA Y COMPRADOEA, ETC. V. AMEKICAN M. CO. 187 

(262 F.) 

défendant, and the other would hâve been between an alien plaintifï 
and an alien défendant. The former case, conceding the inapplicability 
of the doctrine announced in the case of In re Wisner, 203 U. S. 449, 
27 Sup. Ct. 150, 51 L. Ed. 264, which I do not find it necessary to dé- 
cide, would be removable, and the latter would not be removable. 

It is well settled that, where there are several plaintifïs and défend- 
ants, each plaintiff must be capable of suing each défendant in the féd- 
éral courts. Strawbridge v. Curtiss, 3 Cranch, 267, 2 L,. Ed. 435 ; 
New Orléans v. Winter, 1 Wheat. 91, 4 L. Ed. 44; Coal Co. v. Blatch- 
ford, 11 Wall. 172, 20 L. Ed. 179; Cuebas Y Arredondo v. Cuebas Y 
Arredondo, 223 U. S. 376, 32 Sup. Ct. 277, 56 L. Ed. 476; Hooe v. 
Jamieson, 166 U. S. 395, 17 Sup. Ct. 596, 41 L. Ed. 1049; Peninsular 
Iron Co. V. Stone, 121 U. S. 631, 7 Sup. Ct. 1010, 30 L. Ed. 1020. 
If the défendant is an alien and one of the plaintifïs is also an alien, 
though the others are citizens of a state, the fédéral court has no 
jurisdiction. Black's Dillon on Removal of Causes, § 84, citing Saw- 
ver V. Switzerland Marine Ins. Co., 14 Blatchf. 451, Fed. Cas. No. 
12408. 

Tested by this rule, it is cle^r that, as the plaintifï and one of the 
défendants are aliens, this court has not original jurisdiction of this 
case, and same cannot be brought hère from the state court by removal 
proceedings. 

[8] It is also worthy of note that the alien défendant does not join 
in the pétition for removal, and therefore, if this were a removable 
case, it would hâve to be remanded for that reason. C, R. I. & P. Ry. 
Co. v. Martin, 178 U. S. 245, 20 Sup. Ct. 854, 44 L. Ed. 1055 ; Stone v. 
South Carolina, 117 U. S. 430, 6 Sup. Ct. 799, 29 L. Ed. 962; Flet- 
cher V. Hamlet, 116 U. S. 408, 6 Sup. Ct. 426, 29 L. Ed. 679. To per- 
mit the citizen défendant to remove this case upon his pétition alone 
would be to hold that he had the right to remove under the "separable 
controversy" provision of the statute — a right which, as we hâve al- 
ready seen, is not accorded to défendants in suits between "a citizen 
of a state and foreign states, citizens or subjects." 

Counsel for the défendant petitioning for removal contends that 
the alien défendant may be disregarded in considering this motion to 
remand, and in support of such contention cites the case of lowa 
Lillooet Gold Mining Co. v. BUss et al. (C. C.) 144 Fed. 446. I do 
not consider that case in point. Bliss in that case was held to be nei- 
ther a proper nor a necessary party, and was therefore misjoined. In 
this case, the alien défendant, as we hâve seen, was a proper party, 
against which the plaintifï sets up a cause of action properly joined 
and necessary to aiïord full relief to the plaintifï. 

The motion to remand is granted. 



188 2C2 FEDERAL EEI'OIIÏEU 

UNITED STATES v. PHILADELPHIA, B. & W. R. CO, 

(District Court, B. D. Pennsylvania. Jauuary 2, 1920.) 

No. 5246. 

1. Internai bevenue i®=>9 — Stock dividends not subject to corporation' 

excise tax. 

Under the Corporation Excise Tax Act of August 5, 1909, a corporation 
stockholder is not taxable on stock dividends received. 

2. iNTEBNAt BEVENUE <@=»9 CORPORATION EXCISB TAX ACT INAPPLICABLE TO 

EABNINGS IN PBEVIOUS TEAKS. 

Under tlie Corporation Excise Tax Act of August 5, 1909, earnings 
made before 1909 cannot be considered Incoine received during tliat year, 
merely because the corporation tlien distributed them in dividends. 

8. INTERNAL REVENUE <S=39 CORPORATION EXCISE TAX PROPEE ON DIVIDENDS 

FBOM EABNINGS IN PBEVIOUS YEAR8. 

Under the Corporation Excise Tax Act of August 5, 1909, a corporation 
holding stock in another concern is liable on dividends declared by sucli 
concern in 1910, although such dividends represented in part earnings 
made before January 1, 1909. 

4. INTERNAL REVENUE <S=>7, 9 — "EXCISE TAX" AND "INCOME TAX" DEFINED. 

An "excise tax" is an indirect chargé for the privilège of following an 
occupation or trade, or carrying on a business ; vrhile an "income tax" is 
a direct tax imposed upon income, and is as directly imposed as is a tax 
on land. 

[Ed. Note. — For other définitions, see Words and Phrases, First and 
Second Séries, Excise.] 

5. CONSTITUTIONAL LAW <S=>70(3) LEGISLATIVE MEASUBE OF EXCISE TAS CON- 

CLUSIVE. 

Though Congress, in levying an excise tax, should restrict the measure 
of the tax to income derived from the occupation or business with respect 
to which the tax is levied, yet the measure flxed Is conclusive on Uie 
courts. 

At Law. Action by the United States against the Philadelphia, Bal- 
timore & Washington Railroad Company. On rule for judgment for 
want of a sufficient affidavit of défense. Leave to enter a specified 
judgment for plaintiff. 

Robert J. Sterrett, Asst. U. S. Atty., and Francis Fisher Kane, U. 
S. Atty., both of Philadelphia, Pa. 

John Hampton Barnes, of Philadelphia, Pa., for défendant. 

DICKINSON, District Judge. This case cornes before us with the 
efïect of a case stated ; the f acts being stipulated and to be treated as 
if incorporated in an affidavit of défense. The facts are as follows : 

(1) The Delaware Railroad is a corporation, whose activities are 
limited to what is necessary to the continuance of its corporate exist- 
ence. In conséquence, vinder the doctrine of the Minehill Case, it is 
not liable to the payment of an excise tax, and did not pay one. 

(2) The défendant corporation is the operating company, and op- 
érâtes the railroad of the Delaware Company through the part owner- 
ship of the stock of the latter company and an operating arrangement 
satisfactory to the two companies and their stockholdcrs. 

©=»Foi otber cases see samo topic & KEY-NUMBER in ail Key-Numbered Dlgests & Indexes 



UNITED STATES V. PHILADELPIIU, B. & W. B. CO. 189 

(2G2 P.) 

(3) On February 21, 1910, the Delaware Company declared, and on 
February 28th of the same year paid, dividends, of which the défend- 
ant corporation received a large part. 

(4) The dividends received were as f oUows : 

Spécial cash dlvldend of 5 per cent $ 83,223.75 

Extra cash divldend of 20 per cent 332,895.00 

Stock divldend of 70 per cent 1,105,132.50 

Total $1,581,251.25 

(5) The source of thèse cash dividends was earnings of the Dela- 
ware road divided as f ollows : 

Before January 1, 1909 $334,8^9.2» 

Since January 1, 1909 81,229.40 

$410,118.75 

(6) There may be added to this statement, although not the statement 
of a fact, that Act Cong. Aug. 5, 1909, c. 6, 36 Stat. 112, by section 
38 subjects every corporation to the payment of a spécial excise tax, 
équivalent to 1 per centum, upon "the entire net income * * * re- 
ceived by it from ail sources during such year," etc. 

(7) That counsel agrée that the questions presented for décision 
are whether the défendant is liable for the tax upon or rather meas- 
ured by 

(a) The stock dlvldend of $1,165,132.50 

(b) The part of the cash dividends repr&sented bv the earnings 

after January 1, 1909 81,229.46 

(c) The part of the same represented by eai'uings before January 

1, 1909 334.889.29 

[1] (a) With respect to question (a), we understand it to be admit- 
ted that no tax is payable because of the stock dividend under the 
rulings in Towne v. Eisner, 245 U. S. 418, 38 Sup. Ct. 158, 62 L. Ed. 
372, L. R. A. 1918D, 254, and Peabody v. Eisner, 247 U. S. 349, 38 
Sup. Ct. 546, 62 L. Ed. 1152. In conséquence no discussion is called 
for. It may be stated, in explanation, that this cause was ripe for heaf„ 
ing when the later cases were pending in the Suprême Court, and the 
présent case was held awaiting the rulings to be made. 

[2] (b) and (c) With respect to questions (h) and (c), it may be 
premised that if we were dealing with the case of a corporation which 
received earnings in one year, which it made the subject of the payment 
of dividends to its stockholders in another year, we would regard it as 
clear upon principle and authority that such earnings were no part 
of the income of the corporation during the latter year, merely be- 
cause a dividend was declared in that year. If, therefore, the Dela- 
ware Company were not within the doctrine of the Minehill Case, 
'228 U. S. 295, 33 Sup. Ct. 420, 57 L. Ed. 842, and was subject to the 
1909 tax, there could be no finding that the earnings before 1909 was 
income received during that year, nor during the year 1910 merely be- 
cause then distributed in dividends. Southern Pacific v. Lowe, 247 U. 
S. 330, 38 Sup. Ct. 540, 62 L. Ed. 1142. 

[3] It does not follow, however, that a dividend declared in 1910. 



190 262 FEDERAL EEPOETER 

although necessarily out of earnings received at an earlier date, would 
not be part of the 1910 income of a stockholder of that company. On 
the contrary, we think it clear that it would be such. The Southern 
Pacific Case is not in conflict with this conclusion, although it is true it 
was there held that the dividend received by the stockholder was re- 
ferred back to the time the earnings came to the Central Pacific cor- 
poration, because the ruling made was based upon the peculiar rela- 
tions of the two companies, which were in fact such that they were 
held to be one and the same, and the question was in conséquence ruled 
as if it had been one of the liability of the Central Company. 

If, therefore, it were a fact in this case that the Delaware road was 
but another name for the défendant, or merely the hand by which the 
défendant received thèse moneys before 1909, they would not be held 
to be 1910 income, merely because there was a bookkeeping transfer 
at that time, but would be held to be the income of the years before 
1909, when the moneys in fact came to the défendant. There is, how- 
ever, no such fact in this case, but, on the other hand^ the défendant is 
in this case merely as a stockholder of the Delaware road. 

The case of Lynch v. Hornby, 247 U. S. 339, 38 Sup. Ct. 543, 62 
L. Ed. 1149, is distinguished by counsel for the défendant. Whether 
properly so or not we do not stop to inquire, because, as we view it, 
the real doctrine of Southern Pacific v. Lowe sustains the proposition 
that dividends received by a stockholder are part of bis income during 
the year in which they corne to him. Counsel for défendant seems to 
read the latter case as ruling that the dividends there would not hâve 
been held taxable as income of the year in which received, except for 
the fact of the peculiar relations of the two companies. We read the 
ruling as precisely the reverse of this, and that the dividends would 
hâve been held taxable, except for this peculiar state of facts. 

We confess to a feeling of being staggered by such a différence with 
capable and careful counsel with whom we would at any time hes- 
itate to differ, and as we hâve not otherwise been able to reconcile 
the différence, we hâve sought to find it in the thought of the stock- 
holder being a corporation. There is, of course, a fundamental dif- 
férence between an income tax and an excise tax, both with respect to 
what is taxed and the source of the power to tax. 

[4] We are concerned wholly with an excise tax. Whether it is a 
scientifically accurate concept of it or not, the concept of it as a charge 
for the privilège of following an occupation or trade, or carrying on a 
business, gives us a fairly good working idea of what it is. It is, 
in conséquence, an indirect tax, and has no référence to earnings or 
income, except that the sum of such earnings or income may (as any- 
thing else may) be made the measure of the tax. An income tax, on 
the contrary, is a direct tax imposed upon the thing called income, and 
is as directly imposed as is a tax on land. 

[5] If, therefore, an argument were being addressed to a legislator, 
ît might be well urged that in f raming an excise tax the measure should 
be limited to the yield, profits, or earnings of the occupation or busi- 
ness with respect to which the tax is imposed, and the measure should 
not be enlarged by the income which the taxpayer derived from other 



UNITED STATES V. SMITH 19^ 

(262 p.) 

sources wholly disconnected with the occupation or business "with re- 
spect to the carrying on or doing which" he is made subject to the tax. 
If, however, the legislator rejected the argument (as the exception in the 
act of 1909 proves was done), and applied the larger measure, the courts 
would be powerless to make the correction, even if it were assiuned to 
be demanded by the justice of the case. In point of fact there would 
be little merit in the argument as applied to the facts of this case, be- 
cause thèse dividends are as much eamings as any other part of what 
the défendant receives. 

Without a further prolongation of the discussion, we are of opinion 
that the excise tax imposed by the act of 1909 and measured by both 
thèse cash dividends is payable by the défendant. As the amount of 
the judgment to be entered is a matter of calculation, and in order that 
it may hâve a definite date, no judgment is now entered, but counsel 
has leave to enter the judgment indicated in this opinion to be the 
proper one. 



UNITED STATES y. SMITH. 
(District Court, D. Indiana, at Indlanapolis. January 3, 1920.) 

No. 1358. 

1. POST OFFICE ®=»27 DEFENDANT, PRESENTIN» AFFIDAVITS OF OWNBBaHIP OF 

NEWSPAPE^E, CANNOT UBGE THAT TUEY WEBE NOT AFFIDAVITS, IN PBOSECU- 
TION FOB THEIB FALSITT. 

Where défendant, pursuant to Act Aug. 24, 1912, § 2 (Comp. St. § 7313) , 
presented affidavits taken before a notary as to the ownership of a news- 
paper, défendant cannot, In a prosecution for thelr falsity under Criminal 
Code, § 28 (Comp. St. § 10192), urge that, because taken before a notary, 
they were not affidavits within the act. 

2. PosT OFFICE <S=27 — Making of affidavit containing fai.se statements 

NOT ALTEEATION, FOEGEBT, OB COUNTEErEITING OF SAME. 

The making of an affidavit containhig false statements, though the 
same was delivered to the postal authorlties to show the ownership of a 
newspaper, as required by Act Ck)ng. Aiig. 24, 1912, § 2 (Comp. St. § 7313), 
does not fall within Criminal Code, § 28 (Comp. St. § 10192), denouuclng 
the offense of falsely making, altering, or counterfeitlng affidavits, etc. ; 
the affidavit being In fact genuine. 

Delavan Smith was indicted for violation of Criminal Code, § 28, 
for making a false affidavit as to the ownership of a newspaper. On 
demurrer to the indictment. Demurrer sustained. 

L. Ert Slack, U. S. Atty., of Indianapolis, Ind. 
Ferdinand Winter and Miller, Dailey & Thompson, ail of Indian- 
apolis, Ind., for défendant. 

ANDERSON, District Judge. An act of Congress passed August 
24, 1912 (37 Stat. 553, c. 389 [Comp. St. § 7313]), provides: 

"That It shall be the duty of the editor, publisher, business manager, or 
owner of every newspaper, magazine, periodical, or other publication to flle 
with the Postmaster General and the postmaster at the office at which said 
publication is entered, not later than the first day of Aprll and the flrst day 

®=»For other cases eee same topic & KBY-NUMBBR in ail Key-Numbered Dlgests & Indexe» 



192 262 FEDBEAL RlirOUÏEU 

of October of each year, * • • a sworn statement setting forth the namea 
and post office addresses of the editor and managing éditer, publisher, business 
managers, and owners. * • ♦ " Section 2. 

This statute f urther provides : 

"Any such publication shall be denied the privilèges of the mail If It shall 
fall to comply with the provisions of this paragraph within ten days after 
notice by registered letter of such failure." 

Section 28 of the Criminal Code (Act March 4, 1909, c. 321, 35 
Stat. 1094 [Comp. St. § 10192]) provides as follows: 

"Whoever shall falsely make, alter, forge, or counterfeit, or cause or pro- 
cure to be falsely made, altered, forged, or counterfeited, or willingly ald, 
or assist In the false making, altering, forging, or counterfeitlng, any bond, 
bid, proposai, contract, guarantee, securlty, ofEcial bond, public record, afE- 
davlt, or other wrlting for the purpose of defrauding the United States; or 
shall utter or publish as true, or cause to be uttered or published as true, 
or hâve In his possession with the intent to utter or publish as true, any such 
false, forged, altered, or counterfeited bond, bid, proposai, contract, guarantee, 
seeurity, officiai bond, public record, affldavit or other wrlting for the pur- 
pose of defrauding the United States, knowing tlie same to be false, forged, 
altered, or counterfeited ; or shall transmit to, or présent at, or Cause or 
procure to be transniitted to, or preseuted at, the office of any officer of the 
United States, any such false, forged, altered, or counterfeited bond, bid, 
proposai, contract, guarantee, securlty, oflicial bond, public record, affidavit, 
or other wrlting, knowing the same to be false, forged, altered, or counter- 
feited for the purpose of defrauding the United States, shall be flned not 
more than one thousand dollars, or imprisoned not more than ten years, or 
both." 

On October 21, 1919, the défendant was indicted by the grand 
jury for the violation of the varions clauses of this section. The in- 
dictment is in 20 counts, and thèse varions counts are based upon 
four affidavits, dated, respectively, October 1, 1912, April 1, 1918, 
September 30, 1918, and March 31, 1919. 

Thèse affidavits are not charged in any count of the indictment to 
be forged or counterfeited, in the technical sensé of the term. They 
are charged to be genuine as to their exécution, but false as respects 
one of the material statements in them ; that is, as to the ownership 
of the newspaper. Each count is based upon one of thèse affidavits, 
and each of them is averred to hâve been sworn to before a notary 
public. 

Two objections are made to the indictment and to each count of it. 
One of the objections made is that — 

"A notary public is not an officer authorized by any statute of the United 
States to administer an oath in référence to the matters to whlch sald atïi- 
davit relates." 

[1] It is earnestly contended that, this being se, the affidavit is 
not an affidavit, as alleged in the indictment, and that this defect 
appears upon the face of the indictment. If the défendant, as alleged 
in the indictment, presented thèse affidavits to the postmaster in In- 
dianapolis as affidavits, he cannot now be heard to say that they are 
not affidavits. 

In Ingraham v. United States, 155 U. S." 434, 15 Sup. Ct. 148, 39 
L. Ed. 213, the Suprême Court had before it this question. Ingra-. 



UNITED STATES V. SMITH 193 

(262 F.) 

ham was indicted for presenting to the Third Auditor of the Treas- 
ury an affidavit in support of a fraudulent scheme against the govern- 
ment, and upon his trial the objection was made that the affidavit, 
which had been sworn to before a justice of the peace, was not ad- 
missible in évidence without proof that the justice had been duly 
commissioned and qualified as a justice of the peace. The Suprême 
Court said, on page 437 of 155 U. S. (15 Sup. Ct. 149, 39 L. Ed. 
213) : 

"Even If Eemlngton [the justice of the peace] had not been properly com- 
missioned, or had not qualifled, so as to entitle him, in law, to discharge 
the functions of a justice of the peace, the paper presented by the défendant 
to the Third Auditor of the Treasury for the purpose of obtainlng the pay- 
ment or approval of his daim, being In the form of an affidavit, must, for ail 
the purposes of this prosecution, be talien to be an affidavit If he knew 
that the statement in that paper, descriljed in the indictment, was fraudulent 
or flctitious, he was not the less guilty ♦ * ♦ because of the fact, if such 
was the fact, that Remlngton had not been duly commissioned as a justice 
of the peace, and was not, for that reason, entitled to administer the oath 
certifled by him. » * * He is estopped to deny that the document or 
writing so used was not what it purports to be, namely, an aiiidavlt" 

The several counts of the indictment are therefore not bad upon 
this ground. 

[2] It is, however, insisted by the défendant that the différent 
paragraphs or clauses of section 28 apply only to forged instruments,, 
and not to instruments which are genuine as to exécution, but false 
as to the facts contained in them. The Suprême Court has not passed 
upon this section 28, so far as the researches of counsel hâve dis- 
closed; but section 29 (Comp. St. § 10193), which reads as follows: 

"Whoever shall falsely make, alter, forge, or eounterfeit, or cause or pro- 
cure to be falsely made, altered, forged, or counterfeited, or willingly aid, or 
assist in the false making, altering, forging, or counterfeiting, any deed, power 
of attomey, order, certiflcate, receipt, contract, or other writing, for the pur- 
pose of obtaining or receiving or of enabling any other person, either directly 
or indirectly, to obtain or recelve from the United States, or any of their 
officers or agents, any sum of money; or whoever shall utter or publish as 
tnie, or cause to be uttered or published as true, any such false, forged, 
altered, or counterfeited deed, power of attomey, order, certiflcate, receipt, 
contract, or other writing, with Intent to defraud the United States, knowing 
the same to be false, altered, forged, or counterfeited ; or whoever shall trans- 
mit to, or présent at, or cause or procure to be transmitted to, or presented 
at, any office or offleer of the Government of the United States, any deed, power 
of attomey, order, certiflcate, receipt, contract, or other writing, in support 
of, or in relation to, any account or ciaim, with intent to defraud the United 
States, knowing the same to be false, altered, forged, or counterfeited, shall 
be flned not more than one thousand dollars and imprisoned not more than 
ten years" 

— has been before the Suprême Court twice. 

In United States v. Staats, 8 How. 41, 12 L. Ed. 979, the Su- 
prême Court construed the last clause or paragraph of section 29. 
The indictment in that case was based upon an affidavit, genuine in 
fact, but containing what was alleged to be a false and untrue state- 
ment. One of the questions before the court was whether the acts 
charged in the indictment constituted an offense within the last 
262 F.— 13 



194 2G2 FEDERAL REPORTER 

clause of this section 29. The court said, on page 46 of 8 How. 
(12 L. Ed. 979) : 

"The court are of opinion that the offense charged in the indictment comea 
witliln the statute. The only doubt that can be ralsed Is whether the writing 
transmltted or presented to the commissloner In support of the clalm for a 
pension should not, within the meaning of the statute, be an instrument forged, 
or counterfeited, in the tedinical sensé of the term, and not one genuine «s 
to the exécution, but false as it respects the facts embodied in it. 

"The instruments referred to in the flrst part of the section, the false 
making or forglng of which, with the intent stated, is made an offense, proba- 
bly are forged instruments in a strict technlcal sensé; and there is force, 
therefore, in the argument that the subséquent clause, making the transmis- 
sion or présentation of deeds or other writings to an offlcer of the government 
a similar offense, had référence to the same description of instruments." 

But the court held, because of the language of the last clause of 
the section, "any deed, power of attorney," etc., that it embraced the 
instrument counted upon in the indictment. 

In United States v. Davis, 231 U. S. 183, 34 Sup. Ct. 112, 58 L. 
Ed. 177, the Suprême Court again had the same question before it; 
that is to say, whether the third paragraph of section 29 included 
only documents which were forged or counterfeited, and therefore 
excluded ail other documents, no matter how fraudulent they might 
be. The court said: 

"Coming to the text of the third paragraph, we think it is at once apparent 
that its provisions are so comprehensive as to prevent us from holding that 
they Include only documents which are forged or counterfeited, and hence 
exelude ail other documents, however fraudulent they may be. The ail em- 
braclng words, 'any deed, power of attorney, order, certifleate, receipt, or 
other writing in support of or In relation to any account or claim with intent 
to defraud the United States, knowing the same to be false, altered, forged, 
or cotmterfeited,' leave room for no other conclusion. The context of the 
section relnforces thIs vIew, since the contrast between the narrow scope of 
the flrst two paragraphs and the enlarged grasp of the third shows the légis- 
lative Intent, after fully providing In the flrst two paragraphs for forged 
and counterfeited documents, instruments, etc., to reach by the provisions of 
the third paragraph, any and ail fraudulent documents, whether forged or 
not forged, and thus efiiclently to deter from commlttlng the wrong whieh It 
was the purpose of the section to prohibit" 

The court then refers to the case of United States v. Staats and 
says: 

"The court [in that case] fully analyzed the statute, and whlle conceding 
that other clauses of the act dealt with forged instnunents in a technlcal 
sensé, concluded that the case [under the third clause] was within both the 
letter and the spirit of the act." 

When the court in the Davis Case based its construction of the 
statute upon the "narrow scope" of the first two paragraphs and the 
''enlarged grasp" of the third, it, in eiïect, decided that the first two 
paragraphs should hâve the narrow scope contended for; that is, 
they embraced only forged or counterfeited instruments in a technlcal 
sensé. 

Section 28 has no such "all-embracing words" in any of its para- 
graphs, such as are found and expressly relied upon by the Suprême 
Court in its construction of section 29. The second and third para- 



EASTEBN TRANSP. CO. V. EAST CAEOLINA LUMBEB CO. 195 

(2C2 F.) 

graphs of section 28 each uses the words "any such false, forged," 
etc. It therefore follows that, so far as section 28 is concerned, it 
only embraces forged or counterfeited instruments in the technical 
sensé, and does not include instruments wliich are genuine, but which 
contain statements which are not true in fact. This construction as 
to the meaning of the words "falsely make, forge or counterfeit" is 
strengthened by the fact that the sections of the statute, making it a 
crime to forge or counterfeit the coins or paper money of the United 
States, use thèse exact words, as, for example, section 163 (Comp. 
St. § 10333) : 

"Whoever shall falsely make, forge, or counterfeit, or cause or procure to 
be falsely made, forged, or counterfeited" 

—and section 164 (Comp. St. § 10334) : 

"Whoever shall falsely make, forge, or counterfeit, or cause or procure to 
be falsely made, forged, or counterfeited." 

It follows that no count of the indictment states an offense under 
section 28, and the demurrer should be and is accordingly sustained. 



EASTERN TRANSP. CO. v. EAST CAROLINA I^UMBER CO. (PHILADEL- 
PHIA & READING COAL & IBON CO., Gamishee). 

(District Court, E. D. Pennsylvania. January 8, 1920.) 

No. 23. 

1. SnippiNG <S=»39 — Obligation or shipownee undeb chaeteb paett to 

rUENISH BAEQES. 

The obligation of one who had agreed by a charter party to supply 
barges for 18 voyages for a stipulated hire could be met only by perform- 
ance, or by something which excused performance in whole or in part 

2. Shipping iS=>52— Baege ownee, on default of chaeteeke, has choicb 

of remedies. 

Where shipper, who had chartered barges for 18 successive voyages, 
failed to perform by paying the freight and demurrage as stipulated, the 
owner may déclare the breach and refuse further performance, recovering 
any sum already due, together with damages for breach, or disregard the 
breach and elect to continue performance. 

3. Shipping <g=352 — Ownee of baeges, on beeach mat sue foe beeach of 

CHAETER. 

Where the owner elected to continue performance, notwithstanding the 
default of the charterer, who had chartered barges for 18 successive voy- 
ages, such élection carries with it the rlght to demand and bring an action 
tn afflrmance of the contract for each installment for freight and démar- 
rage as it becomes due. 

4. Shipping t@=»52 — Shipownee's élection to declaeb ob waive is final. 

Where a shipper, who had chartered barges for 18 successive voyages, 

defaulted in payment of freight and demurrage, the owner's élection to 

déclare the breach, or to waive it, is final, except in case of a right of 

an élection in successive breaches. 

6. Shipping <S=»52 — Shipownee cannot declaeb beeach of chaetee afteb 

HE HAD WAIVBm SAME. 

Where an owner, who had chartered barges for 18 successive voyages, 
did not elect to déclare the breach on the shipper's default In payment of 

«ssFor other cases see same toplo & KSY-NUMBER In ail Key-Numbered Digests & Indexes 



19C 202 FEDERAL EEPOUTEK 

freight and demurrage, the owner, having waived Bhe default, cannot, 
after hls own subséquent default, déclare a breach and recover therefor. 

6. Shipping <S=351 — Request of shipper for eahlieb delivebt of vessei, 

than chartes paett pbovideid no defense fob failuee to furnish ves- 
sels at time peovided. 

Where the owner, who agreed to fumish barges for 18 successive voy- 
ages, for some time delivered them aecording to the charter party, and 
then defaulted, it is no défense to defaults that the shipper asked for 
barges faster than the contract schedule, and then failed to load them 
and promptly pay demurrage and freight. 

7. Shipping (©=351 — Inabilitt to pbocube tugs no défense to failube to 

FURNISH BABGES AS PEOVIDED. 

Where an owner chartered barges for 18 successive voyages, and the 
charter party did not make any exceptions to the owner's inability to get 
tugs, the owner's inability to get tugs will not excuse f allure to délirer 
barges accordiiig to the charter party. 

8. CONTEACTS <g=3316(4) TlMEl OF ELECTION TO DECLARE BEEACH ON DEFAULT 

OR TO WAIVE IT. 

Where one party to a contract defaults, the Innocent party has a right 
of élection, which occurs at each succeeding default, but the élection cannot 
be deferred until after the contract is at an end and the rights of the 
parties hâve become otherwise flxed. 

9. Shipping <@=>37 — Willingness to contract not équivalent to enteeino 

into charter party. 

A statement by an owner of barges that In effect that It was willing 
to enter into a charter party embodying the contract suggested by the 
shipper, but that it would not agrée until the contract was put into forni, 
Is not équivalent to a contract, and cannot be made basis of an action. 

In Admiralty. Libel by the Eastem Transportation Company 
against the East Carolina Lumber Company, and with the Philadelphia 
& Reading Coal & Iron Company as garnishee. Sur trial hearing on 
Ubel, answer, and proofs. Libel dismissed, as well as cross-libél filed 
by respondent. 

Willard M. Harris, of Philadelphia, Pa., for libelant. 
Wm. Clarke Mason, of Philadelphia, Pa., for respondents. 

DICKINSON, District Judge. The propositions by which this case 
is ruled are broadly stated thèse: 

[1] 1. The obligation assumed by libelant under the charter party 
was to supply barges for 18 voyages, and its right was to receive the 
freight eamed and demurrage due when payable. 

2. This obligation could be met only by performance or something 
which excused performance in whole or part. 

[2] 3. If the shipper failed on his part to perform, by paying freight 
and demurrage as stipulated, the libelant had one of two rights : One 
was to déclare the breach and refuse further performance by declaring 
the contract off, recovering what was due, including damages for the 
breach of the contract ; the other was to disregard the breach, elect 
to continue performance notwithstanding the default, and recover, 
when the contract was performed, ail to which it was entitled, 

[3] 4. This latter right would car ry with it as its corollary the right 
to demand and bring an action in affirmance of the contract for each 
installment of freight and demurrage as it became due and payable. 

^=>For other cases see same topic & KEY-NUMBKR in aU Key-Numbe^ed Dlgests & Indexe» 



EASTERN TRAXSP. CO. V. EAST CAROLINA LUMBER CO, 197 

(262 F.) 

[4] 5. The two rights mentioned are, however, alternative riglits, 
and, although either might be exercised by the libelant at its élection, 
the élection, when made, was final (except that the right of élection re- 
cuiTed at each succeeding breach), and the élection to keep the con- 
tract in force kept alive ail the obligations of both parties thereunder. 
[5] 6. The libelant, having waived defaults in the payment of 
freights and elected to keep the contract in force, had no right after 
its own subséquent default, and after the time of performance was 
past, to déclare a breach and recover on the contract, which had not 
been performed. 

The parties to this action hâve, by their sins of commission and omis- 
sion, or at least the confusion in their dealings with each other, creat- 
ed so many difficulties with which their proctors must cope, and hâve 
cast upon the trial court such an imnecessarily heavy burden of work, 
that they hâve forfeited ail claims to considération, and deserve to be 
left where, at the close, they found themselves to be. In the first 
place, they left open to dispute whether they had made one contract or 
two. In the second place, neither had, or at least neither acted upon, 
any clear concept of what contract it claimed to hâve. In the third 
place, although this is doubtless a conséquence of the others, each was 
seeking to secure ail the rights which could possibly flow to it out of 
the contractual dealings between them, without paying the slightest 
attention to the obligations upon which those rights depended. Nei- 
ther even seems to bave known or regarded as of any importance with 
whom it had a contract. 

The thread by which we may fînd our way out of the labyrinth 
which the parties hâve builded is found, if there is any, in the thought 
that the two lumber companies made one or more contracts, and then 
sought to perform by foUowing the requirements of another contract, 
which the respondent Turner had made with the garnishee. The resuit 
was that each was complaining of defaults of the other, based, not 
upon the charter party between them, but based upon the Turner 
contract. The same explanation, in another form, is that the libelant 
was looking to the first contract, and the respondent to what has been 
called the second contract of July 23d. 

Proctor for respondent and the cross-libelant has eut the gordian 
knot of his difficulties by averring the existence of a second contract, 
and taking his stand upon it. In conséquence, ail he claims dépends 
upon the finding of such second contract. Proctor for libelant and the 
cross-respondent has been able to find no such short and straight road 
out of his difficulties. He has made it entirely clear that the libelant' 
seeks to recover the f reight claimed to hâve been earned by two barges 
and demurrage due to seven others. 

The basis of his claim of right, or his cause of action, is, however, 
by no means of like clearness. The best he has been able to do, as it is 
perhaps the best which could be done, is to take his stand upon the 
broad ground that the libelant had a contract which, if performed, or 
which, so far as performed, gave it the right to what is claimed, and 
that full performance was excused by respondent's breach, which, when 



198 2(;2 ri:ni;;;AL iiîcroinT.R 

declared, gave libelant the riglit, of which it availed iself, to call off 
the contract and recover for what it had donc therennder. 

The proposition of law involved in this statement of the position of 
the libelant is in itself clear enough and is sound. The difficulty is in 
applying it to the fact situation which this case présents. A statement 
of the facts in anything lil<e détail would expand this opinion, already 
overlong, to an impossible length. The proctor for the libelant, with 
an industry and care for which he is to be commended, has grouped 
some of them for us in his brief. This statement we hâve found very 
helpful. Notwithstanding his efforts, however, to keep the statement 
within limits, by confining it to the most salient facts, he has required 
nearly 60 pages for the discussion. This gives a foretaste of what an 
inquiry into ail of the matters in controversy would involve. To meet 
the task as best we may, we will confine this opinion, so far as possible, 
to a statement of the main facts upon which the rulings made dépend, 
and discuss the evidentiary facts, along with the findings of fact, 
which will be filed herewith. 

We feel grateful, also, to the proctor for respondent, who has, as 
before stated, rested his défense, so far as it is affirmative, and his 
cross-libel whoUy, upon the existence of the second contract, which he 
asks us to find. 

One of the many difficulties which an adéquate discussion of the 
merits of this case présents is that there are so f ew, if any, facts which 
may be called undisputed. The contract, even of the parties, is in dis- 
pute. It is not in dispute however, that the lumber companies exe- 
cuted the charter party, which bears date July 10, 1915. Nor is its 
meaning in dispute. 

The libelant was to hâve ready for loading at the James City 
wharves, Newbern, N. C, 18 barges, one on each of named dates, 
"fhese dates covered the period from August to March, both inclusive, 
and called for two barges a month, one on the Ist and the other on 
the middle day of the month, except during the months of October 
and November, when a third barge was to report on the 26th of each 
month. Thèse arrivais were to be "on or about the date named, 
weather conditions permitting." The freight was made payable on 
delivery of cargo. As will appear by the findings of fact, in which 
the movements of each barge are followed, the libelant had a barge to 
report for loading always on time, and usually ahead of time, until 
November 26, 1915. This statement includes 9 barges out of the 18. 
There was a barge due on that date, and another on December Ist 
following. The next barges to arrive reported December 6th and 
lOth. No other barges reported until February 14, 1916, although 
there were 4 barges due on the intermediate dates and one on that 
date. The next contract arrivai dates were March Ist and 16th (the 
latter being the closing date of the contract), but no barges reported 
until March 20th and April 20th. The freight on neither of the two 
last barges was paid. The libelant supplied no more barges. 

It is to be observed that it supplied 9 barges in accordance with its 
contract; then 2 barges, each of which was 11 days behind schedule; 
then no barges for four trips; then one barge, which was 2 months 



EASTEKN TKANSP. CO. V. EAST CAEOLINA LUMBEE CO. 199 

(262 F.) 

late, or on time, according to which date you refer it, and then two 
barges, which were 20 and 36 days, or 80 and 86 days, late, according 
as you refer them to the nearest or the unfilled arrivai dates. It will 
be further noted that neither of the two last-named barges was sup- 
plied within the contract time, and that 5 of the barges were never 
supplied. 

[6] The libelant, in conséquence, is confronted with thèse ques- 
tions: (1) How can it recover on a contract to furnish 18 barges, 
after it has refused to perfomi? (2) How could it excuse nonper- 
formance by declaring a breach of the contract, when it was itself in 
default, and after the time Hmit of the contract had expired? 

The only answer counsel for libelant puts f orth is that the respond- 
ent nagged and harassed the libelant, by asking for barges f aster than 
the contract schedule, and then not loading them, and by not paying 
promptly either demurrage or freight, and that libelant was hampered 
in having its barges on time by its inability to get tugs to tow them. 

However real its troubles and difficulties may hâve in fact been, 
and they were real enough, we see in them no légal excuse for non- 
performance. The first excuse is either unjustified or a dangerous 
one to make. The charter party called for a schedule which, until 
November 26th, was more than met. The answer of libelant to com- 
plaints made during this time was ready at hand. It was more than 
living up to its contract. Complaints after that date were not only 
justified, but respondent might well hâve called off the contract. 

The respondent has set up a second contract to furnish one addi- 
tional barge per month. This second contract the libelant dénies. If 
the complaints of the respondent were because of nonperformance of 
this second contract (and the fact is it was in no respect performed), 
the libelant recognized the existence of this contract by attempting to 
perform or to excuse nonperformance. 

[7] The second excuse, however well grounded in fact, and it is 
very strongly supported, affords no excuse in law. The libelant con- 
tracted to supply barges at stated times. Bad weather might prevent 
performance, and it contracted itself out of liability in the event of 
default so caused. If it was unwilling to assume the duty of towage, 
or providing it, such a stipulation should hâve been inserted, or it 
should hâve protected itself through a tug contract. The courts can- 
not protect it against the conséquences of contracting to do more than 
it was able to perform. 

[8] The real situation was this: The complaints of the respond- 
ent before November 26th were unjustified, except on the basis of a 
second contract. There were repeated defaults in the payment of 
freights. The libelant had just cause to déclare a default, but it could 
not waive this default and hold to the contract, and at the same time 
use thèse waived defaults as an excuse for its own subséquent defaults, 
or for nonperformance of its contract. 

The conclusions reached are that the libelant has shown no cause of 
action, because it has admittedly not performed in fuU, nor has it 
shown a right to recover for part performance, through excusing full 
performance by declaring a breach because of the default of the other 



200 262 FEDERAL REPORTER 

party to the contract ; no breach having been declared untîl the libel- 
ant was itself in def ault, and the tinie of performance by it was past. 
It may be that this places the libelant in the position of being the vic- 
tim of its own indulgence to the respondent. If it had declared a 
breach at any time upon failure of the shipper to pay freights, it 
could hâve relieved itself of ail ftirther obligations under its contract. 
The respondent would then hâve been at liberty to secnre barges else- 
v.'here. It had the right to hold to its contract. nnd thus keep in force 
the obligation of the shipper to take the barges. The keeping of the 
contract in force meant, however, the continuance of its own obliga- 
tion to perform. 

A contract, even after one party is in default, is either on or off, and 
although the innocent party bas the right of élection, and although the 
right recurs at each succeeding default, it is a right which must be 
exercised during the life of the contract, and the élection cannot be 
deferred nntil after the contract is at an end, and the rights of the 
parties Kave become otherwise fixed. 

[9] The conclusion that the libel must be dismissed makes it un- 
necessary to discuss any of the other questions which arise, except 
those arisi.ig under the cross-libel. This is founded upon the propo- 
sition that the letter of July 23, 1915, is contractual. Our finding, as 
.stated, is that it is not. Willingness of the parties to contract is not 
cnough. The letter of libelant is in effect that it was willing to enter 
into a charter party embodying the contract suggested by the respond- 
ent, but that it would not so agrée unless and until the contract was 
put in that fonn. As already twice stated, the claim of the cross- 
libel is based on the second contract and falls with it. The real situa- 
tion with respect to the charter party contract is that neither of thèse 
parties has a claim against the other, because neither has performed. 

An order may be prepared, dismissing both the libel and cross-libel, 
each party to pay their own costs, and neither party to pay costs to 
the other, the record costs to be paid by the one by whom incurred. 
To give defintte date to the order none is now made, but either party 
has leave to submit the form of one to be entered. 



UNITED SVA.TBS v. APPLE et al. 

(District Court, D. Kansas, Third Division. October 7, 1919.) 

No. 110-N. 

1. Indians <g=>27(l) — United States may maintain surr to prêtent Indians 

FROM BEING UESPOIUBD OF ROYAITIES UNDER IJIASB APPBOVED BT GOVERN- 
MENT BEPEE8ENTATIVES. 

Where It was alleged that ignorant Quapaw Indians, who had with 
authooty of the représentatives of the govemment leased oïl lands, were 
being despoiled of the royalties through the fraud and machinations of 
défendants, the govemment not only has the right, but also It is its duty, 
to maintain siiit to protect the Indian lessors, for they were still in a 
State of tutelage and wards of the United States. 

^EsFor other cases see same topio & KBY-NUMBBR In ail Key-Numbered Dlgests & Indexe* 



UNITED STATES V. APPLE 201 

(262 F.) 

2. Indians <g=>27(6) — Bill bt United States against défendants, wno 

WEEE DESPOILING InDIAN LESSKES OF ROYALTIES, HELD TO STATE A CATTSE 
OF ACTION. 

A bill alleging that défendants, one of wliom îield power of attorney 
from Indian lessecs, still in tlie state of tuf«lago, liad eonsinred and were 
defrauding the lessees of tho profits from oil leases made witli consent of 
the représentatives of the govemment, hcld to state a eanse of action. 

In Equity. Suit by the United States against Walter T. Apple and 
others. On separate motions of several défendants to dismiss. Mo- 
tions denied. 

Fred Robertson, of Kansas City, Kan., J. A. Tellier, of Little Rock, 
Ark., and Joseph W. Howell, of Washington, D. C, for plaintiflf. 

Edward E. Sapp, S. C. Westcott, and E. B. Morgan, ail of Gaiena, 
Kan., A. M. Keene, of Et. Scott, Kan., E. S. Bessey and G. W. Earn- 
shaw, both of Joplin, Mo., Al F. Williams and G. W. Staton, both of 
Columbus, Kan., Garland Biffle, of Baxter Springs, Kan., Fred A. 
Walker, of Columbus, Kan., and P. E. Bradley, of Joplin, Mo., for de- 
fendants. 

POLLOCK, District Judge. The facts alleged in the pétition filed 
herein, in so far as necessary to décision of separate motions of certain 
défendants to dismiss, may be briefly stated as follows : 

Benjamin and See-sah Quapaw, fuU-blooded, ignorant Quapaw In- 
dians, through allotment and inheritance, being the owners of three 
tracts of land in Ottawa county, Okl., described in the pétition, in due 
f orm of law made certain mining leases covering the same, reserving as 
rental certain royalties in the minerais to be produced therefrom. The 
mining opérations conducted by the lessors under said mining leases 
on said properties proved to be very successful, to the extent between 
the 13th day of March, 1915, and the 31st day of December, 1917, the 
cash royalties paid to the Indian Icssees under and by virtue of said 
mining leases amounted to as much as $178,000. It is charged in the 
bill said Indian lessees, being ignorant of business affairs and unleam- 
ed, were induced to and did make to a Quapaw Indian relative, de- 
fendant herein, Charles Goodeagle, a certain power of attorney, set 
forth in the pleadings, purporting to empower him as attorney in fact 
to collect the royalties of lessees arising from said mining opérations, 
to deposit the same from time to time to the crédit of lessees in the 
Baxter National Bank, of Baxter Springs, défendant herein, and, fur- 
ther, to check out from said bank and expend said royalty moneys for 
the use and benefit of the Indian lessees, however, in a certain and 
definite manner stated in said power of attorney only, and none other ; 
that said power of attorney, after its making, was lodged with and re- 
tained by said bank for the purpose it might at ail times be fuUy in- 
formed and know the contents of said instrument, and before payment 
of any check drawn on said account, if the same was authorized by the 
power conferred on said attorney in fact, Charles Goodeagle. There- 
after said attorney in fact, and said national bank, and its officers, in 
violation of the trust reposed in them by the Indian lessees, by virtue 
of the terms of said power of attorney, and conspiring together and 

®=aFor other cases see same topic & KBY-NUMBBR in ail Key-Numbered Digests & Indexes 



202 262 FEDERAL REPORTER 

with the other défendants named in the bill, and for the purpose of 
wronging and defrauding said Indian lessees out of their vast sums 
of royalties so accruing, and for the purpose of converting said roy- 
alty moneys to the use and benefit of défendants, from time to time, 
în violation of the terms of said power of attorney, and of the trust 
reposed in them, the bank and the attorney in fact caused said royalty 
moneys to be checked out of said bank and expcnded in the purchase 
and improvement of many tracts of land purchased from the différent 
défendants named in the bill, and, further, said attorney in fact, in vio- 
lation of his trust, but conspiring with other défendants named herein, 
seeking to wrong and defraud said Indian lessees of the property and 
property rights, did make, or cause to be made, in the name of said 
lessees, promissory notes and other contracts, obligating or attempting 
to bind said lessees to the payment of large sums of money to certain 
other défendants named in the bill, ail as particularly described and 
pleaded in the many paragraphs of the voluminous pétition, as a resuit 
and by reason of ail of which conspiracies and fraudulent acts on the 
part of défendants, said lessees hâve been despoiled and defrauded out 
of their vast property rights in more than $200,000. Wherefore the 
government, acting for said Indian lessees, prays the decree of this 
court canceling and annulling said fraudulent transactions and con- 
tracts, that it may hâve an accounting with each and ail of the défend- 
ants named hereïn so procuring any part of said royalty moneys, and, 
on said accounting being taken and stated, a decree for the same may 
enter in favor of plaintifï, to the use and benefit of the lessees in any 
case wherein said royalty funds can be traced in property now held 
by défendants, or any of them ; that the same may be decreed a trust 
fund, and a lien on the property thereby purchased, said lien fore- 
closed, and the property ordered sold in satisfaction of said trust lien ; 
that défendant holders of said promissory notes, and other contract 
obligations made by or in the name of said lessees now in the possession 
of défendants, be ordered to turn same into court, and a decree en- 
tered canceling and annulling the same, and for other and gênerai re- 
hef. 

To this pétition so charging défendants hâve appeared. Some hâve 
fully answered thereto; some others bave filed separate motions to 
dismiss the case. Said motions, principally, are based on the ground 
the government has no interest in or right of suit to correct the wrongs 
of the Indian lessees of which complaint is made in the pétition. Said 
motions stand briefed, argued, and submitted for décision. 

[1] In support of the motions to dismiss it is urged by défendants 
the tracts of land out of which the royalty moneys arose are the ab- 
solute property, in f ee simple, of their Quapaw Indian owners ; hence, 
it is contended, as a necessary séquence the royalties paid from mining 
opérations conducted thereon are the absolute and unconditioned prop- 
erty of the Indian owners, from ail of which it is said to resuit said 
Quapaw Indian owners in their own persons and right, and not the 
government, must sue to correct the alleged wrongs complained of in 
the pétition. On the contrary, the government contends and urges the 
Indian lessees weré both in fact and law incompétent to make a valid 



UNITED STATES V. APPLE 203 

(262 F.) 

mining lease of said properties without the approval of the accredited 
représentative of the government, and, further, were not alone in- 
compétent in fact and law to make said power of attorney authorizing 
Charles Goodeagle to collect and expend said royalties money, when 
made, but over and above ail such contentions, at ail times said Quapaw 
Indian lessees were the wards of the government, and their property 
and property rights were, by reason of the national policy of the gov- 
ernment towards such wards, under the protccting and fostering care 
which the sovereign, as the guardian of the persons and estâtes of its 
wards, owes to right such wrongs as are donc them while this relation 
continues to exist, which exists and will continue to exist until the 
law-making power of the government shall terminate the same. 

Without at this time attempting to détermine precisely what title 
and right the Indian lessees hâve in the lands from which the mining 
royalties accrue, or the question of the power of said Indian owners to 
make mining leases on said properties without the consent and approv- 
al of the représentatives of the government, or other contracts with 
relation thereto, or royalties accruing from mining opérations conduct- 
ed thereon, yet I am of the opinion the government may bring and 
maintain this suit in its capacity as guardian or protector of the estâtes 
of its Indian wards, the lessees, and, further, under the charges made 
in the bill in this case, it was its duty to so do, for, although it may 
in the end appear the power of attorney under which Charles Good- 
eagle acted in collecting the royalties and depositing the same in bank 
be held to hâve been a valid instrument of writing, yet it cannot be held 
the estate of wards of the government may be despoiled and dissipated, 
as charged in this bill, through fraud, collusion, and combination to 
accomplish such purpose, with the knowledge and consent of the bank 
and its officers in which the moneys were deposited, and the other 
alleged conspirators, to their use and benefit, ail as alleged by plain- 
tifif. I think this proposition is fully settled and established in the 
following adjudicated cases controlling or persuasive hère: 

In United States v. Rickert, 188 U. S. 432, 23 Sup. Ct. 478, 47 L. 
Ed. 532, Mr. Justice Harlan, delivering the opinion of the court, says: 

"Some observations may be made that are applicable to the whole case. 
It is said that the state has conferred upon thèse Indians the right of suffrage 
and other rights that ordinarlly belong only to citizens, and that they ought, 
therefore, to share the burdens of government like other people who enjoy 
such rights. Thèse are considérations to be addressed to Congress. It is 
for the législative branch of the government to say vrhen thèse Indians shall 
cease to be dépendent and assume the responsibîuties attaching to dtlzen- 
ship." 

In United States v. Noble, 237 U. S. 74, 35 Sup. Ct. 532, 59 L. Ed. 
844, Mr. Justice Hughes, delivering the opinion of the coiut, says : 

"The Quapaws are still under national tutelage. The government maintains 
an agency, and, pursuant to the treaty of May 13, 1833 (7 Stat. 424), an annual 
appropriation is made for éducation and other assistance (37 Stat 530). In 
1893 the Quapaw National Councll made provisions for allotments in several- 
ty, which were to be subject to the action of Congress, and in the act of 
ratification of 1895 Congress imposed the restriction upon aliénation which has 
been quoted. The guardianshlp of the tJnlted States continues, notwithstand- 
lug the citizenshlp conferred upon the allotteea. United States v. Celestine, 



2Qà 202 FKDlilîAL KEl'ORÏER 

215 U. S. 278, 291 [OO Sup. Ct. 93. 54 h. Ed. 105] ; Tiger v. Western Invest- 
inent Go., 221 V. S. 286, 315. 316 [.SI Sup. Ot. 578, 55 L. Ed. 738] ; Hallowell 
V. United States. 221 U. S. 317, 324 [31 Sup. Ct. 587, 55 L,. Ed. 750]; United 
States V. Sandoval, 231 U. S. 28, 48 [34 Sup. Ct. 1, 58 L. Ed. 107]." 

In United States v. Nice, 241 U. S. 591, 36 Sup. Ct. 696, 60 L. Ed. 
1192, Mr. Justice Van Devanter, delivering the opinion for the court, 
says: 

"It was said in United States v. Kaganui, IIS U. S. 375, 3S3 [6 Sup. Ct. 1100, 
30 L. Ed. 228]: 'Thèse Indlan tribes are the wnrds of the nation. They are 
communities dépendent on the United States. • * « From tlieir very 
wealiness and helplessnesG, so largely due to tlie course of dealing of the 
fédéral government with thcm and the treaties iii which it has bccn promised, 
there arises the duty of protection, and with it the power.' What was said 
In thèse cases has been repeated and applied in many others" — dting United 
States V. 43 Gallons of Whlskey, »3 U. S. 188, 23 L. Ed. 846 ; Dick v. United 
States, 208 U. S. 340, 28 Sup. Ct. 399, 52 U Ed. 520; United States v. Suttou, 
215 U. S. 291, 30 Sup. Ot 116, 54 L. Ed. 200 ; Ex parte Webb, 225 U. S. 663, 
32 Sup. Ct, 709, 56 L. Ed. 1248 ; United States v. Wright, 229 U. S. 226, 33 
Sup. Ct. 630. 57 L. Ed. 1160; United States v. Sandoval, 231 U. S. 28, 34 Sup. 
et. 1, 58 L. Ed. 107 ; United States v. Pélican, 232 U. S. 442, 34 Sup. Ct. 396, 
58 li. Ed. 676; Perrin v. United States, 232 U. S. 478, 34 Sup. Ct 387, 58 L. 
Ed. 691 ; Johnson v. Gearlds, 234 U. S. 422, 34 Sup. Ct. 794. 58 U Ed. 1383 ; 
Joplin Mercantile Co. v. United States, 236 U. S. 531, 545, 35 Sup. Ct 291, 59 
L. Ed. 705. 

"Of course, when the Indians are prepared to exercise the privilèges and 
bear the burdens of one sui juris, the tribal relation may be dlssolved and 
the national guardianship brought to an end, but it rests with Congress to 
détermine when and how this shall be done, and whether the émancipation 
shall at flrst be complète or only partial. Cltizeuship Is not incompatible 
with tribal existence or eontinued guardianship, and so may be eonferred 
OTthout completely emancipating the Indians or pladng them beyond the 
reach of congresslonal régulations adopted for thelr protection," — cltlng 
United States v. Holiday, 3 Wall. 407, 18 L. Ed. 182; Cherokee Nation v. 
Hitchcock, 187 U. S. 294, 308, 23 Sup. Ct 115, 47 L. Ed. 183; United States 
V. Kickert 188 U. S. 432, 445, 23 Sup. Ct 478, 47 L. Ed. 532; United States 
V. Celestine, 215 U. S. 278, 30 Sup. Ct 93, 54 L. Ed. 195 ; Tlger v. Western In- 
vestment Oo., 221 U. S. 286, 311-316, 31 Sup. Ct 578, 55 L. Ed. 738 ; Hallowell 
V. United States, 221 U. S. 317, 324, 31 Sup. Ct. 587, 55 L. Ed. 750; Eells v. 
Itoss, 04 Fed. 417, 12 C. O. A. 205 ; Farrell v. United States, 110 Fed. 942, 49 
C. O. A. 183 ; Mulligan v. United States, 120 Fed. 98, 56 C. 0. A. 50. 

It follows, regardless of the fact whether the Quapaw Indian les- 
sees, Benjamin and See-sah Quapaw, were or were not incompétent 
to make a vahd mining lease on their lands, as that term is employed 
in the act of Congress of June 7, 1897 (30 Stat. 72, c. 3), an(:, further, 
regardless of the validity or invalidity of tlie power of attorney by 
said' lessees made to Charles Goodeagle, yet, as the pétition allèges, 
through the many conspiracies entered into between said attorney in 
fact and his codefendants in violation of the trust by the lessees re- 
posed in their attorney, ail with the knowledge of the défendant bank 
and its officers, the lessees were despoiled and defrauded of their 
property for the use and benefît of the conspirators, the government 
is interested, and is under the obligation and owes the duty to its 
Indian wards to bring and maintain this suit and to right the wrongs 
done by calling défendants to account. Brader v. James, 246 U. S. 
88, 38 Sup. Ct. 285, 62 L. Ed. 591 ; United States v. Boylan (D. C.) 
256 Fed. 468. 



UNITED STATES V. BLOOK 205 

(202 FJ 

[2] Other objections to the pétition are found stated in the motions 
to dismiss, such as the misjoinder of controversies, the nonjoinder of 
indispensable parties, want of equity, etc. Thèse matters, however, I 
do not find urged with any insistence on the briefs and arguments of 
sohcitors for the respective parties. If, as has been held, the plaintiiï 
has légal capacity to niaintain this suit, sufficient facts are found set 
forth in the bill to call for the interposition of a court of equity. 

It follows, finding no ground to sustain the several motions to dis- 
miss, they are denied. It is ordered moving parties are ruled to answer 
the bill within 20 days from the date of this mémorandum. 

It is 80 ordered. 



UNITED STATES v. BLOCK. 
(District Court, D. Indiana, at Indlanapolis. Jannary 10, 1920.) 

No. 691. 

1. Criminal lAw <S=3l66 — Court-martial acquittai, is bab to civil pkose- 

OUTION. 

Défendant registerod on tlie 5tli day of June, 1917, and thereafter 
failed to answer his questionnaire and fled to eseape inilitary duty. He 
was tried by a court-martial for désertion and convlcted, but tlie convic- 
tion was set aside by the reviewing autliorities, and lie was ordered re- 
stored to duty. Held, that this proceeding before the court-martial con- 
stituted a bar to a prosecution in the District Court for failing to answer 
his questionnaire. 

2. Ceiminal law <g=>163 — Former jeopardy défense applicable to mis- 

DEMEAS0B8. 

The prineiple that a man shall not be placed in jeopardy twlce for 
the sarae offense applies to misdemeanors, as well as graver crimes. 

William H. Block was indicted for failure to make return on a 
sélective draft questionnaire. Demurrer to plea of former acquittai 
cverruled. 

L. Ert Slack, U. S. Atty., of Indianapolis, Ind. 
Edward Maher, of Chicago, 111., for défendant. 

ANDERSON, District Judge. On November 4, 1918, the défend- 
ant was indicted by the grand jury for failing and neglecting to fill 
out, swear to, and return his questionnaire to Local Board No. 2 in 
the city of Indianapolis. In substance, the indictment allèges that 
on the 5th day of June, 1917, the défendant was a maie person between 
tlie âges of 21 and 30 years; that on said 5th day of June, 1917, the 
défendant was duly and legally registered under the act of Congress 
entitled "An act to authorize the Président to increase temporarily 
the military establishment of the United States," approved May 18, 
1917, and in accordance with the régulations prescribed by the Prési- 
dent under said act; that the défendant was, on the 27th day of De- 
cember, 1917, under the jurisdiction of Local Board No. 2 in the city 
of Indianapolis, Ind., which said local board was then and there 
f ormed, constituted and operating under said act of Congress and the 
Sélective Service Régulations prescribed thereunder by the Président 

©csFor other cases see same topic & KBY-NXJMBBR in ail Key-Numbered Dlsests & Indexes 



206 262 FEDERAL REPORTER 

on November 8, 1917, and then and there had jurisdiction, by virtue 
of said régulations, over ail registrants who had been registered in said 
precinct; that on said 27th day of December the said local board 
mailed to said défendant the questionnaire of said défendant at his 
last known address, which said questionnaire the said défendant was 
required to fill out, swear to, and return to said local board, in accord- 
ance with said act and said régulations, on or bef ore the 5th day of 
January, 1918; that on the said 27th day of December the said local 
board posted in its office the proper notices prescribed in said régula- 
tions, containing the order number of said défendant, notifying him 
that his questionnaire had on that day been mailed to him by the said 
board, and that he was required by law and by said régulations to exé- 
cute and return to said board his said questionnaire within seven 
days from said 27th day of December ; that the said défendant did not, 
within said seven days, and did not before the 5th day of January, 1918, 
fill out, swear to and return his questionnaire to said board; that on 
the 5th day of January, 1918, the défendant unlawfully and willfuUy 
failed, and did at ail times, from the 5th day of January, 1918, until 
the day of the indictment unlawfully and willfully fail and neglect 
to perform such duty and to fill out, swear to, and return his said 
questionnaire to said local board. 

The défendant was duly arrested and brought into court to answer 
said indictment, whereupon, before his arraignment, the district attor- 
ney, upon request of the Department of Justice at Washington, asked 
that the défendant be turned over and delivered to the military authori- 
ties of the United States at Ft. Benjamin Harrison, Ind., to be dealt 
with in accordance with military law, and it was so ordered by the 
court. The défendant was duly turned over to the military authori- 
ties, and he now files his plea of former acquittai, setting forth the 
order for his court-martial; that the court-martial met on January 15, 
1919, at 10 o'clock a. m., for the trial of the défendant; that the de- 
fendant was then and there arraigned upon the charge of violating the 
Fifty-Eighth Article of War, with the spécification, "In that Private 
William H. Block, Jr., Order No. 1742, Sériai No. 2337, unassigned, 
having been duly drafted into the military service at Indianapolis, 
Indiana, on March 28, 1918, did, on or about March 28, 1918, willfully 
désert the service of the United States, and did remain absent in déser- 
tion until he was apprehended at Roseburgh, Oregon, on or about Oc- 
tober 13, 1918;" to which the défendant pleaded to the spécification, 
"Not guilty;" to the charge, "Not guilty." The plea then avers that 
the paragraphs of the Manual for Courts-Martial that set out the gist 
of the offense were read to the court-martial by the Judge Advocate, 
as follows: 

"Section 130. Eegistrants falling to return their questionnaires or to 
report for physical examlnation to be reported to police authority." 

Then follows the procédure under this section. 

"Section 131. Report to the adjutant gênerai of the state in cases of regis- 
trants who fail to return their questionnaires, or who fail to report for physi- 
cal examinatlon, and who cannot be located." 



UNITED STATES V. BLOCK 207 

(262 FJ 

Then the procédure under such section is set out. 

"Section 133. Adjutant gênerai to order delinquents to report; and notice 
to registrant." 

Then follows the procédure under such section; and 

"Section 140. Persons Inducted into military service vvho fail to report for 
mllitary duty, or who fail to entrain, or who absent theinselves from entrain- 
ment. 

"1. A registrant who, after the tiuie sot for his induction into military 
service (sections 133, 159g), and with intent to évade such service; 

"(a) Fails to report for military duty under induction orders, vphether 
issued by the adjutant gênerai of the state (form 1014, p. 234), or by a local 
board (form 1028, p. 250); or who 

"(b) Fails to entrain for a mobilization camp pursuant to orders; or who 

"(c) Absents himself from hls party en route to a mobilization camp, or 
otherwise refuses or neglects to proceed to tlie camp as ordered 
— is a déserter, and subject to punlshment by court-martial." 

The plea then sets forth the évidence which was introduced against 
the défendant before the court-martial, showing that he registered on 
June 5, 1917, and the procédure thereafter with référence to mailing 
to him his questionnaire, and his failure to answer the same, and the 
posting of the notice as required by the Sélective Service Régulations, 
and évidence that notice was given to the défendant to report to the 
adjutant gênerai. 

The plea further shows that the défendant denied that he had re- 
ceived said questionnaire or such notice, and avers that he was absent 
on private business and that prior to the time that he left on such pri- 
vate business no such questionnaire was in existence ; that by reason of 
his failure to respond to the notice of the adjutant gênerai, as therein- 
before set forth, and under the Sélective Service Régulations and the 
act of Congress (Comp. St. 1918, §§ 2044a-2044k), he became and was 
automatically inducted into the service of the United States as a sol- 
dier, as set forth in the charge and spécification thereinbefore in his 
plea set out; that divers witnesses were sworn; that proceedings 
were had from day to day before pni^ court-martial ; that évidence was 
read, oral évidence was heard, and Sélective Service Régulations were 
read ; that 28 witnesses testified orally ; that there was introduced in 
évidence exhibits, Sélective Service Régulations, the registration card 
of the défendant, forms 1012, 1002, 1010, 1013, 1014, 1018, and report 
of police, also a blank form of questionnaire, ail as required by Sélec- 
tive Service Régulations, and a report of the Médical Board; that 
arguments were heard, and said court-martial found against the de- 
fendant and sentenced him "to be dishonorably discharged from the 
service, to forfeit ail pay and allowances due or to become due, and to 
be confined at hard labor, at such place as the reviewing authority may 
direct, for fifteen (15) years" ; that the matter was taken before the 
reviewing authority, and the following order was made: 

"The sentence Is disapproved. Private Block wiU be released from con- 
finement and restored to duty." 

— and that said last order remains in full force and eflfect, and cannot 
be annulled or set aside in any manner by the military authorities. 



208 262 FEDERAL REPORTES 

The plea further allèges: 

"That the ofCense of failing to file th« questionnaire was Included In the 
said cbarge of 'désertion,' and that he, Iiaving been acquitted of tlie chargo, 
of désertion, is thereby, as a matter of law, acquitted of tlie charge of faillnt; 
to file a questionnaire, being an essential ingrédient of the charge of déser- 
tion, and is a lesser offense included in the charge of désertion." 

[1, 2] The plea of the défendant is based upon the theory that ho' 
lias been once placed in jeopardy and acquitted of the offense charged 
against him in the indictment. The Sélective Service Law provides, in 
section 6, for the punishment of a registrant failing or neglecting u> 
answer his questionnaire. The section, so far as it is applicable to this 
case, reads as f ollows : 

"* * • Or who, In any manner, shall fall or neglect fully to perform 
any duty required of him in the exécution of this act, shall, if not subject 
to military law, be guilty of a misdemeanor and upon conviction in the District 
Court of the United States having jurisdiction thereof, be punished by im- 
prisonment for not more than one year or, if subject to military law, shall be 
tried by court-martial and suffer such punisliment as a court-martial may 
direct." 

The Suprême Court of the United States in Grafton v. United 
States, 206 U. S. 333, 27 Sup. Ct. 749, 51 h. Ed. 1084, 11 Ann. Cas. 
640, held that a soldier in the army, having been acquitted of the crime 
of homicide, alleged to hâve been committed by him in the Philippine 
Islands, by a mihtary court-martial of compétent jurisdiction proceed- 
ing under authority of the United States, cannot be subsequently tried 
for the same offense in a civil court exercising authority in that terri- 
tory. In the course of its opinion the court said (206 U. S. on page 
345, 27 Sup. Ct. 751, 51 L. Ed. 1084, 11 Ann. Cas. 640) : 

"We assume as indisputable, on principle and authority. that before a 
person can be said to hâve been put in jeopardy of life or limb the court in 
which he was acquitted or convicted must hâve had jurisdiction to try him 
for the offense charged. It is alike indisputable that if a court-martial has 
jurisdiction to try an offlcer or soldier for a crime, its judgment will be ac- 
corded the final! ty and conclusiveness as to the issues Involved which attend 
the judgmenta of a civil court in a case of which it may legally take cog- 
nizance." 

Grafton having been acquitted of the crime of homicide by a court- 
martial, and having thereafter been convicted in the civil courts, the 
Suprême Court reversed the case and ordered that the complaint of 
the United States against Grafton be dismissed, and that he be dis- 
charged. This principle, that a man shall not be placed in jeopardy 
twice for the same offense, applies to misdemeanors as well as to grav- 
er crimes. Ex parte Lange, 85 U. S. (8 Wall.) 163, 21 L. Ed. 872. 

In that part of section 6 of the Sélective Service Law above quoted, 
Congress provided that whoever violated such section, "if not subject 
to military law," should be guilty of a misdemeanor, and upon convic- 
tion in the District Court of the United States having jurisdiction 
thereof, be punished by imprisonment for not more than one year, and 
provided further, in the alternative, that "if subject to military law" 
he should be tried by court-martial and suffer such punishment as a 
court-martial may direct, thus recognizing the légal principle that a 



m EE LOONEY 20& 

(262 F.) 

man may not be subjected to trial or punishment twice for the same of- 
fense. 

This is not the case of a plea setting up the former conviction or 
acquittai of the défendant in a court of another sovereignty. It is well 
settled that an acquittai or conviction in a state court is not a good dé- 
fense in this court ; but the rule is différent where both courts dérive 
their powers from the same sovereignty. In this case the court-martial 
and the District Court of the United States sitting in this district both 
dérive their powers from the government of the United States. 

The plea sets forth a good défense of former acquittai, and the de- 
murrer should be overruled; and it is so ordered. 



In re LOONEY. 
(District Court, W. D. Texas, El Paso Division. January 9, 1920.) 

No. 2G8. 

1. Bankrtjptct iS=5225 — Représentative of "ckeditob" not an attobnby 

CANNOT examine WITNESSES BEFOBE KEFEBEE. 

The word "créditer," as used in General Orders in Bankruptcy No. 4 
(89 Fed. iv, 32 G. G. A. vlil), does not include the agent, attomey In fact, 
or proxy of a credltor, and under suoh order and No. 22 (89 Fed. x, 32 
C. G. A. XXV), a credltor cannot appoint a représentative, who Is not an 
attomey and counselor at law, to examine wltnesses before a référée. 

[Ed. Note. — For other définitions, sce Words and Phrases, First and 
Second Séries, Créditer.] 

2. Bankrtjptct <S=»225 — Examination of witnebses before eeferee bt 

"PARTT." 

The tenu "party," as used In General Order In Bankruptcy No. 22 (89 
Fed. X, 32 C. C. A. xxv), provldlng that the examination of wltnesses be- 
fore the référée may be conducted by the party In person, means the ewn- 
er of the claim, and seems meant to exclude agents, attomeys In fact, 
and proxies. 

[Ed. Note. — Fer other définitions, Bee Words and Phrases, First and 
Second Séries, Party.] 

In the matter of Dénia Lahrucia Looney, bankrupt. On review of 
order of référée. Affirmed. 

Dyer, Croom & Jones, of El Paso, Tex. (Gowan Jones, of El Paso, 
Tex., of counsel), for bankrupt. 

Brown & Whitaker, of Murfreesboro, Tenn. (Volney M. Brown, of 
El Paso, Tex., of counsel), for T. K. Blanchard. 

SMITH, District Judge. This is a certificate for the review of an 
order of H. R. Gamble, one of the référées in bankruptcy of this court, 
denying the right of T. E. Blanchard to examine the bankrupt at the 
first meeting of bis creditors. Said Blanchard was the secretary of 
the Tri-State Association of Crédit ]\Ien, and at said meeting filed the 
claims of 24 creditors, in each of which he was named as attorney 
in fact for the owner thereof, and in connection with each presented 
as his authority to act a power of attorney as foUows : 

®s>F0T otber caees see same topic & KEY-NUMBER in aU Key-Numbereil DIgests £ Indexes 
262 F.— 14 



210 262 FEDERAL REPORTEE 

"Sald daimant hereby constitutea and appoints T. B. Blanchard, or hls sub- 
etltute Indorsed hereon, its attomey in fact to join wlth other credltors and 
proceed In bankmptcy agalnst the above-named debtor, under the provisions 
of the act entitled 'An act to establlsh a uniforin System of bankruptey 
throughout the United States,' approved July 1, 1898, and the amendments 
thereto, and to exécute in the name of the nnderslgned, any usual or neces- 
sary pétition or paper in that behalf, and to represent the claimant at ail 
meetings of credltors hereln, wlth authorlty to vote for trustée, also ta accept 

any composition proposed by said bankrupt In satisfaction of debts, 

and upon ail other propositions submitted to the credltors, and to recel ve 
dividends and ail notices In said cause." 

Said Blanchard was not an attorney at law. The référée held that 
Blanchard was not entitled to examine the bankrupt for the reasons, 
first, that he was not authorized to do so by his powers of attomey; 
and, second, that he was forbidden to do so by General Order No. 4 
of the Suprême Court (89 Fed. iv, 32 C. C. A. viii). 

I am of opinion that the ruling of the référée was correct, and 
that the reasons given therefor were sound. The power of attomey 
which was presented authorized the said Blanchard to exécute in the 
name of the owner of the claim any usual or necessary pétition or 
paper in the bankruptey proceeding, and to represent the claimant at 
ail meetings of creditors, with authority to vote for trustée, and also 
with authority to accept any composition proposed by the bankrupt, 
and to act upon ail other propositions submitted to the creditors, and 
to receive dividends and ail notices. The powers which said Blanchard 
was authorized by this power of attorney to exercise in representing 
the claimant at ail the meetings of creditors was limited to voting for 
trustée, accepting composition, and to acting upon any other propo- 
sition that might he submitted to the creditors, and to receiving divi- 
dends and notices. The power of attomey did not authorize him to 
examine witnesses at the meeting of creditors, or to perform any of 
the duties connected with any of the proceedings of a judicial nature; 
but, had it done so, I do not Âink it would hâve been valid in law. 

Counsel for said Blanchard contend that he was authorized to act 
in the examination of witnesses by General Order No. 4, which pro- 
vides that: 

"Proceedings in bankruptey may be conducted by the bankrupt in person in 
hls own behalf, or by a petltioning or opposlng créditer; but a créditer wlll 
only be allowed to manage before the court his indlvldual interest. Every 
party may appear and conduct the proceedings by attomey, vrho shall be an 
attomey or counselor authorized to practlce in the Circuit Court or Dis- 
trict Court" 

The argument of counsel is that, as paragraph 9 of section 1 of the 
Bankruptey Act (Comp. St. § 9585) defînes a creditor to include "any 
one who owns a demand or a claim provable in bankruptey, and may 
include his duly authorized agent, attomey, or proxy," the word "cred- 
itor" in General Order No. 4 should be so defined, and that one who 
holds power of attorney from the owner of a claim is himself a cred- 
itor, and by the terms of General Order No. 4 would be authorized 
to conduct ail of the proceedings in bankruptey. 

Considering the contéxt of this General Order, it appears to me that 
the word "creditor," therein used, should be construed in its ordinary 



IN RE LOONKT 211 

(262 F.) 

and restricted sensé, and not given the statutory définition, since the 
creditor, in conducting the proceedings, is confined to his "individual 
interest," and an agent, proxy, or attorney in fact has no "individual 
interest." I am furtlier confirmed in this view by the fact that this 
General Order f urther requires that, if a creditor be represented by an 
attorney, such représentative "shall be an attorney or counselor au- 
thorized to practice in the Circuit Court or District Court." There is 
no possible reason why the Suprême Court should hâve prescribed this 
qualification of an attorney, if it vsras the intention in the previous part 
of the order to give the creditor the right to appoint any person, with- 
out qualifications, to conduct the proceedings. 

In General Order No. 22 the Suprême Court (89 Fed. x, 32 C. C. 
A. xxv) deals more specifically with this question. It provides that: 

"The examinatlon of wltnesses before tlie référée may be conducted by the 
party In person or by hls counsel or attorney, and the wltnesses shall be 
subjeet to examinatlon and cross-examinatlon, whlch shall be had In conforml- 
ty with the mode now adopted in courts of law." 

[1, 2] It will be noted that this order désignâtes the party, instead 
of the creditor, as being authorized to examine the wltnesses, and says 
that the party so doing shall act in person, which are words of restric- 
tion, The term "party" evidently means the owner of the claim, for 
it is only the owner of the claim who can be a party to the bankruptcy 
proceedings, and it would seem that the intention was to exclude agents, 
attomeys in fact, and proxies. "Counselor or attorney" evidently 
means counselor or attorney at law. That the examination "shall be 
had in conformity with the mode now adopted in courts of law" would 
seem to évidence an intention to authorize only an attorney learned 
and experienced in the law, and qualified to conduct the exeunination 
in conformity with the rules of the courts of law when the party him- 
self does not do it "in person." 

I would not be understood as saying that a creditor may not be repre- 
sented by proxy to a limited extent in the conduct of the bankruptcy 
proceedings, but I believe such représentation should be, and is, con- 
fined to those proceedings which in their nature are not judicial, m 
the sensé that they do not require in their conduct expert knowledge 
of court procédure and practice, such as voting at meetings of cred- 
itors, selecting trustées, accepting composition, dividends, etc. This 
idea is prominent in Form No. 20 (89 Fed. xxxvii, 32 C. C. A. Ixi), 
"General lutter of Attorney in Fact when Creditor is Not Represented 
by Attorney at Law," prescribed by the Suprême Court, when con- 
sidered in connection with General Orders Nos. 4 and 22. And I 
may also add, as worthy of note, that as thèse General Orders and 
said Form No. 20 deal with the question as to the manner in 
which creditors may be represented in the conduct of bankruptcy 
proceedings and the examination of witnesses before the référée, 
it can hardly be presumed that the word "creditor," as therein 
used, was intended to include any qther than the owner of the prov- 
able debt. The word "creditor" does not always, when used, include 
"agent, attorney in fact, or proxy," as is plainly évident from para- 
graph 5, General Order No. XXI (89 Fed. x, 32 C. C. A. xxiii), and 



212 262 FEDEBAL EEPOETEB 

doubtiess from numerous provisions of the Bankruptcy Act. By réf- 
érence to paragraph 9, section 1, of the Bankruptcy Act, it will be 
noted that the word "créditer" may include a duly authorized agent, 
attorney, or proxy, only when consistent with the context of the pro- 
visions of the act in which it is used, and, as already stated, to say that 
the word "creditor," as used in General Orders Nos. 4 and 22, includes 
the agent, attorney, or proxy of the creditor, would not be consistent 
with the context of those General Orders. A référée is a judicial offi- 
cer, and in holding the bankruptcy courts exercises judicial authority. 
Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405 ; White 
V. Schloerb, 178 U. S. 542, 20 Sup. Ct. 1007, 44 L. Ed. 1183; In re 
Covington (D. C.) 110 Fed. 143; In re Eagles (D. C.) 99 Fed. 695; 
In re McGill, 106 Fed. 57, 45 C. C. A. 218; paragraph 7, § 1, Bank- 
ruptcy Act. 

In ail the courts of the United States the parties may plead and 
manage their own cases personally or by an attorney and counselor at 
law. R. St. U. S. § 747 (Comp. St. § 1249). By clear implication this 
statute excludes from the courts ail other agents, attomeys in fact. and 
proxies, than attomeys and counselors at law, and it is the universal 
practice to exclude them. To admit the unieamed nonprofessional in 
the courts, for the purpose of conducting tlieir proceedings in the 
trial of cases for others, would soon inevitably break down ail the rules 
of practice which hâve becn so long in use and are so essential to the 
administration of justice, and I think General Orders Nos. 4 and 22 
were designed and promulgated by the Suprême Court to prevent this 
very thing. 

Therefore, answering the question certified by the référée for review, 
I hold that said order of the référée be affirmed. 



THE OATALUNA, 

THE AEAGON. 

(District Court, S. U. New York. Mareh 26, 1918.) 

1. Shippino <S=175 — Chaktebeb bkeached contract bt rAiLtrEU to pbocube 

CLEAEANCE, ETC., AFTER LOADING. 

Where charter party allowed 12 lay days for loadlng and unloadlng, 
and provlded for payment of demurrage In event of addltional delay, the 
charterer, which falled to obtaln clearance for the vessel after it was 
loaded, etc., must be deemed to hâve breached Its contract, and is llable 
in personam for damages to the owner of the vessel, which, after a long 
delay, unloaded the cargo at the charterer's risk. 

2. Shippino <©=>152 — Freight paid in advance mat bb eecovebed baok 

where cab0o is not delivered. 

The American doctrine is that freight pald in advance can be recovered 
back If the ship faits to deliver cargo at destination, unless there Is a 
spécial stipulation that freight shall not be repaid. 

3. Shipping <@=>49(5) — Cakqo unloaded foe ohabtereb's failube to obtain 

CLEARANCE NOT SUBJECT TO OWNEB'S CLAIMS FOB CBABTEKEB'S BBEACH OP 

contract. 

Where the charterer of a vessel failed to obtain clearance, and the 
owner finally unloaded the cargo, held that, while the charterer was 

^ssToT other cases see same toplc t KEY-NUMBBR In ail Key-Numbered Dlgests & Indexes 



THE CATALUNA 213 

(262 P.) 

llable In personam for breacli of the charter party, whlch flxed the tlme 
for loadlng, etc., yet under the American doctrine, that freight pald In 
advance may be recovered back if cargo la not delivered, the owner had 
no lien on the cargo unloaded, notwithstanding charter party provided 
for payment of freight in advance, for no freight In the propcr acceptance 
of the terra was eamed. 

In Admiralty. Libel by the Compania Trasmediterranea, as owner 
of the steamship Cataluna against 6,387 barrels of petroleum and the 
Société Espagnole d'Achate & d'Affrètements, together with a libel by 
the Compania Trasmediterranea, as owner of the steamship Aragon, 
against 7,072 barrels of petroleum and the Société Espagnole, etc. On 
exceptions to libels. Exceptions overruled as to libels in personam, and 
sustained as to libels in rem. 

Kirlin, Woolsey & Hickox, of New York City Qohn M. Woolsey, 
of New York City, of counsel), for exceptions. 

Burlingham, Veeder, Masten & Fearey, of New York City (Roscoe 
H. Hupper, of New York City, of counsel), opposed. 

MAYER, District Judge. Exceptions hâve been filedto libels 
brought by the owner of two Spanish steamships against their respec- 
tive cargoes of petroleum and the charterer. The libel on behalf of 
the Aragon is brought to recover (1) freight, (2) demurrage, and (3) 
extra expenses, aggregating $174,864; and the libel on behalf of the 
Cataluna is brought to recover (1) freight, (2) demurrage, and (3) 
expenses of lighters, etc., aggregating $156,644. The charters on which 
the libels are founded are in the same terms, and the libels themselves 
are similar in form. It will suffice, therefore, for both cases, to re- 
fer to the Cataluna libel. 

[1] The Cataluna was chartered at Barcelona, Spain, to proceed 
to New York and load a complète cargo of crude petroleum in barrels 
to be provided by respondent, and with said cargo to proceed to cer- 
tain Spanish ports. The charter party provided with regard to freight 
and demurrage as f ollows : 

"(4) Twelve lay days are conceded for the loadlng and unloadlng, com- 
mencing to coimt thèse from the moment of the steamer's arrivai at the port, 
whether the pler is ready or not, tn spite of the custom of the port, always 
that the ship is ready to recelve or discharge its cargo. If the pier Indicated 
by the chartererg cannot be used Immedlately, thèse days will begin to be 
counted immedlately on recelving written notice that the steamer has ar- 
rived in port. 

"(5) For every day's delay occasioned through fault of the charterers, or 
their agents, the charterers vfill hâve to pay 5,000 (five thousand) pesetas 
per day, payable in Barcelona." 

"(8) The charterers must pay the total svun of the freight In Barcelona on 
receipt of télégraphie advice that the cargo has been loaded and the B/Vs 
signed. The freight to be 60 (sixty) pesetas per barrel shlpped and further 
amount of delay, should there hâve been any in New York." 

It is alleged that under the charter party it was the duty of respond- 
ent to furnish the Cataluna with a lawful cargo, and that respondent 
was bound to secure ail such licenses and permits as should be required 
in respect of the cargo, and to furnish ail such papers and documents 



214 262 FEDERAL REPORTER 

concerning cargo as should be necessary to enable the Cataluna to 
clear and sail f rom the port of New York with her cargo. 

The Cataluna arrived at the port of New York on or about August 
27, 1917, was duly tendered to respondent, and in due course began 
loading her cargo of 6,387 barrels of crude petroleum, which loading 
was completed September 17, 1917; lay days allowed under the char- 
ter parties having expired on September 12, 1917. When the loading 
was completed, the Cataluna was ready to proceed on her voyage from 
New York with the petroleum cargo, and libelant demanded from re- 
spondent that bills of lading be presented for signature, and that re- 
spondent should secure and présent such other papers and documents 
as were necessary to enable the Cataluna to clear, including an export 
license for the cargo. Respondent whplly failed and neglected to 
présent bills of lading, and did not provide the necessary export license 
and such other papers as were requisite to enable the vessel to clear, and 
by reason thereof the Cataluna was prevented from proceeding on 
her voyage, and was detained at New York from September 12, 1917, 
to December 5, 1917. On the latter date libelant caused the cargo of 
crude petroleum to be discharged from the Cataluna onto lighters, 
there to be held at the risk and expense of respondent. The libel then 
allèges that by reason of the foregoing matters libelant became entitled 
to collect from respondent the freight provided by the charter party 
to be paid and demurrage money, and fm-ther charges and expenses 
for lighters, etc. The libelant asked that process in rem issue against 
the 6,387 barrels of crude petroleum, and that process in personam, 
with clause of foreign attachment, issue against respondent. 

From the foregoing it is plain that there was a breach of the charter 
party. The Cataluna was not called upon to lie idle indefinitely, and 
the fact that freight and demurrage were to be paid for at Barcelona 
does not transmute a breach into something else, nor prevent libelant 
from recovering because by respondent's conduct libelant was pre- 
vented from transporting the freight. It must be remembered that 
the charter was a voyage charter, and, so far as appears from the 
face of the libel, libelant was always ready to perform its agreement ; 
but respondent, in failing to obtain the necessary clearance papers and 
detaining the vessel for an unreasonable time, breached its contract. 
I am of opinion, therefore, that the libel, so far as it sets forth an 
action in personam, is good, and that the exceptions in that respect 
must be overruled. 

[2, 3] The libel in personam proceeds in effect, upon the theory of 
damages for breach of the charter party ; but, while the libel is good 
in personam, it fails in rem. The American doctrine is that freight 
paid in advance can be recovered back in the event that the ship fails 
to deliver the cargo at destination, tuiless there is a spécial stipulation 
that the freight shall not be repaid. Nat. Steam Nav. Co., Ltd., of 
Greece v. International Paper Co., 241 Fed. 861, 154 C. C. A. 563, ex- 
presses the views of our Circuit Court of Appeals, and that opinion 
clearly points out the différence between the law of England and our 
law upon the subject of prepaid freight and référence is made to wetl 
known leading cases. 



NEW YORK LIFE INS. CO. V. ANDERSON 215 

(262 F.) 

Where freight is not prepaid, there can be no doubt that there can- 
not be a maritime lien, unless the freight is earned ; that is to say, trans- 
ported. Where freight is prepaid, but not transported, it seems to 
me the same principle must apply, although perhaps there is no case 
which clearly and directly disposes of the point. Freight imder our 
law is a payment for the deUvery of goods to destination, and whether 
prepaid or not is earned only by such dehvery in the absence of some 
spécial arrangement to the contrary. No transportation having taken 
place, and no freight having been earned, there is no foundation for 
a maritime lien, and thus for an action in rem. As démarrage is ex- 
tended freight, there is no action in rem for demurrage. The excep- 
tions, so far as they are directed to the action in rem, are sustained. 

Settle order on notice. 



NEW YORK LIFE INS. CO. v. ANDERSON, Internai Revenue Collecter. 
(District Court, S. D. New York. February 11, 1919.) 

1. IntERNAL BEVENUE i®=>9 — ^DIVIDBNDS PAID BT IN8UEANCE COMPANY TO POU- 

CT HOLDEBS OB CBEDITED ON PBEUIUIIS UUST BE EXCLUDED IN COUPUTINa 
THE COMPANT'S IHCOME. 

Dlvidends or surplus, which Ilfe Insurance companles are required by 
Insurance Law N. Y. § 83, either to pay policy holdera lu cash or to crédit 
upou premiuma due from them, must be excluded in determinlng the 
income of the company for the purposes of taxation. 

2. INTBBNAL EEVENÏTE <S=9 — DEPRECIATION IN MAEKET VAX.UB OF 8ECUBITIES 

ROT AIXOWED AS DEDUCTION WHBBE NOT BEALIZED BY SAUE. 

In Computing the Income of an Insurance company for assessment un- 
der Act Aug. 5, 1909, c. 6, | 38, par. 2, whlch allowed ail losses actually sus- 
tained wlthln the year and not compensated by Insurance, together wlth 
reasonable allowance of déprédation of property, to be deducted, dépré- 
dation of securities taken at market value during the year cannot be de- 
ducted, where the déprédation was not reallzed by sale of depredated 
Becurltles. 

At Law. Action by the New York Life Insurance Company against 
Charles W. Andersen, Internai Revenue Collecter. Verdict directed 
for plaintiff. 

Judgment reversed, 263 Fed. 527, C. C. A. — . 

See, also, 257 Fed. 576. 

James H. Mcintosh, of New York City, for plaintiflf. 

Francis G. Caffey, U. S. Atty., of New York City, for défendant. 

LEARNED HAND, District Judge. [1] In Conn. Mut. Ins. Co. v. 
Eaton (D. C.) 218 Fed. 206, affirmed 223 Fed. 1022, 138 C. C. A. 663, 
which is authoritative upon me, the resolution of the insurer under 
which the dividends were paid provided that dividends were payable 
upon ail policies in force at the beginning of the ensuing year. The 
resolution gave the right to the dividend upon payment "or nonpay- 
ment when due" of the succeeding premiums. One of the insured's 
options was to receive the dividend in cash. As I understand the f acts, 
therefore, the debt was absolute upon ail policies which had been kept 

«=»Fof oUier euea «m same topic & KET-NUMBER In ail Ker-Numbered Digests & Indexes 



216 262 FEDERAL REPORTER 

in force durinjf the year in which the dividend was earned. If so, I 
see no différence between that case and a policy issued under section 
83 of the New York Insurance Law (Consol. Laws, c. 28). It can 
make no différence that the dividend is a debt made absolute by stat- 
ute instead of by contract. Therefore that case appears to me to be 
on ail fours with the case at bar. In Mut. Ins. Co. v. Herold (D. C.) 
198 Fed. 199, affirmed 201 Fed. 918, 120 C. C. A. 256, the tacts are not 
clear, and this may not hâve been the situation. 

Moreover, in principle I think there is.no distinction, even if the 
debt be not absolute. Assume, if one please, that the payment of the 
dividend in Conn. Mut. Ins. Co. v. Eaton, supra, was conditional upon 
the insured's payment of the next succeeding premium ; even so, when 
he elected to pay that premium, the dividend became an absolute debt, 
payable in cash. In such cases as the insured had so elected, as he did 
in ail cases there under considération, his further élection to accept, 
not cash, but crédit upon his premium, discharged an absolute debt 
quite as much as a similar élection under section 83 of the New York 
Insurance Law. Perhaps the discharge of such a debt ought to hâve 
been considered équivalent to the receipt of an equal sum of money 
— i. e., as income ; but the law is fixed otherwise, and unless there be 
some distinction I must f oUow it. 

So it seems to me that, as respects ail policies on which the insured 
hâve elected to pay the balance of their premiums during the year for 
which the tax is levied, the crédit of the dividends was as much a pay- 
ment where the New York law did not apply, as where it does. I 
hold, therefore, both on the facts of Conn. Mut. Ins. Co. v. Eaton, su- 
pra, and upon principle, that the plaintiff is right as to this item, and it 
may hâve a verdict as to so much. 

[2] The remaining point is as to the dépréciation of securities 
taken at market value during the year. It is quite apparent that, if 
this dépréciation be accepted as a déduction, and no appréciation be 
added, the insurer may slowly over a séries of years crédit itself with 
possibly the whole value of its securities and without any corre- 
sponding offset. This is obviously an unreasonable resuit, which could 
not hâve been intended. The question is whether the dépréciation 
falls within the déductions covered by paragraph 2 of section 38 of the 
act of 1909 (36 Stat. 112, c. 6). Of the déductions so allowed the only 
one appropria te is: 

"Ail losses actually sustalned wlthin the year, and not compensated by In- 
surance or otherwise, Includlng a reasonable allowance for déprédation of 
property If any." 

This clause of the statute undoubtedly goes to a "dépréciation" which 
has not yet been realized by sale of the depreciated property ; so much 
one must allow. If the securities had been sold, I need not say that 
the loss would not hâve been a proper item of allowance. The clause 
is not intended to cover that situation. The question is whether it 
should be Hmited to the loss in actual use value, due to wear and tear, 
reflected in a fall in money value. It seems to me quite clear that it 
should be so limited. The fluctuations in the market value of a com- 



NEW YORK LIFE INS. CO. V. ANDEKSON 217 

(262 F.) 

mercial security, as in the case of a stock of goods, are constant from 
month to month. No one regards them as a final dépréciation in value 
from which the property will not recover. It may or may not ; but, if 
there has been no certain détérioration in those éléments which con- 
tribuce to the bénéficiai use of the property, and which prevent it from 
ever commanding the same opinion of its value as before, the loss has 
not, I think, been "actually sustained." When consumable goods are in 
part wom out, they can never recover their earlier condition. It is 
true that their value may recover, owing to the increased value of ail 
their class, new and used; but the proportion between the value of 
new and used goods of that kind is presumptively unchanged. The 
loss has then been "actually sustained," in the sensé that it cannot be 
recouped. This is what I think the language means. It refers to such 
goods as by reason of their physical détérioration are permanently im- 
paired in use, from which impairment there was no chance of re- 
covery. 

Sudi an interprétation, moreover, accords with common business un- 
derstanding. A manufacturer charges his profits with the loss to his 
machinery and buildings, due to wear and tear, recognizing that the 
necessity of the upkeep of his capital will in the end inevitably require 
some such allowance. A merchant, on the other hand does not or- 
dinarily include the variations in the market values of his stock in 
counting his profits. They may shortly be restored to their value, and 
the time to charge his profit with them is when they are sold, and the 
gain or loss finally ascertained. 

Cases like Stratton's Independence v. Howbert, 231 U. S. 399, 34 
Sup. Ct. 136, 58 L. Ed. 285, and those which follow it, or Doyle v. 
Mitchell Bros. Co., 247 U. S. 179, 38 Sup. Ct. 467, 62 L. Ed. 1054, and 
those which follow it as well, are quite différent. The question was 
how the gross income was to be estimated, particularly what allowance 
should be made for the original value of the raw material, which had 
been worked up and sold as a finished product. Hays v. Gauley Moun- 
tain Coal Co., 247 U. S. 189, 38 Sup. Ct. 470, 62 L. Ed. 1061, was a 
case where securities were actually sold, and the question was also one 
of gross income. It did not détermine what was to be considered the 
proper déduction for dépréciation not realized by conversion into 
cash. Nor do any of the cases cited in the lower courts seem to me to 
be in point. While the case appears, therefore, to be one of first im- 
pression, I do not hesitate to hold that the défendant is right upon this 
item. 

The plaintiflF will take no interest upon the first item of $694.52 in 
the agreed statement. A verdict will be directed for the amount f ound 
in accordance with the f oregoing. 



218 262 FEDEEAL REPOHTEB 

THE TAMAHA. 

THE F. B. DALZELL. 

THE BtLORBNCJBJ. 

(District Court, B. D. New York. Deeember 5, 1919.) 

1. WHABVES <©=>21 — TCO NOT négligent in BTBETCHIN(ï HAWSEB AOBOeS OPEN 

SLIP. 

Where a tug, under orders, drew a ressel out of a dry dock, stretched a 
hawser from the veasel across an open slip to a pler, suggested to the ves- 
sel's offlcer that a lantem be placed at the steamer's stem after dark, and 
then left, held, that the tug was not négligent In elther stretching the Une 
or in faillng to remain to watch it 

2. Whabves <©=5>21 — Steameb pbimabilt and pikb amo liablb tob injtjeies 

strstalned when tug ban into kawskb acbosb open slip. 

Where a hawser, stretched from a vessel at a dry dock across an open 
slip to a pler, caused injury to llbelant, englneer on a tug whleh endeavored 
to enter the slip after dark, helA, that the steamer was primarlly responsl- 
ble, but that the dry dock company, which was apparently aware of the 
condition and knew that the slip was f requently used by other vessels, was 
also llable< 

3. Whaevks <S=»21 — Evidence insoffiCient to show injuet to libelant 

when his tug ban into a hawseb. 

The testlmony of an englneer on a tug that he had been knocked down 
by something and injured when the tug ran against a hawser stretched 
from a steamer across an open slip to a pler heli insuffldent to establlsh 
that any Injuries were recelved in the manner clalmed, In vlew of fact that 
persons inspeeting the engine room Immedlately after the accident found 
no indications that the room had been affected by the accident, and 
when the condition clalmed as injury mlght hâve resulted from dlsease. 

In Admiralty. Libel by Walter A. Gully against the steamship 
Tamaha; the P. B. Dalzell, James Shewan & Sons, Incorporated, and 
the tug Florence, impleaded. Libel dismissed. 

Harry E. Shirk, o£ Brooklyn, N. Y., for libelant. 

Kirlin, Woolsey & Hickox and L. De Grove Potter, ail of New 
York City, for the Tamaha. 

Carter & Carter and P. S. Carter, ail of New York City, for tti.e F. 
B. Dalzell. 

Foley & Martin and J. A. Martin, ail of New York City, for James 
Shewan & Sons, Inc. 

CHATFIELD, District Judge. The libelant was an englneer upon 
the tug Florence, which attempted to enter a slip adjoining the pier 
used to hold the shop and offices of the Shewan Dry Dock Company 
upon the evening of July 6, 1916. In so doing the tug struck a 7-inch 
hawser which had been stretched from the stem of the steamer Tamaha 
across the slip to the pier upon the south. No lantern had been placed 
on this hawser, or at the stem of the ship, to indicate danger. The 
pilothouse of the tug, its smokestack, and the steampipe leading to the 
whistle were sheered off just above the roof of the main deckhouse. 
The captain of the tug was in the pilothouse, but was saved from se- 
rious injury by the framework of the wheel, which was cmshed down 

^=»For otiier caseï aee same toplc & KET-NUMBBR in ail Key-Numbered DlgesU & Indexe* 



THE TAMAHA 219 

(262 P.) 

over him. The libelant was thrown to the floor in his engineroom, 
and testifies that he was struck upon the left side of the head, or upon 
the left car, by some object which knocked him down. 

Surveyors who examined the boat immediately after the accident 
found absolutely nothing broken or misplaced inside of the engine- 
room, except that the bell wires were pulled loose and a strip of molding 
pulled out of place where thèse wires were torn eut. 

The hawser in question had been placed across the slip after the 
steamer had been drawn out of the dry dock in order to allow another 
vessel of the same line to be put in the dry dock for immédiate re- 
pairs. The Tamaha was placed at the end of the Shewan pier, but 
angling across, so that her bow was held by lines to some structure in- 
side of Shewan's yard. Her stern thus projected partly into the slip 
in question, and the Dalzell tug stretched the hawser, at the direction 
of some one either on the Shewan pier or on the ship, and with the 
approval of the ship's ofScers. The captain of the tug called the at- 
tention of the Tamaha's officer to the line, and indicated that a lantern 
should be placed at the stern of the steamer; but his suggestion was 
not accepted by this officer. 

[1] The Dalzell tug left before dark, and I see no négligence in 
either stretching the line or in failing to remain to watch the line, so 
far as the Dalzell tug was concemed. The négligence consisted in the 
maintenance of this line across an open slip in the dark without some 
light to indicate its présence. Responsibility for that must rest upon 
the vessel, unless that responsibility was shared or assumed by the own- 
ers of the dry dock. The pétition should therefore be dismissed by 
which the F. P. Dalzell was brought into the case. 

[2] As between the Tamaha and the Shewan Company, the Tamaha 
was primarily responsible for the conditions. The Shewan Company 
was apparently aware of thèse conditions, and knew that the hawser 
was blocking the adjoining slip. They also knew that this slip was 
frequently used by vessels which would not know of the présence of 
the hawser. The steamship, therefore, and the Shewan Company, 
must be held at fault for the situation which existed and the careless- 
ness which resulted in the injuries upon the Florence. 

[3] But another issue in this case has been raised by the claimant 
and respondent with respect to the injuries alleged by the libelant to 
hâve been received on this occasion. The libelant suffered the loss of 
his left leg some 35 years ago, when he was a small boy. He com- 
plains of pains at times in his shoulder, which his own doctors could 
trace to no injury, unless it be f rom the strain or discomfort of using a 
crutch under his left arm. He complains of trouble in hearing, and an 
examination by various doctors has disclosed that his hearing is some- 
what impaired. 

Examination in open court showed that his ability to hear was affect- 
ed in great degree by his idea of what the doctors were doing in the 
way of a test The libelant seemed to be attempting honestly to report 
his perceptions and sensations during thèse tests; but it was appar- 
ent that lâ« said he did not hear certain sounds of which he must hâve 



220 262 FEDERAL REPORTEE 

been in some way conscious, and which were much louder and more 
easily distinguishable than the voice, which he quickly responded to, at 
the same distance. 

His loss of hearing is much less than he believes it to be, even if 
he hâs net intentionally misled the doctors during the examinations. 

The libelant has failed to fumish a prépondérance of crédible tes- 
timony indicating that he received any in jury at the time, from which 
the deafness has resulted, or that the deafness is the resuit of any 
blow received at the time of collision with the hawser. 

The captain of the vessel testifies that the libelant complained of no 
injury and was around the boat within a few moments. The libelant 
testifies that it was some half an hour before he was able to get eut 
around the deck, and during this time he pulled most of the fire under 
the boilen 

The captain of the boat seems to hâve been in a better position to 
estimate what was going on, as he retained command and control of 
his boat and was observing the whereabouts and condition of his crew. 
While the libelant may be excused for not appreciating the situation 
and the length of time during which steam was escaping from the 
open steam pipe outside of the engine house, while he was endeavoring 
to pull his fires and to shut ofif any steam that might be escaping, nev- 
ertheless his condition was not such that it is persuasive évidence of his 
having received any severe blow upon the head. The hawser which 
came in contact with the tug was not broken. The eardrums of the li- 
belant were not ruptured, and the testimony leads the court to believe 
that his impaired hearing is the resuit of some other internai trouble, 
which manifested itself either after this accident, or which was first 
-noticed and observed when the libelant's attention was called to what 
might hâve happened from the accident, and that he thereby attribut- 
ed to the accident in question effects with which it had nothing to do 
as a cause. 

The libel will be dismissed, but without costs. 



EX PARTE CHAN WY SHEUNQ 221 

(262 F.) 

Ex parte CHAN WY SHBUNG. 

(District Court, N. D. CaJifornia, S. D, November 20, 1919.) 

No. 16672. 

AxiSKS "S=>32(8) — Evidence instjfficient to sustain oedeb axcLUDiNa Chi- 

NESE. 

Where a Chinese appUcant's father had been admltted as a native- 
born citizen, and applleant's two brothers were subsequently admltted 
as sons of a natlve-bom dtlzen, held, that a déclaration, elalmed to bave 
been inade by applleant's father in Canada, glvlng China as the father's 
blrthplaee and an Instrument by applleant's grandfather, stating that 
he arrived In the United States subséquent to the date applleant's father 
had claimed to bave been bom in thls country, were Insufficient to au- 
thorize the department In overtumlng Its previous décisions and exclud- 
ing the appllcant. 

Habeas corpus proceedings by Chan Wy Sheung. Demurrer to péti- 
tion overruled, and writ issued. 

Joseph P. Fallon, of San Francisco, Cal., for petitioner. 
Annette Abbott Adams, U. S. Atty., and Benjamin F. Geis, Asst. 
U. S. Atty., Both of San Francisco, Cal., for respondent. 

RUDKIN, District Judge. The facts in this case are substantially 
as follows: 

Chan Young, the father of the présent applicant, was admitted to the 
United States in December, 1899, as a native-born citizen, after a full 
hearing before the proper department. The testimony introduced on 
that hearing, consisting of the testimony of the then applicant, his 
father, and at least one other witness f amiliar with the time and place 
of the applleant's birth, showed without contradiction that the appli- 
cant was born at 751 Sacramento street, San Francisco, state of Cali- 
fornia, in the year 1875. In the year 1909 or 1910 Chan Way Bon, a 
son of Chan Young, was admitted as the son of a native-born citizen, 
and in 1917 Chan Way Ging, another son, was likewise admitted as 
the son of a native-born citizen. It is conceded by the govemment 
that the présent applicant is a brother of the two last-named Chinese, 
and a son of Chan Young, who, as already stated, was formally admit- 
ted to the United States as a native-born citizen 20 years ago. Chan 
Young died in San Francisco in 1912, having resided continuously 
in the United States from the time of his admission up to the time of 
his death. The grandfather is likewise dead. The déniai of the ad- 
mission in this case was based upon the fact that the father of the 
applicant under the name of Chun Wan Mong on the 2d of June, 1899, 
filed a statement and déclaration for registration at Victoria, British 
Columbia, stating that he was born at Ding Boy, Sun Woy district, 
China, and that he was then of the âge of 25 years. There was likewise 
offered in évidence at the présent hearing a certified copy of an appli- 
cation for a certificate of résidence, made by Chin Wong, the grand- 
father of the applicant, on the lOth day of April, 1894, stating, among 
other things, that the applicant arrived in the United States in May, 
1876. 

®:3For other cases see same toplc & KEY-NUMBBR In ail Key-Numberefl Dtgests & Indexes 



222 262 FEDERAL REPORTER 

Based upon thèse two certificates or statements, it îs argued by the 
government that the father of the applicant was not a citizen of the 
United States, and that the statement of the grandfather that he 
arrived in the United States in 1876 precludes the idea that his son 
was born hère in 1875. There are grave doubts in my mind whether 
either of thèse statements or certificates are compétent or admissible 
as against the applicant. There is aiso a grave doubt in my mind as to 
whether the déclaration made at Victoria was actually made by the fa- 
ther of the applicant. There is no testimony in the record tending to 
identify hira as the person who made the déclaration, and while the 
déclaration shows that the applicant arrived at Victoria by the steam- 
ship Umatilla, there is other testimony tending to show that he in 
fact arrived by the steamer Walla Walla. But, in any event, it occurs 
to me that the department should be bound in this matter by its own 
prior adjudications, made at a time when the witnesses who had knowl- 
edge of the f acts were living, and able and compétent to testify, and that 
it would be a gross injustice to exclude the applicant now, after the 
death of his father and his grandfather, when it is utterly impossible to 
explain or contradict the ex parte statements ofïered in évidence 
against him. 

As to the déclaration of the grandfather, it was not in évidence be- 
fore the department, and perhaps should not be considered; but in 
any event, it seems to me, entirely too much importance is attached to 
the matter of dates. As showing the ease with which dates may be 
confused or misstated, I need only refer to the record in this case, to 
show that it is stated in the brief of counsel for the government and 
the mémorandum prepared for the Secretary that the application of 
the grandfather was dated April 13, 1894, whereas the certified copy 
shows that it was dated April 10. Furthermore, the testimony given 
by the grandfather in 1899 showed that he had been a résident of the 
United States for 30 years, which would carry him back to the '60's, 
and away beyond the birth of the applicant. I am fuUy aware of the 
limited power of the courts in matters of this kind, and of the force 
and efifect that must be given to the findings of the department ; but 
I am of the opinion that the question hère presented is one of law 
rather than of fact, and I cannot sanction the injustice that would re- 
suit from excluding the applicant from the country at this late day 
under the circumstances djsclosed by this record. The décisions of 
the department, after a full hearing, should be given some efïect, and 
should not be overtumed or set aside in subséquent cases upon any such 
pretext or for any such reason as is hère assigned. 

The demurrer is therefore overruled, and the writ of habeas cor- 
pus will issue as prayed, returnable November 22, 1919, at 10 o'clock 
a. m. 



UNITED STATES V. BENOWITZ 223 

(262 F.> 

UNITED STATES 7. BENOWITZ. 
(District Court, S. D. New York. October 20, 1919.) 

InTXBNAX. REVENUE iS=»25— PKBSONS AtJTHOBIZBD TO ADIUNISTEB OATH TO IN- 
COMX TAX BETDBN. 

Under Income Tax Act Feb. 24, 1919, { 223 (Comp. St Ann. Supp. 1919, 
{ 6336%kk), and the régulations made thereunder, requlrlng Income re- 
turna to be made nnder oatb, such oath may be taken before any person 
authorized by the local law to admlnister oaths. 

Criminal prosecution by the United States against Hyman Benowitz 
for perjury under Criminal Code, § 125 (Comp. St. § 10295). On 
demurrer to indictment. Overruled. 

Francis G. Caffey, U. S. Atty., and Benjamin P. De Witt, Asst. U. 
S. Atty., both of New York City. 

Abraham Levy and Mark Eisner, both of New York City, for de- 
fendant. 

LEARNED HAND, District Judge. It must be conceded that since 
United States v. Curtis, 107 U. S. 671, 2 Sup. Ct. 501, 27 L. Ed. 534, 
and United States v. Hall, 131 U. S. 50, 9 Sup. Ct. 663, 33 L. Ed. 97, 
the crime charged in the first count must stand or fall solely upon 
whether section 406 of the régulations under the income tax law au- 
thorized commissioners of deeds to take oaths to income tax returns 
(United States v. Morehead, 243 U. S. 608, 37 Sup. Ct. 458, 61 L. Ed. 
926), or perhaps whether under Mr. Justice Story's dictum in United 
States V. Bailey, 9 Pet. 238, 253, 257, 9 E. Ed. 113, the oath was taken 
before such an officiai "in conformity with the practice and usage of 
the Treasury Department." 

Section 406 begins by the bare statement that ail returns must be 
verified on oath, in that respect merely repealing the statute. Yet it 
very clearly intended — though it must be confessed, it is very blindly 
worded — to cover the whole matter, because it at once proceeds to 
particulars, providing that soldiers and sailors may take oaths before 
any one generally authorized to administer oaths to soldiers and sailors 
and that persons abroad may go to consular offîcers. It is, of course, 
absurd to suppose that the section taken as a whole meant to say that 
only such officers might administer oaths. If so, no one need, or in- 
deed could, verify his retum unless it were soldiers and sailors and 
persons abroad. This would repeal the statute in substance; indeed, 
such a régulation would be illégal. 

Finally, the section concludes with a provision for the certification 
of oaths taken by "a foreign notary or other officiai having no seal." 
This, of course, directly implies that foreign notariés may take such 
oaths, and that there are also officiais so authorized who hâve no seals 
other than they. It is perfectly apparent f rom this language that those 
who drafted the section must hâve supposed that the first sentence au- 
thorized some officers to take oaths, for the last sentence from which 
the question was taken would be without any conceivable meaning 

^=9Fot other cases aee su ira tAgio ft KBT-NUHBER in ail Key-Numbered Dlgests & Indexe^ 



224 262 FEDERAL REPORTER 

if they did not, just as the second and third sentences, while logically 
possible, would be absurd and indeed invalid in law. If so, the only 
question is as to what officers the draftsinen of the section must hâve 
meant. 

Much the most rational, and, so far as I can see, the only possible, 
interprétation is that they meant to include ail such as were authorized 
by the local law to take oaths in their several districts. If I do not 
so interpret the language, I must suppose that the régulation which was 
meant to put the statute into effect illegally defeated it by applying 
it in a whimsically capricious way. I interpret the régulation, theref ore, 
as intended to allow a commissioner of deeds, among other officiais to 
take such an oath. It becames.unnecessary, theref ore, to consider the 
efïect of Justice Story's dictum in United States v. Bailey, supra. 

The second count is concededly good, if the first is. 

Demurrer overruled. 



HOGAN et ux. v. BUJA. 
(District Court, E. D. Loulslana, New Orléans Division. January 13, 1920.) 

No. 16018. 

li ADMIRA.I,TT lg=>2 — UNDEB SAVING clause, INJURiED SERVANT MAT PEOCÏSED IN 
ADMIEALTT, AT COMMON LAVC, OB UNDEB WORKMEN'S COMPENSATION AOT. 

Under Judlclal Code, § 24, par. 3 (Comp. St. § 991), saving to suitors In 
admlralty tlielr rlghts at common law and under Workmen'g Compensa- 
tion Acts, a person injured by a tort cognlzable in admlralty may proceed 
in admlralty, at common law, or under the provisions of a workmen'a 
compensation act 
2. Masteb and SERVANT <®=»401 — Pleadinq in admibaltt patment of work- 
men's compensation. 

Under Judlclal Code, § 24, par. 3 (Comp. St. § 991), saving to admlralty 
claimants rlghts to workmen's compensation, an exception of no cause 
of action to a llbel for Personal Injuries vyill not be sustained, where the 
libel falls to show that a workmen's compensation award had been re- 
ceived; but, if an award has been reeeived, that fact may be set up in 
défense, for admlralty courts will not permit two recoverles for the same 
tort. 

In Admlralty. Libel by Mr. and Mrs. John Hogan, for the use 
and benefit of their minor son, Alvin Joseph Coiïey, against Albert 
J. Buja. Exceptions to libel overruled, and re&pondents allowed 10 
days to file an answer. 

Daniel Wendling, of New Orléans, La., for libelants. 
Gordon Boswell, of New Orléans, La., for respondent, 

FOSTER, District Judge. This is a libel in personam, brought on 
behalf of a minor for personal injuries. It appears from the allé- 
gations of the libel that the said minor was employed as a longshore- 
man by the respondent, who is a stevedore, and the injuries occurred 
on board the steamship Nondrallie, while lying in the Mississippi 
river at New Orléans. 

An exception of no cause of action has been filed. It is contended 
on behalf of respondent that the amendment to paragraph 3, section 

^=3For otber cases 8e« same toplc & KEY-NUMBER in ail Ke7-Numbered DigesU A Indexes 



HOGAN V. BUJA 225 

(282 F.) 

24, of the Judicial Code adopted October 6, 1917 (Comp. St. § 991), 
"saving * * * to claimants the rights and remédies under the 
workmen's compensation law of any state," deprives the admiralty 
courts of jurisdiction in any state where a workmen's compensation 
law is in force and effect. It does not appear from the libel that 
any settlement has been made under the compensation laws of Lou- 
isiana (Act 20 of 1914 and amendments) ; but, as it is conceded 
in argument, that fact may be considered in determining this ex- 
ception. 

As paragraph 3 of section 24, Judicial Code, was originally en- 
acted, it granted admiralty and maritime jurisdiction to District 
Courts of the United States, "saving to suitors in ail cases the right 
of a common-law remedy where the common law is compétent to give 
it," and it is well settled that the state courts had jurisdiction of a 
suit not in rem to recover damages for an admiralty tort, and the 
injured party might elect whether to sue at. common law or in ad- 
miralty. 

[1] I can see no différence with regard to the workmen's com- 
pensation laws, and therefore the person injured, in a case of tort 
cognizable in admiralty, may elect whether to proceed in admiralty, 
at common law or under the provisions of the workmen's compensa- 
tion law, where it exists. 

[2] If a settlement has been made in this case in such a manner 
as to exclude any further recovery, that fact may be set up in dé- 
fense, as courts of admiralty administer the broadest equity, and 
would not permit two recoveries for the same tort. That is a ques- 
tion to be decided on the merits. If the facts set up in the answer 
in this case warrant it, a trial may be had on that issue, separate 
from the other questions involved in the case. 

The exception will be overruled; re&pondent to hâve 10 days in 
which to file an answer. 
262 F.— 15 



226 262 FEDERAL REPORTER 



TJNITED STATES ex rel. BERGER v. UHL, Actlng CJominlssloner of 

Immigration. 

(District Court, S. D. New York. December 8, 1919.) 

Habeas coepus <©=»54 — ^Application by alien insuffioient as to osounds 
fob detention. 

An application by an alien, lield in custody by the immigration author- 
itles, to obtain release on habeas corpus, wlll be dismissed, wliere it did 
net set forth the ground on whicb he was held by the immigration author- 
ities, or the record of the déportation proceedlngs, but averred merely on 
Information and bellef, witliout stating any grounds, that applicant be- 
lleved he was held in custody because he arrived in 1913. 

Habeas Corpus. Application by the United States, on the relation 
of Fred Harold Berger, for writ of habeas corpus against Byron H. 
Uhl, as Acting Commissioner of Immigration at the port of New 
York. Application denied. 

Chas. Recht, of New York City, for petitioner. 

Francis Caflfey, U. S. Dist. Atty., of New York City, for défendant. 

MAYER, District Judge. This is an application for a writ of 
habeas corpus. It is impossible to ascertain from the pétition what 
facts, if any, are alleged as the ground upon which it is claimed that 
the détention is illégal. The petitioner allèges that — 

"The cause or prêteuse of the imprlsonment or restraint of the said relator, 
to the best of the knowledge and bellef of your relator, is that he arrived tn 
the United States in the year 1913." 

It is impossible to believe that officiais of the govemment detained 
petitioner merely because he arrived in the United States in 1913. The 
sources of the knowledge and belief upon which such an extraordinary 
allégation is based are not stated. 

The petitioner then relates some expériences beginning with his ar- 
rest in California, but carefuUy avoids setting forth any fact upon 
which any présent wrongful détention can be predicated. He states, 
in effect, that he has been confined in various jails and immigration 
stations since 1917, and discloses his wishes as foUows : 

"Your petitioner feels that there is no évidence upon which to base sald 
déportation, but your petitioner wlll not ralse any question as to thls, for 
your petitioner feels that, if the govemment or the people of the United 
States do not désire his présence hère, he is willhig to retum to his native 
country, formerly Baltic Russia, but now the independent republlc of Es- 
thonia and Latvia. 

"Your petitioner feels, however, that he has sufCered great Injury by two 
years of close confinement in various Jails and Immigration stations, In vio- 
lation of promises made to petitioner that he would be immedlately deported." 

The practice of applying for writs of habeas corpus upon loose 
gênerai allégations, which fail to show on the face of the pétition that 
a petitioner is wrongfully detained, should be discontinued. From 
time to time cases may arise where déportation is imminent, and where 
the person detained or his attorney may not hâve time to hâve access 
to tiie records, and thus to draw a satisfactory pétition. In such in- 

^=3 For other cases see same toplc & KEY-NOMBER in ail Key-Numbered Digests & Indexe» 



EX PARTE YOUNQ TOY 227 

(262 F.) 

stances, justice may require the issuance of a writ to prevent pré- 
maturé déportation from making the question moot. But such is not 
this case, where so far as appears from the pétition the petitioner has 
waited for two years, and is now willing to be deported, but desires 
to be set at large until he is accommodated. 

Petitioner or his counsel will hâve no difficulty in examlning the rec- 
ords upon which his déportation is based, and, if he applies again for 
a writ, he will attach to his pétition the record, or a copy thereof 
(which will be furnished without expense), or, in lieu thereof, his 
statements must be made on knowledge, or, if on information and be- 
lief, he must set forth the grounds of his information and belief. 

Application denied. 



Ex parte YOUNG TOY. 

(District Court, N. D. Galifomla, First Division. September 16, 1919.) 

No. 16515. 

Alienb <S=>32(S) — Evidence insufficient to bubtain exclusion of Chinesb. 
In habeas corpus proceedlngs by a Chinese seeking admission as the 
son of a résident merchant, évidence that the father was principally en- 
gaged in delivering liquors and cigars sold by the flrm of which he was 
a member, held not to destroy the father's mercantile status, since the 
manual labor of delivering articles was a necessary part of the business. 

Habeas corpus proceedings by Young Toy. Demurrer to pétition 
for writ overruled, and writ issued. 

George A. McGowan, of San Francisco, Cal., for petitioner. 
Annette Abbott Adams, U. S. Atty., and Ben F. Geis, Asst. U. S. 
Atty., both of San Francisco, Cal., for respondent. 

DOOLING, District Juc^e. Petitioner, a native of China, seeks 
admission into this country as the son of a résident merchant. The 
relationship is conceded, but the mercantile status of the father is de- 
nied. The testimony shows that the father is a member of a firm deal- 
ing in liquors, but that he spends much of his time in delivering goods 
to customers of the establishment. It is also claimed that the firm has 
not sufficient capital, or goods to justify the number of active members 
claimed. It may be said in passing that about six months before the 
date of the exclusion of the présent applicant one of his brothers was 
admitted into the country, and at that time the father's status as a 
merchant was recognized. Establishments dealing in liquor, with pro- 
hibition in sight, naturally would not want a large stock of goods 
on hand, and that phase of the case was not the determining f actor in 
the department's conclusion that the father was not a merchant within 
the meaning of the law. The décision of the commissioner contains 
the following language: 

"Admittlng the alleged father's clalm that he has $500 invested In the 
business, the work perfonned by hlm is that of a laborer, requlring no sklU 
or tralnlng, and would not seem to brlng hlm within the définition of a 'mer- 

@=»For other cases see aame toplc & KET-NUMBBR in ail Key-Numbered Digests & Indexes 



228 262 FEDERAL EEPORTEK 

chant' as one who Is engaged in buying and selllng merchandlse at a Sxed 
place of business, and performing no manual labor other than that necessary 
In the conduct ol hls business as a merchant." 

Hère we hâve the real reason for the détermination that the appli- 
cant's father is not a merchant as defined. But the firm of which the 
father is a member has a fixed place of business and is there engaged 
in buying and selling liquors and cigars. The delivery of goods sold 
by a modem mercantile establishment is just as much an essential part 
of the business as is the sale itself, and a member of the firm who 
makes the delivery is not performing manual labor not necessary in the 
conduct of his business as a merchant. It is not ail manual labor which 
disqualifies, but only such manual labor as is not necessary in the con- 
duct of the business as a merchant. I can see no différence between 
the wrapping up of the goods in the store, and the delivery of them to 
the purchaser's home. Each involves manual labor, but each is neces- 
sary to conduct of the business. 

The demurrer will therefore be overruled, and the writ will issue, 
retumable September 20, 1919, at 10 o'clock a. m. 



SANDBRSON T. BISHOP et aL 
(Circuit Court, W. D. Arkansas, Itexarkana Division. January 7, 1909.) 

1. Vendob and pubchaseb ®=>18(%) — Nbqotiations aftke expibation of op- 

tion HELD NOT TO CBEATE CONTBACT. 

Where a written option to purchase land had expired without renewal, 
furtlier negotiatlons between the parties on the basis of the option oon- 
tract, and aets which were condltional on completion of the sale, held not 
to create a contract enforceable in equity by the vendor. 

2. Specifio pebfoemance <ê=»17 — Contbact held not enfobceablk by thibd 

PEESON. 

A contract made by a thlrd person with one holding an option to pur- 
chase land, by which he agreed to joln In the purchase and pay a stated 
sum for a half interest tn the land, held not enforceable in equity by the 
vendor. 

In Equity. Suit by H. G. Sanderson against George W. Bishop, Jr., 
and Jacob L,. Neff. Decree for défendants. 

W. H. Arnold and M. E. Sanderson, both of Texarkana, Ark., for 
complainant. 

L,. A. Byrne, for défendant Bishop. 

Henry Moore, Jr., of Texarkana, Ark., for défendant Neff. 

ROGERS, District Judge. A careful examination of the record in 
this case discloses the following state of f acts : 

The complainant, on January 2, 1908, gave the défendant Bishop 
an option for the lands in controversy, and during that month Bishop 
paid complainant $1,000 therefor. The option was in writing and re- 

^=9Foi other cases see same toplc & KBT-KOMBER In ail Ker-Numbered Dlgests & Indexes 



SANDERSON V BISHOP 229 

(262 F.) 

cited the price of the lands at $25,000 cash, on certain conditions there- 
in stated. The option was to expire on March 1, 1908, and provided 
that, when Bishop elected to take the land and pay $1,000, complainant 
was, within 10 days thereafter, to furnish an abstract showing a good 
and sufficient title, under the laws of Arkansas, and to exécute deed 
therefor. It also provided that, if the purchase was made the $1,000 
already paid was to go as part of the purchase price. If the title 
should not tum eut to be good, the $1,000 was to be retumed to Bishop, 
and if it turned out to be good, and Bishop refused to purchase the 
land under the terms of the option, then Bishop was to forfeit the 
$1,000 to the complainant. Meantime, however, on January 14, 1908, 
the option by written contract was changed, so that the terms of pay- 
ment were as follows, to wit: $8,500 cash, less the $1,000 paid that 
day, and $16,500 due January 1, 1909 — and, thus modified, the op- 
tion was to stand until the Ist of March, 1908. The abstract furnished 
by complainant thereafter was not perfected, so as to show good title, 
and on the Ist of March the option expired by its terms. After March 
1, 1908, no other option terms of sale were ever offered by the com- 
plainant, but Bishop and complainant's attorney and agent continued 
to negotiate, dicker, and jockey with each other, in an effort to close 
the deal on the terms stated in the expired option. 

Meantime, and while the option was in force, Bishop had interested 
his code fendant, Neff, in the option, and induced him to agrée to buy a 
half interest in the lands for $17,500. That agreement was in writing, 
and was dated January 31, 1908, To accomplish this he induced com- 
plainant's attorney to give him a bogus option, substantially the same 
as the one he already had, except the price was stated at $35,000, in- 
stead of $25,000, as recited in the option of January 2, 1908, and the 
bogus option was antedated, so as to make it appear that it was exe- 
cuted on January 14th, the same day Bishop had paid the $1,000 on the 
option. He also induced the complainant's agent for the sale of the 
land to wire him the purchase price was $35,000. It is not left in doubt 
by the évidence that Bishop intended to use this bogus option and 
telegram to promote the sale to Neff on the basis of $35,000; whereas 
he already had an option to purchase the place at $25,000. Nor is 
there any doubt that complainant's attorney and agent both knew 
what Bishop wanted with the bogus option and telegram. Bishop 
denied having shown the bogus option to Neff until Neff had agreed 
to pay $17,500, being one-half purchase price of the land, $500 of 
which he paid in cash, and of the remaining $17,000 agreed to pay 
$8,750 on or about March 1, 1908. Bishop admits that he promised, 
before or at the time Neff paid him the $500, to show him the option 
contract which contained the terms of the proposed purchase. This he 
never did, but instead showed him the bogus option contract. 

Neff testifies Roberts did show him the bogus contract before he 
agreed to buy, and solicited him to buy on the same terms he (Bishop) 
had bought from complainant. Whatever may be the truth on this 
point, it is certain that Bishop had represented to Neff that the option 
price was $35,000, and confirmed it by the bogus contract, in which 



230 262 FEDERAL REPORTER 

price was recited as $35,000. It is also true that Neff never saw the 
option contract of January 2, 1908, or knew of its existence or its 
ternis, until after this suit was brought. After the option expired, on 
March 1, 1908, ail the negotiations had, between complainant, his 
agent, and attorney, on the one side, and Bishop and his attorney, on 
the other side, proceeded on the basis of the option contract of Janu- 
ary 2, 1908, so far as terms of payment was concemed. As soon as 
Bishop made his agreement with Neff, Bishop's attorney, Byrne, seems 
to hâve practically dropped out of sight, and Bishop relied on Neff's 
attorney, whose duties related solely to passing on the title. The at- 
torney suggested many defects to complainant, and his agent and at- 
torney endeavored to comply, and make the corrections, but never to 
the satisfaction of Neff's attorney, who also represented Bishop as 
to the title. 

It finally came to this: That Bishop was willing to close the deal, 
but Neff was not satisfied with the title. Bishop, to use his own lan- 
guage, could not "swing the deal" without Neff's aid; he could not 
get Neff's aid until Neff's attorney was satisfied as to the title ; com- 
plainant could not satisfy Neff's attorney as to the title, and hence 
Bishop would not close the deal, mainly because, presumably, he could 
not raise the cash payment. Bishop's willingness to close the deal is 
easily explained, because, under the arrangement into which Neff 
had been inveigled if the deal went through he (Bishop) had only to 
pay, in addition to the $500 he had already paid, $7,000 (and that not 
due until January 1, 1909), and become half owner of a plantation 
which cost $25,000, while Neff would be out $17,500 for a half own- 
ership in the same plantation. Naturally Bishop could afford to take 
chances on titles, which Neff could not. While the matter stood in 
this shape, the parties wrangling over the title, the overflow came, 
and the place was greatly damaged, and the crop lost. Immediately 
ail negotiations ceased, and the suit followed. 

[1,2] It is clear that Neff was never bound to complainant in any 
respect, and had no contract with him ; his contract was with Bishop, 
and was conditional. The conditions were never performed, and Neff 
was not bound to Bishop. No cross-bill would, therefore, lie in this 
case on the state of facts disclosed ; and hence the application to file 
it is denied. Neff not being under any contractual obUgations to com- 
plainant, as to him the original bill would not lie. Bishop having fail- 
ed on account of defects in the title to close the option before it expired, 
and the option never having been renewed between him and complain- 
ant, none existed when the overflow came and the negotiations ceased ; 
but it may be said, if the option had been in existence and complainant 
had furnished an abstract showing a perfect title, so that Bishop be- 
came obligated to buy the land, by the very terms of the option con- 
tract of Janiiary 2, 1908 (and there never was any other), if Bishop 
refused to close the option no penalty resulted, except the loss of his 
$1,000 which had been paid upon the option. 

Much is said and some reliance seems to be placed on the fact that 
Bishop had complainant make a deed to himself and Neff, and that 
complainant's brother had entered into a written contract, and had 



SANDEESON V. BISHOP 231 

(262 F.) 

executed a note for $4,000 to pay the rent of the plantation for the 
year 1908; the note being made payable to Bishop and Nefï. Those 
matters are unimportant. No doubt Bishop wanted to use the rent 
note and contract as an additional lever to influence Nefï to buy, and 
he wanted the deed ready, so that, if Neff did buy, he could close the 
deal without delay, and thereby avoid any further risk of Neff 's dis- 
covering that he had been beaten out of $10,000 in the deal with Bishop ; 
but thèse circumstances were ail taken conditionally, and the parties 
could not hâve understood otherwise, and their actions throughout 
were upon that theory. They were taken while the option was pend- 
ing, and if the option f ell they f ell with it necessarily ; otherwise, Bish- 
op and Neff would be getting the rent on land they did not own, and 
had not even agreed to purchase. It is unprofitable to pursue that 
branch of the case any further. 

The principles of law governing options are stated by the Eighth 
Circuit Court of Appeals in the case of James et al. v. Darby, 100 
Fed. 224, 40 C. C. A. 341, and are as applicable to the case at bar as 
that case. 

The bill will be dismissed as to both défendants, and the attachment 
discharged, at the costs of complainant 



232 2G2 FEDERAL REPORTER 



ADAMS EXPRESS CO. v. LANSBURGH & BRO. 

(Court of Appeala of District of Columbla. Submltted November 4, 1919. 
Decided January 5, 1920.) 

No. 3263. 

Masteb and servant <S=»305 — Helpeb moving automobiij: teuck contbaet 
to instructions einoaoed in scope of employment. 

A helper on defendant's automobile truck, standing near plaintifE's 
place of business during the driver's temporary absence, held engagea in 
the scope of his employment wben he moved the truck at a thlrd party's 
request, so as to render défendant liable for the négligent knocking over 
of a lamp post, whlch broke plaintifs window, although défendant had 
explicitly instructed the helper not to drive the truck. 

Appeal f rom the Suprême Court of the District of Columbia. 

Action by Lansburgh & Brc, a corporation, to the use of the Home 
Plate Glass Insurance Company, against the Adams Express Company. 
Judgment for plaintifï, and défendant appeals. Affirmed. 

M. W. King and 1,. Koenigsberger, both of Washington, D. C. (Eu- 
gène Young and Morris Simon, both of Washington, D. C, on the 
brief), for appellant. 

W. H. HoUoway, of Washington, D. C, for appellee. 

ROBB, Associate Justice. Appeal from a judgment in the Suprême 
Court of the District for the plaintiff, appellee hère, for damages re- 
salting from the breaking of a plate glass window by the négligence of 
an employé of the défendant, appellant hère, in operating defendant's 
automobile. 

The case was tried by the court without a jury upon an agreed state- 
ment of facts to the following effect: An electric automobile truck, 
belonging to and in use by the défendant company in the conduct of 
its express business, was standing at the curb about 120 f eet from plain- 
tiff's place of business in this city. The driver of the truck had tem- 
porarily left it "to make certain deliveries." Prior to leaving he had 
removed the starting key and placed it under the front seat of the 
truck. During the absence of the driver a third person requested the 
"helper" to move the truck, that the person in question might gain en- 
trance to a point opposite plaintifï's place of business, which he knew 
to be the next stopping place on the route. When that place was reach- 
ed, a lamp post was knocked over and against plaintifï's plate glass win- 
dow, through the négligent handling of the truck. At the time of the 
accident the helper was in the employ of the défendant company, and 
wore a cap with "Adams Express Company" on it, "but had been ex- 
pressly forbidden to drive or operate machines of said express com- 
pany." Thèse instructions were given him personally, numerous signs 
and notices were posted at defendant's warehouse to the same eflfect, 
and the rule books fumished ail employés forbade the driving or op- 
erating of machines by helpers. This helper had not previously served 
on this particular route, but had served as helper with other drivers 
on trucks owned and operated by the défendant company. Just what 
were the duties of a helper does not appear. 

<g=7FoT otber cases ses same topic & KEiV-NUMBER In ail Ker-Numbered Dlgests ft Indexes 



ADAMS EXPRESS CO. V. LANSBURGH & BEO. 233 

(262 F.) 

The question for détermination is whether, under the admitted facts, 
it may be said that the act of the helper was within the gênerai scope 
of his employment. In Axman v. Washington Gaslight Co., 38 App. 
D. C. 150, the décisions upon this question were quite carefully re- 
viewed, and the conclusion reached that the true test in measuring the 
principal's responsibility is whether the act of the agent was done in 
the prosecution of the business either impliedly or expressly intrusted 
to the agent by the principal. Public policy requires that the principal 
be held liable for what his agent does or omits doing in conducting 
the business of the principal, for the principal has voluntarily substi- 
tuted for his personal management and supervision that of the agent. 
It would be difiicult, if not impossible, precisely to define the meaning 
of "scope of employment," for the character of the emplojrment and 
the nature of the wrongful act in the given case must be considered. 
It has been held that expressions équivalent to "scope of employment" 
are : "Une of duty," Isaacs v. Third Ave. R. Co., 47 N. Y. 122, 7 
Am. Rep. 418; "in the employer's service," Adams v. Cost, 62 Md. 
264, 50 Am. Rep. 211, and Slater v. Advance Thresher Co., 97 Minn. 
305, 107 N. W. 133, 5 L. R. A. (N. S.) 598; "course of service," Eph- 
land v. Mo. Pac. R. Co., 137 Mo. 187, 37 S. W. 820, 38 S. W. 926, 

35 L. R. A. 107, 59 Am. St. Rep. 498 ; "transaction of the employer's 
business," Cobb v. Simon, 119 Wis. 597, 97 N. W. 276, 100 Am. St. 
Rep. 909; "furtherance of the employer's interests," Paulton v. Keith, 
23 R. I. 164, 49 Atl. 635, 54 L. R. A. 670, 91 Am. St. Rep. 624, and 
Smith V. Causey, 28 Ala. 655, 65 Am. Dec. 372; "protection of em- 
ployer's property," West Jersey R. Co. v. Welsh, 62 N. J. Law, 655, 
42 Atl. 736, 72 Am. St. Rep. 659. And there is substantial unanimity 
of opinion that the principal may be held accountable for the wrong- 
ful act of the agent within the scope of his employment, although for- 
bidden by the principal. Axman v. Washington Gaslight Co., 38 App. 
D. C. 150; Palmer v. St. Albans, 60 Vt. 427, 13 Atl. 569, 6 Am. St. 
Rep. 125 ; McCann v. Consolidated Traction Co., 59 N. J. Law, 481, 

36 Atl. 888, 38 TU. R. A. 236; Consolidated Ice Mach. Co. v. Keifer, 
134 m. 481, 25 N. E. 799, 10 L. R. A. 696, 23 Am. St. Rep. 688; Engel 
V. Smith, 82 Mich. 1, 46 N. W. 21, 21 Am. St. Rep. 549; McClung v. 
Dearbome, 134 Pa. 395, 19 Atl. 698, 8 L. R. A. 204, 19 Am. St. Rep. 
708 ; Moses v. Mathews, 95 Neb. 672, 146 N. W. 920, Ann. Cas. 1915A, 
698. In Duggins v. Watson, 15 Ark. 118, 60 Am. Dec. 560, the court 
pertinently observed that, if disobedience of instructions by an agent 
will exonerate the principal, the nde of respondeat superior, designed 
for the protection of innocent third persons, virtually will be abrogated. 

A helper, according to the Century Dictionary, is : 

"One who helps, aids or assists; speciflcally, one who is employed as as- 
sistant to another In doing some kind of work." 

It results, therefore, that the helper in the présent instance was the 
assistant of the driver in delivering and coUecting packages for the de- 
fendant. The truck was a necessary instrument in carrying eut that 
purpose, and it is a reasonable inference that, when the driver left the 
truck to make a delivery, the helper was left in charge. At the moment 
he was the sole représentative of the défendant, and, when he under- 



234 262 FEDERAL KEPOETBR 

took to drive the truck to the next stopping place, he certainly was fur- 
thering the business of the principal in the particular work in which 
he was engaged as helper. He represented the principal and no one 
else. True, his spécifie instructions did not contemplate such an act ; but 
it is equally true that the act was within the gênerai scope of his em- 
ployment. Défendant attaches importance to the fact that the key 
was removed by the driver and placed under the seat of the truck. It 
is quite apparent, however, that this précaution was taken against 
strangers, and not against the helper, who had knowledge of what had 
been donc, as evidenced by his act in removing the key. Indeed, this 
circumstance is not at ail helpf ul to the défendant, for, had the driver 
really intended to prevent the opération of the truck by his helper, he 
would hâve put the key in his pocket, instead of leaving it within easy 
reach of the helper. If the policy of the défendant company be not to 
permit helpers in any circumstances to drive its trucks, it should em- 
ploy helpers who will obey instructions. Certainly the public ought 
not to stdïer the conséquences of disobedience, where, as hère, the help- 
er or assistant is acting within the gênerai scope of his employment and 
in direct furtherance of the business of the principal. 

The judgment is affirmed, with costs. 

Affirmed. 



PASSAIO NAT. BANK et al. v. OOMMBRCIAL NAT. BANK et aL 

(Court of Appeals ot District of Columbla. Submitted October 13, 1»1», 

Decided November 3, 1919.) 

No. 3241. 

CaBTCEIXATION of INBTBtmENTS ®=»15— ADEQUATE BSMBDT AT I»AW FOB MIS- 
BBFBESENTATIONS TO PUBOHASKBS OF SKCtTEITIKS. 

In View of Judlclal Code, % 267 (Oomp. St. S 1244), prohiblting équitable 
sults where légal remedy la adéquate, a suit In equlty to resdnd the 
purchase of securities . and recover the conrfderation paid cannot be 
maintained against défendants, who were not the vendors, but were al- 
leged to hâve made false représentations regardlng the value of the secu- 
rities, slnce a damage action at law would afford adéquate remedy for 
any false représentations made by them, and they could not respond to a 
decree of rescission. 

Appeal from the Suprême Court of the District of Columbia. 

Bill by the Passaic National Bank, the Rutherford National Bank, 
the Savings Investment & Trust Company, and others against the 
Commercial National Bank, Tucker K. Sands, and others. From a 
decree dismissing the bill as to the named défendants, plaintiiïs ap- 
peal. Affirmed. 

C. F. Carusi and Hayden Johnson, both of Washington, D. C, for 
appellants. 

Thos. C. Bradley, W. H. Ellis, C. B. EUis, and A. H. Ferguson, ail 
of Washington, D. C, for appellees, 

VAN ORSDEL,, Associate Justice. Appellants, plaintiffs below, 
filed a bill in equity in the Suprême Court of the District of Columbia, 

©ssFor other cases see same toplo 4 KET-NUMBBR In ail Key-Numbered Dlgests & Indexes 



PASSAIC NAT. BANK V. COMSIEKCIAL NAT. BANK 235 

(262 F.i 

seekîng a rescission of the purchase of certain securities, amounting to 
$95,000 and a money decree for the amount invested therein, with in- 
terest and costs. The facts, as alleged in the bill, are substantially as 
f ollows : 

In 1910 a firm known as F. Mertens' Sons were the owners of a 
large amount of mountain lands in the state of Maryland, from which 
timber had been eut. This firm conceived the idea of converting the 
land into a vast orchard scheme. To this end it was subdivided into 
10-acre tracts. The United States Trust Company, of Washington, 
was selected as trustée to hold title to the property and to act as the 
agency through which payments were to be made by purchasers of 
thèse orchard tracts. Under his contract, the purchaser agreed to 
pay a stated cash payment, usually 10 per cent, of the purchase price, 
with notes maturing from month to month for the balance, payable to 
the trust Company as trustée, and when the purchase price had been 
paid in full, usually in 5 years, the purchaser was to receive a convey- 
ance from the trust company for a commercial orchard. In other 
words, the promoters agreed to plant the land in fruit trees, cultivate 
the same, and, according to the prospectus, turn over to the pur- 
chaser a bearing orchard at the time of the passing of title. 

Large munbers of persons purchased thèse 10-acre tracts at priées 
averaging about $2,000, in some instances paying as high as $2,500. 
The deferred purchase-money notes were indorsed by the trust com- 
pany without recourse, and tumed over to Mertens' Sons, who rede- 
livered large numbers of them to the trust company as collatéral se- 
curity for sums of money advanced to the firm from time to time. 

In July, 1914, the United States Trust Company went into the hands 
of a receiver, and défendant Tucker K. Sands was appointed receiver. 
The défendant Continental Trust Company was then substituted as 
trustée, and took over the trust from the United States Trust Com- 
pany, paying $145,000, the amount of the indebtedness due from Mer- 
tens' Sons, receiving the collatéral in the form of thousands of tract- 
purchase deferred payment notes, took over the title to the real estate, 
and proceeded to exécute the trust in substantially the same terms as it 
had been carried on by the United States Trust Company. With the 
receivership and the transfer of the affairs to the Continental Trust 
Company, défendants Bâtes Warren and Charles W. Warden, who 
had been prominently connected with the affairs of the United States 
Trust Company, became ofHcers and directors of the Continental Trust 
Company. 

In the early part of 1916, the indebtedness of P. Mertens' Sons to the 
Continental 'Trust Company was about $250,000, and it was also large- 
ly indebted to the défendant Commercial National Bank. By this time 
the sale of orchard tracts had aknost ceased, and Mertens' Sons had 
become hopelessly insolvent. They had borrowed large simis of money 
from many banks and trust companies throughout the country, largely 
based upon the commercial paper which had been indorsed over to 
them by the United States Trtist Company, and later by its successor 
as trustée, the Continental Trust Company. In March, 1916, the 
Continental Trust Company, acting through Bâtes Warren, its vice 



236 262 FEDERAL REPORTER 

président, the Commercial National Bank, actîng through Tucker K. 
Sands, its vice président, and the firm of F. Mertens' Sons, acting 
through Frederick Mertens, one of its members, conceived a plan, the 
object of which was the réduction of the indebtedness of Mertens' 
Sons to the two défendant banks, as well as the averting of the financial 
crisis in the affairs of Mertens' Sons, which would resuit in the de- 
struction of the collatéral represented by the tract purchasers' notes. 
The plan conceived was to raise $1,000,000 on securities on 398 tracts 
of land, worth not more than $27,400. The 398 tracts were conv^ed 
to the Continental Trust Company by Frederick Mertens and John 
Mitchell, Jr., who was a partner with Mertens in the apple orchard 
Project. The deeds on their faces purported to convey 500 tracts. 
The 102 tracts additional attempted to be conveyed were not owned 
by either Frederick Mertens or John Mitchell, Jr., nor hâve they ever 
had any interest in said tracts. 

In carrying out this scheme, on the llth of March, 1916, the Green 
Ridge Valley Orchards Company was incorporated, with a capital stock 
of $500,000, divided into shares of the par value of $100 each, by Bâtes 
Warren, vice président of the Continental Trust Company, Tucker K. 
Sands, vice président of the Commercial National BaiJc, Frederick 
Mertens, Otto G. Raymond, and Gardner L,. Boothe. At a meeting of 
the incorporators held on March 16, 1916, at lOo'clock a. m., in Alex- 
andria, Va., a proposition was submitted on behalf of Frederick Mer- 
tens and John Mitchell, Jr., as f ollows : 

"To sell to the sald company, to enable It to carry out the objects for which 
It was incorporated, tlie said 500 orchard tracts for $500,000 of the fuUy pald 
and nonassessable stock of this corporation and for a note of thls company 
for the sum of $500,000, payable on demand." 

The minutes of the meetmg f urther stated : 

"Whereas, the Incorporators believe the aforementioned ofCer to be a rea- 
sonable one, and the priée for sald property to be fair and reasonable ; Now, 
therefore, be It resolved that the directors of thls company be, and they are 
hereby, authorized to acqulre from the said Frederick Mertens and John 
Mitchell, Jr., or their assigna, at a priée not in excess of that mentioned, the 
aforesald 500 orchard tracta" 

On the same day, at 5 :30 p. m., the directors of the Green Valley 
Orchards Company held a meeting in the Commercial National Bank 
Building, Washington, D. C, and accepted the proposition of Mertens 
and Mitchell by a resolution which recited that each tract contained 
approximately 10 acres and each tract was about one-half planted in 
apple trees in good condition. 

Pursuant to the prearranged plan, the Continental Trust Company 
conveyed the 500 tracts of land to the Green Ridge Valley Orchards 
Company, by deed in which the trust company covenanted that the 
property was unincumbered. Upon 398 of the tracts conveyed, how- 
ever, there existed prior mortgages and liens, and the title to the re- 
maining 102 tracts was not owned by Mertens and Mitchell. None of 
the property conveyed, except about 150 tracts, was under cultivation 
and planted with apple trees. 



PASSAIC NAT. BANK V. COIVUIEKCIAL NAT. BANK 237 

C262 P.3 

It is further averred that on the 17th day of March, the day fol- 
lowing the meetings at Alexandria and the Commercial National Bank, 
another meeting of the stockholders was held at the principal office in 
Alexandria, Va., and the f ollowing resolution adopted : 

"Be it resolved, that the Green Bidge Valley Orchards Company, Incorpo- 
rated, shall issue in the manner provlded by law $500,000 of flrst-mortgage 
coupon bonds, bearing date on the 20th day of March, 1916, to be payable 
on or before flve years after date, with interest thereon at the rate of 6 per 
cent per annum, payable semiannually, said bonds to be secured by mortgage 
or deed of trust on ail the property of the Green Ridge Valley Orchards Com- 
pany, Incorporated, said mortgage or deed of trust to be substantially in the 
form submitted and read at this meeting." 

Immediately following this meeting, John Mitchell, Jr., proceeded 
to New York and attempted to interest plaintifïs McBee, Jones & Co. 
in an effort to market the bonds. He was inf ormed by McBee, Jones 
& Co. that conditions were unfavorable for the marketing of bonds of 
that character, but were favorable to the marketing of short-term 
notes well coUateraled. Accordingly, on April 18, 1916, the stockhold- 
ers, who were, in fact, the directors, of the Green Ridge Valley Or- 
chards Company, held a meeting at the office of the corporation, and 
adopted the following resolution: 

"Whereas, it Is deemed for the best interesta of the company that the Com- 
pany issue and sell its collatéral trust notes for the aggregate principal amount 
of $100,000, due in four, six, eight, and twelve months, and that said notes 
1)6 secured by a pledge of $120,000, face amount, of the company's flrst mort- 
gage 6 per cent, flve-year gold bonda in a form of collatéral trust agreement 
to be executed between this company and the EJmpire Trust Company." 

In accordanc.e with this resolution, the directors and officers of the 
company were authorized to and did issue $100,000 collatéral trust 
gold notes of the company, indorsed by Mertens' Sons, pledging as 
collatéral security therefor $120,000 face amount of the mortgage 
bonds under an agreement between the Green Ridge Company and 
the Empire Trust Company. 

About October 1, 1916, Mertens' Sons being financially embar- 
rassed, organized a corporation known as F. Mertens' Sons Corpora- 
tion, of which the président was défendant Bâtes Warren and the 
treasurer was Charles W. Warden, both vice présidents of the Conti- 
nental Trust Company. To this corporation Mertens' Sons undertook 
to convey ail their property in trust for their creditors. Shortly there- 
after an involuntary pétition for bankruptcy was filed against Mertens' 
Sons, and they were adjudged bankrupt, and the deed of conveyance 
to the F. Mertens' Sons Corporation was adjudged in the United States 
District Court for the District of Maryland to be null and void, on the 
ground that at the time of its exécution F. Mertens' Sons were insol- 
vent. 

On May 17, 1916, McBee, Jones & Co. telegraphed to F. Mertens' 
Sons as follows: 

"Hâve Continental Trust and Commercial National wlre us to-day what 
they regard as safe sale value for orehard tracts securing bonds Green Ridge 
Valley Orchards Co." 



238 2C2 FEDERAL REPORTER 

To which, on the same day, the Continental Trust Company an- 
swered by telegraph as f oUows : 

"Eeplying to your Inqulry respectlng value of Indlvldual orchard tracts 
planted to growing apple trees on Green Eidge Valley Orchards and seeuring 
tlieir flre year six per cent, bonds, we thlnk eighteen hundred to two thou- 
sand dollars a conservative valuatlon. The tracts are being well cared for 
and growing In value." 

On the same day a letter was sent from the Commercial National 
Bank, signed by Tucker K. Sands, cashier, as follows: 

"Answering your inquiry as to my opinion of the sale value of orchard 
tracts owned by Green Ridge Orchards Company and covered by bonds, I 
should estimate that the valuation of $2,000 for each lO-acre tract would be 
a fair valuatlon. I understand that prevlous sales of the tracts was at |2,500." 

Upon receipt of this information, McBee, Jones & Co. sold and deliv- 
ered in varions amounts to the plaintiffs in this action $95,000 of the 
face value of the short time notes. Out of the proceeds of sales of 
said notes, $33,750 were remitted for the account of the Continental 
Trust Company, $9,000 to the Continental Trust Company for the 
account of Mertens' Sons, and, at the request of Mertens' Sons, $45,000 
of the unsold notes were exchanged for $45,000 worth of the bonds 
of the Midland Railway Company, which bonds were forwarded to 
the Continental Trust Company for the account of Mertens' Sons, 
and were held by the Continental Trust Company and the Commercial 
National Bank as security for loans made by them to Mertens' Sons. It 
is alleged at length in the bill that the Continental Trust Company and 
the Commercial National Bank knew, or were chargeable in law with 
knowledge, of thèse varions transactions. 

Mertens' Sons, on the 28th day of March, 1917, were adjudged bank- 
rupt, and the estâtes of the firm and the individual members thereof 
are being administered by a trustée in bankruptcy. It is alleged that 
from the best information ohtainable the bankrupts' estâtes will pay 
to the creditors a dividend of not exceeding 5 per cent, on their claims. 
In June, 1917, by the voluntary action of the stockholders, officers, 
and directors, the Green Ridge Valley Orchards Company was adjudged 
a bankrupt, and its only asset consists of the 398 tracts of land, of a 
value of $27,400, incumbered by the mortgage given to the Continental 
Trust Company as trustée, to secure the issue of the $500,000 in bonds, 
which are held, with the exception of the $120,000 face value on de- 
posit with the Empire Trust Company, as collatéral security by creditors 
of Mertens' Sons for varions obligations to them. 

In the bill it is prayed : 

"That the contract of sale and purchase of the gold notes In the MU men- 
tloned be rescinded, for the reasons In the blU set forth, and that the plain- 
tiffs, upon the retum to the défendants of the notes held by the plaintiffs, 
recover of the défendants the money and securlties parted with to the de- 
fendants In the proportion In which the plaintiffs respectlvely are entitled, 
together with Interest and costs, and for sueh other and further relief as 
may be équitable and Just." 

The défendant Tucker K. Sands moved to dismiss the bill of com- 
plaint on the ground, among others : 



PASSAIC NAT. BANK V. COMMERCIAL NAT. BANK 239 

«268 F.y 
"That the blU does not state sueh a case as entitles the plalntiffs to any 
relief against tàls défendant, because they bave a plain, adéquate, and com- 
plète remedy at law." 

The défendant Commercial National Bank also moved to dismiss 
the bill on the ground that — 

"Said blll of camplalnt is bad In substance, and does not contaln allégations 
of fact such as would, If true, entitle tbe plalntiffs, as against this défendant, 
to relief in this court." 

On hearing, the motion to dismiss as to thèse défendants was sus- 
tained, from which decree the case cornes hère on appeal. 

The court below dismissed the bill as to défendants Sands and the 
Commercial National Bank on the ground that plaintifïs, as against 
thèse défendants, hâve a plain, adéquate, and complète remedy at 
law. The Judicial Code of the United States (section 267 [Comp. St. § 
1244]) provides that — 

"Suits in equity shall not be snstained in any court of the United States in 
any case where a plain, adéquate, and complète remedy may be had at law." 

The case hère attempted to be made against thèse défendants is 
based upon the alleged false représentations of défendant Sands in his 
communication of May 17, 1916, to the brokers, McBee, Jones & Co., as 
to the value of the orchard tracts. As the resuit of thèse représenta- 
tions, plaintifïs were induced among other things, to exchange the $45,- 
000 of railroad bonds for a portion of the notes. By the averments of 
the bill, a portion of the railroad bonds was turned over to the Com- 
mercial National Bank as security for an indebtedness of Mertens' 
Sons to the bank. The only ground for équitable jurisdiction is found 
in the prayer for rescission. It is clear that only the vendor, the Green 
Ridge Company, the maker of the notes, and Mertens' Sons, the in- 
dorsers, through whom they came into the hands of the brokers for 
sale, could be compelled by équitable process to rescind. Défendants 
Sands and the Commercial Bank are not vendors nor indorsers of the 
notes. 

The rule as to équitable jurisdiction in cases of this sort is clearly 
stated by Judge Lurton in Hindman v. First National Bank of Louis- 
ville, 112 Fed. 931, 50 C. C. A. 623, 57 L. R. A. 108, as follows: 

"One who bas been induced by false représentations to buy property bas 
open to him no less than three remédies. He may rescind and sue at law 
for tbe considération, he may bring an équitable suit for rescission and obtain 
full relief, or be may retaln what he has received and bring his action for 
fraud and deceit. The flrst two klnds of relief lie, as is most évident, only 
against the vendor. The thlrd wni lie against elther the vendor or any third 
ïterson through whose false représentations, directly made, the plaintlff has 
sustained damages." 

Défendants, not being parties to the contract resulting in the sale of 
the notes, clearly are not in position to respond to a decree requiring 
rescission, and Mertens' Sons and the Green Ridge Valley Orchards 
Company, the only persons against whom the action for rescission 
would lie, are not made parties défendant. If they were before the 



24:0 262 FEDERAL REPOETEK 

court, and rescission could be had, défendant Commercial National 
Bank, if liable, a point not hère decided, could be retained as a de- 
fendant to respond to the extent of tuming over the railroad bonds 
as prayed for in the bill, as one of the results to be obtained from re- 
scission. It is clear that the inability of the plaintififs to obtain rescis- 
sion through lack of proper parties défendant, deprives plaintiffs of 
any means of requiring the bank to respond by turning over the bonds. 
Hence, so far as défendants Sands and the Commercial National Bank 
are concemed, the only liability left would be that growing out of the 
alleged false représentations as to the value of the orchard tracts, 
which, it is averred, induced plaintiffs to invest in the notes. For this 
there is an adéquate remedy at law by an action sounding in tort for 
damages for deceit. 

The decree is afiirmed, with costs. 

Afïirmed. 



KANSAS CITT SOUTHERN EY. CO. V. MARTIN 241 

(262 F.) 

KANSAS CITT SOUTHERN RY. CO. y. MARTIN. 

(Circuit Court of Appeals, Fiftli Circuit. January 6, 1920.) 

No. 3450. 

1. Commerce <@=27(8) — Railway employé unloadinq beidge timbers em- 

ploted in "interstate commerce." 

A rallroad employé, engaged, when injured, in work on the ground un- 
loadlng timbers to be used by him and othors In the reconstruction or 
repair of a bridge, constltutlng part of a railroad in use as an instrumen- 
tality of Interstate commerce, held employed in "Interstate commerce" 
within Bmployers' Liabillty Acts of April 22, 1908, and April 5, 1910 
(Comp. St S§ 1010, 8657-8665). 

[Ed. Note. — For other définitions, see Words and Phrases, ITlrst and 
Second Séries, Interstate Commerce.] 

2. Release ©=58(3) — Vaxiditt question for juet. 

In an action by a servant for personal injury, where défendant pleaded 
a release in bar, the issue made by a reply, alleging that plaintiff was 
induced to exécute the release by fraudulent représentations of defendant's 
agent, and that on leaming their falsity he retumed the check received, 
held properly submitted to the jury with the other issues. 
8. Masteb and servant '®=»216(5) — Risk of injurt from négligence of co- 
employé of interstate carrier not assttmed. 

An interstate carrler's employé, Injured by ties falling from a flat car, 
caused by the négligence of a ooemployé, held not to bave assumed the 
risk. 

In Error to the District Court of the United States for the Eastern 
District of Texas ; George W. Jack, Judge. 

Action at law by M. Martin against the Kansas City Southern Rail- 
way Company. Judgment for plaintifï, and défendant brings error. 
Affirmed. 

John J. King and W. L. Estes, both of Texarkana, Tex., for plain- 
tiff in error. 

J. Q. Mahafïey, of Texarkana, Tex., and S. P. Jones, of Marshall, 
Tex. (Mahaffey, Keeney & Dalby, of Texarkana, Tex., on the brief), 
for défendant in error. 

Before WALKER, Circuit Judge, and FOSTER and GRUBB, Dis- 
trict Judges. 

WALKER, Circuit Judge. The défendant in error (who will be re- 
ferred to as tihe plaintiff), a citizen of the state of Texas, brought this 
suit under the fédéral Employers' Liability Act (35 Stat. 65 ; 36 Stat. 
291 [Comp. St. §§ 1010, 8657-8665]), in the District Court for the 
Eastern District of Texas against the plaintiff in error (which will 
be referred to as the défendant), a Missouri corporation, having its 
principal place of business in Kansas City, in that state. The question 
of the court's jurisdiction of the suit, which was brought in a district 
not that of the résidence of either the plaintiff or the défendant, was 
duly raised; the ground on which the jurisdiction was denied being 
that the plaintiff was not engaged in interstate commerce when he re- 
ceived the injury complained of. 

®=For other cases see same topic & KEY-NUMBER in aH Key-Numbered DIgests & Indexes 
262 P.— 16 



242 262 FEDERAL REPORTER 

[1] The plaintiff was a member of a bridge gang employed in 
maintaining and repairing bridges constituting part of Unes of railway 
in use by the défendant in interstate commerce. When he was in- 
jured, he, as a member of such gang, was assisting in unloading tim- 
bers and cross-ties from a car at a point near a bridge on the defend- 
ant's line of railway over the Calcasieu river, near Lake Charles, La. ; 
the purpose being to use the timbers and ties so placed in the recon- 
struction or repair of that bridge as soon as the required material 
could be assembled, without causing an interruption of the use of the 
bridge in interstate commerce. It is settled that the repair of bridges 
or other structures constituting part of a railway in use as an instru- 
mentality of interstate commerce is so closely related to such commerce 
as to be in légal contemplation a part of it, that a railway employé en- 
gaged in such work is to be regarded as engaged in interstate com- 
merce, and that preparatory steps taken with the purpose of furthering 
the actual work of repair or reconstruction constitute a part of such 
commerce within the meaning of the act. Pederson v. Delaware, 
Lackawanna & Western R. R. Co., 229 U. S. 146, 33 Sup. Ct. 648, 
57 L. Ed. 1125, Ann. Cas. 1914C, 153; Southern Railway Co. v. 
Puckett, 244 U. S. 571, 37 Sup. Ct. 703, 61 L. Ed. 1321, Ann. Cas. 
1918B, 69; Louisville & Nashville R. R. Co., v. Parker, 242 U. S. 
13, 37 Sup. Ct. 4, 61 L. Ed. 119; Philadelphia, Baltimore & Washing- 
ton R. R. Co. V. Smith, 250 U. S. 101, 39 Sup. Ct. 396, 63 L. Ed. — . 

The work in which the plaintiff was engaged when he was hurt was 
not more remote from the actual making of the repairs being pre- 
pared for than the work which was held to be a part of interstate 
commerce in the cases of Pederson v. Delaware, Lackawanna & West- 
ern R. R. Co., supra, and Philadelphia, Baltimore & Washington R. R. 
Co. V. Smith, supra. We are of opinion that the doing of that work is 
to be considered as a part of what was required to efifect the repair 
of the bridge near which it was being donc, and that the plaintiff in 
taking part in that work was engaged in interstate commerce. Un- 
loading the ties at a place near enough to the bridge for them to be 
conveniently available for the use to which they were destined was a 
part of the task of getting the bridge repaired. That task was not 
merely anticipated, but had been entered upon when plaintiff was hurt. 

[2] The défendant set up in bar of the action a written release, al- 
kged to hâve been executed by the plaintiff for a valuable considéra- 
tion. The plaintiff replied to the effect that he was induced to exécute 
the release by described fraudulent représentations made to him by the 
defendant's agent, and that plaintiff, promptly after ascertaining the 
falsity of such représentations, returned the check given to him when 
the release was executed. The court overruled a request of the de- 
fendant, made at the opening of the trial, that the issue so raised be 
heard and determined, on the equity side of the court, prior to the trial 
of the other issues involved ; and the court, over the defendant's ob- 
jection, submitted that issue to the jury with the other issues so sub- 
mitted. 

There is a conflict of décisions on the question whether such an is- 
sue, raised as it was in the instant case, is one at law and triable by a 



KANSAS CITY SOUTHEEN RY. CO. V. MARTIN 243 

(262 F.) 

jury. The view prevailing in some courts is that the issue is not one 
at law, unless the fraud charged touches the exécution of the question- 
ed instrument, so as to be provable under a plea or replication of non 
est factum. In the case of Union Pacific Railway Co. v. Harris, 158 
U. S. 326, 15 Sup. Ct. 843, 39 L. Ed. 1003, such an issue was treated 
as one triable by a jury in an action at law. That was a suit for Per- 
sonal injuries, in which a release was pleaded as a bar to the action. 
The plaintiflf replied that the release was obtained through misrep- 
resentations and fraud, and that the plaintiff, while he was ill, signed 
the release in ignorance of its contents. The court held that there 
was no error in the instructions given in submitting those issues to the 
jury, and affirmed the judgment rendered for the plaintiff. Though 
fraud other than that touching the exécution of the release was set up 
in the pleading attacking its validity, it was decided that there was no 
error in the action of the court in submitting to the jury the issues 
raised. 

Upon a full considération it was decided by the Circuit Court of 
Appeals for the Sixth Circuit, in the case of Wagner v. National 
Ivife Ins. Co., 90 Fed. 395, 33 C. C. A. 121, Circuit Judge Taft deliver- 
ing the opinion, that it is proper in a suit at law for the plaintiff to meet 
a plea of release by a replication that the release was obtained by fraud, 
whether the fraud touches the exécution, or consists in misrepresenta- 
tion as to material facts inducing exécution. Another well-considered 
case to the same effect is American Sign Co. v. Electro Lens Sign Co. 
(D. C.) 211 Fed. 196. What the plaintiff does, when he makes such a 
reply to a plea setting up a release, amounts to his saying that, because 
of the fraudulent misrepresentations alleged, the défendant is without 
right to maintain the défense based upon the release set up. A con- 
tract so procured is no more binding at law than in equity. It is com- 
pétent for a court of law to décide that a transaction vitiated by fraud 
is not effective to confer the asserted right based upon it. Buzard v. 
Houston, 119 U. S. 347, 7 Sup. Ct. 249, 30 L. Ed. 451 ; Equitable Life 
Assur. Soc. V. Brown, 213 U. S. 25, 29 Sup. Ct. 404, 53 L. Ed. 682. 

The sustaining of a replication such as the one in question does not 
require the giving of any équitable remedy or the application of any 
peculiarly équitable doctrine. The resuit is to sustain, on a ground 
cognizable in a court of law, a déniai of the defendant's asserted right 
to maintain a défense based upon an instrument which is unenforce- 
able because the plaintiff was led into making it by fraudulent mis- 
representations. There seems to be no necessity of resorting to a court 
of equity to prevent the enforcement, by action or by défense, of an un- 
sealed instrument procured by fraud. The cancellation and surrender 
of such an instrument are not necessary to prevent it being availed 
of by a party claiming under it. We are of opinion that reason and 
authority support the conclusion that the issue raised by the reply to 
the plea setting up the release was properly submitted to the jury. 

It is insisted that there was no évidence to support a finding that 
the release was procured by fraud. The évidence without dispute 
showed that the plaintiff was seriously injured. While he was still 
in the hospital undergoing treatment, he was approached by W. C. 



214 262 FEDERAL REPOETEB 

Rochelle, the defendant's claim agent, on the subject of a settlement of 
the claim based upon the injury. There were considérable negotia- 
tions ; the plaintiff demanding the payment of more than was offered, 
claiming that he was permanently disabled, "that he was knocked ont, 
that his bridge building was over," and Rochelle insisting that plain- 
tiiï would ultimately make a complète recovery and be able to do 
the same work he was doing before. While matters were in this sit- 
uation the plaintiff consented to be examined by three physicians, nam- 
ed and employed by Rochelle. The examinations were made; the 
physicians reporting to Rochelle, not to the plaintiff. There was évi- 
dence tending to prove that thereafter the plaintiff was influenced to 
make the settlement evidenced by the release by statements made by 
Rochelle to him to the effect that the doctors who had examined him 
said that his injuries were not permanent, and that he would be able 
to go to work again in a very short time. 

There was évidence tending to prove that the plaintiff was perma- 
nently disabled, and that at the time Rochelle made the statements 
attributed to him he had received from one of the examining physicians 
a written report, which not only did not show that that physician con- 
sidered the injuries not permanent, but plainly indicated that he con- 
sidered them very serions; there being no suggestion in that report 
of the likelihood of the plaintiff's recovery. In view of the existence 
of that report, the withholding of it from the plaintiff, and Rochelle's 
knowledge of its contents, the statements attributed to the latter well 
could be regarded as fraudaient représentations, capable of being ef- 
fective in inducing the plaintiff to consent to the settlement evidenced 
by the release, which he promptly repudiated upon being informed by 
another physician, on the day the release was signed, that he had been 
deceived as to the seriousness of his injuries. Without regard to other 
évidence adduced, that which bas been referred to justified the submis- 
sion to the jury of the issue raised as to the validity of the release. 

[3] There is no merit in the contention that the évidence without 
dispute showed that the injury to the plaintiff was due to a risk which 
he assumed, and was not attributable to négligence of a coemployé. 
There was évidence tending to prove that, while plaintiff was standing 
near a car where he was required to be to help in unloading ties there- 
from, he was struck by one or more ties, wliich fell from the car in 
conséquence of another employé stepping on ties on the car after the 
removal, preparatory to unloading, of the stakes or standards which 
Iield them in the position in which they were placed when loaded on the 
car. There was évidence to support the conclusion that the ties were 
so placed that they would not hâve fallen after the removal of the 
supports, if they had not been caused to do so by a man on the car 
stepping on them. The plaintiff did not assume the risk due to the 
négligence of a coemployé in causing the fall of the ties, where the 
plaintiff was endangered thereby. 

The conclusion is that the record does not show that any réversible 
error was committed. 

The judgment is affirmed. 



THE NOETHLAND 245 

(262 F.) 

THE NOETHLAND. THE STIMSON. INGALLS v. BODDEN. 
(Circuit Court of Appeals, Fourth Circuit. November 14, 1919.) 

No. 1750. 

1. Collision <S=356 — Between schooner and oveetakinq steamship, fault 

of steamship. 

A collision at sea on a elear nlght, between a schooner making 2% or 3 
knots and an overtaking steamship, held due solely to fault of steamship, 
on évidence that schooner kept her course and speed, and on seeing 
steanisbip 8 or 10 miles behind showed a brlght white llght astern, 
which should hâve been seen for at least 2 miles, but that she was not 
seen until within half a mile, and the steamishlp then kept her course anci 
speed until collision. 

2. Collision ig=>56 — Défense of inévitable accident not sustained. 

Breaking of the steering gear of an overtaking steamship shortly before 
collision with a schooner held not to sustain the défense of inévitable ac- 
cident, where it was through négligence that the steamship failed to see 
the schooner in time to safely avoid collision. 

Appeal from the District Court of the United States for the East- 
ern District of Virginia, at Norfolk ; Edmund Waddill, Judge. 

Suit for collision by W. A. Bodden, master of the schooner Stimson, 
against the steamship Northland; L. C. Ingalls, master, claimant. 
Decree for libelant, and claimant appeals. Affirmed. 
Fo^ o]>!iii()ii liclow, SCO 257 F. 7()2. 

This Is an appeal Irom ii decree of the District Court of the United States 
for the Eastern District of Virginia, holding the steamship Northland solely 
in fault for a collision between that vessel and the schooner Stimson, which 
occurred about 13 miles southeast of Hog Island Light, ofiC the coast of Vir- 
ginia, at about 4 o'clock on the morning of October 14, 1918. The schooner was 
a four-masted schooner, of the gross tonnage of 693 tons, 185 feet long, ,39.5 
feet beam, 13.8 feet deep, and was bound from New York to Norfolk, light. 
The Northland was a steamer of the burden of 3,282 tons gross, 304.4 feet 
long, 47.2 feet beam, 19.8 feet deep, and engaged in the coastwise frelght and 
passenger business on the route between New York and Norfolk. 

It is conceded that the weather at the time of the collision was good, the 
wind being light from the southwest, the sea smooth, and the Bight being 
clear and starlight. The schooner, for some time prier to the collision, had 
been on a slarboard tack. heading about south by east, making from 2% to 3 
knots an hour, wlth her four lower sails and four jibs set, and her régulation 
running ligbts properly placed and brightly burning. An experienced master 
was at tiie wheel, a sailor was on the forecastle deck of the schooner forward, 
keeping an efficient lookout, and two other sailors of expérience were on the 
deck of the vessel ; one of them having previously been at the wheel until he 
had been sent forward by the master to assist in tacking the ship. Thèse men, 
together with the regular master and mate of the schooner, hâve testifled in 
the case, and the others of the crew of nine of the schooner offered for cross- 
examination. 

It appears that the Northland was proceeding on a course southwest, three- 
quarters south, making between 16 and 17 miles an hour, and was being navi- 
gated by her first offlcer In the pilot house, with a man at the wheel in the 
pilot house, and a lookout on the forward deck. It appears that the navi- 
gators of the schooner, some time before the collision, observed the white 
light of an approaching vessel several miles distant, ofC their port quar- 
ter, and when the steamer was about 2 miles away, and about eight min- 
utes before the collision, her green .light was observed atill abaft on the 
port beam of the schooner, whereupon a white light was shown from 
the scJiooner's stem to the approaching steam vessel, this white light 

©=For other cases see same topic & KBY-NUMBEB in ail Key-Numbered Dlgests £ Indexes 



246 262 FEDERAL REPORTER 

being the regular anchor light of the vessel, a régulation llght whose vlsl- 
bllity Is proved greater than 2 miles, and which was displayed ofE the port 
quarter of the schooner In such a position that the navigators of the steam- 
er should hâve immedlately observed it ; that the schooner contiuued 
her course and speed unehanged, and the steamer overhauled her rapidly, 
seemlngly regardless entlrely of the présence of the schooner, and making no 
elïort to avoid her; two or Ûiree minutes after the white light was shown, crie 
of the crew of the schooner displayed an electrlc torchlight on the deck of 
the schooner forward of omidships in such position also to be entlrely visi- 
ble to the navigators of the approachlng steamer; notwlthstandlng the lights 
thus displayed on the part of the schooner, the steamer Northland continued 
on wlth her course and speed apparently unehanged, comlng into violent colli- 
sion with the schooner a few minutes after this second light was displayed 
from her deck, striking her on her port bow about 30 feet aft of her stem, 
cutting several feet into her, and causing her most serlous damage. 

The lookout of the steamer dld not testify ; the man at the wheel gave his 
déposition, but stated that he did not see the schooner, nor did he know that 
there was a vessel in the viclnity, until he struck ; the only wltness testif y- 
ing really as to the factis of the collision from the steamer being the first 
otflcer, who admlts that he did not see any of the schooner's lights until she 
was about half a mile away, when he saw the white light when It was re- 
ported to him by the lookout, and immedlately thereafter saw the red llght, 
excusing himself from any fault for the collision by attributing it to a break- 
down of Uie steering gear of the Northland. 

The libel was flled in the lower court on Oetober 14, 1918, and on October 
28, 1&18, the dépositions of Capt. Marshal, acting master and navigating offl- 
cer of the schooner, the lookout, wheelsman, engineer, and the mate were tak- 
en in Norfolk. It appears that the dépositions of the first officer, the quarter- 
master, the second assistant engineer, the carpenter, and the master of the 
Northland were taken in New York on February 11, 1919. 

It is Insisted by appellee that thèse witnesses, at least the greater num- 
ber of them, should hâve testified; but, on the other hand, it is insisted by 
counsel for the appellant that most of ail the witnesses who did not testify 
had retired, and therefore could not hâve known as to the facts connected with 
the accident. However, none of them testifled as to the facts of the collision, 
save the first ofiicer and the quartermaster. Thèse were the only witnesses 
examined on behalf of the Northland out of a crew of about 50 ail told. 
Several other witnesses gave their évidence by déposition and before the 
court as to the construction of the steering gear of the Northland. 

Henry H. Little, of Norfolk, Va. (Henry M. Hewitt, of New York 
City, and Walter H. Taylor, of Norfolk, Va., on the brief), for ap- 
pellant. 

Floyd Hughes, of Norfolk, Va. (Hughes, Vandeventer & Eggleston, 
of Norfolk, Va., on the brief), for appellee. 

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges. 

PRITCHARD, Circuit Judge (after stating the facts as above). 
[ 1 ] The law in regard to this case is weli established, but the facts are 
controverted, and in order to reach a correct conclusion it is necessary 
to ascertain, if possible, what actually occurred at the time of the 
collision. It appears that four witnesses testified on behalf of the 
schooner as to the material facts, while only one witness was produced 
who gave affirmative testimony on behalf of the Northland as to the 
main facts. It is true her quartemjaster was a witness, but he only 
testified as to the accident to the steering gear. It appears that he 
liad no report from the lookout, and saw no lights from the schooner. 



THE NORTHLAND 247 

C262 F.3 

He further testified tliat he did not see the schooner nor know of 
her close proximity until the collision. 

MacDonald, first officer, the only witness who testified on behalf of 
the Xorthland as to the main f acts, among other things, said : 

"Tlie obycuration of tlie atmosphère, whatever it might hâve becn, in no 
way intei-fered with my observation of that light. I should siiy that the 
obsouratlon of the atmosphère would pérnïlt me to see the riding light 
of a vessel, or the eolored lights of a vessel which I was approachiug, 
for two miles that morniug; there was just a light vapor on the water. I 
thluk I could hâve seen an anchor light about two miles, that is about ail It ia 
supposed to show. I don't think there was anything in the atmosphère that 
prevented me from seeing the lights of the Stimson when she was at least 
two miles ofC, If those lights had been properly displayed, either a wliite or a 
red light. As a matter of fact I did not see them until they were half a mile 
off." 

This witness admits that he did not see the schooner until she was 
a half mile away. The fact that he did not see the schooner at a greater 
distance than a half mile shows that the steamer was at fault in this 
respect. It is true that he contradicts in many respects the witnesses 
for the schooner; but in weighing his évidence it should be borne in 
mind that he, above ail other witnesses, was most interested, being in 
charge of the navigation of the steamship. But when we consider what 
he says in connection with the évidence for the schooner we are of 
the opinion that it should not prevail against the évidence of the lat- 
ter; there being four witnesses introduced in the schooner's behalf. 
The évidence for the schooner is corroborated, in respect to the 
weather and physical facts about the collision, by Capt. Bodden and 
the mate of the schooner. The failure of MacDonald to observe the 
white light and the red light of the schooner until they were a half 
mile distant furnishes, we think, the principal reason why the acci- 
dent occurred. 

The leamed judge who tried this case made a very clear and concise 
finding as to the relative position of the vessels at and just before the 
collision. He also states very clearly the contention of the respective 
parties, as f oUows : 

"The schooner's case, briefly, is that while on the starboard tack, In the 
vlcinlty in question, and proceeding at about 2% knots an hour, she observed 
the masthead light of the steamship some 8 to 10 miles away, bearing aft 
of her port beam, and subsequently, and when more than 2 miles away, she 
saw the steamshlp's green light; that at the time the schooner was pro- 
vlded with a skilled and compétent crew. In charge of an experienced master, 
ail at thelr proïier stations, and efiBcienUy performing their respective duties, 
with her running lights properly set and brightly buming; that upon ob- 
servlng the steamshlp's whlte light, and partly In the position of an over- 
taken vessel, she at once caused her régulation riding light for approaching 
vessels to be put eut, plaelng the same In the most conspicuous position on the 
companionway of the after cabin, which was the best position In which it 
could be placed, and was in fuU view of the approaching steamship, and 
should hâve been seen 6 to 8 miles away ; that In addition, as the steamship 
contmued to approach, the schooner caused an electric light to be waved, and 
its light flashed upon her salis, to further attract the attention of the ap- 
proaching steamship, and she kept her course and speed; that, notwith- 
standing the plain obligation imposed upon the Northland, the burdened ves- 
sel to avoid collision as well as the risk thereof, with the overtaken vessel, 
the schooner, she continued to approach her at a rapld rate of speed, claimed 



248 262 FEDERAL REPORTER 

to be 17 miles an hour, and ran Into and collided with the Stimson, strtkin:: 
her about 30 feet aft of her stem on the port bow, seriously cuttlng Into and 
crushlng through the schooner from her rail down below to her water Une, 
causing great damage, for the recovery of whieh this libel was flled. 

"The schooner furtber charges that the steamship was without a lookoiit 
properly stationed ; that she was in charge of incompétent and unskillful nini- 
gators; that she failed to keep out of the way of the schooner, or to shjipe lier 
course so as to avoid crossing ahead of her and pass under her stern ; iliat 
she failed to slacken her speed, stop, and reverse, and proeeeded at a too 
rapid rate of speed; and that she, being the overtaking véssel, should not 
bave collided with the schooner at ail, but hâve avoided her by a wide maririn. 

"The respondent in the main, admits the circumstances of the two vesseis 
approaching and coming together, as above stated, but contends: (1) Tliiit 
the collision was the resuit of inévitable accident, in that, when it was too 
late to avoid the conséquences thereof, the Connecting shaft of the steering 
gear broke and parted, through a latent defect, causing the injury. (2) That 
tlie Stimson was in command of an incompétent navigator, without a propor 
lookout, and that she omitted to exhlbit her white or stern light in sufflcient 
time to enable the navigators of the steamship to make proper maneuver to 
avoid the collision." 

It is insisted by cotmsel for the appellee that in this suit, inasmuch 
as there was conflicting évidence, the decree of the lower court will 
not be reversed or disturbed, unless it is clearly shown that the court 
was in error. They cite in support thereof the foUowing cases: The 
Richard F. Young, 246 Fed. 682, 158 C. C. A. 638; Baker- Whiteley 
Coal Co. V. Neptune Navigation Co., 120 Fed. 247, 56. C. C. A. 83 ; 
The Anaces, 106 Fed. 742, 45 C. C. A. 596. We think the rule as 
contended for by appellee is so well established that it is useless for 
us to enter into a further discussion of this phase of the question. 
The évidence is conflicting, but we think, when considered as a whole, 
the leamed judge who heard the case in the court below was amply 
warranted in finding as he did. 

[2] It is contended by counsel for the appellant that the collision 
was the resuit of an inévitable accident, in that when it was too late 
to avoid the conséquences thereof the Connecting shaft of the steering 
gear broke and parted through a latent defect causing the injury. 
This would be a good défense, if the facts of this case were such as 
to bring it within the rule. In the case of The Fullerton, 211 Fed. 
833, 128 C. C. A. 359, the Circuit Court of Appeals for the Ninth 
Circuit, in discussing this question, said: 

"The court below held that the collision was the resuit of inévitable acci- 
dent. In collision cases the accident Is said to be inévitable when it is not 
possible to prevent it by the exercise of due care, caution, and nautlcal sklll. 
The terra Is usnally applied to collisions caused by a vis major, or by the 
intervention of other vessels, or floating Ice, or a severe snowstorm, or the 
disablement of the steering gear. In the Mabey and Cooper, 14 Wall. 204, 
215 (20 L. Ed. 881), the court said : 'Inévitable accident, as applied to a case 
of this description, must be understood to mean a collision which occurs 
when both parties hâve endeavored, by every means in their power, with due 
care and cauti<m, and a proper display of nautical skill, to prevent the occur- 
rence of the accident, and where the proofs show that it occurred in spite of 
everything that nautlcal skill, care, and précaution could do to keep the ves- 
sels Irom coming together.' The Fullerton belng without fault, the question 
arises whether the offlcers In charge of the Transit endeavored by every 
means in their power, with due care and caution, and a proper display ot 
nautical skill, to prevent the collision." 



THE NOETHLAND 249 

(262 F.) 

The évidence as to when and how the steering gear was broken is 
far from satisfactory. The schooner was the favored vessel. There- 
fore it was the duty of the steamer to exercise such care as was neces- 
sary to avoid a collision with her. Not having by proper lookout ob 
served the schooner when at least 2 miles away, the spced the steamer 
was making resulted in its coming in such close proximity to the 
schooner that it was well-nigh impossible to avoid hitting her, which 
places the steamer in the wrong. Therefore, if the steering gear really 
broke at the time as contended by appellant, it did not présent a case 
of inévitable accident. There is évidence tending to show that they 
did not discover the break until after the accident, and in this connec- 
tion it is significant that they displayed no signais to indicate this trouble 
for more than two hours after the collision. 

It also appears that the steamer approached the sailing vessel at 
least twice after the collision, and made other maneuvers which would 
indicate that the steering gear was not disturbed in the way and at 
the time counsel for appellant contend. It is true they produced in 
court what purported to be the broken rod of the steering gear; but 
this only proves that the rod was broken, but throws no light upon 
the question as to the time it was broken, or of the circumstances un- 
der which the breakage occurred. 

It further appears that the schooner was sailing on a starboard tack, 
with four lower sails and four jibs set, and was making only 2% or 
3 knots per hour, and that the wind was light from the southwest, and 
that the night was clear, with no haze or fog, and that her lights were 
properly set and burning. It also appears that the navigation of the 
schooner was in charge of an experienced master, and an efficient 
lookout properly stationed, who discharged their duties. There were 
two other men on deck, who had assisted in tacking the ship short- 
ly before the lights of the steamer were observed. The schooner's 
speed was only about one-fifth of that of the approaching steamship, 
and we fail to see how the schooner could hâve committed any fault 
contributing to the collision. However, it appears from the record 
that she discharged her obligations as to course and speed. Indeed, 
there is no évidence that any fault in this respect was committed. 
MacDonald, among other things, said: 

"I don't thlnk there was any fault with the schooner from the time I saw 
the red light, or anything she could do to avoid the collision. I attribute the 
collision entirely to our failing to keep ont of the way of the schooner by rea- 
son of our steering gear breaking down." 

This sets at rest the question as to the conduct of the schooner. Tak- 
ing it ail in ail, we think the évidence is such as to establish the fact 
that those in charge of the navigation of the steamer were négligent, 
and that such négligence was the cause of the collision, and for this 
reason we think that the défense of the steamer of unavoidable acci- 
dent, even if their contention as to when and how the steering gear 
was broken be true, should not be entertained. 

Therefore we are clearly of the opinion that the conclusions of the 
court below were correct. Such being the case, it necessarily follows 
that the decree of the District Court should be affirmed. 

Affirmed. 



250 262 FEDERAL REPORTEE 



W. G. COYLE & 00., Inc., v. NOETH AMERICA STBAMSHIP CORPORA- 
TION, Limited, et al. 

THE TARMOUTH. 

(Circuit Court of Appeals, Flfth Circuit. January 3, 1920.) 

No. 3408. 

1. Maritime uens ^=>29 — Pctbnishinq coal to fobkiqn vessel tjndeb chae- 

tkb gavk bight to lien. 

Llbelant, wtio fumlsUed coal In New Orléans to a forelgn steamship un- 
der charter made tn New York, and new In the port, on an order glven at 
the request of a business assodate of the charterer, who was absent, 
but pursuant to a réquisition of the chief englneer, and whlch coal was re- 
celved and recelpted for by the master, heid entltled to a lien under Act 
June 23, 1910, c. 373, §§ 1-3 (Comp. St §§ 7783-7785), where It dld not ap- 
pear that libelant could by the exercise of reasonable diligence hâve ascer- 
talned that by the terms of the charter the charterer was to fumlsh coal. 

2. Mabitiïib liens <3=30 — Fubnisheb of supplies not chaeqbd with notice 

of chabtbb. 

The mère fact that one fumlshlng coal to a vessel Is Informed that she 
Is under charter Is not enough to charge hlm wlth notice of the terms of 
the charter party. 

3. Maeitime liens i&=»29 — Lien fob supplies fuenished to foeeign vessel 

PUBSUANT to REQUISITION OF CHIBIB' ENGINEBB. 

An order for coal dellvered to a forelgn steamship, pursuant to a réq- 
uisition of the chlef engineer, an appointée of the owner, where the 
coal Is recelved by the master and englneer and recelpted for by the 
former, Is to be regarded as given by the ship's master wlthln Act June 
23, 1910, c. 373, § 2 (Comp. St. § 7784), although a business assodate of the 
Charterer co-operated lu procurlng the glvlng of the order. 

4. Maritime liens ^=65 — Peesumption of authobity of mastee to peocube 

SUPPLIES not oveecome bt showing made. 

The statutory preaumptlon that a master has authorlty from the 
owner to procure supplies or other necessarles for hls vessel, under Act 
June 23, 1910, c. 373, 1 2 (Comp. St § 7784), Is not rebutted or destroyed by 
showing raerely that the fumlsher was Informed that the vessel was under 
charter. 

Appeal from the District Court of the United States for the Eastern 
District of Louisiana ; Ruf us E. Poster, Judge. 

Suit in admiralty by W. G. Coyle & Co., Incorporated, against the 
steamship Yarmouth; the North America Steamship Corporation, 
Limited, claimant. Decree for respondent, and libelant appeals. Re- 
versed. 

Gustave Lemle, Selim B. Lemle, and Arthur A. Moreno, ail of New 
Orléans, La. (A. A. Moreno and Lemle & Lemle, ail of New Orléans, 
La., on the brief), for appellant. 

Abraham Goldberg, H. Génères Dufour, and Alfred C. Kammer, 
ail of New Orléans, La. (Farrar, Goldberg & Dufour, of New Orléans, 
La., on the brief), for appellees. 

Before WALKER, Circuit Judge, and GRUBB and ERVIN, Dis- 
trict Judges. 

WALKER, Circuit Judge. [1] This is an appeal from a decree dis- 
missing a libel against the Yarmouth, a Canadian steamship, for 

«saFoT other cases see same topio & KEY-ÏJUMBBR In aU Key-Numbered DIgests & Indexes 



W. G. COYLE & CO. V. NORTH AMERICA STEAMSHIP CORP. 251 

(262 F.l 

amounts claimed to be due for coal f urnished and towage services ren- 
dered by the libelant to that ship while it was in the port of New Or- 
léans in July, 1917. The ship was released on a claim interposed by 
its owner, the appellee, a corporation of Nova Scotia. The libelant 
(appellant hère) was engaged in the coal business in New Orléans. 
Among its customers was the Cuyamel Fruit Company, which operated 
a number of steamers, to which the libelant furnished coal at priées 
previously agreed on. It furnished coal to the Yarmouth under the 
following circumstances : Herbert S. Hiller, who was traffic manager 
of the Cuyamel Fruit Company, was of good repute and was well 
known to the appellant, after getting from the latter quotations of 
priées of coal, ordered it to deliver to the Yarmouth 265 tons of Ala- 
bama steam coal at the price quoted. The order was complied with 
by delivering the coal to the Yarmouth ; its master and engineer having 
knowledge of such delivery, the former giving a receipt for the coal. 
A like order, given about a month bef ore, had been complied with in 
the same way. On his direct examination as a witness for the libelant, 
Mr. Hiller testified to the eflfect that the coal was ordered and deliv- 
ered as above stated, and that he ascertained the price and gave the 
order at the request of G. B. Warden, who was associated in business 
with F. R. Betancourt, the charterer of the Yarmouth. The follow- 
ing is a part of the report of the cross-examination of that witness : 

"Q. Dld Mr. Betancourt tell you to order coal for the stearaship Yarmouth? 
A. Mr. Betancourt was out of town. Mr. Warden left It entlrely with me to 
order the coal for the ship. 

"Q. When you ordered this coal from "W. G. Coyle & Co., were any questions 
asked you as to whether or not the ship was under charterî A. I believe it 
was asked who was operating the steamship. It was a new steamer hère In 
town, and they asked me some information about the boat, which I told them ; 
that is what information I gaye them. 

"Q. What information did you give them? A. I told them that the boat 
was chartered under the charter to F. R. Betancourt. 

"Q, They asked no further questions? A. Well, they Just merely asked — 
they asked me if thèse people had an office. I remember they asked me those 
partlculars. 

"Q. You say that the steamshlp Yarmouth was under charter for two 
months. Do you know what months? A. I thlnk It was under charter for 
two months ; that is my understanding. I had nothlng to do with the charter 
of the ship, nor did I see any recorda of the ship; but I do know that they 
told me the ship was under charter, and the managing owner of the ship ad- 
mltted that the boat was under charter. 

"Q. But what I am trylng to get you to answer is whether or not this par- 
tlcular coal which you claim, to hâve ordered was ordered during the time 
you know the ship to hâve been chartered to Betancourt and Warden? A. To 
the best of my knowledge and belief, the boat was under charter at that tlme. 

"Q. You testify that this coal was used for fuel of the steamshlp Yarmouth. 
How do you know that? A, From a statement — 

"Q. You do not know that of your own knowledge; you hâve no actual 
knowledge of It? A. No ; I was not on the ship. 

"Q. When you ordered this coal, did you order any partleular klnd of coal? 
A. No ; the usual custom: is to order sufflclent coal, accordlng to the réquisi- 
tion of the chlef engineer of the boat. 

"Q. And you were the one that agreed as to the price of the coal? A. 
Yes, sir. 

"Q. Do you know how mueh was dellvered under your flrst order? A. I 
kept no records of the delivery. 



252 262 FEDERAL EEPORTEK 

"Q. Do you know how much was delivered under the second order? A. 
It was 265 tons. 

"Q. Did you keep a record of that dellvery? A. No, sir. 

"Q. Then how do you know itV A. I know it by tlie report from tbe eaj>- 
tuin and invoices. 

•'Q. But not of your own knowledge? A. Not of my own knowledge. 

"Q. When was your flrst order given for tlie coal? Was it during tlie exist- 
ence of this same cliarter? A. Yes, sir. 

"Q. Do you renaember how much was delivered then? A. I do not remember. 
I might say that, as far as the deliveries were concerned, I do not believo 
that, in the opération of any boat, the man that purchases the coal knows 
how much goes on the ship actually, because we never see tlie coal go in tho 
.ship, and we only go by the records received from the chief englneers. 

"Q. The flrst œal was bought or ordered from W. G. Coyle & Co. umlor 
the same conditions and circumstauces as the second coal, was it not? A. 
The same; yes, sir. 

"Q. Dld you hâve anythlng else to do wlth Betaneourt, or Warden, or F. 
R. Betaneourt, in ordering thèse supplies? I mean by that, dld you havo 
anythlng to do wlth other officers, the payment of bills, or anything like tliat ? 
A. Not a thlng." 

Following the delivery of the coal and the rendition of towage serv- 
ices, the Hbelant made out a bill therefor against "S. S. Yarmouth and 
Owners," which it sent to Mr. Hiller. Mr. Hiller referred the collec- 
ter to Betaneourt & Co., who had an office in New Orléans, as he had 
done in the case of a similar bill for the coal delivered to the Yarmouth 
about a month before. Betaneourt & Co. paid the first bill, but did not 
pay the second one. Evidence adduced showed that at the time of the 
transactions in question the Yarmouth was being operated under a 
charter party made in New York on the 4th day of June, 1917, by the 
owner, the appellee, to Fiacro R. Betaneourt. By that instrument the 
owner hired the ship for the period of two months from the Sth.day of" 
June, 1917, "with full complément of officers, seamen, engineers, and 
firemen for a vessel of her tonnage." It contained the following pro- 
visions : 

"That the owner shall provide and pay for ail provisions, wages of eaptain, 
offloers, marine Insurance, flremen and crew ; shall pay for the hull Insur- 
ance of the vessel ; also for ail cabin, deck, engine room^ and other necessary 
stores, and keep the steamer in a thoroughly efficient state in hull, machinery, 
and equipment for and during the service. 

" (2) That the charterer shall provide and pay for ail the coal, port charges, 
pilotages, agencles, commissions, consular charges (exeept those pertalning to 
the oaptain, officers, or crew), and ail other usual expensea, exeept those afor&- 
stated ; but when the vessel puts into a port for causes for which the steamer 
is responsible, then ail sueh charges shall be paid by the owner." 

So far as was disclosed, at the time of the transactions in question, 
the libelant was without information as to the Yarmouth and how it 
was being operated, exeept as shown by the above set out part of the 
testimony of the witness Hiller. 

[1] So far as the claim against the ship for the price of the coal 
furnished is concerned, the decree appealed from is sought to be sus- 
tained on the ground that évidence adduced was such as to support a 
finding that the libelant was informed that the ship was operated by a 
charterer, and by the exercise of reasonable diligence could hâve ascer- 
tained that, because of the terms of the charter party, the person order- 



W. G. COTLE & CO. V. NORTH AMEEICA STEAMSHIP COEP. 2;>3 

(262 P.) 

ing the coal was without authority to bind the vesse! therefor. The 
provision in the charter party requiring the charterer to provide and pay 
for coal would, under the proviso contained in section 3 of the "Act 
relating to liens on vessels for repairs, supplies or other necessaries" 
(36 Stat. 604, c. 373 [Comp. St. § 7785]), prevent that act from having 
the effect of giving a lien on the ship for coal furnished on the order 
of the charterer, if the furnisher knew, or by the exercise of reasonable 
diligence could hâve ascertained, the terms of the charter party. The 
Kate, 164 U. S. 458, 17 Sup. Ct. 135, 41 L. Ed. 512 ; The Valencia, 165- 
U. S. 264, 17 Sup. Ct. 323, 41 L. Ed. 710. 

There are material différences betvifeen the facts of each of the two 
cases just referred to and those of the instant case. Each of those dé- 
cisions was rendered in responding to questions certified to the Suprême 
Court by a Circuit Court of Appeals. In the first-cited case the fol- 
lowing facts were disclosed: 

"On the order of a stearmship company, whioh had an agent and office in 
New York City, the libelant, which had a place of business in the same city, 
furnished and delivered coaï to vessels at that place, which were operated by 
the steamship company, under charters requiring the charterer to pay for 
coal furnished to the vessels. 

"The owners of each chartered vessel, as the libelant knew, had an agent 
for the business of the vessel at New York City. The libelant knew or 
could easily hâve known what vessels belonged to the steamship company 
and what vessels were operated by the latter under time charters. It is true 
that its agents did not examine the charter parties, nor make any inquiry as 
to their provisions ; but from what they had always heard about sueh in- 
struments they belleved and assumed, or took it for granted, that they con- 
tained conditions requiring the charterers, at their own expense, to provide 
and pay for ail coals needed by the vessel. It was under thèse ciroumstances 
that the libelant furnished each vessel, operated by the steamship company, 
with coal as ordered by that company, charging the company and the vessel 
therefor, without making any distinction'in the mode of keeping its accounts 
between the vessels owned by the steamship company and those operated by 
It under time charter parties. Spécifications of lien were filed in the propcr 
office against each vessel to which coal was delivered. 

"None of the coal furnished to the chartered vessels was ordered by the 
master of the vessel, nor were any of the hills therefor submitted to him for 
approval. They were submitted only to the steamship company. Nor did the 
agents of the chartered vessels know that coal was supplied by the libelant ou 
the crédit of the vessel, or that any spécifications of lien were flled under the 
local statute." 

It was on the above-indicated state of facts that the court decided 
that the furnisher of the coal was chargeable with knowledge of the 
charterer's lack of authority to bind the vessel for the price of the coal 
furnished. The opinion in that case contained the f ollowing : 

"If the libelant In this case had furnished the coal upon the order of the 
master, and without knowledge or notice that the vessel was operated under 
a charter party, or if coal had been furnished upon the order of the charterer 
as well as upon the crédit of the vessel, under circumstances which did not 
charge libelant with knowledge of the terms of the charter party, but chai^ed 
it only with knowledge of the fact that the vessel was being operated under 
a charter party, a différent question would be presented." 

The just-quoted statement makes it plain that that décision fumishes 
no support for the proposition that, without regard to other attending 
circumstances, the single fact that the furnisher of supplies to a vessel 



254 262 FEDERAL RBPOETBB 

is informed that it is under charter to the party on whose order the 
supplies are furnished charges such fumisher with notice of the terms 
of the charter party. 

The Valencia, supra, also was a case of fumishing coal to a vessel at 
New York, not by the order or procurement of the master but on the 
order of a steamship company which had an office in that city, at which 
the fumisher did business with the steamship company, and the former 
could easily hâve ascertained the ownership of the vessel and the re- 
lation of the steamship company to the owners. Upon the facts certi- 
fied, the court concluded that the libelant by reasonable diligence could 
hâve ascertained that the steamship company did not own the vessel, 
but used it under a charter party providing that the charterer should 
pay for ail coal needed. In each of the cases cited there was a finding 
supported by facts disclosed, that the libelant, who had notice of the 
fact that the party giving the order was the charterer, would hâve 
learned of the terms of the charter party, if he had made use of sources 
of information shown to be accessible to him. The propriety of a dé- 
cision that one is cHargeable with notice of a fact actually unknown 
to him is dépendent upon the circumstances under which he was put 
on inquiry. 

The libelant in the instant case, on an order given by a well and 
favorably known officiai of a ship-operating company with which the 
libelant had business relations, furnished coal to a foreign vessel at 
New Orléans, that vessel being "a new steamer" there, about which no 
information was imparted to the libelant, other than that it was under 
charter to F. R. Betancourt, who, so far as appears, was a total 
stranger to the libelant, and was not in New Orléans when the coal 
was ordered and furnished. It was not disclosed that a charter party 
or a copy of it was in New Orléans, or that any one then at or near 
that place then knew what the terms of that instrument were. Evident- 
ly Mr. Hiller did not know what were the terms of the charter party. 
It was not shown that the libelant by reasonable diligence could bave 
ascertained that the charter party to Betancourt provided that he 
should pay for ail coal needed. One who is put on inquiry by a fact 
or circumstance coming to his notice is not properly diargeable with 
knowledge of another fact actually unknown to him, in the absence 
of a showing that the existence of such unknown fact would hâve been 
disclosed if the suggested inquiry had been made with due diligence. 
In the absence of a showing that one, before acting in a situation pre- 
sented, had reasonably available means of leaming of the existence of 
a fact actually unknown to him, he is not to be held to hâve been bound 
to know that fact, though he was put on inquiry. 

[2] The mère fact that one knows or is informed that a ship is un- 
der charter is not enough to charge him with notice of the terms of the 
charter party. The George Dumois, 68 Fed. 926, 15 C. C. A. 675. 
Tn the case just cited the claim was for coal furnished to a ship in a 
foreign port on an order given by one known to be the charterer of 
it. The coal was received by the master and officers of the ship, was 
a necessary supply to the ship, without which the voyage could not 
hâve been prosecuted, and was used by the ship in prosecuting the voy- 



W. G. COTLB & 00. V. NOETH AMEBICA STEAMSHIP COKP. 255 

(262 F.) 

âge. That case arose and was decided before the enactment of the 
above-mentioned act of June 23, 1910, relating to liens on vessels for 
repairs, etc. It was held that under the law as it then existed a lien on 
the ship resulted from the fumishing of supplies under the circum- 
stances stated, unless it was shown that the f urnisher relied on the créd- 
it of the owner or charterer, not of the ship, and that, though the fur- 
nisher knew that the order for the coal was given by the charterer, he 
was not bound to know the terms of the charter party, which in f act in- 
cluded a provision requiring the charterer to pay for such supplies. If 
there had been no change in the law, that décision would be an author- 
ity supporting a ruling in the instant case that the fumishing of coal by 
the libelant was under such circumstances as to hâve the efïect of creat- 
ing a lien on the ship. 

[3] While the évidence showed that Mr. Hiller, in giving the order 
for the coal, did so at the request of a business associate of the char- 
terer, it also showed that when he gave the order he was apprised of the 
amount of coal needed by a réquisition of the ship's engineer, an ap- 
pointée of the owner, and that the master and the engineer acquiesced 
in the delivery of the coal to the ship ; the former giving a receipt for 
it An order so given is to be regarded as given by the ship's master, 
though a business associate of the charterer co-operated in procuring 
the giving of it. The Philadelphia, 75 Fed. 684, 21 C. C. A. 501 ; Nor- 
wegian Steamship Co. v. Washington, 57 Fed. 224, 6 C. C. A. 313; 
In re Alaska Fishing & Development Co. (D. C.) 167 Fed. 875. 

The necessity, existing under the law as it former ly was, of alleging 
and proving that necessary supplies f umished on such an order as the 
one shown in the instant oase were fumished on the crédit of the ves- 
sel, is dispensed with by the provision of the above ref erred to act of 
June 23, 1910, that designated persons, including a ship's master, 
"shall be presumed to hâve authority from the owner or owners to 
procure repairs, supplies, and other necessaries for the vessel." This 
provision is qualified \xy the following one contained in section 3 of the 
act: 

"But nothlng In thls act shall be coostrued to confer a lien when the fur- 
nlsher knew, or by the exercise of reasonable diligence could hâve ascertained, 
that because of the terms of the charter party, agreement for the sale of the 
vessel, or for any other reason, the person ordering the repairs, supplies, or 
other necessaries was without authority to bind the vessel therefor." 

Language used in the leist-quoted provision, "nothing in this act shall 
be construed to confer a lien," etc., is some indication of the absence 
of an intention to deprive a furnisher of a lien on a ship for necessary 
supplies furnished to it under such circumstances that he would hâve 
had a lien under the previously existing law, unaffected by any lien 
statute. It is questionable whether the same meaning properly can be 
attributed to the proviso that it would hâve had if, instead of the last- 
quoted language, it had used some such language as the following : 

"But the fumlaher shall not hâve a lien If he knew, or by the exercise of 
reasonable diligoice," etc. 

If the transaction now in question had occurred before the enact- 
ment of the act mentioned, as it was a fumishing on the order of the 



256 262 FEDERAL EEPORTEB 

master of necessary supplies to a ship in a foreîgn port, there would 
hâve been a lien on the ship, unless it had been shown that the supplies 
were not fumished on its crédit, or that the libelant knew, or by the 
exercise of reasonable diligence could hâve ascertained, that the mas- 
ter was without authority to bind the vessel therefor, and the cir- 
cumstance that the libelant knew that the ship was under charter would 
not hâve been enough to rebut the presumption that the supplies were 
obtained on its crédit, though the charterer participated in the order- 
ing of them, and the charter party required the charterer to pay for 
them. The George Dumois, supra. As the libelant would hâve had à 
lien if the statute had not been enacted, there is some ground for say- 
ing that language used in the statute stands in the way of its being giv- 
en the effect of preventing a lien in the libelant's favor attaching. 

But, assuming that the statute has the effect of preventing the fur- 
nishing of necessary supplies to a vessel in a foreign port giving a lien 
on it, if a lien would not hâve resulted if the transaction had been in 
the vessel's home port, it is plain that an effect of the statute is to ei- 
ther create or recognize a presumption of the validity of such an order 
as the one on which the libelant furnished the coal, and that proof of 
the giving of that order and of compliance with it by delivering the 
coal to the ship with its master's acquiescence was prima facie suffî- 
cient to entitle the libelant to the lien claimed, and put upon the claim- 
ant the burden of proving that the master was without authority to 
bind the vessel, and that the libelant knew, or by the exercise of reason- 
able diligence could hâve known, of such lack of authority. The 
Yankee, 233 Fed. 919, 147 C. C. A. 593. 

[4] Nothing in the act indicates that the presumption of authority 
in a vessel's master to procure necessaries for it could be rebutted or 
destroyed by showing that the furnisher knew or was informed that 
the vessel was under charter. To rebut or overcome the presumption 
of the master's authority to bind the vessel, it must be shown that the 
furnisher knew, or by the exercise of reasonable diligence could hâve 
ascertaîned, that the terms of a charter party, or something else, 
deprived the master of authority to bind the vessel for necessaries fur- 
nished to it. The burden was on the appellee, the claimant, to prove 
that the libelant knew, or by the exercise of reasonable diligence could 
hâve ascertained, that the charter party required the charterer to 
pay for coal needed. There was an absence of évidence tending to 
prove that the libelant either knew, or from any accessible source of 
information could hâve learned, that the charter party contained 
a provision having that effect. There was no évidence tending to 
prove that either the charter party or any one having knowledge 
of its terms was within reach of the libelant. It was not shown 
where the charterer was, except that he was not in New Orléans. 
To say that the libelant could hâve learned of the terms of the char- 
ter party by applying to the charterer's business associate, who 
was instrumental in procuring the giving of the order for the coal, 
would be a guess or surmise unsupported by évidence. We con- 
clude that the order for the coal was given under such circumstanc- 
es that it is to be treatcd as having been given by the master, and that 



IN RE DEESSLEE PRODUCING CORPORATION 257 

(262 F.) 

no évidence adduced rebutted or destroyed the statutory presumption 
that the master had authority to bind the vessel for the coal funiished 
on that order. It f ollows that the libelant was entitled to a lien for the 
price of the coal. 

The évidence showed that the towage services in question were re- 
quired in getting the coal ordered loaded on the vessel, and in effecting 
a needed movement of the vessel, and that they w^ere rendered at the 
request or with the acquiescence of the master. The rendition of those 
services well may be regarded as necessary to enable the vessel to pro- 
ceed on her voyage, or, at any rate, that they were such as facilitated 
its use as an instrument of navigation. We think such services were 
"necessaries," within the meaning of that word as used in the above- 
mentioned act of June 30, 1910, and that they were rendered under 
such circumstances as to give rise to a lien on the vessel for the price 
or reasonable value thereof. 

The decree appealed from is reversed, and the cause is remanded, 
with instructions to enter a decree for the libelant for the amôunt 
claimed in the libel and costs. 

Reversed. 



In re DEESSLER PRODUCING CORPORATION. 

Pétition and Appeal of DALTON et al. 

(Circuit Court of Appeals, Second Circuit December 10, 1919.) 

No. 61. 

1. Bankbuptct <S=>65 — Préférence of corporation directors fob bankextpt- 

cï rathee than state court fob winding up corporation not fbaud. 

A pétition, verified by the directors of a corporation, alleging Its in- 
aWlity to pay its debts in full, and Its willingness to be adjudged a bank- 
rupt, cannot be said to be fraudulent, because the directors prefer that 
forum rather than a state court, where a stockholder has commenced 
suit for dissolution, and is sufBoient to give the bankruptcy court juris- 
dictlon. 

2. Bankruptcy <S=>61 — Admission as act of bankruptcy eendebs solvenot 

IMMATEBiTAT.. 

Where the act of bankruptcy is a wrltten admiission, as provlded by 
Bankruptcy Act, § 3a (5) , Comp. St. § 9587, the question of solvency is Im- 
nraterlal. 

S. Corporations iS=»559(3) — May exercise powees after appointment ow 

RECEIVEE. 

Appointment of a temporary recelver for a corporation does not deprive 
it of the right to exercise its corporate powers, except as to matters spécial- 
ly confided to the receiver by the court. 

4. Bankeuptcy ©=320(1) — Supeesbding of suit in state couet. 

State court proceedings are superaeded by filing of a pétition In bank 
ruptcy, to make more effective the bankruptcy proceedings. 

5. Bankruptcy <S=320(1) — Proceedings by corporation stockholdeeb no7 

baebed by suit for dissolution in state court. 

The institution by a stockholder of a corporation of a suit for dissolu 
tion in a state court does not deprive other stockholders of the right to In 
stitute proceedings in bankruptcy. 

^=5For other cases see same topic & KBY-NUMBBR In ail Key-Numbered Dlgesta & Indexea 
262 F.— 17 



258 262 fëdbral bepokteb 

6. Bankrtiptcy ®=»439 — Obdee denyino motion to dismiss eeviewed bt 

BEVIBIQTf. 

An order of a court of bankruï>tcy, denying a motion to dismiss a péti- 
tion, is reviewable by pétition to revise. 

Pétition to Revise and Appeal f rom Order of the District Court of 
the United States for the Southern District of New York. 

In the matter of the Dressler Producing Corporation, bankrupt. 
Marie Dressler Dalton and James H. Dalton pétition to revise and 
appeal from an order of the District Court. Affirmed. 

Whitman, Ottinger & Ransom, of New York City (Nathan Ottin- 
ger, of New York City, of counsel), for appellants. 

Barker, Donahue, Anderson & Wylie, of New York City (Louis J. 
Wolflf, of New York City, of counsel), for bankrupt. 

Before ROGERS, HOUGH, and MANTON, Circuit Judges. 

M ANTON, Circuit Judge. [1] The appellants, Marie Dressler Dal- 
ton, a stockholder of one-half the capital stock of the bankrupt and al- 
so a créditer thereof, and her husband, créditer, on February 1, 1919, 
began a proceeding in the state court for a dissolution of the bank- 
rupt corporation. The ground upon which the application was based 
was that there was a hopeless diversion of views of the stockholders 
of equal interest and a désire to prevent waste of the corporate proi>- 
erty. No allusion is made to the insolvency of the company but it was 
asserted that, if the company continued with such divided ownership 
of stock and management, insolvency might resuit. The pétition in 
the state court was made returnable on February 24, 1919. On Feb- 
ruary 19, 1919, this pétition in bankruptcy was filed. It is instituted 
by the stockholders whose interests appear to be adverse to the appel- 
lants. On the same day an order to show cause, returnable on Febru- 
ary 21st, was issued in the proceedings, asking for a stay of the state 
court proceedings. On February 26th the appellants obtained an order 
to show cause, returnable March 3d, for leave to intervene and set 
aside the bankruptcy proceedings. The District Judge, in the order 
now under review, permitted the appellants to file an answer "raising 
the issue of fraud with respect to the admission in writing of the in- 
ability of the bankrupt to pay its debts and its expression of willing- 
ness to be adjudicated a bankrupt." The order stays the proceedings 
in the state court for dissolution, and denied the application of the ap- 
pellants to dismiss the proceedings in bankruptcy. 

It is not disputed but that a pétition in bankruptcy was filed with a 
view to the liquidation of the afïairs of the bankrupt corporation within 
the jurisdiction of the United States District Court rather than the 
Suprême Court of the state. It is asserted that the corporation is 
solvent, but it does appear by the schedules in bankruptcy that it owed 
$22,809.97 as against cash assets of $5,865.86, and motion picture films 
with an uncertain value. The assets are said to be "undeterminable." 
At the time of the filing of the pétition in bankruptcy, the corporation 
was not in a position or condition to continue business, and the désire 
to wind up its affairs was not only necessary, but seemed to be the 

©=3For other casea aee same toplc & KEY-NUMBBR in al! Key-Numbered Dlgests & Indexes 



IN RE DRESSLEK PRODUCING COKPOKATION 259 

(26SFJ 

wish of ail the parties concerned. One faction attempted it in the state 
court; the other faction with frankness of statement, says it chose the 
fédéral court, because it deemed that court "better adapted to pré- 
serve the rights of ail parties." We are of the opinion that it was un- 
necessary to justify a choice, for the petitioners in bankruptcy hâve the 
unchallengeable right to proceed by filing this pétition. The institu- 
tion of the proceedings in the state court is not a bar to maintenance 
of this pétition in bankruptcy. Insolvency need not be alleged or 
shown to successf uUy maintain a pétition in bankruptcy, if the corpora- 
tion is unable to meet its obligations as they mature and arise, and this 
appears to be the fact hère. There are many allégations and déniais 
of f raud on both sides, but through it ail there seems to be the com- 
mon wish to liquidate the afïairs of the bankrupt. 

The appellants contend that a f raud is being committed or consum- 
mated by this pétition in the fédéral court, and that this is, sufficient 
ground for a dismissal of the pétition. In support of this contention 
we are referred to Zeitinger v. Dry Goods Co., 244 Fed. 719, 157 C. 
C. A. 167. In that case a fraud was established by a decree of a state 
court after a trial which lasted for four weeks. A director was ousted 
by the state court for waste and mismanagement, and a receiver was 
appointed to enforce the decree, and the directors were held liable for 
a considérable sum of money. At the time the pétition in bankruptcy 
was filed, the afïairs of the corporation had been taken from the direc- 
tors by a final decree of the state court, and the losses of the corpora- 
tion were decreed to be due and owing from its stockholders and assess- 
ed against them. The court refused to take jurisdiction of the péti- 
tion in bankruptcy, which was authorized by the same board of direc- 
tors, and thus permit the instrumentality of the Bankruptcy L,aw to 
further their fraudulent purposes. 

In the case at bar the directors can at least be said to be holding 
office as de facto officers. They, under oath, say that the corporation 
is unable to pay its debts in full, and ask the protection of the bank- 
ruptcy court. This is sufficient to require the bankruptcy court to take 
jurisdiction. Under thèse circumstances, it cannot be said to be a 
fraud to proceed in winding up the afïairs of the corporation by bank- 
ruptcy proceedings, rather than through the médium of the state law 
in granting a dissolution of the corporation. A choice of a forum, un- 
der the circumstances disclosed by the affidavits in the record, in it- 
self , is not a fraud, and would not warrant the District Judge in refus- 
ing jurisdiction. 

[2] Where the act of bankruptcy is a written admission, as the 
statute provides (section 3a [5] Comp. St. § 9587), the question of 
solvency is immaterial. Matter of Cohn, 227 Fed. 843, 142 C. C. A. 
367; West Co. v. Lea, 174 U. S. 590, 19 Sup. Ct. 836, 43 L. Ed. 1098. 
In re Moench & Sons Co., 130 Fed. 685, 66 C. C. A. 37, this court 
held that the fact that the property of the corporation was in the pos- 
session of receivers appointed in the state court did not affect the juris- 
diction of the court of bankruptcy to adjudicate such corporation a 
bankrupt. It was further held that an admission in writing of inability 
to pay its debts, and its willing^ess to be adjudicated a bankrupt on 



260 262 FEDERAL REPORTER 

that ground, prevented a creditor from proving the solvency as a dé- 
fense. The court said : 

"It would also seem to be reasonable to hold that the power to make the 
admission in writing could be exercised by the same offlcers who hâve tho 
I>ower to make a gênerai assignment, and, In the absence of statuts or by-law 
regulating the subject, such power résides In the dlrectors. ♦ ♦ ♦ It fe no 
doubt true that by commltting either the fourth or flfth acts of bankruptcy, 
when three creditors stand ready at once to take advantage of it by filiug a 
pétition, the corporation achieves the object which the act forbids it to secure 
by its own voluntary pétition, but Its doing so is not such a 'fraud upon the act' 
as to prevent the application of the plain language of the act to the facts pre- 
sented." 

[3] Even where a temporary receiver is appointed for a corporation 
the corporation still has the right to exercise its corporate powers, ex- 
cept as to the matters specially confided to the receiver by the court. 
Sigua Irbn Co. v. Brown, 171 N. Y. 488, 64 N. E. 194. 

[4] It is the désire of the law that the state court proceedings be 
superseded upon the filing of a pétition in bankruptcy, and this to make 
more effective the bankruptcy proceedings. Cresson Coal Co. v. 
Staufïer, 148 Fed. 981, 78 C. C. A. 609; Morehouse v. Giant Powder 
Co., 206 Fed. 24, 124 C. C. A. 158; In re Salmon (D. C.) 143 Fed. 
395. 

[5] A solvant corporation, as a person, may hâve its property dis- 
tributed among its creditors in the manner provided by the Bankrupt- 
cy Act (Comp. St. §•§ 9585-9656)'. Hanover Nat. Bank v. Moyses, 186 
U. S. 181, 22 Sup. Ct. 857, 46 L. Ed. 1113. The claim of the appel-' 
lants, that at the time the directors admitted that the company was in- 
solvent, and unable to meet its obligations as they matured and arose, 
they were without authority to so act, and that, therefore, such a con- 
sent is of no value in the bankruptcy proceedings, is w^ithout force, 
and is not a reason why the motion to dismiss the pétition should be 
granted. If there is a question whether a fraud has been perpetrated, 
and the authority of the board of directors to sign the consent, which 
was filed in the voluntary proceedings in bankruptcy, is questioned, it 
is left open for trial by the order sought to be revised. 

We are of the opinion that the action of the board of directors hère 
was justified upon the affidavits presented, and that the District Judge 
correctly disposed of the question presented in the court below. Mat- 
ter of United Grocery Co. (D. C.) 239 Fed. 1016; Matter of Cohn 
(D. C.) 220 Fed. 956. 

[6] The petitioner seeks to hâve this cause reviewed both by a pé- 
tition to revise and by an appeal. Evidently they hâve been doubtful 
as to their remedy. We hâve considered the cause as coming to us 
pursuant to a pétition to revise, rather than an appeal. Summary pro- 
ceedings are reviewable only by a pétition to revise. In re Goldstein, 
216 Fed. 887, 133 C. C. A. 91 ; Gibbons v. Goldsmith, 222 Fed. 826, 
138 C. C. A. 252. Where the court of bankruptcy has erroneously 
retained jurisdiction to àdjudicate the rights of an adverse claimant it- 
self, the action may be reviewed by a pétition to revise. Mueller v. 
Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405 ; Shea v. Lewis, 



IN EE DRESSLEB PKODUCING CORPORATION 2C1 

(262 F.) 

206 Fed. 877, 124 C. C. A. 537; In re Gill, 190 Fed. 726, 111 C. C. A. 
454; In re Vanoscope Co., 233 Fed. 54, 147 C. C. A. 123. 

There is a clear distinction between "controversies arising in bank- 
ruptcy proceedings" and "bankruptcy proceedings." Bankruptcy pro- 
ceedings, broadly speaking, cover questions between the alleged bank- 
rupt and include the matters of administration generally, such as ap- 
pointments of receivers and trustées, allowance of daims, and matters 
to be disposed of summarily. AU of thèse matters occur in the settle- 
ment of the estate. In re Friend, 134 Fed. 778, 67 C. C. A. 500. The 
determining factor or the important considération for ascertaining to 
which class the particular application belongs is to détermine the ob- 
ject and character of the proceedings sought to be reviewed. If it is 
a controversy arising in bankruptcy proceedings, the Circuit Courts of 
Appeals exercise their jurisdiction as in other cases, under section 24a 
(Comp. St. § 9608). If the controversy pertains to proceedings in 
bankruptcy relative to the adjudication and the subséquent steps in 
bankruptcy, it is one which may be revised in matters of law upon 
notice and a pétition by the aggrieved party. 

The distinction was marked in Moody v. Century Savings Bank, 239 
U. S. 374, 36 Sup. Ct. 111, 60 h. Ed. 336, where the court said: 

"Whether the Circuit Court of Appeala rightly sustained Its jurisdiction 
turns upon whetlier this is one of tliose 'controversies arising In banliruptcy 
proceedings' over whlcii the Circuit Courts of Appeals are invested, by section 
24a of the Bankruptcy Act, with the same appellate jurisdiction that they 
possess in other cases under Judicial Code, § 128 [Comp. St § 1120], or is a 
mère step in bankruptcy preceedings the appellate review of which Is regu- 
lated by other provisions of the Bankruptcy Act. If it is a controversy arising 
in bankruptcy proceedings, the jurisdiction of that court was properly Invok- 
ed, as is also that of this court. We entertain no doubt that it Is such a con- 
troversy. It has every attribute of a suit in equity for the marshallng of as- 
sets, the sale of tlie iucumbered property, and the application of the proceeds 
to the liens in the order and mode ultimately fixed by the deeree. True, it was 
begun by the trustées and not by an adverse claimant ; but this is immaterlal, 
for the mortgagees, who claimed adversely to the trustées, not only appeared in 
response to notice of the trustées' pétition, but asserted their mortgage liens and 
sought to hâve them enforced against the proceeds of the property conform- 
ably to the contentions bofore stated. ïhis was the équivalent of an affirma- 
tive inten'ention, and, when taken in connection with the trustées' pétition, 
brought into the bankruptcy proceedings a controversy which was qulte apart 
from the ordinary steps in such proceedings and weU within the letter and 
spirit of section 24a." 

Pétitions to revise bring up questions of law only ; appeals, both of 
law and of fact. Elliott v. Toeppner, 187 U. S. 327, 23 Sup. Ct. 133, 
47 L. Ed. 200. A pétition to revise calls up any order or judgment and 
judicial action in bankruptcy proceedings; appeals, final judgments 
only. Duryea Power Co. v. Sternbergh, 218 U. S. 299, 31 Sup. Ct. 
25, 54 L. Ed. 1047. 

If the question arises in an independent suit to détermine the claim 
necessary for the settlement of the estate, or if it arise in one of the 
cases specified in section 25a (Comp. St. § 9609), review may be had 
by appeal ; but if the question pertains to and arises in a bankruptcy 
proceeding, and does not fall within either of the cases specified in 
section 25a, review may be had by pétition to revise in matter of law. 



262 262 FEDERAL REPORTER 

Under section 24a, a controversy arising between a trustée and a third 
party in respect to property either in the possession of the trustée or 
a third party, the review in the Circuit Court of Appeals is had on ap- 
peal and in the same manner as any other case; but in case of such 
controversy the revisory power is not available. On the review, the 
judgment in independent suits to recover assets, or to détermine con- 
troversies arising relative to the bankrupt estate, the remedy is by ap- 
peal. 

We are of the opinion that the remedy of the aggrieved party hère 
was by a pétition to revise. 

The détermination below is affirmed. 



UNITED STATES v. VOGEI* 

(Circuit Court of Appeals, Second Circuit. December 10, 1919.) 

No. 29. 

AxiENS ©=568 — Power or couet to gbant amkndment of natubauzation pé- 
tition. 

Where an alIen In hls déclaration of Intention, and later In hls pétition 
for naturallzatlon, erroneously stated the soverelgnty to whlch he owed 
allegiance, whlch allegiance, as requlred by statute, he "partlcularly" re- 
nounced, the court Is wlthout power on hearlng of his pétition, by an or- 
der nunc pro tune, to allow ameadment of the déclaration and pétition, to 
date back to the tlme of their flllng. 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

Pétition by Albert Vogel for naturalization. From an order grant- 
ing naturalization, and dismissing its pétition for cancellation of certifi- 
cate, the United States appeals. Reversed. 

Francis G. Caffey, U. S. Atty., of New York City (Julian Hartridge, 
of New York City, of counsel), for the United States. 
Frank Case Hayden, of New York City, for appellee. 

Before ROGERS, HÔUGH, and MANTON, Circuit Judges. 

MANTON, Circuit Judge. Appellee, at the time his application for 
ritizenship was filed, was a résident of the Southern district of New 
York. He was bom in Benningen, Germany, in 1885. He came to 
this country from France in 1906. On August 27, 1914, he subscrib- 
ed and swore to a déclaration of intention to become a citizen, and 
on April 23, 1917, he subscribed and filed a pétition for naturalization. 
Each of thèse papers recited that he was bom in Benningen, Germany, 
in 1885, and in them he made the usual oath renouncing allegiance to 
any foreign sovereign, particularly the emperor of Germany. On Au- 
gust 7, 1917, he subscribed and swore to an oath of allegiance, renounc- 
ing his foreign allegiance, to wit, to the emperor of Germany. On 
March 26, 1918, he appeared in open court before the District Judge 
to complète his naturalization. The District Judge took testimony, and 

€=9Foi other cases see same topic & KEY-NUMBRR In ail Key-Numbered Digests & Index»» 



UNITED STATES V. VOGEL 263 

(262 P.) 

the appellee testified that he was a French citizen. An order was grant- 
ed nunc pro tune striking out the words "William II, emperor of Ger- 
many," and substituting the words "French Republic," and a decree 
was entered admitting the appellee to citizenship. The govemment has 
appealed from the order amending the oath of allegiance and granting 
naturalization to the appellee, and asks that the certificate be canceled. 

The District Judge filed an opinion in which he recognized the con- 
flict of authorities of the various District Courts as to the power of a 
District Judge to amend, nunc pro tune, a déclaration of intention to 
become a citizen, at any time during the proceedings. He reached 
this conclusion, taking the view that, because the statute requires, with 
respect to both the déclaration of intention and the pétition for nat- 
uralization, that the applicant renounce, not only his particular sover- 
eignty, but that of every other sovereignty as well, the purpose oî 
particularizing as to his own sovereignty is merely one of identification, 
and that the gênerai renunciation is sufficient to include that sovereign- 
ty. The court was of the opinion that the new loyalty was adequately 
evidenced by the oath of allegiance as supplemented by the gênerai re- 
nunciation. 

The requirements to become a citizen of the United States are con 
tained in section 3 of the act of June 25, 1910 (Comp. St. § 4352), as 
f ollows : 

"First. He shall déclare on oath before the clerk of any court authorized 
by this act to naturalize aliens, or his authorized deputy, in the district in 
which such alien résides, two years at least prier to his admission, and after 
he has reached the âge of eighteen years, that It is bona flde liis intention to 
become a citizen of the United States, and to renounce forever ail allegiance 
and fidelity to any foreign prince, potentate, state, or sovereignty, and partlcu- 
larly, by name, to the prince, potentate, state, or sovereignty of which the 
alien may be at the time a citizen or subject. ♦ • • 

"Second. Not lésa than two years nor more than seven years after he has 
made such déclaration of intention he shall make and file, in duplicate, a pé- 
tition in writing, slgned by the applicant in his own hand wrlting and duly 
verifled, in which pétition such applicant shall state his full name, his place 
of résidence (by street and number, if possible), his occupation, and, If possi- 
ble, the date and place of hs birth. * • • 

"The pétition shall set forth that • ♦ * It is his intention to become a 
citizen of the United States and to renounce absolutely and forever ail alle- 
giance and fidelity to any foreign prince, potentate, state, or sovereignty, par- 
tlcularly by name to the prince, potentate, state, or sovereignty of which he at 
the time of fillng of his pétition may be a citizen or subject. ♦ * * 

"At the timte ôf filing his pétition there shall be filed with the clerk of the 
court a certificate from the Department of Commerce and Labor, If the petl- 
tioner arrives in the United States after the passage of this act, stating the 
date, place, and manner of his arrivai in the United States, and the déclara- 
tion of Intention of such petitloner, which certificate and déclaration shall be 
attached to and made a part of said pétition. 

"Third. He shall, before he is admitted to citizenship, dedare on oath In 
open court that he will support the Constitution of the United States, and that 
he absolutely and entirely renounces and abjures ail allegiance and fidelity to 
any foreign prince, potentate, state, or sovereignty, and particularly by name 
to the prince, potentate, state, or sovereignty of which he was before a citizen 
or subject. • • • " 

The United States District Courts bave jurisdiction to naturalize 
by virtue of section 3 of the act of June 29, 1906 (34 Stat. 596 [Comp. 



204 2G2 FEDERAL REPORTER 

St. § 4351]). This section provides the procédure and the limitations 
thereof. Section 2171 of the Revised Statutes provides that no alien 
vvho is a native, citizen, or subject or the denizen of any country, state, 
or sovereignty with which the United States is at war at the time of 
his application, shall be then admitted to become a citizen of the Unit- 
ed States. At the time of this application the United States was at 
war with the German Empire. 

The district judge found that appellee was the son of a parent who 
was of Alsace-Lorraine at the time that territory was a part of France. 
His father served in the French army in the Franco-Prussian war, and 
lie returned to France afterwards to réside in Paris. He and his wife 
were both French citizens. The appellee was bom in Germany while 
his mother was there on a visit, after Benningen became German terri- 
tory. The appellee mistalcenly renounced allegiance to Germany, when 
he should hâve renounced allegiance to France. This was due to mis- 
taken information given the applicant as to the proper sovereignty. 
The question, therefore, is presented whether the court had the power 
to admit to citizenship, in view of the erroneous renunciation in the 
déclaration of intention and pétition for naturalization in the spécifica- 
tion of the particular sovereignty to which allegiance had been pre- 
viously owing, and to do this by granting an order nunc pro tune. 

In the District Courts, there has been a division of view as to such 
power in the court. The following authorities hâve held that no such 
power exists in the court: In re Lewkowicz, 169 Fed. 927; In re 
Stack, 200 Fed. 330; Ex parte Lange, 197 Fed. 769; In re Friedl, 202 
Fed. 300. On the other hand, it has been held that such power existed 
in the fédéral court. U. S. v. Viaropulos, 221 Fed. 485 ; U. S. v. 
Orend, 221 Fed. 777; In re Denny, 240 Fed. 845. 

In U. S. V. Ginsberg, 243 U. S. 472, 37 Sup. Ct. 422, 61 L. Ed. 853, 
four questions were certified to that court which dealt with the regu- 
larity of naturalizing citizens. But two of the four questions were an- 
swered. The first of the questions answered was: 

"Is the final hearing of a pétition for naturalization, had In open court as 
required by section 9 of the act of June 29, 1906, c. 3592 [Comp. St. § 4368], If 
after the pétition is first presented in open court the hearing thereof is passed 
to and finally held In the chaïubers of the judge adjoining the courtroom, on a 
subséquent day and at an earller hour than that to which the court has been 
regularly adjournedî" 

And the second : 

"(4) May a certificate of citizenship be set aslde and canceled, In an Inde- 
pendent suit brought under section 15 of the act of June 29, 1906, c. 3592 
ÎComp. St. § 4374], on the ground that It was illegally procured, if the uncon- 
tradicted évidence at the hearing of the pétition showed indisputably that 
the petitioner was not qualified by résidence for citizenship, and that the court 
or judge who heard the pétition and ordered the certificate mlsapplied the 
law and the facts?" 

The court held that a hearing in the judge's chambers .adjoining the 
courtroom did not satisfy the requirements of the act and that the cer- 
tificate of citizenship granted by the court could be annuUed in an in- 
dependent suit by the United States. The court said: 

"An alien who seeks political rights as a niember of this nation can right- 
fully obtain them only upon tenns and conditions specified by Congress, 



UNITED STATES V. VOGEL 265 

(262 F.) 

Courts are wlthout authority to sanction changes or modifications ; thelr duty 
1b rlgidly to enforce the legislativi will in respect of a matter so vital to the 
public welfare. • » * The whole statute indlcates a studied purpose to 
prevent well-known abuses by means of publicity througliout the entire pro- 
ceedings. Its plain language repels the Idea that any part of a final hearing 
may take place in chambers, whether adjoining the courtroom or elsewliere. 

"I\'o alien bas the slightest right to naturalization unless ail statutory le- 
quirements are complied with, and every certificate of citizenshlp must be 
treated as granted upon condition that the government may challenge it as 
provided in section 15 and deouand its canœllation unless issued in accord- 
iDice with such requirements. If procured wben prescribed qualifications 
bave no existence In fact It la illegally procured ; a manifest mistake by the 
judge cannot supply thèse nor render their existence nonessential." 

When the act of June 29, 1906 (34 Stat. 596), was enacted "as a uni- 
form rule of naturalization," Congress dictated in particularity as to 
what the déclaration of intention should consist of, and required the 
applicant to particularize as to the sovereignty from whence he came 
and which he was renouncing. The System is statutory, and the oiily 
province of the courts is to ascertain the will of Congress and exécute 
it accordingly. Citizenship can only be obtained by complying with 
the terms as prescribed by Congress. The act itself provides the terms 
to an explicit degree when "an alien may be admitted to become a 
citizen in the manner and not otherwise." Citizenship may not be ob- 
tained by an alien in any other manner. Every material obligation, 
as imposed by statute, constitutes a part of the manner as contemplated 
by Congress in the act. The act provides that an alien shall renounce 
"particularly by name to the prince, potentate, state, or sovereignty of 
which he was before a citizen or subject" at the appropriate time in 
each instrument. It is not within the power of courts, in our opinion, 
to vary this rule and permit the applicant at a later time to recognize 
his mistake and ask to change it, for to do so would be permitting the 
applicant to déclare his intention of renunciation at a time other than 
wlien maklng his application. 

When making his déclaration and signing his pétition and filing the 
same is the time he must announce his renunciation as a citizen or sub- 
ject of the particular government. It was the intent of Congress to 
hâve such renunciation of the particular foreign sovereignty made con- 
temporaneously with the exécution and filing of each of the necessary 
instruments, and the court is without power later to permit a change 
to date back by granting an order nunc pro tune. 

For the court to do so, we think, is reading into the statute a per- 
mission which is tantamount to a trespass upon the executive domain, 
nor can the court say which steps must be complied with and which 
may be omitted in compliance, and which may be corrected if error 
creep in. To permit such power in the court would frustrate the 
whole act ; it would place the power of the court above the terms of 
the act. To permit of a substantive amendment would, in but a step 
further, permit naturalization to become effective without amending 
an insufficient déclaration. This the courts cannot and should not do. 
We think the court below was without the power to grant the order 
nunc pro tune, and erred in admitting the appellee to citizens'nip. 

Decree reversed. 



266 262 FEDERAI. REPORTER 



HAMMBESOHLAG MFG. CO., Inc., v. IMPORTEES' & TRADERS' NAT. 

BANK. 

(Circuit Court of Appeals, Second Circuit. December 10, 1919.) 

No. 46. 

1. Banks and bankino iS=9l48(3) — Dutt of defositob to vkeitt bank statb- 

IIENT. 

A depositor, who sends his passbook to be wrltten up and recelves It 
back with his pald checks as vouchers, Is under obligation to the bank to 
examine and verlfy the passbook and vouchere, and to report to the 
bank any errors dlsclosed. 

2. Banks and banking <S=» 148(1) — No liabilitt fob patment op baised 

CHECKB, WEEBE ALIEBATIONB NOT DISCOVEBABLE BT BEASONABLE CABE AND 
DEPOSITOB I-ATE IN MAKINQ CLAIM. 

A bank expressly authorized lu wrlting to pay checks to a deposltor's 
bookkeeper, and wtdch so pald checks duly signed by the depositor, but 
whlch, after signlng, had been raised by the bookkeeper, held not llable 
for the overpayments, where the checks were entlrely written by the 
bookkeeper, and the altérations were not dlscoverable by reasonable care, 
and where deposltor's passbook was wrltten up and retumed wlth can- 
celed cheoks each month, and no clalm was made by depositor until 
more than a year after the ralslng of the checks commenced. 

3. XbIAL <S=>141 — ^DlEEOTION OF VERDICT PEOPEB WHEBB EVIDENCE 18 TJNDIS- 

PTJTED. 

A dlrected verdict Is proper, where the évidence Is undlsputed and free 
from confllct. 

4. Banes and BANKING ®=»148(4) — Liabilitt tob patment of baibed oheces 

AFFECTED BT LACHES OF DEPOSITOR IN NOTIFTING. 

Where a deposltor's passbook was written up and retumed wlth can- 
celed checks each month, wlth a notice stamped thereon requestlng its ex- 
amtnation, and stating that the bank disclalmed responsibillty for any er- 
ror unless notlfled withln 30 days, the bank Tveld not llable for payment of 
raised checks, whlch It could not hâve dlseovered by reasonable care, and 
of whlch It was not notlfled for nine months. 

Manton, Circuit Judge, dissenting. 

In Error to the District Court of the United States for the Southern 
District of New York. 

Action by the Hammerschlag Manufacturing Company, Incorporat- 
ed, against the Importers' & Traders' National Bank. Judgment for 
défendant, and plaintifï brings error. Affirmed. 

The plaintlfC is a corporation organized and exlstlng under the laws of the 
State of New Jersey and bas its principal office In the town of Garfleld, in 
that State. The défendant ia organized and exlstlng under the laws of the 
United States, and Is a résident and citizen of the state of New York, and has 
its principal office and place of business in the Southern district of New 
York. At the times hereinafter mentloned the plaintifif was a depositor In the 
bank owned and conducted by défendant 

The plalntifC, between August 1, 1913, and October 21, 1914, Inclusive, de- 
poslted wlth défendant $659,815.40 ; and on August 1, 1913, the défendant was 
indebted to plaintlfC in the sum| of $21,036.84 upon an account for money de- 
poslted wlth it. Between the dates mentloned the défendant pald to the 
plaintiff upon Its order the amount of $675,702.24. The plaintlfC demands In 
thls action the différence between the amounts whlch défendant received and 
the amounts pald out to it or on its order, to wit, the sum of $5,150. It ap- 
pears that checks payable to "Bearer a/o Exchange" were presented to de- 
fendant by the plamtlfC's accredlted représentative and were pald by It, which 

<g=53For otlier cas*» see same toplc & KEY-NUMBER In aU Key-Numbered Dlgests & Indexes 



HAMMERSCHLAG MFG. CO. V. IMPORTEES' & TBADEKS' NAT. BANK 267 

(S62 F.) 

had been raised by the sald aocredited représentative. It also appears thaï, 
the inerease to which thèse chedis had been raised equaled the balance for 
wMch the plalntiff sues. 

At the conclusion of the plalntiff's case défendant moved to dismisa the 
oonrplaint and for the direction of a verdict, upon the ground that plalntiff 
falled to show liabûity on the part of the défendant bank, and that from 
plalntiff's own évidence it appeared the défendant bank was free from any 
Uabillty or fault respecting the raised checks. The motions vrere granted and 
a verdict was retumed under the court's instructions in favor of défendant. 

Louis S. Postier, of New York City, for plaintiff in error. 
Henry W. Baird, of New York City, for défendant in error. 

Before ROGERS, HOUGH, and MANTON, Circuit Judges. 

ROGERS, Circuit Judge (after stating the facts as above). The 
question which this case présents relates to the right of a bank which 
has paid raised checks to escape liabiHty for repayment of the amounts 
so paid by estabHshing the neghgence of the depositor in not examining 
the passbook and vouchers returned to him by tlie bank, and in not 
reporting to the bank without unreasonable delay the errors discovered 
or which might hâve been discovered. 

In the présent case there was no forgery of signatures. It is ad- 
mitted that the signatures were ail genuine. The forgeries consisted 
in raising the amounts for which the checks were originally drawn, 
and the altérations were ail made by the plaintifï's confidential book- 
keeper. He had exclusive charge of the préparation of the checks for 
signatures, and exclusive charge of the présentation of the checks for 
signatures. After the signatures were affixed, the bookkeeper would 
raise the amount of the check and présent it to the bank for payment. 
The altération of checks by him began in August, 1913, and in June 
of that year the plaintiff had written the following letter and given 
it to the bookkeeper, William H. Hooper, who presented it to the 
paying teller of the bank : 

"New York, June 6, 1913. 
"Importers' & Traders' National Bank, Broadway and Murray Street, City — 
Gentlemen : Please accept thls letter as authorlty for payment to our Mr. W. 
H. Hooper of checks presented by him, drawu to the order of bearer — signature 
below. 

"RespectfuUy yours, [Slgned] Hammierschlag Mfg. Co., 

"J, D. Goldberg, Vice Président, 
"Dla J. D. 6/K. 

"[Signed] William H. Hooper." 

Each one of the altered checks was altered by Hooper, presented by 
him, and to him the money on ail of them was paid. The amount of 
the check as originally drawn was erased by an ink eradicator prép- 
aration, and as the raised amount was in the handwriting of the one 
party who wrote the original check there was nothing in the appearance 
of the check to challenge attention. The protectograph was not used, 
with a possible exception of one or two of the checks, until after the 
altération in amount was made. No book containing checks and stubs 
was used. The checks were drawn on voucher forms, which were 
padded, and the amounts were entered in the book as the book of orig- 
inal entry. 



268 262 FEDERAL REPORTER 

[1] A deposîtor who sends his passbook to be written up, and re- 
ceives it back with his paid checks as vouchers, is under an obligation 
to the bank to examine and verify his passbook and vouchers, and re- 
port to the bank the errors disclosed. 

In Weisser's Administrators v. Denison, 10 N. Y. 68, 61 Am. Dec. 
731 (1854), the court declared that a depositor owes the bank no 
duty which requires him to examine his passbook or vouchers with a 
view to the détection of forgeries. It also declared that where checks 
forged by the confidential clerk of the depositor were paid by the bank, 
charged to the depositor in his bank book, the book balanced and with 
the forged vouchers, among others, retumed to the clerk, who exam- 
ined them and reported them correct, and the principal did not dis- 
cover the forgeries until months afterwards, when he immediately in- 
formed the bank, the bank could not retain the amount of the forged 
checks. The more récent authorities in New York, soon to be con- 
sidered, lay down a quite différent doctrine. 

In Leather Manufacturers' Bank v. Morgan, 117 U. S. 96, 6 Sup. 
Ct. 657, 29 L. Ed. 811 (1886), the rule is laid down that the depositor 
is bound personally or by an authorized agent and with due diligence 
to examine the passbook and vouchers, and to report to the bank 
without unreasonable delay any errors that may be discovered ; and if 
he fails to do so, and the bank is misled to its préjudice, he cannot 
afterwards dispute the correctness of the balance shown by the pass- 
book. It is also held that, if the duty of examination is delegated by 
the depositor to the clerk guilty of the forgeries, he does not so dis- 
charge his duty to the bank as to relieve himself f rom loss. 

In Critten v. Chemical National Bank, 171 N. Y. 219, 63 N. E. 969, 
57 h. R. A. 529 (1902), the rule is laid down that a bank depositor 
owes to the bank the duty of exercising reasonable care to verify re- 
turned vouchers by the record kept by him of the checks he has issued, 
for the purpose of detecting forgeries or altérations; and in that 
case the court held a bank depositor chargeable with the knowledge of 
the fraudaient altération of checks possessed by his clerk to whom he 
intrusted the examination of the vouchers, and with his négligence or 
failure in the vérification of the accounts, although the clerk hap- 
pened to be the one who made the altérations, where the comparison 
of the checks with the stubs in the check book would hâve disclosed 
sùch altérations to an innocent party previously unaware of the for- 
geries. 

In Morgan v. United States Mortgage & Trust Co., 208 N. Y. 218, 
101 N. E. 871, L. R. A. 1915D, 741, Ann. Cas. 1914D, 462 (1913), a 
trusted clerk in the employ of the trustées of an estate, and who was 
their immédiate agent in dealing with the bank, forged 28 checks, 
aggregating a large sum, which the bank paid. Checks drawn on the 
account of the estate were signed by a rubber stamp imprinting the 
words "estate of David P. Morgan," and were authenticated by the 
actual signature of one of the trustées. The clerk who made the de- 
posits filled out the body of the checks, obtained from the bank 
the passbook and vouchers and check list whenever the account was 



HAMMERSCHLAa MFG. CO. V. IMPORTEES' & TRADERS' NAT. BANK 2^ 

(262 F.) 

balanced, and employed in his forgeries the simulated signature of the 
trustée Morgan. An action was brought to recover the ainount paid 
by the bank on the forged checks. The court held that there could be 
no recovery ; the rule being that a bank is permitted to escape liabiHty 
for repayaient of amounts paid out on forged checks, if it estabhshes 
that the depositor has been guilty of neghgence which contributed to 
such payments and that it has been free from any neghgence. The 
négligence which the bank reUed upon was the négligence of the trus- 
tées in not examining their passbook and list of vouchers, and thus 
discovering within a reasonable time what they were being charged 
with. The depositors were in the habit of making an examination, 
but the examination was incomplète and ineffective. The court de- 
clared that if they had examined the check list and passbook, and 
compared them with their own books, they would hâve discovered at 
once the payment and débit to their account of checks which they 
had not drawn, and the forgeries would hâve been uncovered. The 
trustées had relied for vérification merely on a comparison of vouch- 
ers, without any effort to verify them by comparison with the check 
list or passbook. 

In Myers v. Southwestern National Bank, 193 Pa. 1, 44 Atl. 280, 
74 Am. St. Rep. 672 (1899), the court recognized the duty of the de- 
positor to verify the settlements of his bank book, and held that he 
could not recover from the bank the loss which he sustained by not 
doing so. In that case the depositor intrusted to the confidential clerk, 
who committed the forgeries, the duty of verifying the passbook, and 
the court held the depositor clearly responsible for the acts and omis- 
sions of his clerk in the course of the duties with which he was in- 
trusted. 

So in First National Bank of Birmingham v. Allen, 100 Ala. 476, 14 
South. 335, 27 L. R. A. 426, 46 Am. St. Rep. 80 (1893), it is held to be 
the duty of the depositor, who has his passbook written up by the 
bank and receives it back with his paid checks as vouchers, to examine 
the passbook and vouchers either personally or by an authorized agent, 
and report to the bank without unreasonable delay any errors that may 
be discovered in them. The court also held that, if the depositor has 
the examination niade by an agent who happens to hâve been the one 
guilty of the forgeries, the depositor will be chargeable with the knowl- 
edge of the agent. And see Dana v. National Bank, 132 Mass. 156; 
De Fariet v. Bank of America, 23 La. Ann. 310, 8 Am. Rep. 597. 

[2] In the instant case the bank deposit book was balanced each 
month. After it was balanced it was returned with the vouchers and 
the check list; and on each occasion when the passbook was returned 
there was stamped in red ink on it the f oUowing notice : 

"The bank requests and expects that the dealers will carefuUy examine their 
passbooks and vouchers each time when returned to them, and that they wlU 
at once notlfy the bank of any error In the account or balances, and especial- 
ly to any objection on their part, for any reason, to any voucher returned 
being charged agalnst them. The bank disclaims responsibility for any error 
in the accounts as rendered, unless informed of it within 30 days after tbn 
retum by it of the passbook and the surrender of the vouchers." 



270 262 FEDERAL REPORTER 

No one in the plaintiff's company examined the retumed checks, 
but the bookkeeper who forged them. This appears f rom the foUow- 
ing excerpt f rom his testimony : 

"Q. But, I mean, was there anybody In the business tliat went over tiieso 
retumed checks? A. Myself. 

"Q. That checklDg up, as It were, ot the checks retumed from the bank, 
was done by y ou? A. Yes, sir. 

"Q. And by no one else in the concem? A. Not in the company. 

"Q. Is that correct? A. Yes, sir. * • • 

"Q. So that, at the expense of répétition, I will ask you whether I am cor- 
rect in understanding tiiat the sole examiination inade of the passbook and 
the retumed checks during this perlod, outside of whatever the outside ac- 
countant did, was made by you? A. Yes, sir." 

The outside accountant, as the record shows, made a monthly ex- 
amination. He checked up the vouchers retumed by the bank, and 
checked them up against the bank list. Then he took the checks and 
checked them up against the gênerai exhibit, which contained a record 
of the number of tiie check, the date, the payée, and the amount, and 
compared the amount with the entry in the gênerai exhibit. He took 
the deposits as listed by the bank, and compared them with the de- 
posits listed in the gênerai exhibit; and he took the balance as shown in 
the gênerai exhibit and the outstanding checks that did not come 
through, and found there was an agreement with the balance as shown 
by the bank. Although he knew there was a daily cash receipts book, 
he admitted that he did not look at it ; and he admitted that, if he had 
compared it with the gênerai exhibit book, the discrepancies would 
hâve been immediately disclosed. He was asked by the court whether 
there would hâve been any trouble about it, and answered : 

"No; it would be very plain and obvions that there was a défalcation or 
embezzlement." 

Inasmuch as the examination which it was the duty of the plaintiflf 
to make involved, not simply the authenticity of the signatures to 
checks, but the amount of the checks, as to whether they had been 
raised or not, that duty could not be performed with ordinary care 
by looking at the entries in a secondary book and leaving unopened 
the book of original entries. Such a method of examination left the 
door wide open for such forgeries as was practiced in this case, and 
the négligence of the accountant is clearly attributable to the plaintiff ; 
the law being that, when a duty is cast upon any person, that person 
may not absolve himself of his duty by delegating the duty to some 
other person to perform. In this case the duty clearly was not ade- 
quately performed. When the plaintiff sent its passbook to défendant 
to be balanced, it in effect demanded to be informed as to the con- 
dition of its account, and, when the balanced passbook and the vouch- 
ers were returned, the silence of the plaintiff respecting the retumed 
vouchers and the entries in the passbook amounted to an admission on 
its part as to their correctness. 

The rigid responsibility imposed on banks must be maintained. It 
is equally important, however, that depositors who make négligent 
examinations of the accounts rendered to them by their banks should 



HAMMERSCHLAG MFG. CO. V. IMPOETERS' & TRADERS' NAT. BANK 271 

C262 FJ 

themselves sustain the losses which resuit from their own and not the 
bank's carelessness, and which would hâve been prevented if they them- 
selves had exercised reasonable care. The plaintifï seeks in this case 
to hold the bank responsible for the payment of checks raised by its 
own employé, who was authorized by it to prépare the checks and 
to obtain the money on them, and over whose conduct no reasonable 
supervision was exercised. 

The failure, however, of a bank depositor adequately to examine 
his passbook and vouchers, and to give the bank prompt notice of any 
errors he may discover, is no défense to the depositor's right to 
recover the money so paid from the bank, if the bank's ofiîcers, bef ore 
paying the checks, could hâve detected the forgeries, if they had 
exercised reasonable care. This principle was declared by the Suprême 
Court in Leather Manufacturers' Bank y. Morgan, supra, where it was 
said: 

"Of course, If the defendant's olBcers, before paying the altered checks, 
could by proper care and skill bave detected the forgeries, then It cannot re- 
celve a crédit for the amount of those checks, even if the depositor omltted 
ail examination of his ac-count." 

And this coutt so understood the décision and applied it in New 
York Produce Exchange Bank v. Houston, 169 Fed. 785, 95 C. C. A. 
251 (1909), as did the Circuit Court of Appeals in the Sixth Circuit in 
First National Bank v. Fourth National Bank, 56 Fed. 967, 971, 6 
C. C. A. 183 (1893). This being the law, we are brought to inquire 
whether in the instant case the défendant bank, if it had exercised rea- 
sonable care in examining the checks, could hâve detected the forgeries. 
If in the exercise of such care it might hâve detected them, it must an- 
swer to the plaintifï for its failure to do so. The proof is that the 
altérations in the checks were so cleverly done that even the man 
who made them could not himself detect them. The court asked 
him whether it was f air to say that the altérations were so success- - 
fully accomplished that he who made them was unable to détermine 
them by examining the checks. The reply was, "I believe invariably 
so." Then the court again asked, "You believe it [détection] could 
not be made?" And the witness answered, "Yes, sir." Then followed 
this: 

"The Court: In other words, what you mean to say is that so far as you, 
the author of this change, was conœmed, tlie change was so completely effec- 
tive that even you could not see that there was a change; Is that true? 

"The Wltnesa: Yes, sir." 

In making the altérations the same ink was employed that was used 
in writing the original amounts. At the time of the trial there were 
two or three checks in which there was shown to be a différence in 
the appearance of the ink. The appearance of ink changes in time, 
and there is absolutely no évidence whatever as to the condition of 
the ink on the checks at the time they were presented to the bank, 
or that there was anything about them to put the bank upon inquiry. 
In the case of one or two of the checks, it was possible that the pro- 
tectograph mark had been changed. The practice was to hâve checks 
signed first, then altered, and then protectographed. Asked as to the 



272 2G2 FBDEKAL EBPOETEB 

check upon which possibly the protectograph mark was changed, the 

witness answered: 

"I would e&y that the check appears to hâve been changed; but It would be 
a very dilficult problem to détermine tliat it has really been changed." 

And the following excerpt from the testimony of the accountant 
employed by the plaintifif to make the audits is important upon this 
phase of the subject : 

"Q. Was there anythlng in the course of your work that directed your at- 
tention as queer about any of those checksî A. No. 
"Q. You thought they were ail rightî A. Oertainly." 

In view of the testimony as to the appearance of the checks which 
had been altered, and in view of the letter of June 6, 1913, written 
by défendant to the bank, and left with the paying teller, and which 
elsewhere appears, it is very évident that it is impossible to say that 
there was a laçk of reasonable care in the f ailure of défendant to detect 
the altérations in the checks. 

This brings us to inquire whether the question of the negHgence of 
the défendant in paying the checks, or of the plaintiff in examining 
the passbook and vouchers, after their retum by the bank, should 
hâve been submitted to the jury. 

[3] It is the province of a jury to détermine facts, and of a court 
to déclare the law. But a judge may direct a verdict, where there is a 
failure of évidence, or where the évidence is contrary to ail reason- 
able probabilities, or where it is uncontroverted ; and a directed ver- 
dict is proper, when it is plain that a contrary verdict cannot be per- 
mitted to stand. The rule is stated correctly in 23 Am. & Eng. Encyc. 
of Law (2d Ed.) 551, where it is said that — 

"When the facts are adraitted, or are undisputed, or -where the évidence is 
^not conflicting, there Is no question vphich need be submitted as a question of 
fact, and the court may wlthdraw the case from the jury and itself décide 
ail questions which are Involved as questions of law; e. g., the question of 
négligence is often a mlxed question of law and faot, but when the direct fact 
or facts in issue are ascertained by undisputed évidence, and such fact or 
facts are décisive of the case, a question of law is raised and the court sliould 
décide it without submlttlng any question to the jury." 

Again at page 558 it is said that — 

"If the évidence Is free from conflict, or the facts are undisputed, or cou- 
ci usively proved, so that there is no reasonable chance for drawing différent 
conclusions from them, the court may and must wlthdraw the whole case from 
the jury, or the partlcular fact or facts in issue as to which there is no coii- 
fllct In the évidence." 

Thèse propositions are established by a long line of décisions, which 
are cited, and which need not be repeated hère. 

The évidence in the case at bar is undisputed and free from con- 
flict. Counsel for plaintifif admits this in his brief where he says : 

"We feel convinced, and respectfuUy urge upon this court, that no question 
of fact exists in this case with relation to complalnant's conduct In the ex- 
amination of the retumed vouchers, and that fromi the uncontradicted testi- 
mony It must be held that It discliarged its whole duty to the bank." 



HAMMERSCHLAQ MFG. CO. V. IMPORTERS' & TRADERS' NAT. BANK 27S 

(262 F.) 

We agrée that no question of fact arises, either as to the plaintiff's 
or the defendant's conduct. The testimony is uncontradicted aHke as 
to the conduct of each. The défendant called no witnesses, and 
such évidence as is in the record cornes from the plaintiff's own wit- 
nesses, and they stand uncontradicted. The facts being undisputed, 
there was no question of fact for the jury to détermine. 

This case is in principle not unHke Morgan v. United States Mort- 
gage & Trust Co., supra. It was claimed in that case that the question 
of the neghgence of the bank should hâve been submitted to the jury. 
But the court declared that, after an examination of ail of the évi- 
dence, it was not thought that there was any which would hâve 
justified the jury in deciding that the respondent was négligent; and 
the court came to the same conclusion as respects the négligence of 
the depositors. After calling attention to what steps tne depositors 
took, and failed to take, to verify the accounts rendered by the bank, 
Judge Hiscock, who wrote for the New York Court of Appeals, said : 

"The only question Is whether a jury would hâve been permitted to say that 
they were free from négligence, when they closed their eyes or turned them 
away from thèse certain nieans of détection of their own agent's wrongdoing, 
which were furnished to themi for ttiat very purpose by the bank. I do not 
think it would hâve been permitted to so détermine." 

And in Critton v. Chemical National Bank, supra, the Court of Ap- 
peals disposed of the question of négligence as a matter of law upon 
the undisputed évidence. 

The plaintiff, however, notwithstanding the admission, already quot- 
ed, that there is no question of fact, still strongly relies upon Leather 
Manufacturers' Bank v. Morgan, supra, in which the Suprême Court 
held that the question of the depositor's négligence in examining his 
retumed passbook and vouchers was a question for the jury; but 
that case seems to us distinguishable from the case at bar. The facts 
in the instant case are undisputed and beyond controversy, while in 
the Morgan Case they appear to hâve been otherwise. In the latter 
case the court in its opinion speaks of the évidence as — 

"tending to show — we do not say beyond controversy — that Cooper failed to 
exercise that degree of care, which under ail the clrcumstances, It was hls 
duty to do." 

And again the opinion says: 

"There was also évidence tending to prore — we do not say conclus! vely — that 
the depositor gave practically no attention to the account rendered by the 
bank, except to that one rendered March 2, 1881" 

— which led to the discovery of the forgeries. And then the court 
goes on to say that if the case had been submitted to the jury, and 
they had found such négligence upon the part of the depositor as pre- 
cluded him from disputing the correctness of the account rendered, 
"the verdict could not hâve been set aside as wholly unsupported by 
the évidence." And again it says : 

"As there Is, under the évidence, falr ground for controversy as to whether 
the officers of the bank exercised due ciiULiuii ueiure yuiing the altered checks, 
and whether the depositor omitted, to the injury of the bank, to do what or- 
262 F.— 18 



274 262 FEDERAL KEPORTEK 

dlnary care and prudence requlred of him, It was not proper to witMraw the 
case from the jury." 

Upon the undisputed évidence in the case at bar this court can 
see no ground for controversy. The bank as a matter of law, upon 
the undisputed facts, was not guilty of négligence, and the depositor 
was. 

[4] In conclusion, we corne to consider whether the plaintiff in 
error was entitled to a verdict upon the three forged checks, aggre- 
gating $400, paid prior to the first bank balancing. In New York it 
has been held that a bank is not relieved from liability for raised 
checks, which it had paid before the account was balanced, by the 
f allure of the depositor subsequently to discover the altérations, un- 
less thereby the bank has lost an opportunity to obtain restitution. 
Critton v. Chemical National Bank, supra; Weisser's Administrators 
v. Denison, supra. 

It would seem sufïîcient to say that, whatever the rule may be under 
other circumstances, it certainly is inapplicable to the facts under con- 
sidération. The plaintifï must hâve known the rule of the bank, stamp- 
ed upon its passbook each time it was balanced, in which it was stated 
that— 

"The bank disclaims responsibllity for any error in the accounts as ren- 
dered, unless tnformed of it wlthin 30 days after the retum by it of the 
passbook and the surrender of the Touchers." 

In continuing to do business with the bank with knowledge of this 
rule, the plaintiff consented to be bound by it, and is estopped to claim 
that the bank is liable to it upon the three checks paid prior to the 
first balancing of the passbook. Those checks were paid in August, 
1913, and the passbook was balanced at the end of that month. Notice 
of the forgeries was not given to the bank until May, 1914. Under 
the circumstances of this case, it is unnecessary to inquire whether the 
doctrine held in New York as to the right of the depositor to hold 
the bank for payments of forged checks paid prior to the first bal- 
ancing of the passbook is or is not recognized in the fédéral courts. 

Judgment affirmed. 

MANTON, Circuit Judge (dissenting). The défendant in error had 
money of the plaintiff in error on deposit. It was subject to checking 
in withdrawals. The relation existing between the bank and depositor 
was that of debtor and creditor, and the bank can justify the pay- 
ment on the depositor's account only on actual direction of the depos- 
itor. Critton v. Chemical Bank, 171 N. Y. 218, 63 N. E. 969, 57 L. 
R. A. 529. In the case under considération, payment was made without 
actual direction of the depositor, because of forgeries. The bank can 
only escape liability by affirmatively establishing (1) négligence of the 
depositor directly relating to and facilitating the forgeries; (2) omis- 
sion of the depositor to use ordinary care in the examination of re- 
turn vouchers to the préjudice of the bank, thus estopping the de- 
positor in making claim ; and (3) by the bank establishing that it was 
guilty of no négligence in paying the forged checks. Leather Mfrs.' 
Bank v. Morgan, 117 U. S. 96, 6 Sup. Ct. 657, ^9 L. Ed. 811 ; N. Y. 



275 

(262 F.) 

Produce Exchange Bank v. Houston, 169 Fed. 785, 95 C. C. A. 251 ; 
Morgan v. U. S. Mortgage & Trust Ce, 208 N. Y. 218, 101 N. E. 
S71, L. R. A. 1915D, 741, Ann. Cas. 1914D, 462. 

Unless the case be a plain one, whether each or any of thèse dé- 
fenses has been established was a question of fact for the jury, and net 
one of law for the court. When the f raudulent altération of the checks 
was proved, the liabihty of the bank for the amount was made out, 
and it was incumbent upon the défendant in error to establish affirma- 
tively négligence on the part of the plaintifï in error to relieve it from 
the conséquences of its fault or misfortune in paying on forged or- 
ders. Critton v. Chemical Nat. Bank, 171 N. Y. 224, 63 N. E. 969, 
57L.R.A.529. 

The question of négligence cannot arise unless the depositor has, in 
drawing his check, left blanks unfilled, or by some affirmative act of 
négligence facilitated the commission of the fraud by those into 
whose hands checks may corne. Crawford v. West Side Bank, 100 N. 
Y. 50, 2 N. E. 881, 53 Am. Rep. 152. While it is true that the drawer 
of a check may be liable when he draws the instrument in such an 
incomplète state as to facilitate or invite fraudulent altérations, he is 
not bound, under the law, to so prépare the check that nobody else 
can successfully tamper with it. Belnap v. National Bank of Mass., 
100 Mass. 380, 97 Am. Dec. 105. 

Reading the prevailing opinion leads me to the conclusion that the 
court has decided the questions of fact which are presented by this 
évidence as questions of law, rather than permitting the submission of 
such questions of fact to the jury. The évidence is disputed, and the 
inferences to be drawn therefrom are in dispute. Reasonable minds 
might differ as to the conclusions to be drawn legitimately from such 
évidence, and such are typical questions for a jury's solution. The 
leading authorities, which are binding upon us, and which are con- 
sidered in the prevailing opinion, illustrate the necessity for us ta 
pronounce that a jury question is presented by the évidence hère. 
The forgeries hère were committed by an employé of the plaintiff in 
error who occupied the position of head bookkeeper and trusted execu- 
tive. The forgeries in each instance consisted in the raising of the 
amounts of checks drawn by the plaintiff in error to "Bearer, Account 
Exchange," after the checks had been drawn and were completed and 
duly signed. The checks were prepared by Hooper in his own hand- 
writing, and thereafter signed by an officer of the plaintiff in error, 
and were presented to the bank by Hooper. After the signature, he 
committed the altérations resulting in the forgeries. The altération 
of the check was made by the use of CoIIins' ink eradicator. Some of 
the checks were stamped by a protectograph. In thèse instances, the 
stamp of the protectograph was obliterated by restamping. This al- 
tération was plain and quite visible to the naked eye. This was also 
true of the change in the color of ink used. 

The checks were drawn on voucher form and were numbered con- 
secutively. It was not the practice of the officers of the company 
to examine the books; but this was left to its bookkeepers, including 



276 262 FEDERAL REPORTER 

riooper. He devised a System of keeping the accounts in the books of 
the plaintiff in error which covered up his forgeries and thefts. At 
the end of each month the returned vouchers, with the bank's state- 
ment, were checked up and reconciled by Hooper, and also by an au- 
diting accountant employed by the plaintiff in error. Because of this 
ingénions scheme of Hooper, they were found correct by the auditing 
accountant and were net detected. In issuing the checks to "Bearer, 
Account Exchange," a method was pursued by which the ofEcers of 
the Company reimbursed plaintiff in error for petty cash taken as 
needed in the management of the business. The plaintiff in error's 
method of bookkeeping and method of checking up the accounts cap- 
not be said to be antiquated, much less a négligent method. Hooper 
was shrewd and élever enough to deceive his colaborers in the plaintiff 
in error's employ, including the auditing accountant. But there was 
sufficient indication to a prudent paying teller at a bank to put him 
on notice of the altérations made by the protectograph stamp, if, in- 
deed, the altération in the figures should not hâve been discovered. 
This is not the case as should be disposed of by the court as a ques- 
tion of law. 

In Critten v. Chemical Nat. Bank, 171 N. Y. 224, 63 N. E. 971, 57 
L. R. A. 529, Judge Cullen said : 

"In the présent case the fraudulent altération of the checks was not merely 
in the perforation of the additional figure, but in the oblitération of the written 
name of the payée and the substitution therefor of the word 'Cash.' Agalnst 
this latter change of the Instrument the plaintlffs could not hâve been ex- 
pected to guard, and wlthout that altération it would hâve no way proflted the 
crlminal to ralse the amount. Apart, however, from that considération, the 
question was clearly one of fact, to be determlned largely by an inspection of 
the checlis themselves." 

The bank cannot be excused from its négligence upon the theory 
that there was neglect by the depositor in examining the returned 
vouchers. If the bank's officers, before paying the altered checks, 
could, by proper care and skill, bave detected the forgeries, then it 
cannot receive a crédit for the amount of those checks, even if the 
depositor omitted ail examination of his account. Leather Manufac- 
turers' Bank v. Morgan, 117 U. S. 96, 6 Sup. Ct. 657, 29 L. Ed. 811. 
This doctrine enunciated in Leather Manu facturer s' Bank v. Morgan et 
al., supra, was accepted by this court in New York Exchange Bank 
V. Houston, 169 Fed. 785, 95 C. C. A. 251, and was so interpreted by 
the Sixth Circuit in the First National Bank v. Fourth National Bank, 
56 Fed. 967, 6 C. C. A. 183. In the New York state court, the gên- 
erai rule is that a bank may pay and charge to its depositor only such 
sums as are duly authorized by the latter, and, of course, a forged 
check is not authority for such payment. The bank may escape lia- 
bility for the repayment of amounts paid out on forged checks, by 
establishing that the depositor bas been guilty of négligence which 
contributed to such payment and that it bas been free from any nég- 
ligence. Morgan v. U. S. Mortgage & Trust Co., 208 N. Y. 222, 
101 N. E. 871, L. R. A. 1915D, 741, Ann. Cas. 1914D, 462. But as 
Judge Harlan said, in Leather Mfrs.' Bank v. Morgan, supra: 



277 

(262 F.) 

Wliere thoro is "fair ground for controversy as to whelher the officers of tïie 
bank oxercised due caution before paying the altered checks, * * ♦ It 
was not proper to withdraw the question from the jury." 

Of course, the depositor owed a duty of some examination and 
vérification of its account with the bank when the passbook and vouch- 
ers were returned. In this they guarded against a continuation of sub- 
séquent f orgeries and thef ts ; but such examination means the exercise 
of ordinary care, either personally or by some authorized agent. The 
bank cannot justly complain, after such examination, if forgeries were 
not discovered by such examiner until it was too late to retrieve. Leath- 
er Mfrs.' Bank v. Morgan, supra; Frank v. Chemical Nat. Bank, 84 
N. Y. 209, 38 Am. Rep. 501. 

When, having obtained from the bank a list of vouchers and bal- 
anced passbook, which were intended to give and did give them a cor- 
rect basis for comparison and vérification, the plaintifï in error, by its 
agents, made an examination and reconciled the accounts, the care 
with which such examination is made, and whether it was ordinary 
prudent vigilance, is a question for the jury. Morgan v. U. S. Mort- 
gage & Trust Co., supra. The following language was quoted with 
approval in Leather Mfrs.' Bank v. Morgan, supra: 

"The alleged duty, at most, only requires the depositor to use ordinary 
care ; and ii thls is exercised, whether by himself or his agents, the bank 
cannot justly eomplain, although the forgeries are not discovered until it i'3 
too late to retrieve its position or make réclamation from the forger." 

In National Bank v. Tacoma Mil! Co., 182 Fed. 1, 104 C. C. A. 441 
(C. C. A. 9th Dist.), there was an examination of the bank's balance. 
The deposit slips and checks upon such examination did not reveal the 
forgeries. Accounts were reconciled, as in the case at bar, and there 
the court approved a direction of the verdict fastening liability on the 
bank, saying: 

"If those statements tally with the deposit slirw made up by the depositor 
and the checks drawn against the bank, and if the balances agrée one with the 
other, the depositor is not obliged to look further, nor to bear in mind some 
Irregularity that niay appear elsewhere in his gênerai books, although a search- 
ing inquiry might lead to a discovery of the fraud. ïïie présent case is illus- 
tra tive of the principle. The mlll company was unable to ascertain what had 
happened, until it sent out to its customers for statements of their accounts 
and called in experts to détermine the condition of its books. It was then dis- 
covered that the Mandan Mercantile Company crédit was given on April 5th, 
which gave a élue to the Une of inquiry, and led to a discovery of the fact that 
that item did not appear in the bank deposit, as it should hâve done ; and it 
was found that, if the items In the mlll company's cash account had been 
checked with the deposit account, it would hâve shown that this item had not 
been deposlted, although it is probable the cash had been drawn from the 
bank, in this particular instance, and put in the cash drawer of the mlll com- 
pany. The inquiry which the défendant would hâve had the plaintlfE pursue to 
discover the fraud is collatéral to an examination of the passbook and the 
record of checks drawn against the bank account, and it does not seem to us 
that the plalntifE was guilty of such négligence in relation thereto as that 
the question should hâve been submitted to the jury." 

In both the leading authorities considered and approved by the pre- 
vailing opinion (Leather Mfrs.' Bank v. Morgan, 117 U. S. 96, 6 Sup. 
Ct. 657, 29 L. Ed. 811 ; Critten v. Chemical Bank, 171 N. Y. 219, 63 



278 262 FEDERAL REPORTER 

N. E. 969, 57 L. R. A. 529), the courts held the question o£ négligence 
of the bank and depositor in.each case should be submitted to the jury. 
Even though the depositor in the présent case could be said to be es- 
topped because of négligent conduct or method of examination of the 
returned vouchers, this does not exempt the bank from liability for 
such forged checks as were paid before the depositor had an oppor- 
tunity to examine the returned vouchers, and the plaintiff in error 
should prevail at least as to thèse sums. 

In my opinion, upon this record, we should not décide as a question 
of law whether the plaintiff in error or défendant in error was nég- 
ligent. Plainly they are questions of fact for the jury. The judg- 
ment should be reversed. 



TEANSCONTINENTAIi PETROLEUM CO. T. INTEROOBAN OIL CO. 

(Circuit Ctourt of Appeals, Eighth Circuit December 12, 1919. Kehearlng 
Denied Pebruary 21, 1920.) 

No. 5339. 

1. CONTEACTS ®=slO(4) — ^MUTUAUTT OF CONTEACT FOB SALE TO ESTENT Or BUT- 

EB'S EEQTJIREMENTS. 

A contract for the sale and purchase of a commodity, where the quan- 
tity to be delivered or received is measured by the output or requlrementa 
of an established plant or business during a limited tlme, does not lack 
mutuallty. 

2. contbacts 's=>10(4) — mutttalrrt of conteact foe sale of oil limited to 

sellee's peoduction. 

A contract, by a corporation operatlng some 20 oil wells, to sell a 
stated quantity of crude oil, to be delivered during two years, held not 
invalid, for lack of mutuallty, because of a provision llmitlng Its obliga- 
tion to dellver to the production of its wells then owned or aftervrards 
acqulred during the termt 

3. Sales iS=»71 (4) — Mutxtalitt of pbovisions of contract foe sale of oil. 

A provision of a contract for sale and purchase of crude oll, to be de- 
livered through a stated tlme, that seller should not be bound to deliver 
beyond the production of Its own wells, also limita purchaser's obligation 
to receive to such production. 

4. WiTNESSEs ©=287 (1) — Mat explain testimont on cboss-examination. 

Where the superintendent of the export department of a large Mexican 
oil Company, having wells from which the oil was piped and transported 
to his headquarters at the coast, where it was stored in tanks for ship- 
ment, testifled that during the term of a contract his company did not 
load, deal In, or buy any oil other than from its own wells, the striking 
out of his testlmony as hearsay, because of his statement on oross-es- 
amlnation that he was not at the wells during the time, and the refusai to 
permit him to explain that, while not stationed at the wells, he vislted 
them, that he had charge of ail transportation Unes, and the men operatlng 
them, and of the books and records, showing the source of the oil 
handled, held error. 

5. Evidence ©=5317(1) — Witnesses <g=>268(2) — Officee of coepobation may 

TESTIFT as to its business; CBOSS-BXAMINATION as to SOUBCE of KNOWL- 
EDGE. 

That the knowledge of an ofiBcer of a large corporation as to facts con- 
nected wlth its business is gained largely from others, and from recorda 
in the course of the business, does not render his testimony as to such 

<g=3For other cases see same topic & KEY-NUMBER in ail Key-Numbered Digests & Indexes 



TRANSCONTINENTAL PETROLEUM 00. V. ENTEROOEAN OIL 00. 279 

(262 F.) 

facts incompétent as hearsay, and while cross-examlnatlon as to hls 
source of knowledge is proper, and may afifeet the welght of Ms testiraony, 
that question is for the jury. 

6. Evidence <®=s>158(27) — Damages fbom beeach of conteact mat be shown 

BT PAEOL. 

On the question of damages resulting from breach by défendant of a 
contract to purchase crude oll, oral testlmony as to other sales at the 
place durlng the time of default heli not incompétent, as secondary, be- 
cause the sales and purchases, as between the parties thereto, may hâve 
been evidenced by wrltten contracts. 

7. Principal and surety <@=»6 — Liabilitt of paett fob default or assignée ; 

"GUABANTY." 

A défendant, whieh contracted to purchase from plaintifl a large quan- 
tity of crude oil, to be delivered in future, held directly and prlmarlly 
liable for breach of the contract by Its assignée, notwlthstandmg a pro- 
vision of the contract that in case of assignment défendant should "remain 
as simple guarantor for its fulfillment," for the term "guaranty," whlle 
strlctly importing secondary liabillty, is often used in a broader sensé 
to signify suretyship in gênerai. 

[Ed. Note. — For other définitions, see Words and Phrases, First and 
Second Séries, Guaranty.] 

In Error to the District Court of the United States for the District 
of South Dakota; James D. Elliott, Judge. 

Action at law by the Transcontinental Petroleum Company against 
the Interocean Oil Company. Judgment for défendant, and plaintiff 
brings error. Reversed and remanded for new trial. 

Philip W. Russell, of New York City (Homer, Martens & Gold- 
smith, of Pierre, S. D., and Wing & Russell, of New York City, on the 
brief), for plaintiff in error. 

A. K. Gardner, of Huron, S. D. (Colby & Brown, of New York 
City, on the brief), for défendant in error. 

Before HOOK and STONE, Circuit Judges, and AMIDON, Dis- 
trict Judge. 

HOOK, Circuit Judge. This was an action by the Transcontinental 
Petroleum Company of the Republic of Mexico against the Interocean 
Oil Company of South Dakota for breach of a written contract of sale 
and purchase of crude oil produced in the Panuco oil fields, near Tam- 
pico, Mexico. The plaintiff was the seller, and défendant the pur- 
chaser. The breach claimed was in the failure of the latter and its 
assignée to take a large part of the quantity of oil contracted for. At 
the conclusion of plaintiff's évidence the trial court directed a verdict 
for the défendant and judgment followed accordingly. 

[1,2] At the threshold of the case is defendant's contention that the 
contract is void for want of mutuality of obligation. This involves a 
construction of the firist three paragraphs of the contract. By the first 
paragraph plaintiff agreed to sell and deliver to défendant 1,200,000 
barrels of Mexican crude petroleum oil upon terms and conditions 
specified, "provided, however, that deliveries in said quantity or in any 
quantity are limited to the actual production of the oil wells owned by 
the vendor and the production of other wells which may be from time 

<®=3For other cases see same toplc & KBY-NUMBBR in ail Key-Numbered Dlgests & Indexes 



280 262 FEDERAL REPORTER 

to time controlled by the vendor." The second paragraph provides 
for deliveries by plaintiff at the rate of not less than 50,000 barrels per 
month from January 1, 1914, to December 31, 1915, in cargo lots into 
defendant's vessels of stated capacities, failure of the latter to take the 
speciiied quantity in any month to be made up the next. The défend- 
ant was given the right to require plaintifï, by notice, to commence 
the monthly deHveries before January 1, 1914. By the third paragraph 
défendant agreed "to take said oil as above provided, and pay for the 
same at the rate" specified. 

The argument of défendant is that the proviso of the first paragraph 
limiting plaintifï's undertaking to the production of wells owned or 
controlled by it made it entirely optional with plaintiff to deliver any oil 
at ail. There is no merit in the argument. In effect, the contract bound 
the plaintiff to deliver the entire output of its wells, up to the quantities 
specified. No such personal choice or option was given to withhold or 
refuse deliveries of oil produced by its wells as is sometimes held to 
destroy the requisite mutuality of contract obligations. The limita- 
tion is a physical one, of a kind common in business affairs. When the 
quantity of a commodity to be delivered or received under a contract 
of sale rests in the uncontrolled will or désire of one of the parties, 
mutuality is lacking. It is otherwise when the quantity is measured by 
the output or requirements of an established plant or business during 
a liraited time. Cold Blast Transp. Co. v. Kansas City Boit & Nut Co., 
52 C. C. A. 25, 114 Fed. IT , 57 L. R. A. 696. This latter rule is an 
adjustment of légal principles to necessary and reasonable business 
visages. It appears plaintiff owned and controlled about 20 oil wells 
in the Panuco field, with extensive structural equipment, and thougli 
the life of any parti cular well might not be forecast with certainty, it 
is idie to say plaintiff did not bave an established plant, the actual 
product of which it could bind itself to sell and deliver in whole or in 
part during the time limited. The plaintiff could not, without violat- 
ing its contract, hâve capped its wells or choked their production to es- 
cape deliveries. In that respect a corrélative duty on its part would 
be implied. 

[3] The plaintiff contended at the trial thaf the proviso above dis- 
cussed was for its sole benefit, and therefore it was not required to 
prove as part of its case that it was able and willing to make the de- 
liveries of oil produced by its wells. The court properly ruled other- 
wise. In effect the plaintiff's contention was that its right to make de- 
liveries was not limited to the product of its wells, but that defendant's 
right to require deliveries was so limited. If that were the contract, 
it would be unilatéral. In most of the cases cited for the contention, 
the provisions held to be for the benefit of one, but not both, of the 
parties, related to incidental matters, not, as hère, going to the very 
root of the contract and vital to its mutuality. 

Plaintiff introduced évidence tending to show the following: De- 
fendant gave notice under the contract advancing the beginning of 
the two-year delivery period to November, 1913. For the first five 
months défendant sent vessels, and received and paid for an aggregate 
,-vmount of oil less by 78,256.09 barrels than the minimum quantity it 



TEANSCONTINENTAL PEÏKOLEUM CO. V. INTEEOCEAN OIL CO. 281 

(262 F.) 

was required to take in that time. It refused to receive or pay for 
any oil thereafter. In April, 1914, it assigned the contract to one Von 
Reitzenstein under a clause that it might do so "and remain as simple 
guarantor for its fulfillment by its assignées." The assignée failed to 
take or pay for any oil. James Dickson, a witness for plaintifï, with 
23 years' expérience in the oil business in Mexico, testified that he had 
been superintendent of plaintiff's export department ever since its plant 
was built in 1911, and had under him in 1913 and 1914 about 200 em- 
ployés, including assistant superintendents and foremen. He describ- 
ed the extensive plant of the plaintifï in the Panuco oil field and at the 
station where vessels were loaded. He said that during the contract 
period, 1913-1915, and before and since that time, the plaintifï possess- 
ed and controlled about 20 flowing oil wells in the Panuco field. Panu- 
co is about 64 miles up the river from Tampico. The office of the wit- 
ness was at Las Matillas, about 3 miles from Tampico. The oil flow- 
ed from the wells through pipes into flow tanks, thence by pipe fines 
about 2 miles into loading tanks at the river. It was then run into 
barges and taken down the river to Las Matillas, where it was pumped 
into storage tanks of several hundred thousand barrels capacity. He 
gave the dimensions, number, and capacities of the différent instru- 
mentalities and the quantifies of oil on hand available for delivery at 
différent times under the contract. He testified that the plaintifï did 
not load, deal in, or buy any other oil than that from its wells above 
mentioned. 

[4] Without going into further détails, it may be said that, except 
for what will be mentioned presently, the testimony of this witness 
was that the output of plaintiflf's wells, the transportation and storage 
capacity of its plant, and the quantifies on hand available for deliverieS 
to défendant were much in excess of the requirements of the contract. 
During the cross- examina tion this occurred: 

"Q. Now, you had not been up to Panuco for a number of years prior to 
1914, had you? A. No, sir. 

"Q. You had not been in 1912, had youî A. 1911 and 1912. 

"Q. Since that time you had been down at Las Matillas? A. Yes, sir." 

At the close of the cross-examination, and before the redirect ex- 
amination, the court ruled that, because the witness had not been 
at the oil field since 1912, his testimony as to the source of the oil 
stored at Las Matillas was hearsay, and on motion of défendant it 
was struck out. Plaintifï's request that it be allowed to examine the 
witness further on that subject was denied. Later a request that the 
witness be permitted to explain his statement that he had not been 
up at Panuco since 1912 was likewise denied, as was also a formai of- 
fer to show by him that he meant that he had not been employed there 
since that year, but had originally constructed the pipe Unes from the 
wells to the loading tanks at the river, and had been at the oil field a 
number of times during the contract period down to November, 1915 , 
that no new pipe lines had been built ; that as superintendent of plain- 
tiflf's export department he also had officiai charge of the conveyance 
of the oil by barge from the loading tanks at Panuco to Las Matillas, of 
the men engaged in that work, and of the plaintifï's books and records 



282 262 FBDEBAL BEPOBTEB 

concerning it. Thèse rulings of the court left the plaintifï without 
proof of a vital part of its case. It had no other available witness upon 
that subject. 

[5] Much of what officiais of large enterprises know of their opéra- 
tions is necessarily learned "in the course of business" and from as- 
sociâtes Eind employés, through conférences, conversations, letters, re- 
ports, records, and the like. It is upon such information that the busi- 
ness is directed and carried on. Considered narrowly and technically 
it might be regarded as proceeding in considérable measure from hear- 
say ; but absolute, first-hand, personal knowledge is not as a rule prac- 
ticable and is not required as an invariable rule of évidence. As Lord 
EUenborough said, "the rules of évidence must expand according to 
the exigencies of society." Pritt v. Fairclough, 3 Campbell, 306. 
Cross-examination into the scope of the jurisdiction and duties of 
the officiais and the sources and extent of their information may affect 
the weight of their testimony, which is for the jury. If plaintifï's 
président had not died, but had testified, as Mr. EHckson did, that his 
Company did not "load, deal in, or buy" oil not of its own production, 
there would hâve been little, if any, question as to the admissibility of 
his testimony, even though it appeared that he had not been at the 
wells, 60-odd miles away. And we do not think it should hâve been 
ruled as a matter of law that like testimony by the superintendent of 
the export department was inadmissible. He testified to the fact posi- 
tively, and no légal inference or presumption arises from the title of 
his office that he did not possess the requisite information. For aught 
that appears, the oil coming under his jurisdiction may hâve been about 
ail that was produced by his company; his duties may bave required 
constant and full information as to its origin and quantity — what was 
on hand from month to month, and what could be reasonably counted 
on in the future from the known source or sources of supply. One in 
charge of the export department of a Mexican oil company may hâve 
been bound to know such things as fully and definitely as the highest 
officiai. We also think that the statement of the witness, on cross- 
examination, that he was not at the oil wells after 1912, might well 
hâve been intended as meaning that he was not officially stationed 
there. That is not an unusual form of expression in like circum- 
stances. When attention was drawn to the distinction on redirect ex- 
amination, the witness should hâve been allowed fully to explain. Re- 
direct examinations are primarily for such purposes. 

[6] As bearing upon its loss and damage, the plaintifï offered testi- 
mony of other sales and purchases of oil in that neighborhood during 
the period of defendant's default. The trial court excluded it as not 
the best évidence, becai^se it appeared the transactions were conduct- 
ed by written correspondence or according to written contracts. But 
the sales, purchases, and prices were not required to be in writing. 
That they were so was casual or fortuitous as to others than the par- 
ties to tiiose particular transactions. Oral évidence of the prices 
received and paid was not proof of the contents of writings, within the 
rule on that subject. Even if the writings had been introduced, there 
would still hâve been testimony that the transactions indicated were 



PONTANA V. UNITED STATES 283 

(262 F.) 

consummated. The money might hâve passed by check or draft, but 
it would hardly be contended that those instruments must be produced. 
The existence of written évidence of a fact does not alvsrays exclude 
paroi proof of it. Keene v. Meade, 3 Pet. 1, 7, 7 L. Ed. 581. For ex- 
ample, the mère fact of title to personal property may be shown orally, 
although there is a vv^riting evidencing the sale. Dixon-Pocahontas Fueî 
Ce. V. Grain Co., 71 W. Va. 715, 17 S. E. 362, Ann. Cas. 1914C, 115. 

[7] Finally, as to defendant's liability for the default of its as- 
signée : The contract says that upon its assignment défendant should 
remain as a simple guarantor. Strictly speaking the liability of a 
guarantor is for the debt or obligation of a third person, is secondary 
and collatéral, and its en forcement dépends upon compliance with 
certain conditions. The liability of a surety is original, primary, and 
direct. Hall v. Weaver (C. C.) 34 Fed. 104, 106. But the term "guar- 
anty" is often used in a broader and more comprehensive sensé. It is 
employed, also, to signify suretyship in gênerai. See Saint v. Wheel- 
er & Wilson Mfg. Co., 95 Ala. 362, 10 South. 539, 36 Am. St. Rep. 210. 
The customary incidents of a strict guaranty are lacking hère. The 
principal obligation was primarily defendant's, not that of a third per- 
son ; and while défendant had an unrestricted right to assign, the very 
act of assignment carried with it its assurance to plaintiflf of fulfill- 
ment by its assignée. Except for the assignment by the défendant, 
the obligation to take and pay for the oil was its own, and under the 
circumstances its guaranty should be liberally, not technically, con- 
strued. We think it remained directly and severally liable for the 
default of its assignée. Neither a prior action against him nor his 
présence hère is essential. 

The judgment is reversed, and the cause is remanded for a new trial. 



FONTANA V. UNITED STATES. 

(Circuit Court of Appeals, Eighth Circuit December 8, 1919.) 

No. 5295. 

1. Indictment and information c=>176 — Vabiance of peoof as to tikœ or 

OFFENSE NOT MATEBIAL, WHERE WITHIN LIMITATION PEBIOD. 

The averment In an Indictment that défendant made statements vlolat- 
Ing the Bspionage Act on a speclfled day was a mère formai jurlsdlctlon- 
al allégation, whlch permltted the govemment to show that such state- 
ments were made at any time before the Indictment was flled wlthin the 
statute of limitations and after passage of the Bsplonage Act. 

2. CONSTITUTIONAL LAW <S=»265 INDICTMENT, TO CONSTITUTB DUE PKOCESS OF 

LAW, MUST DISTINCTLT AND SPECIFICALLY CHARGE OFFENSE. 

In order to constltute due process of law, an indictment must not only 
Inform accused that there is a charge against him, but must be suffldently 
distinct and spécifie to advlse him what he has to meet and to give him a 
falr and reasonaWe opportunity to prépare his défense. 

3. Ckiminal law iS=308 — Indictment and information <S=>55 — ^Testino on 

peesumption that accusbd has no knowledge of facts chaeqbd. 
A person Indlcted for a serlous offense is presumably Innocent, and the 

,e=jFot other cases see same topio & KEY-NUMBER in ail Key-Numbered Dlgests & Indexes 



284 262 FEDERAL REPORTER 

sufflciency of an Indictment must be tested upon the presumptlon that he 
is Innocent, and bas no bnowledge of the facts charged against hlm. 
t. Indictment and information <S=>71 — Bequibements as to definitenkss 

8TATED. 

An Indictment must set forth tbe facts so dlstinctly as to advise ae- 
cused of tJie charge, and give hlm a falr opportunity to prépare bis dé- 
fense, so particularly that a conviction or acquittai would bar another 
prosecution for tbe sam« offense, and so clearly that the court may dé- 
termine whether tbe facts stated support a conviction. 
t. War <S=»4 — Indictment undee Espionage Act held insufficient. 

An indictment charging that ntne statements of accused uttered in a 
certain town vlolated the Espionage Act, but not Identlfying the occasioi'.s 
upon whicb the statements were made, héld InsufEcient, because not 
specifleally advising accused of the charge he would be required to meet, 
and not suffieiently deflnite to be pleaded in bar of a subséquent prosecu- 
tion. 

6. Criminal law iS=»29g — Bae to subséquent pbosecution dépends on ix- 

dictment, and not évidence adduced on former trial. 

Whether a conviction or acquittai is a bar to a subséquent prosecution 
must be determlned from the Indictment and judgment at the former trial, 
and the évidence on such trial cannot be considered, because not a part 
of the judgment. 

7. Wab <S=4 — Indictment under Espionage Act insufficient. 

An indictment charging that accused made nine statements vlolating 
the Espionage Act, but not specifying the circumstances under whlch, 
they were made, helâ, insufficient, where, If made in a publie address 
advocating the results alleged In the Indictment In the présence of mem- 
bers of the military or naval forces of the United States, or of those 
ellgible to become such members, or, If circulated among such men, they 
might be calculated to produce such results, but if uttered in private con- 
versations, or in discussion with or in the présence of loyal men of ordi- 
nary intelligence, in the absence of other circumstances to indicate the 
evil intents alleged, they would be susceptible to the inference that they 
were made with the intents charged. 

8. Indictment and information <S=>63 — Conclusions begaeding intent to 

violate law not sufficient. 

When language does not constltute a crime. If uttered under some cir- 
cumstances, but does, if uttered under others, it Is not enough for an in- 
dictment to charge that the language was used with intent to violate tho 
law, since that would be a mère conclusion of the pleader. 

9. Wab <©=>4 — Evidence insufficient to sustain Espionage Act conviction. 

In prosecution for vlolating the Espionage Act, évidence that accused's 
utterances after passage of the act constituted only a sentence or two In 
a sermon and statements to persons soliciting Red Cross subscrlptlona In 
accused's bouse, etc., held Insufficient to sustain a conviction. 

In Error to the District Court of the United States for the District 
of North Dakota; Charles F. Amidon, Judge. 

J. Fontana was convicted of violating the Espionage Act, and he 
brings error. Reversed and remanded, with directions to discharge 
défendant. 

John Knauf, of Jamestown, N. D. (B. W. Shaw, of Mandan, N. D., 
on the brief), for plaintifï in error. 

M. A. Hildreth, U. S. Atty., of Fargo, N. D. (John Carmody, Asst. 
U. S. Atty., of Fargo, N. D., on the brief), for the United States. 

Before SANBORN, CARLAND, and STONE, Circuit Judges. 

®=>For otlier cases see same toplc & KEY-NUMBEH in ail Key-Numbered Dlgests &. Indexes 



FONTANA' V. UNITED STATES 285 

(262 F.) 

SANBORN, Circuit Judge. The défendant below was convicted of 
three violations of section 3 of the Espionage Act of June 15, 1917 (40 
Stat. p. 217, c. 30 [Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 
10212c]), and sentenced to three years in the penitentiary under an 
indictment containing three counts which charged that by saying the 
same words on or about December 19, 1917, he 

(1) Willfully made and conveyed false reports with the intent to 
interfère with the opération and success of the military and naval 
forces of the United States and to promote the success of its enemies, 
to the injury of the United States ; 

(2) Willfully caused and attempted to cause insubordination, dis- 
loyalty, and refusai of duty in the military and naval forces of the 
United States, to its injury; and 

(3) Willfully obstructed the recruiting and enlistment service of the 
United States, to the injury thereof. 

The défendant demurred to the indictment, and the demurrer was 
overruled. At the close of the évidence he moved for a directed ver- 
dict, on the ground that there was no substantial évidence to sustain 
a verdict against him, and this motion was denied, and he made a mo- 
tion in arrest of judgment, and that motion was denied. Thèse rul- 
ings are assigned as error. 

Counsel for the défendant instst that the indictment was insuf- 
ficient, because it did not set forth the facts which the pleader claim- 
ed constituted the violations charged so distinctly as to advise him of 
the charges he had to meet and to give him a fair opportunity to pré- 
pare his défense, nor so particularly as to enable him to avail himself 
of a conviction or acquittai in défense of another prosecution for the 
same ofifense. 

The indictment charged that the three offenses were committed on 
or about December 19, 1917, at New Salem, a town in North Dakota, 
during the war between the United States and the Impérial Gernian 
government, with the respective intents denounced by the statute, by 
falsely stating: 

(1) That Président Wilson was a man who, after securing his élec- 
tion on the slogan "kept us out of war," turned squarely around and by 
the use of his high office of Président whipped the members of Con- 
gress into line by threats of exposure of this one and that one, and in 
this way secured the authority to enter the war with Germany ; 

(2) That he felt proud of tiie noble fight the Gennans were making 
in the war ; 

(3) That the sinking of the Lusitania was justified, and that there 
was no reason whatever for the United States taking up arms against 
Germany ; 

(4) That he frequently prayed for the success of the armies of Ger- 
many over the armies of the United States ; 

(5) And stated to his congrégation and to divers persons, whose true 
names are to the grand jurors unknown, false and injudicious state- 
ments as aforesaid ; 

(6) That he did not want to subscribe for Liberty L,oan Bonds, be- 
cause it would tend to encourage the administration ; 



286 262 FEDERAL REPOETEE 

(7) That the Président was using the same methods of threats 
to force every bank within the United States to subscribe to Liberty 
Loan Bonds ; 
- (8) That the purchase of Liberty Loan Bonds would give the coun- 
try more money to fight Germany and thus prolong the war ; 

(9) That he desired the success of the enemies of the United States. 

[1] The averment in the indictment that the défendant made thèse 
statements on or about December 19, 1917, was a mère formai juris- 
dictional allégation, which permitted the introduction of évidence of 
any of them at any time before the indictment was filed within the 
statute of limitations, and there was nothing but that formai state- 
ment and the allégation that the statements were made at New Salem 
to indicate at what time, under what circumstances, on what occasions, 
to whom, in whose présence, or by what persons the govemment would 
attempt to prove that the défendant had made any of thèse statements, 
nothing to indicate to him whether he was to be tried for making ail of 
them at one time, on one occasion, or for making some of them at one 
time to one person, and others at other times and on other occasions 
to other persons. 

[2, 3] The basic principle of English and American jurisprudence 
is that no man shall be deprived of hfe, liberty, or property without 
due process of law ; and notice of the charge or claim against him, not 
only sufficient to inform him that there is a charge or claim, but so 
distinct and spécifie as clearly to advise him what he has to meet, and 
to give him a fair and reasonable opportunity to prépare his défense, 
is an indispensable élément of that process. When one is indicted for 
a serions offense, the presumption is that he is innocent thereof, and 
consequently that he is ignorant of the facts on which the pleader 
founds his charges, and it is a fundamental rule that the sufficiency of 
an indictment must be tested on the presumption that the défendant is 
innocent of it and has no knowledge of the facts charged against him 
in the pleading. Miller v. United States, 133 Fed. 337, 341, 66 C. C. A. 
399, 403; Naftzger v. United States, 200 Fed. 494, 502, 118 C. C. A. 
598, 604. 

[4-6] It is essential to the sufficiency of an indictment that it set 
f orth the facts which the pleader claims constitute the alleged transgres- 
sion, so distinctly as to advise the accused of the charge which he has 
to meet, and to give him a fair opportunity to prépare his défense, so 
particularly as to enable him to avail himself of a conviction or acquit- 
tai in défense of another prosecution for the same offense, and so clear- 
ly that the court may be able to détermine whether or not the facts 
there stated are sufficient to support a conviction. United States v. 
Britton, 107 U. S. 665, 669, 670, 2 Sup. Ct. 512, 27 L. Ed. 520; United 
States V. Hess, 124 U. S. 483, 488, 8 Sup. Ct. 571, 31 L. Ed. 516; Mil- 
ler V. United States, 133 Fed. 337, 341, 66 C. C. A. 399, 403; Armour 
Pkg. Co. V. United States, 153 Fed. 1, 16, 17; 82 C. C. A. 135, 150, 
151, 14 L. R. A. (N. S.) 400; Etheredge v. United States, 186 Fed. 
434, 108 C. C. A. 356; Winters v. United States, 201 Fed. 845, 848, 
120 C. C. A. 175, 178; Horn v. United States, 182 Fed. 721, 722, 105 
C. C. A. 163, 167. If the pleader had set forth in this indictment any 



FONTANA V. UNITED STATES 287 

(262 F.} 

fact or facts, such as the time, place, occasion, circumstances, persons 
présent, or any other distinctive earmark whereby the défendant could 
hâve found out or identified the occasion or occasions when the gov- 
ernment intended to attempt to prove that the défendant uttered any 
of the nine sayings charged he might hâve been able to investigate the 
basis of the charges, to leam who were or were not présent on the oc- 
casions referred to, hence who were possible witnesses, and to prqjare 
his défense; but there is nothing of that kind in the indictment. As 
it reads, he might hâve been called to meet on each of the nine charges 
testimony that at any time of day or night, at any place in New Salem, 
on any occasion, public or private, before the indictment was filed, 
and after the Espionage Act was passed on June 15, 1917, he had ut- 
tered to any one whomsoever any of the statements charged in the in- 
dictment. Thèse considérations compel the conclusion that this plead- 
ing signally failed to state the facts which the government claimed con- 
stituted the alleged offense in this case, so distinctly as to give the de- 
fendant a fair opportunity to prépare his défense to meet any of them, 
and that he could not and did not hâve that notice of them required to 
give him a fair trial. 

Nor were the charges in this indictment so certain and spécifie that 
upon conviction or acquittai thereon it or the judgment upon it con- 
stitute a complète offense to a second prosecution of the défendant 
for the same offense. In determining this question the évidence on 
the trial may not be, and the indictment and the judgment alone can be, 
considered, because the évidence does not become a part of the judg- 
ment, and as the indictment states no facts from which the time, places, 
or occasions on which the respective statements therein were alleged to 
hâve been made can be identified, the indictment and judgment failed 
to identify the charges so that another prosecution therefor would be 
barred thereby. Florence v. United States, 186 Fed. 961, 962, 964, 
108 C. C. A. 577, 578, 580, and cases there cited ; Winters v. United 
States, 201 Fed. 845, 848, 120 C. C. A. 175, 178. 

[7, 8] Moreover, there is no such clear statement in the indictment 
of the facts which the government claims constituted the offenses 
charged as enables a court fairly and justly to détermine that they 
would sustain a conviction. If the statements charged, when consider- 
ed in the light of the times and circumstances under which they were 
uttered, were reasonably calculated to efïect the results averred, the 
indictment was sufficient to require the court to send the case to the 
jury. If, on the other hand, upon its face, in the light of the times 
and circumstances it disclosed, the facts pleaded in the indictment 
were not reasonably susceptible to the inference that the statements 
were made by the défendant with the intent to interfère with the opéra- 
tion and success of the military and naval forces of the United States, 
and to promote the success of its enemies to the in jury of the United 
States, or to cause or attempt to cause insubordination, disloyalty, and 
refusai of duty in the military and naval forces of the United States 
to its injury, or to obstruct the recruiting and enlistment service of the 
United States to the injury thereof, the demurrer should hâve been 
sustained. "The question in every case," said Mr. Justice Holmes in 



288 262 FBDiBRAL BBPOKTEB 

Schenck v. United States, 249 U. S. 47, 52, 39 Sup. Ct. 247, 248, 63 
Iv. Ed. 470, "is whether the words used are used in such circumstances 
and are of such a nature as to create a clear and présent danger that 
ihey will bring about the substantive evils that Congress has a right to 
prevent." 

The statements set forth in this indictment are such that, if uttered 
under some circumstances, as, for example, in a public address ad- 
vocating in the présence of the members of the military or naval forces 
of the United States, or of those eligible to become such members, or 
if written and circulated among such men, they might be calculated to 
produce the results alleged. But there is none of thèse statements that, 
if uttered in private conversations or discussion with or in the présence 
of loyal men of ordinary intelligence, in the absence of other circum- 
stances to indicate evil intents, susceptible to any such inference. Il- 
lustrations of the case of the former class are Doe v. United States, 
253 Fed. 903, 166 C. C. A. 3; O'Hare v. United States, 253 Fed. 538, 
165 C. C. A. 208. Illustrations of the latter class are Von Bank v. 
United States, 253 Fed. 641, 165 C. C. A. 267; Wolf v. United States, 

259 Fed. 388, C. C. A. . As was said by Judge Carland in the 

Von Bank Case: 

"The Jury • • ♦ had no right to flnd a crlminal intent, unless such la- 
tent was the necessary and legitimate conséquence of the words spoken." 

Whether or not the statements in the indictment were reasonably 
calculated to indicate the intents stated, or to "create a clear and prés- 
ent danger" of the results alleged, was conditioned by the time and cir- 
cumstances in which they were said. It is an elementary rule of crim- 
inal law that when language does not constitute a crime if uttered un- 
der some circumstances, and does constitute a crime if uttered under 
other circumstances, it is not enough to charge that it was used with 
intent to violate the law. That would be a mère conclusion. The facts 
must be set forth, so that the court can détermine, and not the pleader, 
whether or not they constitute the crime. United Staes v. Hess, 124 
U. S. 483, 8 Sup. Ct. 571, 31 L. Ed. 516; United States v. Cruikshank 
et al, 92 U. S. 542, 23 L. Ed. 588; United States v. Carll, 105 U. S. 

611, 26 L,. Ed. 1135; Shilter v. United States, 257 Fed. 724, 725, 

C. C. A. . 

Take, for example, the first charge in the indictment, that the Prési- 
dent secured his élection on the slogan "kept us out of war," and by 
using his high office whipped the members of Congress into line to se- 
cure the authority to enter the war. If that statement was made in 
a private conversation with a loyal citizen, in the présence of no other 
person, his utterance of it was not susceptible to the inference that he 
made it with any of the evil intents charged, or to the inference that 
it was reasonably calculated to produce the results alleged. Perhaps, 
however, if it had been made in a public address, in the présence of 
men who were members of the military or naval forces of the United 
States, such an utterance might, in view of other things said in the 
same address, bave been susceptible to a différent inference. Take the 
fifth statement, that he "stated to his congrégation and to divers per- 
sons, whose true names are to the grand jurors unknown, false and in- 



PONTANA V. UNITED STATES 289 

(262 F.) 

judicious statements as aforesaid." That charge is so indefinite and 
ambiguous that it is clearly insufficient to warrant the introduction of 
any évidence under it. No court can détermine from it whether it 
means that he made the statements preceding it, or that he made other 
injudicious statements to them, in the sanie way that he made the 
preceding statements. The allégations in the indictment regarding the 
other statements are likewise indefinite and insufficient, and for the 
reasons which hâve